Braye v. Archer-Daniels-Midland Co.

Decision Date06 February 1997
Docket NumberARCHER-DANIELS-MIDLAND,No. 80383,80383
Citation676 N.E.2d 1295,175 Ill.2d 201,222 Ill.Dec. 91
Parties, 222 Ill.Dec. 91 Curtis BRAYE v.COMPANY, Appellant (All Tri-R, Inc., Appellee).
CourtIllinois Supreme Court

Frederic L. Kenney of Winters, Featherstun, Gaumer, Kenney, Postlewait & Stocks, Decatur, for appellant.

Alexander M. Wilson, Edwardsville, for appellee.

Justice McMORROW delivered the opinion of the court:

This interlocutory appeal arises from two questions which were certified by the circuit court pursuant to Supreme Court Rule 308 (155 Ill.2d R. 308). First, we are asked to determine whether the liability cap provided to an employer who has paid an injured employee's workers' compensation benefits (Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991)) may be waived by contract. We also are asked to determine whether the alleged contractual language at issue in the case at bar operates as a waiver of the Kotecki cap or whether it is void for being in violation of the Construction Contract Indemnification for Negligence Act (740 ILCS 35/0.01 et seq. (West 1994)).

BACKGROUND

On June 12, 1991, the plaintiff, Curtis Braye, sustained injuries after falling from a motorized scaffold, while working as a welder on a construction site at Archer-Daniels-Midland's (ADM) manufacturing facility in Decatur, Illinois. Braye filed a workers' compensation claim against his employer, All Tri-R, Inc., which was settled for $172,000. In 1993, Braye filed an action against ADM alleging violations of the Structural Work Act (Ill.Rev.Stat.1989, ch. 48, par. 60 et seq. (subsequently 740 ILCS 150/0.01 et seq. (West 1992)) (repealed by Pub. Act 89-2, eff. February 14, 1995)), and common law negligence.

In February of 1994, ADM filed its answer to Braye's complaint as amended, denying the allegations. ADM also filed a third-party action against All Tri-R, seeking contribution pursuant to the Joint Tortfeasor Contribution Act (Ill.Rev.Stat.1989, ch. 70, par. 301 et seq.). In its initial prayer for relief, ADM sought contribution in an amount commensurate with All Tri-R's relative degree of culpability in proximately causing Braye's injuries, but not to exceed All Tri-R's maximum liability under the Workers' Compensation Act (820 ILCS 305/1 et seq. (West 1992)), consistent with this court's decision in Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991). In Kotecki, this court held that an employer's contribution liability to a third-party plaintiff is limited to the amount of workers' compensation benefits paid to the injured employee. Kotecki, 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023.

In March of 1995, ADM filed a motion for leave to amend its request for contribution from All Tri-R, now seeking an amount commensurate with All Tri-R's relative degree of culpability and no longer limited by All Tri-R's workers' compensation liability. 1 ADM premised its motion to amend on a purchase order which allegedly governed the work in question. The purchase order states, in pertinent part:

"If [All Tri-R's] work under the order involves operations by [All Tri-R] on the premises of [ADM] or one of its customers, [All Tri-R] shall take all necessary precautions to prevent the occurrence of any injury to person or damage to property during the progress of such work and, except to the extent that any such injury or damage is due solely and directly to [ADM's] or its customer's negligence, as the case may be, [All Tri-R] shall pay [ADM] for all loss which may result in any way from any act or omission of [All Tri-R], its agents, employees or subcontractors."

ADM maintained that because this language evidenced All Tri-R's intent to remain liable for all loss resulting from All Tri-R's own negligence, ADM should be permitted to file its amended request for contribution from All Tri-R without the limitation announced in Kotecki. ADM argued that the purchase order established that All Tri-R had bargained away any potential limit on its contribution liability in a third-party action, including the limit set forth in Kotecki. Additionally, ADM urged the circuit court to follow Herington v. J.S. Alberici Construction Co., 266 Ill.App.3d 489, 203 Ill.Dec. 348, 639 N.E.2d 907 (1994), where the court held that an employer is free to forgo the protection of the Kotecki cap by virtue of a contract which preceded the litigation.

All Tri-R responded to ADM's motion to amend by arguing that the purchase order could be read as allowing indemnity for ADM's own negligence and therefore was void and unenforceable under the Construction Contract Indemnification for Negligence Act (Indemnification Act) (740 ILCS 35/0.01 et seq. (West 1994)). All Tri-R maintained that the purchase order was at best ambiguous. As such, All Tri-R argued, the ambiguity must be construed against ADM, which allegedly drafted the purchase order in question. Finally, All Tri-R argued that even if the purchase order did not violate the Indemnification Act, Herington was decided incorrectly.

