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Tag Archives: Third-party practice
It’s Better Together: Avoid Third-Party Headaches by Ensuring Claimants are Aware of Other Responsible Parties Pre-suit
It seems like a rare occasion when a plaintiff files suit more than a couple days in advance of the expiration of the statute of limitations. As a result, defendants are typically left filing third-party actions to bring in other potentially responsible parties. This not only creates added costs for defendants, but defendants also face a number of barriers to filing third-party actions, such as indemnity agreements and waivers of liability, warranties of merchantability or fitness for a particular purpose, and the like.
Although third-party defendants could move to dismiss the third-party actions based on such contractual provisions, those defenses typically do not foreclose a plaintiff’s claim at the pleading stage. For this reason, it is better practice to ensure that claimants are aware of other potentially responsible parties pre-suit and have the opportunity to name them as defendants.
Once a claim is reported, as much information as possible should be gathered from the insureds, including any contractual agreements, such as leases or licenses, invoices, purchase or work orders or similar documents evidencing any deliveries, construction, maintenance or repair work.
- Ownership of property – leases, management association agreements, service agreements, such as snow removal, etc.
- Repairs, maintenance or modifications – estimates, work orders, invoices, contracts or subcontracts, additional insurance certificates, etc.
- Chain of distribution – purchase orders, invoices, receipts, proofs of payment, rental or delivery agreements, etc.
If an initial investigation reveals that there may be another potentially responsible party, the identity of that party should be shared with the claimant or claimant’s counsel in a denial letter or other writing to increase the chance that the claimant reaches out to a potentially responsible party pre-suit or names it in the complaint. A potentially responsible party can also be put on notice directly through a tender letter, if appropriate, or a written request to provide the identity of any insurance carriers. A proactive investigation could then also trigger the identification of other potentially responsible parties and also increase participation in pre-suit settlement negotiations.
It is also important to remember that some potentially responsible parties, such as municipal entities, are subject to shorter statutes of limitations, creating an even greater incentive to pass along this information to the claimant sooner rather than later. Additionally, a potentially responsible party may impact the jurisdiction and venue in which an action is brought, and jurisdictional limitations could also foreclose later third-party actions.
Even where potentially responsible parties are not identified pre-suit or named in the complaint, defendants in Illinois have two years from the date suit was filed against them to file a third-party action against any other potentially responsible party for contribution under the Joint Tortfeasor Contribution Act and the Illinois Code of Civil Procedure (735 ILCS 5/13-204).