Wreglesworth v. Arcto, Inc.

Case Date: 09/29/2000
Court: 1st District Appellate
Docket No: 1-99-2662 Rel

SECOND DIVISION

September 29, 2000

No. 1-99-2662
NICHOLAS WREGLESWORTH, by his mother
and legal guardian,
BARBARA WREGLESWORTH, and
BARBARA WREGLESWORTH, individually,

                    Plaintiffs-Appellees,

          v.

ARCTO, INC. d/b/a TIGERSHARK
WATERCRAFT, a Minnesota corporation
doing business in Illinois now known as
ARTIC CAT, INC., a Minnesota
corporation, and ARCTCO SALES, INC.,
a Minnesota corporation doing business
in Illinois,

                    Defendants-Appellants.

APPEAL FROM THE
CIRCUIT COURT OF
COOK COUNTY.

 

 

 

 

HONORABLE
MICHAEL HOGAN,
JUDGE PRESIDING.

JUSTICE GORDON delivered the opinion of the court:

Defendants Arctic Cat, Inc., and Arctco Sales, Inc.(hereinafter referred to collectively as the Arctco defendants),appeal from an order of the trial court dismissing theircounterclaim for indemnity against plaintiffs NicholasWreglesworth (Nicholas), a minor, by his mother and legalguardian, Barbara Wreglesworth, and Barbara Wreglesworth,individually (Barbara). Plaintiffs' lawsuit against Arctco arosefrom a 1995 accident in which Nicholas was injured while ridingas a passenger in a Tigershark personal watercraft in Indiana. Arctco filed a counterclaim for indemnity based on a release andindemnity agreement executed by Barbara. In dismissing thecounterclaim, a ruling which was made appealable pursuant toSupreme Court Rule 304(a), the trial court concluded thatdefendants were barred from enforcing the release provision. Arctco argues on appeal that the trial court erred in applyingIllinois law to the release, adding that if the court hadcorrectly applied Indiana law, Arctco would have been releasedfrom liability and indemnified for future liability for theaccident. For the reasons set forth below, we affirm the trialcourt's decision dismissing defendants' counterclaim.

BACKGROUND

According to plaintiffs' complaint, the accident occurred onJuly 22, 1995, while Nicholas and his father, James Wreglesworth,both Illinois residents, were vacationing at Cedar Lake, Indiana,with other Illinois residents including Vera Ortega. Nicholassustained severe and permanent injuries on that date when theTigershark personal watercraft in which he was riding as apassenger collided with a pier. At the time of the collision,Vera Ortega was driving the watercraft, which was manufactured bydefendants and owned by Timothy Lawrence, an Indiana resident. In their three-count complaint, filed July 21, 1997, Nicholas andBarbara allege negligence, product liability and breach ofwarranty against defendants based on a number of factorsincluding that the watercraft could not be steered unless it wasunder acceleration and that it was difficult to control andmaneuver at high speeds.

Defendants subsequently filed a counterclaim for indemnityagainst plaintiffs, based on a Parents' Release and IndemnityAgreement executed by Barbara on August 16, 1997, in Illinois. That agreement, a copy of which was attached to the counterclaim,released Timothy Lawrence, Vera Ortega and the Allstate insurancecompany (Lawrence's insurer) from liability arising from theaccident, in exchange for a payment of $100,000 (the limit ofLawrence's Allstate policy). The agreement also purported torelease "any other person, firm or corporation charged orchargeable with responsibility or liability" in connection withthe July 22, 1995, accident. Similar language in the agreement'sindemnification provision purported to require the repayment of"any additional sum of money that any of [the releasees] mayhereafter be compelled to pay on account of the injuries to saidminor because of the said accident."

Plaintiffs filed a section 2-619 motion (735 ILCS 5/2-619(West 1992)) to dismiss the counterclaim, asserting that therelease applied only to the joint tortfeasors specificallyidentified in it (Timothy Lawrence and Vera Ortega) and not todefendants. Plaintiffs alleged in their motion that they hadsettled with Lawrence and Ortega as to Nicholas' cause of action,pursuant to which the foregoing release and indemnity agreementhad been entered into. Attached to plaintiffs' motion are copiesof their petition in probate to settle this matter which involvedthe minor's estate, and of the probate court's order approvingthe settlement. The petition states that "[t]he minor has acause of action against [the] Estate of Vera Ortega, deceased[,](1)and Timothy Lawrence for injury to the minor on July 22, 1995,"and that "[a] settlement of $100,000, policy [l]imit" had beenoffered and Barbara recommended that it be accepted. In itsSeptember 2, 1997, order, the probate court ordered that "[t]hecause of action be settled for $100,000 and, upon receiving thatsum, the guardian execute and deliver to the party against whomthe cause of action lies a release and discharge from allliability *** on account of the injuries." The court alsoapproved the distribution of the proceeds as stated in thepetition. As noted, although the probate court directed that therelease be granted prospectively, the release and indemnityagreement had already been entered into the previous month, onAugust 16, 1997, but not submitted to the probate court forapproval.

Following a hearing on June 24, 1999, the trial courtgranted plaintiffs' motion to dismiss the counterclaim,concluding that the probate court neither looked at the releasenor interpreted it, nor did the probate court consider anythingbeyond "what was presented," i.e., a settlement as to the twoparties identified in the petition. The trial court also heldthat it was Illinois and not Indiana law that applied. In July1999 the court added Rule 304(a) language making the June 24order appealable.

DISCUSSION

We first consider plaintiffs' contention that no settlementwith defendants was ever approved by the probate court, andtherefore that nothing in the release purporting to dischargedefendants from liability as to the minor's claims could bevalid. We agree with that contention.

