Burge v. Exelon Generation Company, LLC ( 2015 )

2015 IL App (2d) 141090No. 2-14-1090
Opinion filed July 30, 2015
______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
______________________________________________________________________________
RICK BURGE and NELDA M. BURGE, ) Appeal from the Circuit Court
) of Ogle County.
Plaintiffs-Appellants, )
)
v. ) No. 12-L-8
)
EXELON GENERATION COMPANY, LLC, ) Honorable
) John B. Roe,
Defendant-Appellee. ) Judge, Presiding.
______________________________________________________________________________
JUSTICE HUTCHINSON delivered the judgment of the court, with opinion.
Justices Burke and Spence concurred in the judgment and opinion.
OPINION
¶1 Plaintiffs, Rick Burge and Nelda M. Burge, appeal from an order of the circuit court of
Ogle County granting the motion of defendant, Exelon Generation Company, LLC, to dismiss
plaintiffs’ two-count negligence complaint. Defendant successfully argued that plaintiffs’
exclusive remedy was under the Workers’ Compensation Act (the Act) (820 ILCS 305/1 et seq.
(West 2012)). We reverse and remand for further proceedings.
¶2 Count I of the complaint sought recovery for injuries Rick allegedly suffered due to the
unsafe condition of defendant’s premises. Count II sought recovery for Nelda’s loss of Rick’s
services and earnings and his love, affection, and companionship. It is undisputed that Rick’s
injuries arose out of and in the course of his employment with Exelon Nuclear Security, LLC
2015 IL App (2d) 141090(ENS), and that Rick filed and settled a workers’ compensation claim against ENS. ENS is a
Delaware limited liability company organized pursuant to an agreement (the LLC Agreement)
making defendant the sole member of ENS. ENS provided security services on defendant’s
premises pursuant to a contract with defendant. Additional relevant facts will be set forth in our
analysis of the issue raised on appeal.
¶3 At the outset, we note that, although defendant’s motion to dismiss did not indicate that it
was brought pursuant to any particular provision of the Code of Civil Procedure (the Code) (735
ILCS 5/1-101 et seq. (West 2012)), the motion was, in substance, brought pursuant to section 2-
619 of the Code (735 ILCS 5/2-619 (West 2012)). Section 2-619 provides that an action may be
dismissed, on the motion of the defendant, based on various enumerated defenses (735 ILCS 5/2-
619(a)(1)-(8) (West 2012)) or “other affirmative matter avoiding the legal effect of or defeating
the claim” (735 ILCS 5/2-619(a)(9) (West 2012)). A section 2-619 motion must be supported by
affidavits establishing grounds for dismissal that do not appear on the face of the complaint. 735
ILCS 5/2-619(a) (West 2012); Becker v. Zellner, 292 Ill. App. 3d 116, 124 (1997). As our
supreme court has noted, “[a]n appeal from a section 2-619 dismissal is similar to an appeal
following a grant of summary judgment, and both are subject to de novo review.” Raintree
Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 254 (2004). The question on appeal is
“whether the existence of a genuine issue of material fact should have precluded the dismissal or,
absent such an issue of fact, whether the dismissal is proper as a matter of law.” Id.¶4 Under section 1(a)(3) of the Act (820 ILCS 305/1(a)(3) (West 2012)), an employer “is
liable to pay compensation to his own immediate employees ***, and in addition thereto if he
directly or indirectly engages any contractor whether principal or sub-contractor to do any such
work, he is liable to pay compensation to the employees of any such contractor or sub-contractor
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2015 IL App (2d) 141090unless such contractor or sub-contractor has insured, in any company or association authorized
under the laws of this State to insure the liability to pay compensation under this Act, or
guaranteed his liability to pay such compensation.” In its motion to dismiss, defendant
contended that it was undisputed that it had engaged ENS as a contractor to provide security
services on defendant’s premises. Defendant argued that it was “the employer who paid
workers’ compensation benefits for the plaintiff Rick Burge” and that, pursuant to section 5(a) of
the Act (820 ILCS 305/5(a) (West 2012)), plaintiffs could not maintain a common-law action
against defendant. Section 5(a) provides, in pertinent part:
“No common law or statutory right to recover damages from the employer, his insurer,
his broker, any service organization retained by the employer, his insurer or his broker to
provide safety service, advice or recommendations for the employer or the agents or
employees of any of them for injury or death sustained by any employee while engaged
in the line of his duty as such employee, other than the compensation herein provided, is
available to any employee who is covered by the provisions of this Act, to any one
wholly or partially dependent upon him, the legal representatives of his estate, or any one
otherwise entitled to recover damages for such injury.” Id.¶5 In support of its motion, defendant submitted the affidavit of Christine M. Wendt, the
workers’ compensation manager of the benefits department for Exelon Business Services
Company. Wendt averred that she oversaw “the entire Exelon-related system of workers’
compensation benefits.” According to Wendt’s affidavit, defendant used a third-party
administrator/payor for workers’ compensation benefits and “paid all monies for the [ENS
account] made to or on the behalf of Rick Burge.” Wendt averred that defendant “paid the
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2015 IL App (2d) 141090worker’s compensation benefits of any/all employees of [ENS], including [Rick], as it was
obligated to do under [section 1(a)(3) of the Act].” (Emphasis added.)
