Bosio v. Branigar Organization, Inc.

• Decision Date: 09 April 1987
• Docket Number: No. 2-86-0847,2-86-0847
• Citation: 506 N.E.2d 996,154 Ill.App.3d 611,107 Ill.Dec. 105
• Parties: , 107 Ill.Dec. 105 Anthony BOSIO, Plaintiff, v. The BRANIGAR ORGANIZATION, INC., an Illinois corporation, Defendant and Third-Party Plaintiff-Appellant (E.M. Melahn Construction Co., a Delaware corporation, Third-party Defendant-Appellee; W.A. Rakow & Associates, Ltd., Third-Party Defendant).
• Court: United States Appellate Court of Illinois

Page 996

506 N.E.2d 996

154 Ill.App.3d 611, 107 Ill.Dec. 105

Anthony BOSIO, Plaintiff, v. The BRANIGAR ORGANIZATION, INC., an Illinois corporation,

Defendant and Third-Party Plaintiff-Appellant (E.M. Melahn

Construction Co., a Delaware corporation, Third-party

Defendant-Appellee; W.A. Rakow & Associates, Ltd.,

Third-Party Defendant).

No. 2-86-0847.

Appellate Court of Illinois,

Second District.

April 9, 1987.

Sweeney & Riman, James J. Graney, Chicago, for third-party plaintiff-appellant.

Puckett, Barnett, Larson, Mickey, Wilson & Ochsenschlager, John R. Wienold, Aurora, for third-party defendant-appellee.

Justice REINHARD delivered the opinion of the court:

Branigar Organization, Inc. (Branigar) appeals from the dismissal of the breach of contract count of its third-party complaint against E.M. Melahn Construction Co. (Melahn). The single issue raised is whether the contract provision which required Melahn to provide public liability insurance for Branigar's benefit was enforceable under a statute which makes indemnification agreements in construction contracts void and unenforceable.

Plaintiff, Anthony Bosio, an employee of Melahn, filed a two-count complaint against Branigar alleging that he was injured while working on Branigar's premises when a ditch caved in. He alleged negligence and a violation of the Structural Work Act (Ill.Rev.Stat.1977, ch. 48, par. 60 et seq.). Branigar filed a third-party complaint against W.A. Rakow & Associates, Ltd., the engineer who provided the specifications for the construction project, and later filed a third-party complaint against Melahn. The complaint against Melahn alleged that Branigar was entitled to indemnification and contribution from Melahn, and, in count III, alleged that Melahn was obligated under their construction contract to defend and insure Branigar against plaintiff's suit. Branigar alleged that Melahn breached the contract by failing to defend and hold Branigar harmless.

A copy of the contract, dated December 19, 1977, was attached to the third-party complaint. The construction contract provided, in pertinent part:

"The CONTRACTOR further agrees that it will save and keep harmless the OWNER [Branigar] from any and all claims that may arise on the part of any of its employees, agents or servants, by reason of injury, death or any claim while in pursuit of this contract and that all employees, agents or servants of the CONTRACTOR shall in no manner be construed to be employees of the OWNER.

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The CONTRACTOR shall furnish public liability insurance in the principal sum of $100,000.00 to $300,000.00 with insurance carrier thereon satisfactory to the OWNER, indemnifying and saving harmless the OWNER from any and all personal injury claims arising thereunder by reason of the performance of this contract."

Melahn filed a motion to dismiss in which it argued, in pertinent part, that the part of the agreement which required Melahn to provide public liability insurance indemnifying Branigar and saving it harmless, relied on by Branigar in its breach of contract count, is unenforceable under section 1 of "An Act in relation to indemnity in certain contracts" (Act) (Ill.Rev.Stat.1985, ch. 29, par. 61). The court granted Melahn's motion to dismiss as to the indemnification and breach of contract counts. The court found that the contract provision relied on by Branigar was void under the statute.

Branigar maintains on appeal that the trial court erred in dismissing its breach of contract count against Melahn because construction contract provisions requiring a contractor to obtain liability insurance for an owner are not invalid under the statute.

Section 1 of the Act states:

"With respect to contracts or agreements, either public or private, for the construction, alteration, repair or maintenance of a building, structure, highway bridge, viaducts or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise or agreement to indemnify or hold harmless another person from that person's own negligence is void as against public policy and wholly unenforceable." (Ill.Rev.Stat.1985, ch. 29, par. 61.)

Our supreme court has stated that this section serves to protect the construction worker and the general public from suffering construction-related injuries by encouraging accident prevention measures. (Capua v. W.E. O'Neil Construction Co. (1977), 67 Ill.2d 255, 260, 10 Ill.Dec. 216, 367 N.E.2d 669; Davis v. Commonwealth Edison Co. (1975), 61 Ill.2d 494, 499, 336 N.E.2d 881.) The statute voids, as against public policy, indemnification provisions in construction contracts relieving a person from liability for his own negligence. (See Lohman v. Morris (1986), 146 Ill.App.3d 457, 460, 100 Ill.Dec. 263, 497 N.E.2d 143.) There is no dispute that the separate indemnification provision in the contract here is unenforceable based on section 1 of the Act. The issue presented is whether the other clause in the contract requiring Melahn to furnish public liability insurance is likewise unenforceable as an indemnification agreement.

Under the Act, an agreement for indemnity for one's own negligence will be enforced if it is found in a construction bond or an insurance contract. (Champagnie v. W.E. O'Neil Construction Co. (1979), 77 Ill.App.3d 136, 142, 32 Ill.Dec. 609, 395 N.E.2d 990; see Ill.Rev.Stat.1985, ch. 29, par. 63.) Section 3 of the Act provides:

"This Act does not apply to construction bonds or insurance contracts or agreements." (Ill.Rev.Stat.1985, ch. 29, par. 63.)

This section, however, does not apply to the situation here as an agreement to obtain insurance in a construction contract is not an insurance contract or an agreement of insurance. Zettel v. Paschen Contractors, Inc. (1981), 100 Ill.App.3d 614, 617, 56 Ill.Dec. 109, 427 N.E.2d 189.

The court in Capua v. W.E. O'Neil Construction Co. (1977), 67 Ill.2d 255, 10 Ill.Dec. 216, 367 N.E.2d 669, in holding that indemnity and hold-harmless agreements in construction bonds are valid under the Act, discussed favorably an agreement in a construction contract requiring a contractor to post a construction bond in which the contractor agrees to indemnify or hold harmless the owner. The court stated that such a requirement would allow an injured worker to look to the surety for satisfaction of his claim if the owner is unable to satisfy his liability. The court concluded that this furthers the purpose of the Act to protect the interests of the construction worker and the general public by preserving a potential source of compensation for injured workers, noting that there will be times when a worker will be unable to recover from the owner or contractor, as when the defendant is insolvent or the damages are too...