Ioerger v. Halverson Construction Company, Inc. ( 2008 )

Docket Nos. 105912, 105917 cons.
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
DANIEL IOERGER et al., Appellees, v. HALVERSON
CONSTRUCTION COMPANY, INC. (Midwest Foundation
Corporation, Appellant).
Opinion filed December 18, 2008.
JUSTICE KARMEIER delivered the judgment of the court, with
opinion.
Chief Justice Fitzgerald and Justices Freeman, Thomas, Garman,
and Burke concurred in the judgment and opinion.
Justice Kilbride dissented, with opinion.
OPINION
The issue in this case is whether the immunity afforded to an
employer by the exclusive remedy provisions of the Workers’
Compensation Act (the Act) (820 ILCS 305/5(a), 11 (West 2000))
extends to the employer’s co-venturer in a joint venture and to the
joint venture itself. The circuit court held that it does. The appellate
court reversed and remanded. 377 Ill. App. 3d 223. For the reasons
that follow, we reverse the appellate court’s judgment, affirm the
judgment of the circuit court, and remand to the circuit court for
further proceedings.
The relevant facts are these. During the summer of 1999, Midwest
Foundation Corporation (Midwest) entered into a joint venture
(hereinafter, the Joint Venture) with Halverson Construction
Company, Inc. (Halverson), in connection with a project undertaken
by the Illinois Department of Transportation (IDOT) to repair the
McCluggage Bridge over the Illinois River in Peoria. The terms of
this business arrangement were set forth in a written agreement
between Midwest and Halverson. The agreement provided that
Midwest and Halverson “constitute[d] themselves as joint venturers
for the purpose of submitting joint bids *** for the performance of
the construction contracts herein before described, and for the further
purpose of performing and completing such construction project.” If
the bids were awarded, they were to be “entered into in the names of
the parties as joint venturers.”
Under the agreement, profits and losses and liabilities resulting
from the project were to be shared 60/40, with the larger share going
to Midwest. The agreement required Midwest and Halverson to each
make periodic contributions of working capital to the Joint Venture
in proportion to their respective share of the profits and losses. It also
specified how various responsibilities and costs were to be allocated.
Pursuant to the agreement, Midwest was responsible for “the
performance of all labor for the Joint Venture, including payroll,
payroll taxes, fringes and other employee expenses, including, but not
limited to, the establishment of worker[s’] compensation insurance
and the payments of all premiums therefore.” Correspondingly,
Midwest was “entitled to reimbursement from the Joint Venture for
the costs incurred in performing the foregoing obligations; such
reimbursement to be paid at such time or times as the Joint Venture
shall determine.”
IDOT accepted the Joint Venture’s bid and the Joint Venture
began work on the bridge project. In accordance with the joint
venture agreement, Midwest furnished workmen for the project.
Throughout the course of the project, Midwest would pay the labor
costs, including workers’ compensation insurance premiums, then
submit statements to the Joint Venture for reimbursement.
Among the workers employed by Midwest on the bridge project
were ironworkers Daniel Ioerger, Randy McCombs, Robert L. Foulks,
Sr., and Ralph Bill. On April 24, 2000, while the four were working
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from a platform suspended above the river, the platform collapsed,
causing them to plummet into the river below. Ioerger, McCombs and
Bill were injured. Foulks was killed.
Ioerger, McCombs, Bill and Robert Lamar Foulks, as
administrator of the estate of Robert L. Foulks, Sr. (hereinafter
referred to collectively as plaintiffs), each applied for and received
workers’ compensation benefits through Midwest’s workers’
compensation insurer. It is undisputed that these workers’
compensation benefits were plaintiffs’ exclusive remedy with respect
to Midwest and that sections 5(a) and 11 of the Workers’
Compensation Act (820 ILCS 305/5(a), 11 (West 2000)) precluded
plaintiffs from bringing a common law action for negligence against
Midwest in circuit court. See Meerbrey v. Marshall Field & Co., 139
Ill. 2d 455, 462-63 (1990).
In addition to seeking workers’ compensation benefits from
Midwest, plaintiffs brought a civil action in the circuit court of Peoria
County against Halverson, the Joint Venture, and various other
defendants to recover damages for injuries they sustained as a result
of the accident. Their complaint, as amended, contained more than 40
counts. Counts I through V were directed against Halverson. Counts
I, II, and V, brought on behalf of Ioerger, McCombs and Bill,
respectively, alleged negligence. In counts III and IV, Robert Lamar
Foulks, as administrator of the estate of Robert L. Foulks, Sr.,
asserted claims under the Wrongful Death Act (see 740 ILCS
180/0.01 et seq. (West 2000)) and the Survival Act (755 ILCS 5/27-6
(West 2000)). Counts XI through XV paralleled courts I through V,
but were directed against the Joint Venture rather than Halverson. All
the remaining counts involved other defendants and are not relevant
to this appeal.
