Flora v. Home Federal Sav. and Loan Ass'n, No. 81-2912

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before ESCHBACH, POSNER and COFFEY; COFFEY
• Citation: 685 F.2d 209
• Parties: Howard M. FLORA and Virginia Flora, Plaintiffs-Appellants, v. HOME FEDERAL SAVINGS AND LOAN ASSOCIATION, et al., Defendants-Appellees. HOME FEDERAL SAVINGS AND LOAN ASSOCIATION, Counter-Plaintiff-Appellee, v. Howard M. FLORA, doing business as Flora Construction Company, Counter- Defendant.
• Docket Number: No. 81-2912
• Decision Date: 09 August 1982

Page 209

685 F.2d 209 Howard M. FLORA and Virginia Flora, Plaintiffs-Appellants,
v.
HOME FEDERAL SAVINGS AND LOAN ASSOCIATION, et al.,
Defendants-Appellees.
HOME FEDERAL SAVINGS AND LOAN ASSOCIATION, Counter-Plaintiff-Appellee,
v.
Howard M. FLORA, doing business as Flora Construction
Company, Counter- Defendant. No. 81-2912. United States Court of Appeals,
Seventh Circuit. Argued June 14, 1982.
Decided Aug. 9, 1982.

Page 210

John J. Henely, Cooney & Stenn, Chicago, Ill., for plaintiffs-appellants.

Cornelius F. Dore, Dore & Clark, Chicago, Ill., for defendants-appellees.

Before ESCHBACH, POSNER and COFFEY, Circuit Judges.

COFFEY, Circuit Judge.

In this case we are asked to decide whether Howard Flora, a sole proprietor who (1) contracted with Home Federal Savings and Loan Association to work on a building it owned and (2) was injured while doing the work, could continue to maintain an Illinois Structural Work Act action against Home Federal, after Flora's sole proprietorship, Flora Construction Company, was found to have been the active tortfeasor and thus responsible for indemnifying Home Federal for any liability under the Act. We conclude that, because Flora and his sole proprietorship are a single legal entity for purposes of the Structural Work Act, it was in fact Flora who was charged with liability, and thus he could not continue to maintain the action.

The events giving rise to this appeal are as follows. The plaintiff, Howard Flora, doing business as the Flora Construction Company, was engaged as a contractor in a project at the offices of the defendant, Home Federal Savings and Loan Association. During the course of the project, Flora directed several of his employees to erect scaffolding at the job site. Subsequently, while working on the scaffolding his men had erected, Flora fell and sustained injuries. As a result, the plaintiffs (Flora and his wife) brought this diversity action against the owner of the building and the architects of the project, charging them with wilful violations of the Structural Work Act, Ill.Rev.Stat. ch. 48, par. 60 et seq. ¹ The defendants filed counterclaims against Flora seeking indemnification for any liability. On October 29, 1981, the court granted the defendants' motions for summary judgment on the counterclaims, finding that "Flora was responsible for his own injuries." Further, on November 10, the court, acting sua sponte after a review of the "amended complaint and all the other pleadings," dismissed the action.

In this appeal the plaintiffs do not contest the district court's grant of summary judgment on the indemnification counterclaims. ² Rather, they challenge the subsequent step taken by the court: sua sponte dismissal of the entire action. The plaintiffs object to that disposition on two grounds: first, that there was no substantive basis for the court's dismissal; and second, that the court's sua sponte action was not proper under the Federal Rules of Civil Procedure and thus unfair.

A

The plaintiffs' initial challenge to the court's dismissal is based on the premise that Flora has a "dual capacity" for purposes of the Act; that even though he is responsible, doing business as Flora Construction Company, for indemnification as an "employer," he cannot be barred from bringing an action as an "employee," see Palier v. Dreis & Krump Mfg. Co., 81 Ill.App.2d 1, 225 N.E.2d 67 (1st Dist. 1967) (an indemnification action under the Act may not run against an "employee"). This argument is an extrapolation from the district court's suggestion, in its order permitting the owner's counterclaim, that Howard Flora (the sole proprietor) and Flora Construction

Page 211

Company (the sole proprietorship) are separate legal entities. We hold, however, that regardless of whether such a bifurcation was justified for procedural purposes, it is meaningless under the substantive terms...