Find Legal Information

SIXTH DIVISION

September 22, 2000

No. 1-98-3674

JUSTICE BUCKLEY delivered the opinion of the court:

This appeal arises out of a third-party action. PlaintiffBenjamin Walker brought an action against Ridgeview ConstructionCompany (Ridgeview) and others for injuries sustained at aconstruction project. In turn, Ridgeview brought a third-partyaction against Walker's employer, Gateway Concrete Forming Systems,Inc. (Gateway), for contribution and breach of contract. Ridgeviewsettled with Walker in the principal action for $100,000. Then, onApril 6, 1998, after a bench trial of the third-party action, thetrial court found in favor of third-party plaintiff Ridgeview andagainst third-party defendant Gateway and entered judgment for$290,906.89 plus costs. On April 29, 1998, the trial court enteredan order granting Ridgeview's motion to amend the complaint tochange all references to Ridgeview to read "Ridgeview ConstructionCompany, for the use of General Casualty Insurance Company." OnJune 1, 1998, Gateway filed a posttrial motion wherein it arguedthat (1) Ridgeview was not entitled to damages; (2) the trial courterred in allowing Ridgeview to make a postjudgment amendment to itscomplaint; (3) Ridgeview waived its right to seek insurancecoverage pursuant to its contract with Gateway; (4) the trial courterred in excluding parol evidence; and (5) Ridgeview failed toprove the reasonableness of its legal fees. On August 27, 1998,the trial court denied Gateway's posttrial motion. Gateway nowappeals from the order entered on April 6, 1998, finding in favorof Ridgeview and entering judgment for $290,906.89 plus costs; fromthe order entered on April 29, 1998, granting Ridgeview's motion toamend; and from the order entered on August 27, 1998, denyingGateway's posttrial motion. Gateway contends that the trial courterred: (1) in entering judgment for Ridgeview because Ridgeviewsuffered no damages; (2) in allowing Ridgeview to amend thecomplaint to name General Casualty Insurance Company as the realparty in interest; (3) in excluding parol evidence of the parties'understanding of Gateway's alleged obligation to purchaseinsurance; (4) in failing to recognize that Ridgeview waived itsright to enforce aspects of its contract against Gateway; and (5)in awarding Ridgeview legal fees because Ridgeview did not provethe fees incurred in its defense were reasonable. For the reasonsthat follow, we now reverse.

STATEMENT OF FACTS

Plaintiff Benjamin Gary Walker was injured in a 1992construction accident while working on the South Chicago CommunityHospital construction project. Walker sued Pepper ConstructionCompany, the general contractor, and certain subcontractors,including Ridgeview, alleging negligence and violations of theIllinois Structural Work Act (740 ILCS 150/1 et seq. (West 1994)). On November 25, 1997, Pepper Construction Company, AdvanceMechanical Systems, Inc., and Ridgeview filed a second amendedthird-party complaint against Walker's employer, Gateway, primarilyalleging that Gateway had been negligent in supervising Walker and,thus, at least partly responsible for his injuries. The principalaction went to trial, but Ridgeview settled with Walker for$100,000 prior to trial. Ridgeview's liability carrier, GeneralCasualty Insurance Company (General Casualty), paid the settlementon Ridgeview's behalf and also fully financed Ridgeview's defensein the Walker lawsuit up to the settlement. Thereafter, on January20, 1998, judgment was entered on the verdict for Walker and hiswife and against Pepper Construction Company in the amounts of$2,450,000 and $25,000, respectively.

In addition to its claim for contribution, Ridgeview's third-party action against Gateway also alleged that Gateway had beencontractually obligated to maintain liability insurance that wouldhave covered Ridgeview for lawsuits such as Walker's. Ridgeview'ssecond amended third-party complaint alleged that Gateway hadallowed Ridgeview's coverage to lapse after the first year, inalleged violation of the contract. As a result of that breach,Ridgeview sought to recover from Gateway the costs and expenses oflitigating the principal action.

