Illinois Official Reports
Appellate Court
Gadson v. Among Friends Adult Day Care, Inc., 2015 IL App (1st) 141967
Appellate Court ROBERT GADSON, Plaintiff-Appellant, v. AMONG FRIENDS
Caption ADULT DAY CARE, INC., JOHN G. KLIMEK and NICOLE M.
PETERS, Defendants-Appellees.
District & No. First District, Fourth Division
Docket No. 1-14-1967
Filed August 13, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 13-L-1840; the
Review Hon. John H. Ehrlich, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Ronald J. Scaletta, of Law Offices of Ronald J. Scaletta, of Chicago,
Appeal for appellant.
David M. Bennett, Robert Marc Chemers, and Heather E. Plunkett, all
of Pretzel & Stouffer Chtrd., of Chicago, for appellees.
Panel JUSTICE ELLIS delivered the judgment of the court, with opinion.
Presiding Justice Fitzgerald Smith and Justice Howse concurred in the
judgment and opinion.
OPINION
¶1 Plaintiff Robert Gadson was involved in an automobile accident in which he allegedly
sustained both damage to his car and personal injury. He was compensated by his automobile
insurance company for the damage to his car (minus a deductible). So the insurance company
filed a subrogation claim against defendants for the property damage to the car. The
insurance company did not file that lawsuit in its own name but rather in the name of its
insured, plaintiff. Plaintiff later filed a separate lawsuit of his own against defendants,
alleging personal injury. Defendants moved to dismiss the personal injury lawsuit as barred
by res judicata, in light of the earlier property damage lawsuit in the name of plaintiff against
the same defendants, which by that point had been resolved by settlement. The trial court
agreed with defendants and dismissed the personal injury suit. We must determine whether
the trial court properly interpreted section 2-403 of the Code of Civil Procedure (Code) (735
ILCS 5/2-403 (West 2010)) in dismissing this action based on res judicata. We hold that it
did not. We reverse the trial court’s dismissal and remand for further proceedings.
¶2 I. BACKGROUND
¶3 After a March 18, 2011 auto accident, plaintiff’s automobile insurer, American Access
Insurance Company (American Access), compensated plaintiff for his automobile damage,
minus a $500 deductible plaintiff paid. On August 31, 2011, American Access retained a
lawyer, Ronald J. Scaletta, and filed a subrogation action against defendants, Among Friends
Adult Day Care, Inc. (Among Friends), and Nicole M. Peters, in the municipal division of the
circuit court of Cook County (docket No. 12 M1 015955). The lawsuit sought $7,287.85 for
property damage to plaintiff’s vehicle. The action was styled, “Robert Gadson v. Among
Friends Adult Day Care, Inc., John G. Klimek & Nicole M. Peters.” The complaint did not
mention American Access or the fact that the action was brought in subrogation.1
¶4 On February 20, 2013, while the subrogation case was still pending, plaintiff, through a
different attorney, filed this action in the law division of the circuit court of Cook County
(docket No. 13 L 1840), naming the same defendants and based on the same car accident, but
in this case seeking damages for personal injuries only.
¶5 On April 23, 2013, after arbitration, the parties reached a settlement in the subrogation
action and dismissed it. The record contains a copy of a release of claims against defendant
Peters and her auto insurer that purports to be signed by plaintiff and Scaletta, in
consideration of payment of $2,089.47. (As we will see, plaintiff denies ever signing that
release.) The release discharged Peters from any further present or future claims of property
damage arising from the March 18 car accident. (We are not aware of any release executed
between plaintiff and the other defendant, Among Friends, and none has been called to our
attention.)
¶6 The record also contains copies of two settlement checks, one from each defendant’s
insurance company. The first check is for $2,089.47 from Peters’ auto insurer, made payable
to “Law Offices of Ronald J. Scaletta & American Access.” The second check, from
defendant Among Friends’ auto insurer in the amount of $3,134.19, was made payable to
1
According to the record, the third named defendant, John G. Klimek, was Among Friends’ agent
and the driver of its vehicle, but he is not a party to this appeal.
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“Ameican [sic] Access A.S.O. Robert Gadson and its attorneys Ronald J. Scalleta [sic] Law
Offices.” The parties acknowledge that “A.S.O.” is shorthand for “as subrogee of.”
