Commerce Bank v. Illinois Department of Children et al.

ORDER

Jann, J.

This claim is before the Court on Respondent’s Motion to Dismiss Claimant’s Amended Complaint. This cause has proceeded through two trials and appeals on all underlying matters of fact and law against parties other than the State.

The parties have responded and submitted proofs at the Court’s request. The Court requested oral argument and the parties presented their positions.

Respondent’s Motion seeks dismissal for failure to exhaust remedies against parties previously adjudged immune from personal financial judgment and on a theory of collateral estoppel due to res judicata on the underlying facts and law by decisions rendered in courts of general jurisdiction.

The claim arises from the tragic death of a 3 year old girl who was placed in a foster home by Youth Services of Mid-Illinois (YSMI), a contract services provider, retained by DCFS and the State, Respondents herein. The foster parents were selected by YSMI and were to be monitored and supervised pursuant to YSMI’s contract with DCFS.

Louise Osborn and her brother were placed in the same foster home by YSMI. Louise was left unattended by her foster parents for at least three hours on a very hot day. Little Louise somehow made her way into a closet [*201] where she crawled into a wooden storage unit, and eventually expired due to hyperthermia (heat stroke) and asphyxiation (lack of oxygen) per the coroner’s report. The closet could not be opened from the interior door per the record.

The Amended Complaint filed by Claimant consists of six Counts, all of which are directed against DCFS.

Counts I and II are directed against DCFS on a negligence theory. Counts III and IV are directed against DCFS alleging the principal agency relationship between the foster parents and DCFS. Counts V and VI are directed against DCFS alleging a principal agency relationship between Youth Services of Mid-Illinois and DCFS.

I. Failure to Exhaust Remedies.

We first address Respondent’s Motion to Dismiss on exhaustion. Respondent’s arguments as to the existence of a viable claim for willful and wanton negligence against the foster parents to defeat parental immunity is not persuasive. The record indicates Claimant attempted to present claims wherein recovery might be made under an insurance policy covering the foster house. While that fact is not determinative of the issue, in this particular fact scenario, it is to be considered under a theory that Claimant is obliged to seek any possible satisfaction or recovery before determination in this Court, allowing Respondent the benefit of any possible set-off per 74 Ill.Adm.Code 790.60.

The record indicates the Circuit Court’s grant of parental immunity and an order of protection against personal liability of the Augsburgers, the foster parents, was a legal bar to any possible recovery against the Augsburgers for purposes of exhaustion of remedies prior to final adjudications of negligence in the McLean County Circuit Court trials preceding this action.

Rule 60 explicitly states “no frivolous or unreasonable action is required to be brought…in order to comply with the exhaustion of remedies requirement.” 74 Ill.Adm.Code 790.60. (See Stupp Bros. Bridge & Iron Co. v. State (1998), 51 IllCt.Cl.195).

II. Collateral Estoppel

Respondent’s second basis for dismissal states that prior findings of fact and law in the trial courts, and decisions upon appeal, are binding upon this Court and as alleged against DCFS. Claimant is collaterally estopped from seeking remedy by the application of res judicata. Essentially, Respondent argues that Claimant’s Amended complaint alleging negligence under a respondeat superior theory must fail because both the foster parents and [*202] YSMI obtained final judgments that no principal agency relationship existed between YSMI and the foster parents.

If no principal agency relationship existed, as to those parties, no negligence arising from the relationship alleged as principal agency by Claimant may be imputed to Respondent on the same theory per the prior adjudication of the issue.

Claimant argues that because DCFS was not a party within the jurisdiction of the trial and reviewing Courts, there is a question of fact remaining on the principal agency issue. Claimant also asserts a non-delegable statutory duty was owed Louise by DCFS, and the adjudication of the negligence actions the foster parents and the placement agency which was contracted to supervise and assure compliance with DCFS regulations does not preclude an individual action against DCFS.