¶6 In their written response to defendant’s motion, plaintiffs relied, in part, on Laffoon v.
Bell & Zoller Coal Co., 65 Ill. 2d 437, 447 (1976), where our supreme court held that section
5(a) “confer[s] immunity upon employers only from common law or statutory actions for
damages by their immediate employees.” (Emphasis added.) Confronted with that legal
authority, defendant stated in its reply to plaintiffs’ response that its prior reference to its “
‘obligations’ ” under section 1(a)(3) was “merely to the fact [that] the Act requires there to be
coverage for workers/employees generally and [was] in no means intended to imply that [ENS]
was uninsured.” Defendant claimed, however, that it had reimbursed ENS for workers’
compensation payments to ENS employees. Citing Ioerger v. Halverson Construction Co., 232
Ill. 2d 196 (2008), and Villa v. Arthur Rubloff & Co. of Illinois, 183 Ill. App. 3d 746 (1989),
defendant argued that, because it had reimbursed ENS for workers’ compensation payments, and
because of its authority to manage ENS’s affairs, it was cloaked with the same immunity as ENS.
Defendant submitted a supplemental affidavit from Wendt stating that ENS was self-insured and
that “[t]hrough the [LLC Agreement defendant] paid the workers’ compensation benefits of
any/all [ENS employees], including [Rick], on a reimbursement basis.”
¶7 Plaintiffs filed a surreply, in which they argued that Wendt’s affidavits consisted of
conclusions rather than facts within her personal knowledge. Defendant responded that Wendt,
as manager of “the entire Exelon-related system of workers’ compensation,” had personal
knowledge of the matters stated in her affidavits. Defendant further argued that the evidence
established that defendant and ENS were “a ‘joint venture’ as described in the Ioerger case and
have an ‘agency’ relationship as described in the Villa case.” Defendant reasoned that “[a]s in
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2015 IL App (2d) 141090both [Ioerger and Villa] the Defendant and [ENS] are so closely related that both are entitled to
the grant of immunity afforded by [section 5(a) of the Act] and that grant is completely
consistent with the intent of the Act.”
¶8 On appeal, plaintiffs argue that defendant was not Rick’s employer and that, to enjoy
immunity under section 5(a) from liability in a common-law negligence lawsuit, defendant must
establish at least that it was legally responsible for payment of workers’ compensation benefits to
Rick. Plaintiffs assert that Wendt “may be qualified to testify that Defendant actually footed the
bill for [Rick’s] benefits, but not that it was required to do so.” Defendant responds that it is
entitled to immunity as the agent of Rick’s employer (ENS), regardless of who paid or was
obligated to pay workers’ compensation to Rick. According to defendant, any defects in
Wendt’s affidavits were immaterial.
¶9 It is true that section 5(a) of the Act bars lawsuits against an employer’s agents. 820
ILCS 305/5(a) (West 2012). However, we disagree with defendant’s assertion that it was ENS’s
agent. Defendant relies on the powers conferred upon it by the LLC Agreement, which provides,
in pertinent part:
“Management. The Management of [ENS] shall be vested in the sole member, Exelon
Generation Company, LLC. The Member shall have exclusive authority over the
business and affairs of [ENS] and shall have the full power and authority to authorize,
approve or undertake any action on behalf of [ENS] and to bind [ENS], without the
necessity of a meeting or other consultation. In connection with the foregoing, the
Member is authorized and empowered:
a. to appoint, by written designation filed with the records of [ENS], one or more
persons to act on behalf of [ENS] as officers of [ENS] with such titles as may be
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2015 IL App (2d) 141090appropriate including the titles of President, Vice President, Treasurer, Secretary
and Assistant Secretary, and
b. to delegate any and all power and authority with respect to the business and
affairs of [ENS] to any individual or entity including any officers and employees
of [ENS]. In the absence of appointment of officers, agents and employees of
[ENS] shall have such power and authority to act on behalf of [ENS], as shall be
conferred by the Member.”
