Jentz v. Conagra Foods, Inc.
| Decision Date | 06 August 2012 |
| Docket Number | 11-CV-0391-MJR,10-CV-0952-MJR,10-CV-0474-MJR |
| Parties | JOHN W. JENTZ, PLAINTIFF, v. CONAGRA FOODS, INC. AND WEST SIDE SALVAGE, INC., DEFENDANTS. JUSTIN AND AMBER BECKER, PLAINTIFFS, v. CONAGRA FOODS, INC., DEFENDANT. ROBERT SCHMIDT, PLAINTIFF, v. CONAGRA FOODS, INC. AND WEST SIDE SALVAGE, INC., DEFENDANTS. |
| Court | U.S. District Court — Southern District of Illinois |
(Lead case)
I. Introduction
A jury trial commenced in this consolidated action on May 8, 2012, and concluded on June 1, 2012. On June 11, the Court provided the parties with a draft Judgment, allowing them until June 18 to object to the form of the Judgment (Doc. 486).
On June 18, Defendant ConAgra Foods, Inc., filed its Objection to the Court's form of Judgment (Doc. 490). Among ConAgra's proposed amendments was the addition of Paragraph 9: "Becker - ConAgra vs. West Side third Party Complaint for Contribution; Kotecki waiver."1
The Kotecki issue was first raised on January 20, 2012, when ConAgra moved for summary judgment on its third-party complaint against West Side Salvage, Inc., on the basis that West Side had waived any protections limiting its liability for contribution under Kotecki v. Cyclops Welding Corp., 585 N.E.2d 1023 (Ill. 1992). Finding that a genuine issue ofmaterial fact existed as to whether the April 19, 2010 contract was fully executed and governed the parties' relationship, the Court denied ConAgra's motion as to whether the contract was enforceable and reserved as to the Kotecki waiver (Doc. 403). On June 1, the jury found that ConAgra had proven that the April 19, 2010 contract between ConAgra and West Side was valid and awarded ConAgra $3,000,000.00 in damages for property damage.
The issues pending before the Court are (1) whether West Side agreed to the indemnification provision in the contract and knowingly bargained away its Kotecki protection; (2) whether ConAgra waived or abandoned its claim for contractual indemnification; (3) whether Illinois or Iowa law should apply to the issue; (4) whether the language of the indemnification clause constitutes a Kotecki waiver; and (5) whether the judgment should specify that liability is joint and several.
II. Discussion
West Side contends that there cannot be a finding of waiver because there is no evidence that it knowingly bargained away its Kotecki protection and, in fact, that testimony established the opposite. West Side submits that Ken Langham testified that he signed the contract without reading the terms and conditions and without understanding what he was signing. At trial, ConAgra questioned West Side's President Gene Schwers for hours without asking a single question about contract negotiations,execution or whether West Side intended to waive the Kotecki cap. West Side also asserts that the testimony of ConAgra's contract administrator, Cathy Rihanek, who stated that West Side had to sign the contract to get paid, shows that there was no bargained-for exchange. Lastly, West Side submits that ConAgra presented the jury with very specific questions regarding what West Side was required to do under the contract but did not ask the jury to decide whether and to what extent West Side agreed to the indemnity provision.
So, in essence, West Side asks the Court to strike the clause or render it a nullity. The jury decided that the April 2010 contract was valid and enforceable, so the Court's analysis begins with how Illinois courts interpret a contract.
Under Illinois law, "[a] contract must be construed as a whole, viewing each provision in light of the other provisions." Reserve at Woodstock, LLC v. City of Woodstock, 958 N.E.2d 1100, 1111-12, (Ill.App.Ct. 2011), citing Thompson v. Gordon, 948 N.E.2d 39 (Ill. 2011). "The parties' intent is not ascertained by viewing a clause or provision in isolation, or by looking at detached portions of the contract." Id., citing Thompson, 948 N.E.2d 39; Hot Light Brands, LLC v. Harris Realty, Inc., 912 N.E.2d 258 (Ill.App.Ct. 2009) (). Or, summing up succinctly, contract interpretation "is not a smorgasbord at which you take what you like and leave what does not appeal to your tastes." Wells Fargo Funding v. Draper & Kramer Mortg. Corp., 608 F.Supp.2d 981, 987 (N.D.Ill. 2009).
As required by Illinois law and the basic principles of contract interpretation, the Court must give full meaning and effect to every provision of the April 2010 contract and may not interpret the contract in a manner that would nullify a provision. In short, the indemnification clause is valid and enforceable.
West Side asserts that by not presenting evidence and not asking the jury to decide the factual issue of whether and to what extent West Side agreed to indemnify ConAgra, ConAgra waived its opportunity to have the legal issue of whether West Side waived its Kotecki protection decided by this Court as a matter of law. The undersigned Judge agrees that ConAgra waived or abandoned its claim for contractual indemnification. But it does not follow that ConAgra waived its claim that West Side waived its Kotecki protection. That is discussed below.
ConAgra presented no evidence on indemnification and did not ask the jury to decide the factual issue through an offered jury instruction. As a result, ConAgra waived or abandoned its claim for contractual indemnification, which was included in Count IV of ConAgra's Second Amended Cross-claim against West Side (Doc. 435).
West Side submits that Iowa law arguably applies to the issue before the Court. Citing Moore v. Wausau Club v.Dick Judson Orchestras, Inc., 777 F.Supp. 619, 621 (N.D.Ill. 1991), West Side contends that the place of the employer's benefits coverage is the single most important factor in determining which state's workers' compensation law to apply. Under Iowa law, ConAgra's contribution claim fails because contribution claims by a third-party tortfeasor against a plaintiff's employer are not permitted. According to West Side, since Becker's workers' compensation coverage is based in Iowa, Iowa law must be applied to his workers' compensation claim.
Even if West Side were correct, its argument fails because it did not raise the issue in a timely manner and has repeatedly invoked Illinois law in defending against ConAgra's third-party claim. West Side did not raise this defense in its Answer to ConAgra's Complaint or to its Second Amended Complaint (Docs. 134, 160). In West Side's response to ConAgra's motion for summary judgment (Doc. 186), it invoked the protection of Illinois law under Kotecki and made no mention of Iowa law.
The Federal Rules of Civil Procedure require parties to raise all affirmative defenses at the pleadings stage. "Failure to plead an affirmative defense may result in waiver of that defense." Fort-Greer v. Daley, 228 Fed.Appx. 602, 603-04 (7th Cir. 2007). "The person served with thesummons and third-party complaint ... must assert any defense against the third-party plaintiff's claim under Rule 12;..." Fed. R. Civ. P. 14(a)(2)(A). With certain exceptions not relevant here, "[e]very defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required." Fed. R. Civ. P. 12(b). While the Court may allow a defense to be asserted later and give the plaintiff the opportunity to respond, Fort-Greer, 228 Fed.Appx. at 604, in this instance where the action has been tried to verdict, it is far too late to allow West Side to invoke Iowa law.
West Side has throughout the case inconsistently taken the position that Illinois law applies, particularly in relying on Kotecki.2 "'It is fundamental to our adversarial process that a party waives his right to complain of an error where to do so is inconsistent with the position taken by the party in an earlier court proceeding.'" Sbarboro v. Vollala, 911 N.E.2d 553, 564 (Ill.App.Ct. 2009), quoting McMath v. Katholi, 730 N.E.2d 1 (Ill. 2000), quoting Auton v. Logan Landfill, Inc., 475 N.E.2d 817 (Ill. 1984). It would be manifestly unfair and prejudicial for the Courtto...
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