The Bar News

Quick Takes on Thursday's Illinois Supreme Court Civil opinions

Our panel of leading appellate attorneys review Thursday's top Illinois Supreme Court Civil opinions in Valfer v. Evanston Northwestern Healthcare, Fattah v. BimRichter v. Prairie Farms Dairy and Commonwealth Edison Company v. Illinois Commerce Commission.

Valfer v. Evanston Northwestern Healthcare

By Alyssa M. Reiter, Williams Montgomery & John Ltd.

This case explored the breadth of a hospital’s immunity under the Illinois Hospital Licensing Act. Following a peer review, the hospital revoked Dr. Valfer’s privileges to practice at the hospital. After Dr. Valfer sued, the hospital obtained summary judgment. The trial court agreed that the hospital was immune from damages under the Licensing Act and that it had complied with its bylaws and had not engaged in any willful and wanton conduct.

The Supreme Court affirmed. The Licensing Act provides immunity to hospitals in connection with the physician review process. Once action is taken pursuant to peer review, the hospital is immune from civil damages unless it acts with “willful and wanton misconduct” which is defined as “a course of action that shows actual or deliberate intention to harm or that, if not intentional, shows an utter indifference to or conscious disregard for a person’s own safety and the safety of others.” The Court held that the only reasonable way to interpret the willful and wanton misconduct exception was that it required physical harm.

The Court noted, however, that its decision “should not be interpreted as condoning sham peer review.” Also, the Licensing Act immunizes a hospital only from civil damages. Other remedies, such as injunctive and declaratory relief, remain available. Further, immunity is only afforded in cases where the purpose of the hospital’s decision is “internal quality control…or the improving or benefiting of patient care and treatment….”

The Court also rejected the doctor’s argument that this section of the Licensing Act constituted impermissible special legislation and deprives doctors of their right to access the courts.

Richter v. Prairie Farms Dairy

By Karen Kies DeGrand, Donohue Brown Mathewson & Smyth LLC

The Illinois Supreme Court ruled that a refiled action arising from an agricultural cooperative’s termination of plaintiffs’ membership survives res judicata, claim splitting and statute of limitations challenges. Plaintiffs, doing business as a dairy farm, filed suit seeking shareholder remedies and asserting statutory and common law fraud. The defendant,  the cooperative, moved to dismiss all three counts for failure to state a viable claim. Granting the motion in part, the trial court dismissed the fraud counts with leave to file an amended complaint. The plaintiffs did not amend; rather, they proceeded solely on the shareholder claim. Before reaching the merits, plaintiffs voluntarily dismissed the case without prejudice under 735 ILCS 5/2-1009.

Within one year, plaintiffs refiled the action against the cooperative. In addition to reasserting the claim for shareholder remedies, the plaintiffs included in the second lawsuit counts alleging misrepresentation, fraud and breach of fiduciary duty. The defendants moved to dismiss the refiled action on several grounds, three of which relied on the plaintiffs’ election not to file an amended complaint in the first lawsuit.

The supreme court did not buy this argument. For the final order or judgment requirement of the res judicata defense, the defendant cited Supreme Court Rule 273 and argued that plaintiffs’ failure in the first lawsuit to replead the dismissed counts by the court-ordered deadline transformed the dismissal with leave to file into an adjudication on the merits. Categorizing this argument as an attempt to create an “ ‘automatic final judgment’ mechanism” that contradicts established law, the supreme court rejected this theory. In the absence of a final order or judgment, the res judicata defense failed. Similarly, given the absence of a final order, the court ruled that plaintiffs were not guilty of claim splitting.

Again arguing its automatic adjudication theory, the defendant lost its bid to challenge the timeliness of the refiled action under the statute of limitations. All of the claims in both actions arose from the same group of operative facts; therefore, the timely filing of the initial complaint and refiling within the time permitted by 735 ILCS 5/13-217 saved the action from a limitations defense.

The defendant’s last arrow was laches. The supreme court declined to address this defense, because the trial court did not rule on it.

Fattah v. Bim

By Michael T. Reagan, Law Offices of Michael T. Reagan

Fattah v. Bim, 2016 IL 119365 holds that the implied warranty of habitability by the builder-vendor of a newly constructed residence, which is normally also extended to the second purchaser of the residence, does not exist in favor of the second purchaser where the first purchaser had executed a valid waiver of that implied warranty.

The court explained the reasons for the creation of such a warranty in Petersen v. Hubschman Construction, 76 Ill.2d 31 (1979), and the economic justifications for recognizing waivers of that warranty. Redarowicz  v. Ohlendorf, 92 Ill.2d 171 (1982) extended the warranty to the second purchaser, but only so long as the second purchaser seeks recovery for damages that would have been available to the first purchaser. Here, because the builder-vendor had bargained with the first purchaser for a waiver of the warranty, extension of the warranty to the second purchaser would have permitted recovery in excess of what the first purchaser would have been entitled to. The court listed the policy and practical reasons why that will not be permitted.

Posted on May 20, 2016 by Chris Bonjean
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