Lend Lease (US) Constr. Inc. v. Admin. Emp'r Servs., Inc.

• Decision Date: 20 October 2016
• Docket Number: Nos. 16-1294,16-1739,s. 16-1294
• Citation: 840 F.3d 386 (Mem)
• Parties: Lend Lease (US) Construction Inc., Plaintiff–Appellant, v. Administrative Employer Services, Inc. and Technology Insurance Company, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

840 F.3d 386 (Mem)

Lend Lease (US) Construction Inc., Plaintiff–Appellant,

v.Administrative Employer Services, Inc. and Technology Insurance Company, Inc., Defendants–Appellees.

Nos. 16-1294

16-1739

United States Court of Appeals, Seventh Circuit.

Argued September 16, 2016

Decided October 20, 2016

Theresa A. Guertin, Saxe Doernberger & Vita, P.C., Trumbull, CT, for Plaintiff–Appellant.

David M. Macksey, Joseph R. Marconi, Ramses Jalalpour, Johnson & Bell, Ltd., Chicago, IL, Dennis M. Rothman, Lester Schwab Katz & Dwyer, LLP, New York, NY, for Defendant–Appellee Administrative Employer Services, Inc.

Kevin M. Lougachi, Karbal, Cohen, Economou, Silk & Dunne, Chicago, IL, Tania Gondiosa, Mound Cotton Wollan & Greengrass LLP, New York, NY, for Defendant–Appellee Technology Insurance Company, Inc.

Before Posner, Ripple, and Rovner, Circuit Judges.

Posner, Circuit Judge.

In 2014, Lend Lease construction company, the construction manager of the River Point Tower Project—a project to build an ultramodern office building in downtown Chicago—hired Cives Corporation to be a subcontractor on the project. Cives in turn hired Midwest Steel, Inc., to be a sub-subcontractor. Midwest had, years before, hired Administrative Employer Services, Inc. (AES) to supply Midwest with additional workers, who would be co-employed by Midwest and AES. These workers would work on the River Point Project.

In order to provide workers' compensation insurance to all the workers on the project, Lend Lease entered into what is called a “contractor controlled insurance program” with an insurance company named Starr Liability & Indemnity Co. The Starr policy provided for a $500,000 deductible; that is, Lend Lease would have to pay the first $500,000 of any claims, covered by the policy, of injured workers. All subcontractors were supposed to join in the policy; Lend Lease alleges that Midwest enrolled and therefore its workers were covered. Lend Lease also alleges that AES had several years earlier obtained workers' compensation for its workers from Technology Insurance Co. (referred to by the parties as “TIC”), which meant that injured AES-Midwest workers could obtain workers' compensation from either Starr (or Lend Lease if it hadn't used up its deductible) or TIC.

Later in 2014, four ironworkers, jointly employed by Midwest and AES and performing work for Midwest (and thus indirectly for Lend Lease, as the overall contract manager) were injured on the job and sought workers' compensation. Starr accepted coverage but under a reservation of rights, because of the $500,000 deductible. The workers' claims ultimately exceeded $500,000 (though by how much we haven't been told), so Lend Lease has had to pay its full deductible and Starr has paid the remaining claims.

But with Midwest and AES having acknowledged that they were the co-employers of the injured workers, Lend Lease filed a diversity suit against TIC, AES's insurer, and AES as well, seeking reimbursement of the $500,000 in workers' compensation benefits that Lend Lease had paid to the four...