Quoting Villa, 183 Ill. App. 3d at 750, defendant argues that “[u]nder Illinois law, an agent is one
who acts under authority from another to transact business for him or manage his affairs and who
is required to act for the other.” The argument is unpersuasive. It is well established that “[a]n
agency is a fiduciary relationship in which the principal has the right to control the agent’s
conduct and the agent has the power to act on the principal’s behalf.” Powell v. Dean Foods Co.,
2013 IL App (1st) 082513-B, ¶ 65. We find nothing in the LLC Agreement that gives ENS any
right to control defendant. Indeed, quite the opposite appears to be true. Because ENS has no
right to control defendant, defendant is not ENS’s agent.
¶ 10 The question we are left with is whether defendant’s role, if any, in paying Rick’s
workers’ compensation settlement confers immunity, pursuant to section 5(a), from a common-
law action for damages. To answer this question, it is necessary first to consider the principles
set forth in Ioerger and an earlier decision from our supreme court, Forsythe v. Clark USA, Inc.,
224 Ill. 2d 274 (2007).
¶ 11 In Forsythe, the plaintiffs brought wrongful-death actions against the defendant. The
decedents, who were employees of a wholly owned subsidiary of the defendant, died in a fire at a
refinery. Id. at 278. The fire allegedly occurred when other employees of the defendant’s
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2015 IL App (2d) 141090subsidiary attempted to replace a valve on a pipe without ensuring that flammable materials
within the pipe had been depressurized. Id. The plaintiffs alleged that the employees who
attempted to replace the valve were not qualified to do so. The plaintiffs further alleged that, as
part of its overall budgetary strategy, the defendant required its subsidiary to engage in cost-
cutting measures that prevented the subsidiary from properly training its employees and keeping
the premises in a safe condition. Id. The defendant argued that it was merely a holding company
and owed no duty to the employees of its subsidiary. Id. at 279. The trial court entered summary
judgment for the defendant. Id. Our supreme court concluded that the defendant could
potentially be held liable under a theory of active-participant liability. The court held that
“[w]here there is evidence sufficient to prove that a parent company mandated an overall
business and budgetary strategy and carried that strategy out by its own specific direction or
authorization, surpassing the control exercised as a normal incident of ownership in disregard for
the interests of the subsidiary, that parent company could face liability.” (Emphasis in original.)
Id. at 290.
¶ 12 The Forsythe court concluded that there were genuine issues of material fact and the
defendant was not entitled to judgment as a matter of law on the question of active-participant
liability. More significantly for present purposes, the Forsythe court rejected the defendant’s
argument that section 5(a) of the Act immunized it from active-participant liability for injuries to
workers employed by its subsidiary. In essence, the defendant asked to be treated as the
decedents’ employer on the basis that imposing active-participant liability would be equivalent to
piercing the corporate veil. The Forsythe court rejected the argument:
“Direct participant liability, as we now recognize it, does not rest on piercing the
corporate veil such that the liability of the subsidiary is the liability of the parent. On the
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2015 IL App (2d) 141090contrary, this form of liability is asserted, as its name suggests, for a parent’s direct
participation, superseding the discretion and interest of the subsidiary, and creating
conditions leading to the activity complained of. ***
In essence, defendant is requesting that it be allowed to pierce its own corporate
veil in order to avoid liability. Illinois courts have consistently expressed reluctance for
allowing such a practice. [Citations.] The appellate court in this case recognized this
point when it rejected defendant’s attempt ‘to have its cake and eat it too: asserting, on
the one hand, that it was merely a shareholder in arguing that it owed no duty to the
decedents, while, at the same time, attempting to invoke the Act’s grant of immunity by
characterizing itself as the decedents’ employer.’ [Citation.]
***
*** It was [the subsidiary], not defendant, who paid workers’ compensation
benefits to the decedents’ families. It was [the subsidiary], not defendant, who actually
employed the decedents. As such it is [the subsidiary], not [the defendant], that should
enjoy the exclusive remedy provision of the *** Act. We decline to allow [the
defendant] to pierce its own corporate veil. Accordingly, the *** Act does not immunize
defendant from liability.” Id. at 297-98.