¶7 After the subrogation action was dismissed with prejudice, both defendants filed motions
to dismiss the personal injury action that is the subject of this appeal. Defendant Among
Friends, moving for dismissal under sections 2-619(a)(4) and (a)(9) of the Code (735 ILCS
5/2-619(a)(4), (a)(9) (West 2010)), argued that this action was barred by res judicata, in light
of the previous property damage lawsuit arising from the same car accident and involving the
same plaintiff and defendants. Defendant Peters additionally argued that the personal injury
action was barred by the release of claims plaintiff signed in the property damage claim,
pursuant to section 2-619(a)(6) (permitting dismissal where “claim set forth in the plaintiff’s
pleading has been released, satisfied of record, or discharged in bankruptcy” (735 ILCS
5/2-619(a)(6) (West 2010))).
¶8 The dispute concerning res judicata revolved around section 2-403 of the Code (735
ILCS 5/2-403(d) (West 2010)), a section of the Code that in part governs how subrogation
claims must be brought and which provides an exception to res judicata in the subrogation
context. Plaintiff claimed that subsection (d) of section 2-403 provided him that exception to
res judicata. Defendants argued that plaintiff did not follow the dictates of subsection (c) in
filing the subrogation claim, and thus plaintiff could not escape res judicata by relying on the
exception to that doctrine contained in subsection (d). With regard to the additional argument
of release raised only by defendant Peters, plaintiff filed an affidavit saying that the signature
on the release purporting to be his was not–he swore he never signed that release.
¶9 The trial court entered a written order dismissing the action based on section 2-619 of the
Code, without specifying which subsection was the basis for its ruling and without otherwise
clarifying the grounds for dismissal. We have no transcript of any oral argument or ruling
from the bench, and the parties cite to none.
¶ 10 Plaintiff moved for reconsideration. In his motion, plaintiff once again swore that he did
not sign the release of all claims relied upon by defendant Peters for dismissal. Regarding
res judicata, his motion included an affidavit from the attorney in the subrogation case, Mr.
Scaletta, who swore that the defense attorneys in the subrogation case knew that it was a
claim brought in subrogation. In further support of his sworn contention, Mr. Scaletta noted
that the checks were written out to the insurance company, American Access (one of which
was written to American Access “as subrogee of” plaintiff). He also noted that the estimate
of repairs tendered to defendants showed a deductible of $500 paid by plaintiff. From all of
this, plaintiff argued, defendants obviously knew that the property damage lawsuit was a
claim brought in subrogation, even if plaintiff did not properly follow the dictates of
subsection (c) of section 2-403.
¶ 11 Unlike the hearing on the motion to dismiss, we do have a transcript from the motion for
reconsideration. The trial court ruled that, even if the affidavit of Mr. Scaletta was taken as
true and defendants did, in fact, affirmatively know that the first lawsuit was a subrogation
claim, it would not affect his ruling. The trial court said it did not matter whether defendants
knew that the property damage action was one in subrogation; the statute, section 2-403(c),
required that the insurance company bring the lawsuit in its own name and attach a
verification explaining that the insurance company had become subrogated to plaintiff due to
the reimbursement of plaintiff’s property loss. American Access did none of that–the
complaint was filed in plaintiff’s name, and no verification was attached–and thus the initial
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action could not be considered a “subrogation” claim under subsection (c). As such, plaintiff
could not rely on the exception to res judicata for “subrogation” claims in subsection (d).
¶ 12 This appeal followed.
¶ 13 II. ANALYSIS
¶ 14 A section 2-619 motion to dismiss provides a means of obtaining a summary disposition
when a plaintiff’s claim can be defeated as a matter of law or on the basis of easily proven
issues of fact. Zurich Insurance Co. v. Amcast Industrial Corp., 318 Ill. App. 3d 330, 333
(2000). A section 2-619 motion to dismiss admits all well-pleaded facts in the complaint, and
all documents submitted in support of the motion must be considered in a light most
favorable to the nonmoving party. Id. In reviewing the trial court’s dismissal of an action
based on section 2-619, we consider (1) whether a genuine issue of material fact exists and, if
not, (2) whether the defendant is entitled to a judgment as a matter of law. Id.
¶ 15 The trial court’s ruling on a section 2-619 motion presents a question of law, which we
review de novo. DeLuna v. Burciaga, 223 Ill. 2d 49, 59 (2006). Similarly, we review de novo
the construction of a statute, also a question of law. Id. We may affirm the judgment of the
circuit court on any basis appearing in the record, even if it was not the grounds on which the
circuit court relied, and even if the trial court’s basis for dismissal was incorrect. Rodriguez v.