We have very carefully considered Claimant’s arguments and authority for denial of Respondent’s Motion.

We have painstakingly reviewed both the procedural and legal history of this sad case. Despite our desire to do justice for a child denied the comforts and protection of a functional natural home life and perhaps foster neglect, we are unable to find a legal basis to preserve this action on the record presented.

All issues Claimant presents have been either fully adjudicated on the merits in courts of general jurisdiction or decided in significantly similar fact scenarios and contractual relationships by the Illinois Supreme Court and Illinois Appellate Courts for the theories of agency and imputed negligence to DCFS under respondeat superior underlying this claim. The issue of non-delegable duty of DCFS as argued by Claimant herein has also been expressly addressed by the Appellate and Illinois Supreme Courts. Respondent’s arguments that all issues are collaterally estopped on the basis of res judicata, is supported by the following summary of the decisions in this claim as well as applicable precedent in very similar cases by our state courts of general jurisdiction.

1. Commerce Bank v. Augsburger, 288 Ill.App.3d 510,680 N.E.2d 822 (1997), (Commerce Bank I).

The 4th District Appellate Court affirmed the Circuit Court’s grant of parental immunity to Sarah Augsburger on the facts presented and based its decision on the inherent nature of the acts giving rise to the injury as being within the intimate framework of family life shared by both natural and foster parents. The Court summarized its basis for affirming the grant of immunity by stating “Foster parents are nearly as much in need of leeway [in regard to the supervision and discipline of children under their care] as are natural parents”. Id. at 517, and as cited as Accord in Wallace v. Smyth, 203 Ill 2d 441, 786 NE 2d 980 (2002).

[*203] 2. The McLean County Circuit Court dismissed Claimant’s respondeat superior claims, but allowed the negligence claims against YSMI, the foster placement contractor, to proceed to verdict. YSMI was found not negligent.

3. Claimant appealed the single issue of dismissal of its respondeat superior claims. The 4th District reversed and remanded the question of agency or master servant between the foster parents and the contractor for trial in the circuit court in Commerce Bank II, (slip decision No 4-98-0833, August 10, 1999, unpublished order pursuant to Supreme Court Rule 23).

4. The McLean County jury trial, on the remand, found Sarah Augsburger, the foster mother, negligent, and her negligence had proximately caused Louise Osborn’s death. The jury further found that Sarah Augsburger was an agent of YSMI. An award of $640,000.00 was entered against YSMI on respondeat superior grounds for wrongful death and survival in the verdict.

5. YSMI appealed to the 4th District Appellate Court upon the denial of its motions for judgment notwithstanding the verdict and for a new trial in Commerce Bank v. Youth Service of Mid-Illinois, Inc., 333 Ill.

App. 3d 150, 156 (2002), (Commerce Bank III). The Fourth District considered the explicit question of whether the facts of record supported the jury’s finding that YSMI was a principal or employer of Sarah Augsburger, and examined the discrete duties of YSMI and the foster parents, and the role of DCFS to arrive at their decision. The Court examined the issues of whether Sarah Augsburger was an independent contractor, and whether YSMI could claim derivative immunity if an agency or master servant relationship was found to exist between YSMI and the foster parent, given the court had previously denied grant of government immunity to the foster parents, but granted parental immunity when the case was remanded for trial on proof of agency and imputed negligence to YSMI under respondeat superior.

6. The majority in Commerce Bank III held that the Illinois Supreme Court’s decision in Nichol v.

Stass, 192 Ill.2d 233, 239, 735 N.E.2d 582, 587 (2000), (Nichol II) was determinative of the issue of agency status of a foster parent. The summary entitled Background which begins the Opinion for the majority by Justice Cook is instructive as to the general position of the court, later affirmed, as to the relative duties of the respective parties in this claim. “…… Defendant provided services to the children, created plans, distributed state money to the foster parents, and monitored the foster parents, all pursuant to DCFS regulations. In other words, defendant acted in [*204] DCFS’ place. The only duties which DCFS reserves for itself in cases like this are the licensing of the foster parents and the initial removal of the children from their homes that places them in the state custody. DCFS also handles court appearances.”

