Burge v. Exelon Generation Company, LLC , 2015 IL App (2d) 141090 ( 2015 )

Illinois Official Reports
Appellate Court
Burge v. Exelon Generation Co., 2015 IL App (2d) 141090
Appellate Court RICK BURGE and NELDA M. BURGE, Plaintiffs-Appellants, v.
Caption EXELON GENERATION COMPANY, LLC, Defendant-Appellee.
District & No. Second District
Docket No. 2-14-1090
Filed July 30, 2015
Decision Under Appeal from the Circuit Court of Ogle County, No. 12-L-8; the Hon.
Review John B. Roe, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Elizabeth Uhrich and Louis F. Pignatelli, both of Pignatelli &
Appeal Associates, P.C., of Rock Falls, for appellants.
Daniel G. Wills and Jonathan R. Walton, both of Swanson, Martin &
Bell, LLP, of Chicago, and Donna R. Honzel, of Mateer Goff &
Honzel LLP, of Rockford, for appellee.
Panel 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 (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
(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 (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 unless 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
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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
worker’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
both [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
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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 appropriate 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
subsidiary 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
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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 contrary, 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-venture 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
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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 negligence. 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; shall
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
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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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