The circuit court tried that aspect of the third-party actionwithout a jury shortly after the conclusion of the trial of themain action. At the bench trial on February 2, 1998, Ridgeviewpresented the testimony of Scott Smeja, its vice-president, whoconfirmed that General Casualty paid the entire portion of thejudgment attributable to Ridgeview, as well as the attorney feesand legal costs associated with the original trial.

Gateway moved for a directed finding on the basis of Smeja'stestimony, arguing that Ridgeview could not set forth a prima faciecase for breach of contract because Ridgeview had not suffered anydamages. Gateway also argued that Ridgeview had not proved thereasonableness of the legal fees incurred. The trial judge deniedthe motion and, on April 6, 1998, ultimately entered judgment infavor of Ridgeview in the amount of $290,906.89, plus costs.

At a subsequent status hearing, Ridgeview orally moved forleave to amend its third-party complaint to reflect that the realparty in interest was its liability insurer, General Casualty. Thecourt granted the request and, on April 29, 1998, ordered that thepleading would be "amended on its face, instanter," to reflect GeneralCasualty's interest. Gateway subsequently filed a posttrial motionwhich the trial court denied. Gateway now appeals.

DISCUSSION

A. BREACH OF CONTRACT

Gateway first contends that the trial court erred in enteringjudgment for Ridgeview because Ridgeview did not suffer anydamages.

The standard of review we apply when a challenge is made tothe trial court's ruling following a bench trial is whether thetrial court's judgment is against the manifest weight of theevidence. See Bazydlo v. Volant, 164 Ill. 2d 207, 215 (1995); Inre Gilman Community Fire Protection District, 303 Ill. App. 3d 246,248 (1999). A reviewing court will not reverse a trial court'sdecision merely because different conclusions can be drawn; anopposite conclusion must be clearly evident. See In re GilmanCommunity Fire Protection District, 303 Ill. App. 3d at 246.

In order to show a breach of contract, a plaintiff must showthat (a) a contract exists between plaintiff and defendant, (b)plaintiff performed her obligations under the contract, (c)defendant did not perform his obligations under the contract, and(d) damages resulted from the breach. See Wilkonson v. Yovetich,249 Ill. App. 3d 439, 449 (1993). Here, the testimony of Smejaclearly established that Ridgeview paid neither the settlement withWalker nor any of the legal fees incurred in its defense. Therewas no testimony that Ridgeview paid any deductible amount or thatits insurance premiums were affected. In the absence of testimonythat Ridgeview suffered damages, Ridgeview cannot maintain a breachof contract action.

The purpose of damages is to put the nonbreaching party intothe position he or she would have been in had the contract beenperformed, but not in a better position. Compensation awarded ina breach of contract action should not provide plaintiff with awindfall. See Harden v. Playboy Enterprises, Inc., 261 Ill. App.3d 443, 454 (1993). Because Ridgeview failed to prove that itsuffered damages, an essential element of a breach of contractaction, Gateway was entitled to a directed finding as a matter oflaw. See Prevendar v. Thonn, 166 Ill. App. 3d 30, 36 (1988).

Accordingly, we find that the trial court's denial ofGateway's motion for a directed verdict was against the manifestweight of the evidence.

B. AMENDMENT TO COMPLAINT

When the trial court denied Gateway's motion for a directedverdict and entered judgment in favor of Ridgeview and againstGateway for $290,906.89 plus costs on April 6, 1998, the court alsoallowed Ridgeview to amend its complaint. Thereafter, on April 29,1998, three weeks after judgment was entered, the trial courtgranted Ridgeview's motion to amend the complaint to change allreferences to Ridgeview to read "Ridgeview Construction Company,for the use of General Casualty Insurance Company." Ridgeviewasserts that by allowing the amendment, the "defect" in itscomplaint, i.e., its inability to prove damages, was effectivelycured. Gateway, however, challenges the propriety of the amend-ment.