The Court acknowledged that while the nature of the supervision, monitoring, and provision of care was traditionally indicative of an agency relationship under Illinois law and precedent, the Nichol II decision was controlling because the duties of YSMI were derived from responsibilities DCFS had contracted for pursuant to its statutory obligation to establish regulations and rules for the protection of wards of the State, and fell within the Nichol II decision’s holding that the contractor was merely “monitoring licensing standards set by DCFS regulation at 89 Ill. Adm. Code §402.”

The Court further held:

“. . .in every area where defendant (YSMI) could exercise control over the Augsburgers, defendant was

merely monitoring licensing standards set by DCFS regulations.”. . .

“There was also uncontradicted testimony that every interaction defendant had with the Augsburgers was

dictated by DCFS regulations. If DCFS had been monitoring the Augsburgers in the case, the Augsburgers

would not have been agents of DCFS despite the amount of control the regulations gave DCFS over the

Augsburgers’ day-to-day parenting. See Nichol, 192 2d at 240, 735 N.E.2d at 587.

By merely acting in accordance with DCFS regulations, defendant did not have the right to exercise any

more control over the Augsburgers than DCFS would have if it were providing services directly. The

defendant in this case was essentially acting in DCFS’ place. Pursuant to the Illinois Supreme Court’s

decision in Nichol, if there is no proof that defendant was exercising control over the Augsburgers beyond

merely subjecting them to DCFS regulations, then an agency relationship has not been provided in this

case. Nichol, 192 Ill.2d at 240, 735 N.E.2d at 587. Therefore, since there was no evidence that defendant

exercised day-to-day control over the Augsburgers’ parenting beyond merely subjecting them to DCFS

regulations, the jury’s finding of an agency relationship cannot stand.” Id., 156.

7. Claimant appealed the adverse holding of the 4th District.

The Illinois Supreme Court considered the issue of whether YSMI should be vicariously liable for negligence of Sarah Augsburger under the doctrine of respondeat superior upon review of the sufficiency of the [*205] evidence underlying the 4th District’s ruling. The Supreme Court issued an Opinion filed March 18, 2004 (which it stated had no precedential value) in No. 94830 Commerce Bank v. Youth Services of Mid-Illinois, Inc. announcing “because one Justice recused herself and the remaining Justices could not reach agreement, the Appellate Court decision is being allowed to stand.”

8. The Appellate Court in Commerce Bank I specifically noted Claimant had made no attempt to defeat the grant of parental immunity to the Augsburgers. Hence, no allegations relating to the various exceptions negating parental immunity as set out in Nichol II, such as willful and wanton conduct, may be asserted in this claim for Sarah Augsburgers’ negligence. The grant of parental immunity was affirmed on appeal and governmental immunity was specifically rejected as applying to Augsburger, as was an agency or employment relationship with YSMI arising from compensation as a foster parent. The findings in Commerce Bank III, remain undisturbed, and affirmed. Commerce Bank III also stated that if DCFS had been monitoring the foster parents in this case, the foster parents would not have been agents of the state despite the amount of control and supervision the regulations gave DCFS over the Augsburgers day-to-day parenting by virtue of DCFS statutory authority.

The Supreme Court subsequently determined that parental immunity did not apply to a residential child care facility in Wallace v. Smyth. The majority reasoned that while the parental immunity doctrine logically reaches foster parents, it cannot stretch to cover a corporate entity and its employees. The Court distinguished the professional staff of a residential facility exercising their professional duties in handling state wards from those of parents, despite the similarities of their responsibilities.

We find the prior holdings of the courts of general jurisdiction to be controlling as res judicata in this claim which deprives this court of jurisdiction, as there is no authority to establish an individual duty owed Claimant by DCFS, or how negligence may be imputed to DCFS on the law and record.

