Common Fund Doctrine
The plaintiff, Wajnberg, was in a car accident with the at-fault driver, Wunglueck. Plaintiff’s insurer, Erie Insurance Company, paid $10,000.00 of the plaintiff’s medical expenses. It then wrote a letter seeking reimbursement from Farmers Insurance Company, the defendant’s insurer. Erie filed a claim for damages with Arbitration Forum, Inc., of which both it and Farmers were members. Later, Wajnberg filed suit against Wunglueck and Farmers seeking to defer the mandatory arbitration while the lawsuit was pending. Arbitration Forum, Inc. deferred the pending arbitration in light of the companion litigation. Wajnberg settled with Wunglueck for $40,000, which they understood to include Erie’s medical payments subrogation claim. Next, Wajnberg moved to adjudicate Erie’s lien to zero, or in the alternative, reduce it by one-third pursuant to the common fund doctrine. The Court eventually: (1) found that it had jurisdiction to adjudicate Erie’s medical payments lien; (2) granted the motion to adjudicate Erie’s lien; (3) granted the motion to enforce the settlement; (4) reduced Erie’s $10,000 lien by one-third pursuant to the common fund doctrine; and (5) denied plaintiff’s and Erie’s cross-motions for sanctions. Erie appealed.
On appeal, the central issue was whether Erie promptly and unequivocally notified plaintiff and/or his attorneys that it desired to represent its own subrogation claim in order to avoid creating an interest in the settlement fund and having the common fund doctrine apply. The Court noted that even in cases where the insurer sends a letter that notifies the plaintiff of its intention to represent its own subrogation interest before the plaintiff files suit, the insurer may not overcome application of the common fund doctrine if the letter fails to be unequivocal and if the insurer does not meaningfully participate in the suit. The Court held that the common fund doctrine was correctly applied because no letter was ever sent to the plaintiff and/or his attorneys. The Court rejected Erie’s argument that its ability to recover payment was contractual and not in the form of a lien because the common fund doctrine is quasi-contractual and independent of the parties’ insurance contract.
Wajnberg v. Wunglueck, 2011 IL App (2d) 110190, 963 N.E.2d 1077 Ill.App 2 Dist., 2011.
