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Collateral Estoppel Applied in Case Involving Workers’ Compensation Settlement

Armstead v. Natl’l Freight, Inc., 2020 IL App (3d) 170777

Dylan R. Besser

I. Introduction

Question 1 – If, in the underlying workers’ compensation claim, a claimant only establishes injury to his knee, can this claimant then, in a subsequent civil lawsuit, claim injuries above and beyond what was established in said workers’ compensation claim? Based on Armstead v. Nat’l Freight, Inc., 2020 IL App (3d) 17077, the answer is no.

Question 2 – What is the proper doctrine for moving for summary judgment on a plaintiff’s tort claim in a situation like the above? Would Plaintiff’s tort claim be barred under the doctrines of (1) collateral estoppel, (2) res judicata, or (3) judicial admission? The appellate court ruled Plaintiff’s claim was barred under collateral estoppel.

I. Procedural Background

On March 6, 2015, Driver 1 (hereafter “Driver 1” or “Plaintiff”), while operating a semi-truck during the course and scope of his employment with Manfredi Mushroom Company (“Manfredi”), was struck at an excessive speed by a semi-truck being operated by Driver 2. Driver 2 was operating his semi-truck during the course and scope of his employment with National Freight. On March 13, 2015, Driver 1 filed a workers’ compensation claim against his employer, Manfredi. During workers’ compensation proceedings, an independent medical examiner (“IME”) opined that Driver 1 suffered an injury to the right knee as a result of the March 6, 2015 accident. The IME also opined that there was not enough information available that indicates Driver 1 suffered any injury relative to his lower back.

On November 9, 2016, Driver 1 signed a release agreement that settled the workers’ compensation claim (“Agreement”). The Agreement, in pertinent part, contained the following: “[s]tate the precise nature of the injury,” the description indicates “[r]ight knee strain. The parties agree that [Driver 1] did not sustain any other injury or medical condition as a result of the [March 6, 2015] work injury.”

Driver 1/Plaintiff filed a tort complaint against Driver 2 and National Freight (“Defendants”), Driver 2’s employer, alleging Driver 2 negligently operated the vehicle at an excessive speed in the course of his employment as National Freight’s agent. Plaintiff complained of and sought damages for back, shoulder, and knee injuries that occurred as a result of said accident. He maintained the accident caused injuries to his back, shoulder, and knee in interrogatories. Defendants filed a motion for summary judgment, arguing the claims for injuries other than the knee were barred by doctrines collateral estoppel or constituted judicial admissions. Defendants’ motions were granted at the trial court level based on the doctrine of judicial admissions. 

II. The Proper Legal Standard(s)

Collateral estoppel is an equitable doctrine, the application of which precludes a party from relitigating an issue decided in a prior proceeding. The minimum requirements for the doctrine of collateral estoppel are as follows: (1) the issue decided in the prior adjudication is identical with the one presented in the suit in question, (2) there was a final judgment on the merits in the prior adjudication, and (3) the party against whom estoppel is asserted was a party or in privity with a party in the prior adjudication. Important to note, only the party against whom estoppel is asserted must be the same or in privity with the party in the prior adjudication. Worth noting, a prior adjudication is required, but litigation is not; instead, only the incentive and opportunity to litigate is required. A party may argue that, even if the requirements for collateral estoppel are present, it would be unfair to apply said doctrine under present circumstances. A court’s determination not to apply collateral estoppel because of unfairness typically rests either (1) on some inadequacy in the forum in which the matter was first determined or (2) on the view that the party to be estopped did not have a full and fair opportunity to litigate the issue, perhaps because the party had no motivation to vigorously litigate the issue in the earlier case.

There are two types of admissions: Judicial Admissions and Evidentiary Admissions. Judicial admissions are formal admissions in the pleadings that have the effect of withdrawing a fact from issue and dispensing wholly with the need for proof of the fact. Conversely, evidentiary admissions do not have the strength of judicial admissions and such admissions may be explained by the party and may be made in, among other things, pleadings in a case other than the one being tried; evidentiary admissions may be admitted in a different case.