We must agree with Claimant’s contention that current applicable precedent may severely limit opportunities for recovery when a foster parent is granted parental immunity in like circumstances. The respective dissent of Justice Myerscough in Commerce Bank III, and Justice Freeman’s special concurrence in Wallace v.

Smyth, citing his dissent in Nichol, 192 Ill.2d at 253-73, certainly indicate that Claimant’s theory that foster parents should not enjoy parental immunity has been debated repeatedly. Only Justice Myerscough’s dissent in Commerce III supports the seminal issue Claimant presents now on primarily equitable grounds. Justice [*206] Myerscough’s dissent rejected the majority’s findings that YSMI “did not have the right to exercise any more control over the Augsburgers than DCFS would have had if it were providing services directly. Slip op. at 9.

Justice Myerscough found the record on the extent of YSMI’s control over the Augsburgers required a finding that YSMI acted independently to determine whether DCFS regulations were being followed by the Augsburgers, and YSMI made the determination of when and on what basis reports were made to DCFS. Hence, the Justice reasoned the trial court’s jury finding of the existence of an agency relationship established on the record, and imputing negligence to YSMI for the foster parent’s neglect should have been affirmed. The dissent was narrowly drawn on the facts and proofs presented which suggested that YSMI had failed to follow DCFS regulations for reporting or supervision as an independent contractor.

Justice Freeman’s special concurrence in Wallace, references his prior dissent in Nichol II, at 272-73.

Justice Freeman’s dissent in Nichol argued that there are very distinct differences between foster parents and natural parents to be considered in extending the status of in loco parentis status for a foster child to a foster parent.

Justice Freeman noted the obvious supervisory and contractual aspects of the relationship which are not those of a natural parent, and emphasized the fact that foster parents do not stand in loco parentis to a foster child because they do not take upon themselves the financial obligations of a parent. The Justice went on to caution that unintended consequences might arise by extending the status to foster parents, and invite others in similar or less intimate child welfare roles to assert the same privilege and immunity. The Justice was certainly proved correct on his prognostication, as illustrated by Wallace, wherein a corporate child welfare entity sought immunity. Justice Freeman objected to the majority’s artificial distinction between foster parents and institutional care providers of child welfare services in deciding Maryville Academy was not entitled to the same immunity enjoyed by the Augsburgers and other foster parents given the parallel nature of the relationships and financial compensation for services rendered. Justice Freeman repeated his contention that neither foster parents, nor institutions, or corporate entities should be allowed to claim immunity. Hence, though the majority reached the correct conclusion in denying immunity, the decision was based on a prior erroneous decision creating the judicial distinction.

We wish to acknowledge and applaud Mr. Douglas Koth’s advocacy and tenacity in this claim for a child he never knew. In Mr. Koth, Louise Osborn at last found the champion and protector denied her in an all too short life, and her tragic demise. No higher purpose may be served by our legal profession than the representation of [*207] those who cannot speak for themselves or act to protect themselves. Every child deserves loving care, protection from harm and the comfort of a safe home. Mr. Koth clearly has acted upon this laudable tenet. We are grateful for his service on behalf of Louise Osborn. Our decision is based purely upon the law and facts, and in no way upon any failure by Mr. Koth to prosecute this claim.

Based upon the above analysis, IT IS HEREBY ORDERED:

Respondent’s Motion to Dismiss for failure to exhaust remedies is DENIED.

Respondent’s Motion to Dismiss based upon our collateral estoppel holdings as cited in Sabarra v. State (1995), 47 Ill.Ct.Cl. 321,323, is GRANTED.

ORDER

Jann, J.

Claimant has filed a Motion for Rehearing and Response to Respondent’s pleading in opposition to rehearing.

Upon review of the pleadings the Court ORDERS:

Claimant’s Motion for Rehearing is denied as all matters raised were fully considered in our prior dismissal of this claim. This cause is dismissed with prejudice.