Halverson and the Joint Venture filed separate motions for
summary judgment pursuant to section 2–1005 of the Code of Civil
Procedure (735 ILCS 5/2–1005 (West 2000)), arguing that as co-
venturers with Midwest, they are cloaked with the same immunity
enjoyed by Midwest under the Workers’ Compensation Act. The trial
court agreed and entered summary judgment in their favor. In so
doing, it made an express written finding pursuant to Supreme Court
Rule 304(a) (210 Ill. 2d R. 304(a)) that there was no just reason to
delay enforcement or appeal.
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Plaintiffs appealed. The appellate court reversed and remanded,
with one justice dissenting. 377 Ill. App. 3d 223. Halverson and the
Joint Venture each petitioned for leave to appeal. 210 Ill. 2d R. 315.
We granted both parties’ petitions and consolidated them for briefing,
argument and decision.1
Summary judgment is appropriate where “the pleadings,
depositions, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.”
735 ILCS 5/2–1005(c) (West 2000). Whether summary judgment was
properly granted in a particular case is a matter we review de novo.
Williams v. Manchester, 228 Ill. 2d 404, 416-17 (2008).
Under the express terms of the Workers’ Compensation Act, the
law’s exclusive remedy provisions extend not only to the employer,
but to various other specified entities, including agents of the
employer. 820 ILCS 305/5(a) (West 2000). The question of whether
an agency relationship exists is normally a question of fact. A court
may decide the issue as a matter of law, however, if only one
conclusion may be drawn from the undisputed facts. See Churkey v.
Rustia, 329 Ill. App. 3d 239, 243 (2002). This is such a case.
As described earlier in this opinion, Halverson was a co-venturer
with Midwest. Under Illinois law, joint ventures are governed by
partnership principles, “for a joint venture is essentially a partnership
carried on for a single enterprise.” In re Johnson, 133 Ill. 2d 516, 526
(1989); see Burtell v. First Charter Service Corp., 76 Ill. 2d 427, 438
(1979) (“[w]hen a joint venture is found to exist, the legal principles
pertaining to the relationship between partners govern”). Partners, in
turn, are agents of the partnership and of one another for purposes of
the business. That is so both as a matter of common law and under the
1
After plaintiffs filed their briefs, Halverson and the Joint Venture each
filed motions to strike them on the grounds that they failed to adequately
cite to the record as required by Supreme Court Rules 341(h)(6) and
341(h)(7) (201 Ill. 2d Rs. 341(h)(6), (h)(7)). Although we agree that the
briefs contain deficiencies, those deficiencies did not significantly impede
the ability of Halverson and the Joint Venture to respond to plaintiffs’
arguments, nor did they hamper our review to the merits of this case. The
motions to strike are therefore denied.
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Uniform Partnership Act, which Illinois has adopted (see 805 ILCS
205/1 et seq. (West 2000)). See Gilpin v. Lev, 70 Ill. App. 2d 66, 75
(1966). As a co-venturer with Midwest, Halverson was therefore
Midwest’s agent. Because Halverson was Midwest’s agent, it was, in
turn, entitled to invoke the same immunity afforded to Midwest by
the exclusive remedy provisions of the Workers’ Compensation Act
(820 ILCS 305/5(a), 11 (West 2000)). Smith v. Metropolitan Sanitary
District of Greater Chicago, 77 Ill. 2d 313, 318 (1979); see Moran v.
Gust K. Newberg/Dugan & Meyers, 268 Ill. App. 3d 999, 1005-06
(1994). Accordingly, the circuit court was correct to grant
Halverson’s motion for summary judgment based on the Act.
Our conclusion is the same with respect to the Joint Venture
itself. That is so for two reasons. The first is inherent in the nature of
the joint venture form of business organization. While a partnership
is treated as a separate entity for purposes of owning property, it is not
a separate legal entity. Because joint ventures are governed by
partnership principles, the same is true of them. See Palumbo Bros.,
Inc. v. Wagner, 293 Ill. App. 3d 756, 766 (1997). The Joint Venture
in this case was thus inseparable from its constituent entities,
Midwest and Halverson. Both of those entities being immunized by
the exclusive remedy provisions of the Workers’ Compensation Act,
it necessarily follows that the Joint Venture was likewise shielded by
the exclusive remedy provisions of the Act.