¶ 13 In contrast, in Ioerger, the court held that a joint venture was entitled to section 5(a)
immunity from liability for injuries to employees of one of the two corporations engaged in the
joint venture. After first concluding that the joint venture was entitled to immunity based on its
agency relationship with the corporation that employed the injured workers, the Ioerger court
held that the joint venture should also enjoy immunity because it was obligated under the joint-
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2015 IL App (2d) 141090venture agreement to pay workers’ compensation for the employees of both corporations. The
Ioerger court reasoned as follows:
“We observed in Forsythe [citation], 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.
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.” (Emphasis added.) Ioerger, 232
Ill. 2d at 203.
While one of the two corporations was responsible for the performance of all labor for the joint
venture and for the payment of premiums for workers’ compensation insurance, that corporation
was entitled to reimbursement from the joint venture pursuant to the terms of the agreement. Id.
at 204. Because the joint venture had the “[u]ltimate responsibility” for payment of the
premiums, “it was entitled to avail itself of the Act’s exclusive remedy provisions.” Id.¶ 14 We agree with plaintiffs that the reasoning in Ioerger depends on the existence of some
preexisting legal obligation to pay, or reimburse another payor, for compensation due under the
Act or for premiums for workers’ compensation insurance. The Act makes no provision for an
entity that is legally distinct from the employer to unilaterally insulate itself against liability for
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2015 IL App (2d) 141090negligence. To allow such an entity to do so would be particularly problematic where the
employer is self-insured and a separate entity could thus make reimbursement decisions on a
case-by-case basis. In Forsythe, our supreme court observed:
“[Section 5(a)] serves a balancing function. On the one hand, the Act establishes a new
‘system of liability without fault, designed to distribute the cost of industrial injuries
without regard to common-law doctrines of negligence, contributory negligence,
assumption of risk, and the like.’ [Citation.] On the other hand, the Act imposes
‘statutory limitations upon the amount of the employee’s recovery, depending upon the
character and the extent of the injury’ and provides ‘that the statutory remedies under it
shall serve as the employee’s exclusive remedy if he sustains a compensable injury.’
[Citation.]” Forsythe, 224 Ill. 2d at 296.
If the system is to maintain this balance, an entity cannot be permitted to choose whether to be
treated like an employer or like a third party, depending on what appears the most to its
advantage in a particular case.
¶ 15 Thus, we agree with plaintiffs that immunity under section 5(a) of the Act cannot be
predicated on defendant’s payment of workers’ compensation unless defendant was under some
legal obligation to pay (such as the contractual obligation imposed by the joint-venture
agreement in Ioerger). We also agree with plaintiffs that the evidence on this point, to wit,
Wendt’s affidavits, falls short of establishing such an obligation.
¶ 16 Illinois Supreme Court Rule 191(a) (eff. Jan. 4, 2013) provides that affidavits in support
of a section 2-619 motion “shall be made on the personal knowledge of the affiants; shall set
forth with particularity the facts upon which the claim, counterclaim, or defense is based; shall
have attached thereto sworn or certified copies of all documents upon which the affiant relies;
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2015 IL App (2d) 141090shall not consist of conclusions but of facts admissible in evidence; and shall affirmatively show
that the affiant, if sworn as a witness, can testify competently thereto.”
¶ 17 Wendt’s initial affidavit stated that defendant paid workers’ compensation benefits to
ENS employees “as it was obligated to do under [section 1(a)(3) of the Act].” However, in her
supplemental affidavit she stated that ENS was self-insured but that defendant reimbursed it
“through” the LLC Agreement. To the extent that the word “through” is meant to imply that the
LLC Agreement imposed a legal obligation upon defendant, it is a conclusion rather than a fact
admissible in evidence. Moreover, the LLC Agreement, which is part of the record on appeal,
says nothing about the obligation to provide workers’ compensation insurance for ENS’s
employees.
¶ 18 Accordingly, defendant has failed to establish a basis for claiming immunity under
section (5)(a) of the Act, and it was error to dismiss plaintiffs’ complaint.
¶ 19 For the foregoing reasons, we reverse the judgment of the circuit court of Ogle County
and remand for further proceedings.
¶ 20 Reversed and remanded.
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