Sheriff’s Merit Comm’n, 218 Ill. 2d 342, 357 (2006).
¶ 16 The doctrine of res judicata provides that a final judgment on the merits, rendered by a
court of competent jurisdiction, bars any later actions between the same parties (or their
privies) on the same cause of action. Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 334
(1996). The bar extends both to issues actually decided in the original action and to those
which could have been decided. Id. at 334-35. A defendant invoking the defense of res
judicata must show: (1) a final judgment on the merits by a court of competent jurisdiction;
(2) an identity of causes of action; and (3) an identity of the parties or their privies. Id. at 335.
A “cause of action” is defined as the set of facts giving the plaintiff the right to relief. Id. at
338.
¶ 17 Thus, where a plaintiff and a defendant are involved in a car accident, and the plaintiff
sues the defendant for property damage to his car, resulting in a final judgment, the plaintiff
is barred from later filing a second lawsuit, against the same defendant, arising from the same
car collision, seeking damages for personal injuries. Mason v. Parker, 295 Ill. App. 3d 1096,
1097-99 (1998). Generally speaking, Illinois law does not allow such claim-splitting. As
explained in Mason, to allow a plaintiff to chop his claims up in such a fashion “leav[es] the
courtroom doors open to a possibility of never-ending legal battles between the same parties
based upon the same set of facts. Litigation should have an end. No person should be
harassed with a multiplicity of lawsuits arising out of one cause of action.” Id. at 1098-99.
¶ 18 But the legislature recognized an exception to the res judicata doctrine in the context of
subrogation claims. See 735 ILCS 5/2-403(d) (West 2010). It is not difficult to see why. If an
insurance company makes its insured whole (or close to whole) for property damage the
insured suffered, the insurance company has the right to recover that reimbursement from the
party responsible for the damage in the first place. It does so through subrogation–it steps
into the shoes of the insured and pursues the property damage claim against the tortfeasor.
But suppose that, out of that same occurrence that produced the property damage, the insured
also suffered personal injuries. The insured has not been compensated by the insurance
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company for those injuries, and he or she should have the right to pursue any claims for
personal injury against the tortfeasor, independently of whether the insurance company is
seeking recovery for property damage from that same defendant in a different lawsuit. After
all, the insured typically has no control over whether the insurance company files its own
lawsuit for property damage; the insured may not even know it did so. Thus, the General
Assembly long ago determined that, in the subrogation context, the benefits of res judicata
“were outweighed by the potential harm that could be suffered by [the insured-]subrogor who
did not know of the prior action brought by the [insurer-]subrogee or did not have any control
over the prior action if he did know.” Landrum v. Time D.C., Inc., 85 Ill. App. 3d 985, 991
(1980).
¶ 19 We have cited with approval the reasoning of a Florida court that provided this additional
reason for exempting subrogation claims from the res judicata bar:
“ ‘The policy reason behind this insurance subrogation exception is to facilitate
the prompt settlement of property damage claims by an insured as against his own
insurance carrier without prejudicing either the insured’s right to sue the tortfeasor for
personal injuries or the insurance carrier’s right to bring a subrogated property claim
against the same tortfeasor. A contrary rule would discourage such settlements by
requiring the plaintiff insured to bring all of his claims together in a single lawsuit
and not settle his property damage claim with his own carrier as soon as possible.’ ”
Zurich Insurance Co. v. Amcast Industrial Corp., 318 Ill. App. 3d 330, 337 (2000)
(quoting McKibben v. Zamora, 358 So. 2d 866, 868 (Fla. Dist. Ct. App. 1978)).
¶ 20 Indeed, as we also noted in Zurich, courts in other jurisdictions have found the need to
exempt subrogation claims from the res judicata doctrine to be so compelling that they
imposed the exception by judicial fiat in the absence of a state statute. Id. at 336 (collecting
cases).
¶ 21 The statutory exemption to res judicata for subrogation claims, subsection (d) of section
2-403, reads as follows:
“(d) A judgment in an action brought and conducted by a subrogee[, i.e., the
insurer] by virtue of the subrogation provision of any contract or by virtue of any
subrogation by operation of law, whether in the name of the subrogor[, i.e., the
insured] or otherwise, is not a bar or a determination on the merits of the case or any
aspect thereof in an action by the subrogor to recover upon any other cause of action
arising out of the same transaction or series of transactions.” 735 ILCS 5/2-403(d)
(West 2010).