Allowing the Joint Venture to invoke the exclusive remedy
provisions of the Act is also mandated by the principles underlying
the Act’s remedial scheme. We observed in Forsythe v. Clark USA,
Inc., 224 Ill. 2d 274, 298 (2007), quoting Forsythe v. Clark USA, Inc.,
361 Ill. App. 3d 642, 651 (2005), that allowing a party who has paid
nothing toward an injured employee’s workers’ compensation
benefits to nevertheless invoke the Act’s immunity to escape tort
liability for the employee’s injuries would be tantamount to allowing
the party “to have its cake and eat it too.” By the same token,
subjecting a party to tort liability for an employee’s injuries
notwithstanding the fact that the party has borne the costs of the
injured employee’s workers’ compensation insurance would be the
same as declaring that a party who has paid for the cake may neither
keep it nor eat it.
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As these metaphors illustrate, the immunity afforded by the Act’s
exclusive remedy provisions is predicated on the simple proposition
that one who bears the burden of furnishing workers’ compensation
benefits for an injured employee should not also have to answer to
that employee for civil damages in court. See Schmidt v. Milburn
Brothers, Inc., 296 Ill. App. 3d 260, 269 (1998). While the joint
venture agreement between Midwest and Halverson in this case
specified that Midwest was responsible for “the performance of all
labor for the joint venture, including payroll, payroll taxes, fringes
and other employee expenses, including, but not limited to, the
establishment of worker[s’] compensation insurance and the
payments of all premiums therefore,” the agreement further provided
that Midwest was “entitled to reimbursement from the Joint Venture
for the costs incurred in performing the foregoing obligations; such
reimbursement to be paid at such time or times as the Joint Venture
shall determine.” Ultimate responsibility for payment of the workers’
compensation insurance premiums therefore lay with the Joint
Venture. Because the Joint Venture bore the expense of the workers’
compensation premiums and was thus responsible for making
workers’ compensation benefits available to plaintiffs, it was entitled
to avail itself of the Act’s exclusive remedy provisions.
In reaching a contrary conclusion, the appellate court in this case
based its decision on the belief that the Joint Venture had not, in fact,
contributed to the payment of workers’ compensation premiums or
reimbursed Midwest for its payment of them before the accident.
According to the appellate court, defendants actually admitted “at the
time of oral arguments, months/years later *** that [Halverson and
the Joint Venture] had not reimbursed Midwest for any expenses
associated with the joint venture.” 377 Ill. App. 3d at 230. Moreover,
the appellate court held, Halverson and the Joint Venture could not
cure the lack of reimbursement after the fact. In the court’s view,
“it would be bad public policy to allow Halverson and/or the
joint venture, at this point, to now deliver or postdate a check
to Midwest for reimbursement of wages and workers’
compensation premiums to fulfull its obligations under the
joint venture agreement in order to obtain the protection of
the Act’s immunity.”
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With due respect to the appellate court, we believe that its
characterization of the facts underlying this case is incorrect.
Uncontradicted deposition testimony submitted by the Joint Venture
in support of its motion for summary judgment established that
Midwest and Halverson periodically sought and received
reimbursement for their labor costs from the Joint Venture as
specified in the joint venture agreement. The transcript of the oral
argument before the appellate court contains nothing that could be
construed as admission by defendants that the deposition testimony
was somehow erroneous or that the claimed reimbursements had
never been made. In addition, after the appellate court filed its
opinion containing its error, defendants adduced additional
documentation in support of their petition for rehearing which
showed specifically that the Joint Venture had reimbursed Midwest
for workers’ compensation premiums and other labor costs for
plaintiffs for the month in which the accident occurred.
The appellate court’s reasoning is flawed for another reason as
well. Even if the Joint Venture had not yet made reimbursement to
Midwest for the workers’ compensation premiums and other labor
costs, the fact remains that it was contractually obligated to do so.
Joint ventures arise solely through voluntary agreement (see Herst v.
Chark, 219 Ill. App. 3d 690, 694 (1991)) and are controlled by the
terms of the agreements through which they are created (Harmon v.
Martin, 395 Ill. 595, 612-13 (1947)). Where, as here, the agreement
requires the Joint Venture to reimburse the individual co-venturers for
workers’ compensation premiums and other labor costs, it is that
contractual obligation, not the timing of particular reimbursements,
which is dispositive.
For the foregoing reasons, the circuit court was correct when it
granted summary judgment in favor of Halverson and the Joint
Venture based on the exclusive remedy provisions of the Workers’
Compensation Act (820 ILCS 305/5(a), 11 (West 2000)). The
appellate court erred when it set the circuit court’s judgment aside.
