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Workers’ Compensation FLASHPOINTS January 2019

January 15, 2019Print This Post Print This Post

Joseph P. Basile | E-mail Joseph Basile

This month presents a review of an Illinois Supreme Court decision in which an injured worker attempted to intervene in her employer’s subrogation suit filed pursuant to §5(b) of the Workers’ Compensation Act, 820 ILCS 65/1, et seq. The court ruled that the doctrine of res judicataprecluded intervention. The case presented a review of the elements of res judicata.The court did not address the question of whether an employee has a right to intervene in an employer’s subrogation action in which res judicatais not applicable.

Injured Worker’s Petition To Intervene in Employer’s Subrogation Suit Barred by Res Judicata

In A & R Janitorial v. Pepper Construction Co., 2018 IL 123220, the Illinois Supreme Court ruled that res judicataprecluded a petition to intervene that was attempted by an injured worker. The claimant suffered work-related injuries as a result of the negligence of third parties. She was employed as a custodial worker for A & R and worked at a high rise building in Chicago. The owner of the building hired Pepper Construction Company to perform maintenance work. Pepper hired Perez & Associates to replace carpets. On August 17, 2012, while the claimant was cleaning, a desk that had been placed in an upright position fell on her, causing injuries. The claimant filed a workers’ compensation claim against A & R and received benefits.

The claimant failed to file a timely personal injury suit, and her employer, A & R filed a subrogation complaint on August 11, 2014, pursuant to §5(b) of the Workers’ Compensation Act. The complaint named multiple defendants; however, after several named defendants were dismissed, Pepper and Perez remained as defendants.

On June 11, 2015, the claimant filed her personal injury action against Pepper, Perez, and two other defendants. Pepper filed a motion to consolidate the claimant’s case with the subrogation case for purposes of discovery. Perez filed a motion to dismiss alleging the action was barred by the two-year statute of limitations. Pepper joined in the motion. The circuit court granted the motion and dismissed the suit without prejudice. The claimant then filed an amended complaint against Pepper only alleging her injuries arose out of Pepper’s construction improvements and was therefore timely under the four-year construction statute of limitations. Pepper moved to dismiss the complaint, arguing the construction statute of limitations was inapplicable because the law considers carpet replacement to be ordinary maintenance, not construction or an improvement to property.

The circuit court agreed with Pepper and dismissed with prejudice the amended complaint on September 12, 2016. The order stated there was no just reason to delay enforcement or appeal of the decision. The claimant did not appeal the dismissal order.

On November 10, 2016, the claimant filed a petition seeking leave to intervene in A & R’s subrogation action and to amend A & R’s complaint in order to seek additional damages for her injuries. Pepper filed a brief in opposition, arguing the petition to intervene was barred by the applicable statute of limitations and the doctrine of res judicatapursuant to Sankey Brothers, Inc. v. Guilliams, 152 Ill.App.3d 393, 504 N.E.2d 534, 105 Ill.Dec. 434 (3d Dist. 1987). On December 20, 2016, the circuit court ruled that Sankey was almost directly on point and held that res judicatabarred the intervention.

The claimant filed an appeal of the dismissal and argued her right to intervene was supported by Echales v. Krasny, 12 Ill.App.2d 530, 139 N.E.2d 767 (1st Dist. 1957), and Geneva Construction Co. v. Martin Transfer & Storage Co., 4 Ill.2d 273, 122 N.E.2d 540 (1954), and that res judicatawas inequitable because the dismissal of her untimely lawsuit was not a final judgment on the merits.

The appellate court reversed the judgment, holding that res judicatadid not bar the intervention because the claimant had an “interest” in her employer’s subrogation action. 2018 IL 123220 at ¶20. It further held res judicatadid not apply because there was no identity of parties between the two actions. It also held that, since §5(b) of the Workers’ Compensation Act was silent with respect to an employee’s right to intervene in her employer’s action, §2-408 of the Code of Civil Procedure, 735 ILCS 5/2-408, et seq., governed her petition. The court remanded the case to the circuit court to determine whether the statutory factors for intervention were established.

The Supreme Court’s opinion pointed out that the order subject to review was the December 20, 2016, order denying the petition to intervene. The circuit court’s sole basis for denying the petition was that res judicata barred intervention after the personal injury complaint was dismissed with prejudice. A trial court’s decision whether to allow intervention will not be reversed on appeal unless the court abused its discretion.

The doctrine of res judicataprovides that a final judgment on the merits rendered by a court of competent jurisdiction bars any subsequent actions between the same parties or their privies on the same cause of action. Res judicatabars not only what was actually decided in the first action but also those matters that could have been decided.

The court then analyzed the three requirements for res judicataand found them present. The first requirement was whether the September 12, 2016, order was a final judgment on the merits. The opinion stated that “[t]here is no question that an order dismissing a complaint with prejudice is a final, appealable order.” 2018 IL 123220 at ¶17. An involuntary dismissal of an action based on the applicable statute of limitations is a judgment on the merits for purposes of res judicata.

The second requirement is an identity of cause of action. Illinois courts use the transactional test under which separate claims are considered the same cause of action if they “arise from a single group of operative facts, regardless of whether they assert different theories of relief.” 2018 IL 123220 at ¶18, quoting River Park, Inc. v. City of Highland Park, 184 Ill.2d 311, 703 N.E.2d 883, 893, 234 Ill.Dec. 783 (1998). In this case, the first claim was a personal injury action. The subsequent claim was the petition to intervene, which was a claim for purposes of res judicatabecause the claimant was seeking to control the litigation and amend A & R’s complaint in order to allege additional damages against the defendants. Both claims arose from the same group of operative facts — alleged negligence of the defendants that caused a workplace injury.

The third factor was the identity of parties or their privies. Here the claimant attempted to sue Pepper for her injuries in her personal injury action and her petition to intervene.

The claimant argued that she had an interest in A & R’s subrogation claim as found by the appellate court, which precluded res judicata. The Supreme Court disagreed. Whether she had an interest in A & R’s action based on A & R’s pursuit of certain damages had nothing to do with whether res judicatabarred her petition to intervene. The court also rejected her argument that it would be inequitable to apply res judicatato her case. Her personal injury action was properly dismissed as being untimely filed. Her petition to intervene was her second attempt to sue Pepper for the same claim that the circuit court denied on res judicatagrounds. The circuit court did not abuse its discretion in denying her petition to intervene.

The court’s opinion also states that the court was making no findings on whether the claimant would otherwise have a right to intervene in her employer’s subrogation action if res judicatawere inapplicable or whether her petition to intervene was timely. The court also declined to address A & R’s argument that it should be allowed to control the litigation if the claimant were allowed to intervene.

For more information on workers’ compensation, see WORKERS’ COMPENSATION PRACTICE (ILLINOIS) — 2015 EDITION. Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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