¶ 22 “There is no question that section 2-403(d) is designed to protect an insured from having
a claim for personal injury barred by res judicata because his subrogated insurance carrier
has previously litigated the issue of property damage arising out of the same accident.”
Zurich, 318 Ill. App. 3d at 335-36; accord Landrum, 85 Ill. App. 3d at 990 (construing
predecessor statute as “a statutory exception to the basic rules of res judicata”).
¶ 23 Defendants do not dispute as much; each of them at least generally recognizes section
2-403(d) as providing an exception to the application of res judicata for subrogation claims.
They claim, however, that the property damage action filed in the name of plaintiff by
American Access’s lawyer was not a subrogation claim, at least not for the purposes of
section 2-403. They argue that plaintiff cannot fall under the protection of section 2-403(d)
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because the initial property damage lawsuit failed to comply with subsection (c) of that
statute:
“(c) Any action hereafter brought by virtue of the subrogation provision of any
contract or by virtue of subrogation by operation of law shall be brought either in the
name or for the use of the subrogee[, i.e., the insurer]; and the subrogee shall in his or
her pleading on oath, or by his or her affidavit if pleading is not required, allege that
he or she is the actual bona fide subrogee and set forth how and when he or she
became subrogee.” 735 ILCS 5/2-403(c) (West 2010).
¶ 24 It is undisputed here that the property damage lawsuit at issue was filed in the name of
plaintiff, who was the subrogor, not the subrogee. It is likewise undisputed that the complaint
neither pleaded nor incorporated by affidavit that American Access was “the actual bona fide
subrogee,” nor did the complaint “set forth how and when [American Access] became
subrogee.” Id. Thus, defendant Among Friends argues, because the property damage lawsuit
“was not styled as a subrogation action, *** the exception [to res judicata] does not apply.”
As defendant Peters puts it, the initial property damage lawsuit “was not a subrogation action
because it did not comply with” subsection (c) and thus “was not ‘saved’ by” subsection (d).
¶ 25 At first blush, it might appear that the textual argument defendants raise has some merit,
because subsection (c) does require that “any” action brought in subrogation “shall be
brought either in the name or for the use of” the insurer-subrogee. Id. The word “any” covers
the universe, and “shall” is often given a mandatory construction. But the problem with this
interpretation is that “[a] long line of cases has established the principle that if an insured
plaintiff has even a de minimus pecuniary interest in the suit, that interest is sufficient to
allow a subrogation action to be maintained in the plaintiff’s name.” Radtke v. International
Heater Co., 140 Ill. App. 3d 542, 544 (1986); see also Orejel v. York International Corp., 287
Ill. App. 3d 592, 604 (1997); Brooke Inns, Inc. v. S&R Hi-Fi & TV, 249 Ill. App. 3d 1064,
1078-79 (1993); Scheibel v. Groeteka, 183 Ill. App. 3d 120, 145 (1989); Nitrin, Inc. v.
Bethlehem Steel Corp., 35 Ill. App. 3d 577, 592 (1976); In re Estate of Mallerdino, 20 Ill.
App. 3d 331, 336-37 (1974). Neither defendant acknowledges the principle established in
this long line of cases, nor did the trial court address it.
¶ 26 Here, it is undisputed that plaintiff retained a $500 deductible interest in the outcome of
the subrogation lawsuit. Thus, even if his interest was minor compared to that of American
Access, he was still a real party-in-interest to the litigation. In accordance with the case law
above, it was entirely proper for American Access to name plaintiff, instead of itself, in the
subrogation suit; it was not a violation of section 2-403(c).
¶ 27 Defendants point to case law holding that “the interest of the subrogee cannot be
concealed in any proceeding brought for its benefit.” But those cases reinforce our position.