III. Applied in Armstead v National Freight

a. Judicial Admission and Evidentiary Admission

On appeal, Plaintiff argued the circuit court erred in granting Defendants’ motion for summary judgment because the response to “state the precise nature of your injuries” is not a judicial admission. In support, Plaintiff pointed to language in the Agreement limiting its application as to Plaintiff and his former employer Manfredi (not Defendants in the present matter), Plaintiff’s statement was not made under oath, and Plaintiff points to language in the statement that is contradicted by his answers to interrogatories in the present matter. Additionally, the Agreement contained specific language indicating it is not the exclusive remedy for Plaintiff and does not alter his right to recovery against third parties. Further, Plaintiff sought recovery against the alleged

tortfeasor and his employer (Defendants) from whom he has not yet recovered. The appellate court found that Plaintiff’s statements made in the workers’ compensation Agreement did not constitute a judicial admission; as such, the circuit court erred when it granted Defendants’ motion for summary judgment based the doctrine of judicial admissions.

b. Doctrine of Collateral Estoppel

However, Defendants contended the court overlooked their alternative argument under the doctrine of collateral estoppel. The Appellate Court agreed and affirmed judgment for
Defendants under this alternative basis. 

As to the first requirement, the issue decided in prior adjudication is identical with the issue presented in the suit in question, the court found Defendants met this requirement. Specifically, the workers’ compensation suit resolved the issue as to the extent of Plaintiff’s injuries following the March 6, 2015 motor vehicle accident, and Plaintiff’s present suit is for damages resulting from said motor vehicle accident (in tort).

As to the second requirement, that there was a final judgment on the merits in the prior adjudication. The workers’ compensation Agreement set the parties’ rights and liabilities based upon the agreed facts stated in the Agreement, which qualified as a judgment on the merits. This is true even though the Agreement came from a settlement between parties rather than an independent determination of facts and issues.

As to the third requirement, the party against whom estoppel is asserted was a party or in privity with a party in the prior adjudication, i.e. the plaintiff. 

Furthermore, the Appellate Court rejected Plaintiff’s argument it would be unfair to apply the doctrine of collateral estoppel under the present circumstances. The Court found no unfairness in barring Plaintiff, the injured semi-truck driver, from relitigating the extent of his injuries. First, the forum was not inadequate. Plaintiff made no argument that the Pennsylvania workers’ compensation forum varied in any meaningful way from the same type of proceedings in Illinois. In fact, in Illinois, the procedural adequacy of workers’ compensation proceedings has long been recognized by Illinois Courts. Secondly, Plaintiff did have the full and fair opportunity to litigate the extent of his injuries in Pennsylvania. As such, the court found no unfairness in barring Plaintiff from now complaining of additional injuries when he had the opportunity to pursue those claims during his workers’ compensation proceedings.

In sum, the court held that Plaintiff’s tort claim was barred under doctrine of collateral estoppel to the extent it sought compensation for injuries beyond injury to the right knee as identified in workers’ compensation Agreement.

IV. Armstead v National Freight in Illinois Supreme Court

Please note this is not the end of the story. Plaintiff was granted leave to appeal to the Illinois Supreme Court. Plaintiff argument on appeal is that lawyers and workers’ compensation commission arbitrators do not have the time to consider each of the terms set forth in the settlement contract. Further, Plaintiff argues there was no incentive for Plaintiff to litigate the workers’ compensation case and that workers’ compensation trial lawyers do not make enough money to vigorously litigate the cases.

On July 13, 2021, the Illinois Supreme Court allowed Illinois Defense Counsel’s (“IDC”) Motion for Leave to File an Amicus Brief in the Armstead v National Freight case. IDC’s Brief addressed Plaintiffs arguments. According to the IDC, the terms of workers’ compensation settlement contracts are consistently and routinely considered by petitioners’ and respondents’ attorneys and to conclude otherwise would essentially allege the attorneys handling workers’ compensation cases are violating the rules of professional conduct by not providing competent representation for their clients. Further, workers’ compensation settlement contracts have already been determined to be binding in other areas of the law. The purpose of the collateral estoppel doctrine was to prevent relitigating previously-decided issues – affirming the Appellate Court Decision in Armstead would support the idea of judicial economy.

We will continue to monitor the Armstead appeal and advise of the outcome in the Illinois Supreme Court. Because many workers’ compensation claims ultimately result in a third-party civil action, it will be interesting to see how the Illinois Supreme Court addresses the scope of doctrine of collateral estoppel or admissions made during the workers’ compensation action. 

  • Chicago Bar Association
  • Workers' Compensation Lawyers Association
  • DRI
  • The Illinois Association of Defense Trial Counsel
  • Illinois Self-Insurers' Association
  • Chicago Bar Association
  • Workers' Compensation Lawyers Association
  • DRI
  • The Illinois Association of Defense Trial Counsel
  • Illinois Self-Insurers' Association
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