Under Illinois law, a minor is a ward of the court when heis involved in litigation, and the court has a duty and broaddiscretion to protect the minor's interests. See Ott v. Little

Company of Mary Hospital, 273 Ill. App. 3d 563, 570-71, 652N.E.2d 1051, 1056 (1995); Burton v. Estrada, 149 Ill. App. 3d965, 976, 501 N.E.2d 254, 262 (1986). That duty to protect isreflected in section 19-8 of the Probate Act of 1975 (ProbateAct), which requires that the court approve or reject anysettlement agreement proposed on behalf of a minor. See Ott, 273Ill. App. 3d at 571, 652 N.E.2d at 1056; 755 ILCS 5/19-8 (West1992) ("By leave of court *** a representative may compound orcompromise any claim or any interest of the ward *** in anypersonal estate *** upon such terms as the court directs"). Thusneither a guardian nor a next friend can effectuate settlement ofa minor's suit without court approval. Ott, 273 Ill. App. 3d at571, 652 N.E.2d at 1057. "Similarly, a parent has no legalright, by virtue of the parental relationship, to settle aminor's cause of action; and court review and approval of asettlement reached by a parent also is mandatory." Ott, 273 Ill.App. 3d at 571, 652 N.E.2d at 1057.

The Rules of the Circuit Court of Cook County contain asimilar requirement. Rule 12.15 provides that:

"(b) If no proceeding is pending before anotherDivision or another court for a recovery on a cause ofaction for personal injury or wrongful death, the roleof the Probate Division shall be as provided in thissubparagraph.

(i) To settle a cause of action for personalinjury to a minor or a disabled person, the guardian ofthe estate of the ward shall file in the [ProbateDivision] a petition for approval of the settlement ofthe cause of action." Cook Co. Cir. Ct. R. 12.15(b)(i)(eff. September 3, 1996).



Thus under Rule 12.15, in order to settle a minor's suit forpersonal injury the guardian must file a petition for approvalwith the probate court.

In the instant case, the only settlement that was approvedby the probate court was the agreement reflected in plaintiffs'petition to settle, and in the September 2, 1997, order approvingthat settlement. As noted, the petition stated that there was acause of action against Timothy Lawrence and the estate of VeraOrtega arising from Nicholas' injuries in the July 22, 1995,accident, and the petition recommended acceptance of a $100,000settlement. The September 2 order approved the settlement aspresented in the petition, and directed the guardian to "executeand deliver to the party against whom the cause of action lies arelease and discharge from all liability *** on account of theinjuries." (Emphasis added.) According to the petition, theparties against whom the cause of action lay were TimothyLawrence and the estate of Vera Ortega. There is no mention ofthe Arctco defendants in either the petition or the order.

Therefore, if the release operated as a settlement with theArctco defendants, it was without court approval. We have foundno Illinois case which deals directly with the effect of such asettlement, but courts in jurisdictions with statutory provisionssimilar to Illinois' have held that absent court approval, anysettlement of a minor's suit is of no legal effect. In Scrutonv. Korean Air Lines Co., 46 Cal. Rptr. 2d 638, 641-43 (Cal. Ct.App. 1995), the California Court of Appeal construed section 372of the California Code of Civil Procedure, and held that withoutcourt approval, a proposed compromise of a minor's claim couldnot be valid or binding. The court noted that contracts ofminors are voidable, adding that such a proposed compromise "isalways voidable at the election of the minor *** unless and until'the court's imprimatur has been placed on it.'" Scruton, 46Cal. Rptr. 2d at 643. See also Daigle v. Clemco Industries, 593So. 2d 1282, 1288 (La. Ct. App. 1991), aff'd, 613 So. 2d 619 (La.1993) (construing similar Louisiana statute and holding that "[a]minor's rights may not be relinquished except pursuant tospecific authorization from a court of competent jurisdiction,and any compromise entered into without court approval is of nolegal effect").

We find these holdings persuasive, particularly since theyare predicated upon statutes similar to Illinois' section 19-8. Accordingly, we hold that any settlement of a minor's claim isunenforceable unless and until there has been approval by theprobate court. Thus under Illinois law, the August 16, 1997,release is unenforceable by the Arctco defendants with regard toNicholas' claims.

The same is true under Indiana law. In Danes v. AutomobileUnderwriters, Inc., 307 N.E.2d 902, 906 (Ind. Ct. App. 1974), thecourt construed Indiana's Minor's Compromise Statute and heldthat "[t]he enforceability of the compromise [of a minor's suit]or a release accompanying it is suspended *** until thesettlement is approved by a court of competent jurisdiction." The court explained that such an agreement is voidable "pendingcourt approval."

Because Indiana and Illinois law are essentially the same onthis point, there is no need to apply a choice-of-law analysis. See Malatesta v. Mitsubishi Aircraft International, Inc., 275Ill. App. 3d 370, 374, 655 N.E.2d 1093, 1096 (1995) (beforeapplying choice-of-law analysis, court must determine whetherthere is a conflict in the laws of the two states; such aconflict exists if the difference in laws would result in adifference in outcome). Under either state's law the outcomewould be the same: because there was no court approval, therelease is unenforceable as a settlement regarding Nicholas'claims against the Arctco defendants.

Further, in the instant case, regardless of which state'slaw were to apply, it is the Illinois probate court to which theparties must turn since Illinois is the forum state. As noted,the Rules of the Circuit Court of Cook County require that anysettlement of a minor's claim for personal injury be submitted tothe probate court for approval. See Cook Co. Cir. Ct. R.12.15(b)(i) (eff. September 3, 1996). According to theRestatement (Second) of Conflict of Laws, it is the local law ofthe forum that controls in such matters. See Restatement(Second) of Conflict of Laws