Those cases only stand for the proposition that an action must be brought in the name of the
insurer-subrogee if that insurer-subrogee has compensated the insured for all the damages it
could seek against a defendant, and the insured thus no longer has any claim remaining. In
Shaw v. Close, 92 Ill. App. 2d 1, 4 (1968), for example, the insured had fully resolved its
claims; “the only action which remained was [that] of the insurance company.” Thus,
because the insured was the only remaining real party-in-interest, the “action had to be
brought either in the name of or for the use of the [insurance] company.” Id. Likewise, in
Nitrin, Inc., 35 Ill. App. 3d at 592, the court noted that the interest of the insurer-subrogee
could not be concealed, but again, the insurer-subrogee had already compensated the insured
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“for all damages it was seeking against defendant,” and it was only because of that fact that
the court held that the insurer-subrogee was required to be disclosed as the real
party-in-interest. In Orejel, 287 Ill. App. 3d at 605, we upheld the trial court’s decision not to
require the insurer-subrogee to be named as a plaintiff because the insured still had a
remaining, if relatively small, pecuniary interest in the proceeding. Orejel distinguished yet
another case cited by defendants for their mistaken proposition (Prudential Insurance Co. v.
Romanelli, 243 Ill. App. 3d 246, 250 (1993)), where “the court held that the insurance
company was the actual party in interest because, based upon the record, the plaintiff no
longer had any interest in the subrogated claim.” (Emphasis in original.) Orejel, 287 Ill. App.
3d at 605.
¶ 28 It is clear from this discussion that, under section 2-403(c), where the insurer-subrogee is
the only remaining real party-in-interest to the subrogation action because the pecuniary
interest of the insured has been fully satisfied, the insurer-subrogee is required to file the
action in its own name. It may not conceal its status, and in addition must swear to the facts
that entitle it to its subrogated status. 735 ILCS 5/2-403(c) (West 2010). But where, as here,
the insured retains even a de minimus financial stake in the outcome of the subrogation
proceeding, the subrogation claim may be brought in the insured’s name, and the remaining
affidavit/verification language in subsection (c) is inapplicable.
¶ 29 If the foregoing was not clear enough, we also would point to the language of section
2-403(d), language which defendants do not address despite plaintiff’s repeated references to
it, which provides that the exception to the res judicata doctrine applies to “[a] judgment in
an action brought and conducted by a subrogee ***, whether in the name of the subrogor or
otherwise.” (Emphasis added.) 735 ILCS 5/2-403(d) (West 2010). If, as defendants claim, a
subrogation claim can never be brought in the name of the insured-subrogor, this highlighted
language would be unnecessary, if not nonsensical. Clearly, the General Assembly
contemplated that some subrogation claims might be brought in the name of the
insured-subrogor, and the legislature intended that subrogation claims brought in the name of
the insured-subrogor would receive the same res judicata exception as those brought in the
name of the insurance company.
¶ 30 We thus find section 2-403(d)’s exception to the res judicata doctrine applicable here.
The property damage lawsuit filed by American Access in plaintiff’s name was
unquestionably a subrogation claim that complied with section 2-403(c) and that fell within
the exception in section 2-403(d). Thus, plaintiff’s personal injury action was not barred by
res judicata and should have been allowed to proceed in the circuit court.
¶ 31 It appears that the trial court’s ruling to the contrary was the basis for its dismissal of the
complaint, and we find that ruling to be in error. But defendant Peters raises an additional
argument, and even if the trial court did not rely on it, we have already noted that we may
affirm on any basis in the record. Rodriguez, 218 Ill. 2d at 357. So we will consider that
remaining argument.
¶ 32 Defendant Peters brought her motion to dismiss based on section 2-619(a)(6), which
permits dismissal upon proof that plaintiff had signed a valid release of all claims in a matter.
We do not find the release to be a basis for dismissal here for two reasons. First, plaintiff
responded to the motion to dismiss with an affidavit stating that he never signed that release,
and his affidavit was unopposed. The unopposed affidavit would be enough, by itself, to
create a question of fact as to the validity of the release. See Doe v. University of Chicago
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Medical Center, 2015 IL App (1st) 133735, ¶ 55 (plaintiff’s unopposed affidavit created
question of fact as to scope of defendant’s promises to her, precluding section 2-619
dismissal). Second, even if the release were valid, it only discharged defendant with regard to
any further present or future property damage claims, and this lawsuit is a personal injury
action. The scope and extent of a release depends on the intent of the parties as expressed in
the instrument. Shaw, 92 Ill. App. 2d at 3. The release said nothing about personal injury
claims, and we will not read it as such.
¶ 33 The judgment of the circuit court of Cook County is reversed. We remand the cause for
further proceedings.
¶ 34 Reversed and remanded.
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