Following a hearing on the motion, the circuit court concluded that the language of the purchase order did not violate the Indemnification Act. The court also determined that Herington controlled its ruling because Herington recognized that an employer may waive its right to assert Kotecki as a defense to a third-party action for contribution. Accordingly, the court allowed ADM to file an amended third-party complaint seeking contribution from All Tri-R in an amount commensurate with its relative degree of culpability. The court then certified the following questions pursuant to Supreme Court Rule 308 (155 Ill.2d R. 308):

"Whether the liability cap in third-party actions provided to an employer who pays an injured employee's worker['s] compensation benefits may be waived by contract, and if so, whether a contract which states:

'If [All Tri-R's] work under the order involves operations by [All Tri-R] on the premises of [ADM] or one of its customers, [All Tri-R] shall take all necessary precautions to prevent the occurrence of any injury to person or damage to property during the progress of such work and, except to the extent that any such injury or damage is due solely and directly to [ADM's] or its customer's negligence, as the case may be, [All Tri-R] shall pay [ADM] for all loss which may result in any way from any act or omission of [All Tri-R], its agents, employees or subcontractors[ ]'

is an enforceable contract for contribution."

The appellate court answered the first question in the affirmative, holding that an employer is free to decide whether to forgo the Kotecki limit by virtue of a contract. 276 Ill.App.3d 1066, 1070, 213 Ill.Dec. 514, 659 N.E.2d 430. However, the appellate court went on to find that the language of the purchase order was void and unenforceable because it violated the Indemnification Act. 276 Ill.App.3d at 1070-71, 213 Ill.Dec. 514, 659 N.E.2d 430. We granted ADM's petition for leave to appeal. 155 Ill.2d R. 315(a).

ANALYSIS
I

We first address the question of whether the liability cap on an employer's contribution liability in a third-party action may be relinquished by contract. ADM submits that this court should adhere to the holding and rationale in Herington v. J.S. Alberici Construction Co., 266 Ill.App.3d 489, 203 Ill.Dec. 348, 639 N.E.2d 907 (1994). In Herington, the court held that in the context of a third-party action, an employer's promise to pay for liability attributable to its own negligence operated as a waiver of the limitation set forth in Kotecki. Accord Liccardi v. Stolt Terminals (Chicago), Inc., 283 Ill.App.3d 141, 218 Ill.Dec. 666, 669 N.E.2d 1192 (1996). The court reasoned that because an employer may waive the affirmative defense contained in section 11 of the Workers' Compensation Act in a direct action initiated by an employee (Doyle v. Rhodes, 101 Ill.2d 1, 77 Ill.Dec. 759, 461 N.E.2d 382 (1984)), it may also waive the liability limitation announced in Kotecki in anticipation of third-party litigation. ADM maintains that Herington does not undermine Kotecki because it is consistent with the notion that an employer should be able to contract for its potential liability. ADM also contends that the rule in Herington advances two important public policies: the policy which favors holding parties responsible for their contractual obligations, and the policy which favors the allocation of liability according to the parties' relative fault in order to promote workplace safety.

All Tri-R counters, without citation to relevant authority, that the rationale of Herington is flawed because the limitation on an employer's contribution liability set forth in Kotecki cannot be equated with an affirmative defense. All Tri-R further argues that the rule announced in Herington contravenes the Workers' Compensation Act as interpreted by Kotecki. Moreover, All Tri-R contends that Herington was decided erroneously because the Workers' Compensation Act is the sole measure of an employer's liability, regardless of an employer's attempt to modify its rights under the Act. See 820 ILCS 305/11 (West 1994).

We reject All Tri-R's argument that the Kotecki cap cannot be waived by contract. In Doyle v. Rhodes, 101 Ill.2d 1, 77 Ill.Dec. 759, 461 N.E.2d 382 (1984), this court was called upon to determine whether the immunity of an employer from an action at law by an injured employee provided by sections 5(a) and 11 of the Workers' Compensation Act also bars an action for contribution against the employer by a third party who was partially responsible for the employee's injury. Section 11 provides, in relevant part, that the Act "shall be the measure of the responsibility of any employer * * *." 820 ILCS 305/11 (West 1994). This court determined that section 11 is an affirmative defense to a common law action brought by an employee for a work-related injury. Doyle, 101 Ill.2d...

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