Lawyers are almost always happy to accept a voluntary dismissal of claims against their client. However, such a dismissal can create a trap for the unwary. In particular, a tort defendant might lose the ability to bring contribution claims against others if the plaintiff later re-files the action. Fortunately, there are steps counsel can take to mitigate that risk.
As most practitioners know, a tortfeasor may bring a contribution action against other potentially responsible parties within two years after being served with the complaint in the tort action. 735 ILCS 5/13-204. Most attorneys are also aware that a tort plaintiff has the right to voluntarily dismiss a tort action and then re-file the case within one year regardless of whether the statute of limitations expired in the interim. 735 ILCS 5/13-217. This can lead some to enter a single order voluntarily dismissing the plaintiff’s claim and the defendant’s contribution claim on the assumption that if the plaintiff later re-files the action, the defendant will have a new two-year period to reassert the contribution claim. That assumption would be wrong and the counterclaim could be lost unless the defendant takes precautions to preserve its contribution claim.
In Wall v. Ekstrand, 2-10-0591, 2011 WL 10451615, at *1 (Ill. App. Ct. 2d Dist. May 18, 2011), the defendant argued that the trial court erred when it dismissed its third-party complaint for contribution, which was filed within two years after the plaintiff re-filed its voluntarily dismissed complaint. Id. On appeal, the defendant argued that its cause of action for contribution did not accrue until plaintiff re-filed its complaint. Id. The appellate court disagreed. Id.
In support of its decision, the appellate court analyzed Section 13-204 of the Illinois Code of Civil Procedure, the section of the Code that deals with contribution and indemnity. Id. Section 13-204 provides, in relevant part, that:
"Contribution and indemnity.
(a) In instances where no underlying action seeking recovery for injury to or death of a person or injury or damage to property has been filed by a claimant, no action for contribution or indemnity may be commenced with respect to any payment made to that claimant more than 2 years after the party seeking contribution or indemnity has made the payment in discharge of his or her liability to the claimant.
(b) In instances where an underlying action has been filed by a claimant, no action for contribution or indemnity may be commenced more than 2 years after the party seeking contribution or indemnity has been served with process in the underlying action or more than 2 years from the time the party, or his or her privy, knew or should reasonably have known of an act or omission giving rise to the action for contribution or indemnity, whichever period expires later.
(c) The applicable limitations period contained in subsection (a) or (b) shall apply to all actions for contribution or indemnity and shall preempt, as to contribution and indemnity actions only, all other statutes of limitation or repose, but only to the extent that the claimant in an underlying action could have timely sued the party from whom contribution or indemnity is sought at the time such claimant filed the underlying action [.]" 735 ILCS 5/13204 (emphasis added) .
Interpreting this section of the Code, the appellate court stated that while it would appear that a defendant has two years after an action is re-filed to bring a third-party contribution claim, section 13-204(c) "makes clear that the provisions of subsection (b) shall apply only to the extent that the claimant in an underlying action could have timely sued the party from whom contribution or indemnity is sought at the time such claimant filed the underlying action [.]’" Id. at *2.
In light of section 13-204(c), the appellate court in Wall held that the facts of that case dictated that the defendant’s third-party contribution action was untimely because it was not brought until after the time when the claimant in the underlying action could have timely sued the putative third-party defendant. Id.
In support of its decision, the appellate court affirmatively cited Bd. of Managers of Wespark Condo. Ass’n v. Neumann Homes, Inc., 388 Ill. App. 3d 129 (1st Dist. 2009), which held that even though the third-party complaint was filed less than two years after the plaintiff sued the defendant, and thereby within the two-year period established in section 13204(b), the third-party complaint did not meet the additional limitation of section 13204(c), i.e. that the claimant in the underlying action must have been able to timely sue the party from whom contribution was sought at the time the claimant filed the underlying action. Id. *3.
Thus, both Wall and Neumann stand for the proposition that a defendant cannot bring a timely third-party contribution action where the claimant in the underlying action cannot timely sue the party from whom contribution was sought at the time the claimant filed the underlying action. Importantly, where applicable, courts view re-filed actions as the operative underlying action for purposes of this analysis.
Where a defendant files and then voluntarily dismisses a third-party contribution claim, the defendant (pursuant to section 13-217) must re-file their third-party contribution claim within one year after dismissal. See Wiesehan v. JLG Indus., Inc., 3-14-0144, 2015 WL 5173965, at *4 (Ill. App. Ct. 3d Dist. Sept. 2, 2015). Section 13-217 gives plaintiffs, including third-party contribution plaintiffs, the right to re-file a cause of action within one year after the dismissal, or the remaining period of limitations, whichever is greater. 735 ILCS 5/13-217. Case law suggests that section 13-217 applies to third-party contribution plaintiffs even where the plaintiff in the underlying suit voluntarily dismissed, but did not later re-file, their action. Id.
Thus, Wiesehan stands for the proposition that where a defendant files and then voluntarily dismisses a third-party contribution claim, they have one year after the court enters the dismissal order or the remaining period of limitations, whichever is longer, to refile the claim or risk it being barred as untimely.
Accordingly, if the plaintiff’s tort claim is dismissed at the same time as the contribution action, there can be problems. If the plaintiff waits until the last possible day to re-file its tort claim against the defendant, defendant will likely not learn of the filing until days or weeks later. By that time, it will be more than one year after the dismissal of the contribution action and the contribution claims will be time barred.
How might a defendant protect and preserve its contribution claims in this scenario? There are at least three approaches.
First, before the voluntary dismissal, the defendant could enter into a tolling agreement with the third-party defendant. The tolling agreement would explicitly extend the statute of limitations and repose by a reasonable amount of time. This would give the defendant the cushion it needs to pursue a contribution claim if that becomes necessary.
But what if the third-party defendant will not agree to a tolling agreement? In that instance, the defendant should enter staggered dismissal orders. The defendant should ask the court to first dismiss plaintiff’s claims with an order that explicitly states that the contribution claims remain pending. The defendant could then enter a dismissal order on the contribution claims 30-60 days later thereby creating a 30-60 day buffer zone between expiration of plaintiff’s re-filing deadline and the deadline for refiling the contribution claim. One year later, the defendant will have time to determine whether plaintiff has re-filed the tort action while leaving time to respond with a timely contribution action.
Finally, a defendant who has not entered a tolling agreement or staggered the dismissal orders could attempt to protect itself by filing an anticipatory contribution action. Prior to the one-year deadline, the tort defendant could file a new action alleging, on information and belief, that the tort plaintiff has or will file a tort action against the defendant and plead the contribution claim against the original third-party defendant. If the original plaintiff does not re-file the tort action, the defendant can voluntarily dismiss its anticipatory contribution claim. If the plaintiff does re-file its contribution action, the defendant can move to consolidate its contribution claim with plaintiff’s re-filed action. This consolidation would be necessary given the Illinois Supreme Court decision in Laue v. Leifheit, 105 Ill. 2d 191 (1984), requiring the contribution action to be brought in the same action as plaintiff’s tort claim.
Forcing a plaintiff to take a voluntary dismissal of tort claims can be a successful milestone for a defendant. However, as set forth above, a defendant should take steps to preserve its contribution claims in the event that the original tort claims later rise from the ashes.