There are four factors to examine when assessing the proprietyof the trial court's ruling on a motion to amend: (1) whether theproposed amendment would cure the defect in the pleading; (2)whether other parties would be prejudiced or surprised by theproposed amendment; (3) whether the proposed amendment is timely;and (4) whether the party seeking to amend had other opportunitiesto do so. See Loyola Academy v. S&S Roof Maintenance, Inc., 146Ill. 2d 263, 273-74 (1992); State Farm Fire & Casualty Co. v. M.Walter Roofing Co., 271 Ill. App. 3d 42, 49 (1995).

Gateway contends that the amendment did not cure the defect inRidgeview's pleadings, i.e., that Ridgeview did not prove damages. Ridgeview argues, however, that by amending the complaint to nameGeneral Casualty as the real party in interest, the trial court hasallowed General Casualty to recover as Ridgeview's subrogee.

As recognized by the Illinois Supreme Court, the doctrine ofsubrogation is a method whereby one who has involuntarily paid adebt or claim of another succeeds to the rights of the other withrespect to the claim or debt so paid. See Dix Mutual Insurance Co.v. LaFramboise, 149 Ill. 2d 314, 319 (1992). The right ofsubrogation is an equitable remedy which rests on the principlethat substantial justice should be attained by placing ultimateresponsibility for the loss upon the one against whom in goodconscience it ought to fall. See Dix Mutual Insurance Co., 149Ill. 2d at 319. Subrogation is allowed to prevent injustice butwill not be allowed where it would be inequitable to do so. See Dix Mutual Insurance Co., 149 Ill. 2d at 319. Indeed, Gateway doesnot quarrel with General Casualty's right to bring a subrogationaction. Instead, Gateway challenges whether it was proper forGeneral Casualty to wait until after final judgment beforeasserting such a right.

We agree with Gateway and find that this was not a properamendment and that it did not transform the action into one ofsubrogation. First, the change to the complaint effected by theamendment was in form only, not substance. As argued by Gateway,there is a substantive difference between a subrogation action anda breach of contract action. Section 2-403(c) of the Illinois Codeof Civil Procedure provides:

"Any action hereafter brought by virtue of thesubrogation provision of any contract or byvirtue of subrogation by operation of lawshall be brought either in the name or for theuse of the subrogee; and the subrogee shall inhis or her pleading on oath, or by his or heraffidavit if pleading is not required, allegethat he or she is the actual bona fidesubrogee and set forth how and when he or shebecame subrogee." 735 ILCS 5/2-403(c) (West1992).

The interest of the subrogee cannot be concealed in any proceedingbrought for its benefit, but it either must be named as theplaintiff or disclosed as the real party in interest. See Shaw v.Close, 92 Ill. App. 2d 1 (1968). Here, none of the requirementsfor a subrogation action were met by the amendment to thecomplaint. Therefore, because General Casualty was not properlynamed as subrogee, the breach of contract action must fail for thereasons set forth in part A above.

In addition, as Gateway contends, Ridgeview's amendmentprejudiced Gateway. Gateway conducted discovery based on Ridge-view's status as plaintiff and did not seek any information as toRidgeview's insurer. According to Gateway, it also made a numberof strategic decisions based on the identities of the parties suchas its decision not to demand a jury trial. Also, Ridgeviewoffered no justification for the untimeliness of the amendment. Indeed, the amendment came three weeks after judgment was entered. Moreover, Ridgeview possessed many opportunities to amend itscomplaint. As Gateway noted, Ridgeview twice amended its complaint--once to add a breach of contract count and once again thereafter.

Accordingly, after a review of all the relevant factors, wefind that allowing the amendment was improper.

CONCLUSION

For the foregoing reasons, we hereby reverse.

Reversed.

Campbell, P.J., and Zwick, J., concur.