The judgment of the appellate court is therefore reversed, the
judgment of the circuit court is affirmed, and the cause is remanded
to the circuit court for further proceedings.
Appellate court judgment reversed;
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circuit court judgment affirmed;
cause remanded.
JUSTICE KILBRIDE, dissenting:
In my view, a question of material fact exists as to whether
Halverson and the Joint Venture paid for the workers’ compensation
benefits in this case and were, therefore, entitled to immunity from
tort liability under the Workers’ Compensation Act (Act) (820 ILCS
305/1 et seq. (West 2000)). I believe the appellate court properly
reversed the trial court’s grant of summary judgment. Accordingly, I
respectfully dissent.
Summary judgment is appropriate only when “the pleadings,
depositions, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.”
735 ILCS 5/2–1005(c) (West 2000). In reviewing a grant of summary
judgment, this court must construe the pleadings, depositions,
admissions, and affidavits strictly against the moving party and
liberally in favor of the nonmoving party. Williams v. Manchester,
228 Ill. 2d 404, 417 (2008). Summary judgment is a drastic means of
disposing of litigation that should not be granted unless the movant’s
right to judgment is clear and free from doubt. Forsythe v. Clark
USA, Inc., 224 Ill. 2d 274, 280 (2007); Adams v. Northern Illinois
Gas Co., 211 Ill. 2d 32, 43 (2004).
In the summary judgment motions, defendants Halverson and the
Joint Venture asserted immunity from tort liability under the Act. In
Forsythe, this court examined the exclusive remedy provision in the
Act (820 ILCS 305/5(a) (West 2000)). Forsythe, 224 Ill. 2d at 296.
This court recognized that a party must contribute to providing
workers’ compensation benefits to receive the benefit of the Act’s
immunity. Forsythe, 224 Ill. 2d at 298. As noted by the majority, the
Act’s immunity from tort liability is based on “the simple proposition
that one who bears the burden of furnishing workers’ compensation
benefits for an injured employee should not also have to answer to
that employee for civil damages in court.” Slip op. at 5-6, citing
Schmidt v. Milburn Brothers, Inc., 296 Ill. App. 3d 260, 269 (1998).
Thus, the Act’s protection from tort liability is limited to the party
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that pays workers’ compensation premiums or otherwise provides
those benefits.
I believe this case presents a genuine question of material fact on
whether the defendants actually contributed to the workers’
compensation premiums. As noted by the appellate court, the
defendants did not produce conclusive evidence that they paid or
contributed to the workers’ compensation premiums before the
accident. The appellate court further noted that “at the time of oral
arguments, months/years later, it was admitted that [Halverson and
the Joint Venture] had not reimbursed Midwest for any expenses
associated with the joint venture.” 377 Ill. App. 3d at 230. I believe
the appellate court’s statement is supported by the transcript of the
oral argument. The transcript shows Halverson’s attorney asserted
that under the joint venture agreement:
“Midwest Foundation is obliged to acquire the workers’
compensation coverage, is required to pay that premium, and
is reimbursed that premium out of the joint venture proceeds.
*** Now, once, then, the Midwest Foundation is reimbursed
that premium out of the joint venture proceeds, then the
potential distributable profit of the joint venture is reduced,
and they share in it in that manner.”
We must construe this statement strictly against the defendants as
the moving parties, and liberally in favor of the plaintiffs. Williams,
228 Ill. 2d at 417. Consistent with the appellate court’s opinion, this
statement can be fairly construed to mean that Midwest paid the
workers’ compensation premiums and only anticipated
reimbursement of those amounts at the conclusion of the project. The
statement does not indicate that the defendants ever paid or
contributed to the payment of the workers’ compensation premiums.
The majority has identified evidence that may tend to show the
defendants contributed to providing workers’ compensation benefits.
The majority, however, relies in part on evidence submitted with the
defendants’ petition for rehearing in the appellate court. That
evidence was not part of the record before the trial court when it ruled
on the motions for summary judgment. Thus, that evidence should
not be considered in reviewing the trial court’s decision.
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In sum, the defendants, as the moving parties, must show their
right to relief is clear and free from doubt. Forsythe, 224 Ill. 2d at
280. Given this record, I believe a genuine issue of material fact
exists on whether the defendants actually bore the burden of
providing workers’ compensation benefits. The defendants, therefore,
have not shown clearly that they are entitled to the protection of the
Act’s exclusive remedy provision. Accordingly, I would affirm the
appellate court’s judgment reversing the grant of summary judgment
and remanding the cause to the trial court for further proceedings.
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