Liccardi v. Stolt Terminals (Chicago), Inc.

• Decision Date: 23 August 1996
• Docket Number: No. 1-95-0863,1-95-0863
• Citation: 283 Ill.App.3d 141,669 N.E.2d 1192,218 Ill.Dec. 666
• Parties: , 218 Ill.Dec. 666 Ardis LICCARDI, Indiv. and as Special Adm'r of the Estate of Arthur Farmer, Deceased, Justin Farmer, Larry Farmer, Kenneth Farmer, James Farmer, Ardis Farmer, Antoinette Liccardi, and Melissa Farmer, Plaintiffs, v. STOLT TERMINALS (CHICAGO), INC., Defendant and Third-Party Plaintiff-Appellant (Jetstream of Houston, Inc., Technical Specialties, Inc., Jarvis Engineering Company, and Combined Plant Services, Inc., Defendants, Gundersen/Viking, Inc., Third-Party Defendant-Appellee).
• Court: United States Appellate Court of Illinois

Page 1192

669 N.E.2d 1192

283 Ill.App.3d 141, 218 Ill.Dec. 666

Ardis LICCARDI, Indiv. and as Special Adm'r of the Estate of Arthur Farmer, Deceased, Justin Farmer, Larry Farmer Kenneth Farmer, James Farmer, Ardis Farmer, Antoinette Liccardi, and Melissa Farmer, Plaintiffs, v. STOLT TERMINALS (CHICAGO), INC., Defendant and Third-Party Plaintiff-Appellant (Jetstream of Houston, Inc., Technical Specialties, Inc., Jarvis Engineering Company, and Combined Plant Services, Inc., Defendants, Gundersen/Viking, Inc. Third-Party Defendant-Appellee).

No. 1-95-0863.

Appellate Court of Illinois First District, Fifth Division.

Aug. 23, 1996.

Rehearing Denied Sept. 26, 1996.

Lord, Bissell & Brook, Chicago (Hugh C. Griffin, C. Kevin McCabe and Stephanie A. Burris, of counsel), for Appellant.

Seyfarth, Shaw, Fairweather & Geraldson, Chicago (Jeremy P. Sackmann, Brent I. Clark and Joshua R. Rich, of counsel), for Appellee.

Justice COUSINS delivered the opinion of the court:

The appellant and third-party plaintiff, Stolt Terminals (Chicago), Inc. (Stolt), filed a third-party complaint seeking contribution from appellee and third-party defendant, Gundersen/Viking, Inc. (Gundersen). Stolt contracted with Gundersen for it to clean Stolt's storage tanks, and a Gundersen employee died while waterblasting a tank on Stolt's property. Decedent's relatives sued Stolt pursuant to alleged violations of the Structural Work Act (740 ILCS 150/1 (West 1994)). After Stolt sought contribution from Gundersen, Gundersen moved to limit any contribution award to the amount of its workers' compensation liability, the contribution limit for employers imposed by the supreme court in Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991). Stolt responded that Gundersen had waived the Kotecki contribution limit in its contract with Stolt, relying on the fifth district case of Herington v. J.S. Alberici Construction Co., 266 Ill.App.3d 489, 203 Ill.Dec. 348, 639 N.E.2d 907 (1994). However, the trial court held that Herington conflicted with Kotecki and its public policy to protect employers, and the court granted Gundersen the Kotecki limit on its contribution liability.

We reverse and remand.

On October 9, 1990, Gundersen and Stolt entered into a contract where Stolt agreed to pay $3,175 for Gundersen to provide the labor and equipment to waterblast a tank on Stolt's property to remove accumulated rust in the tank's interior. Stolt drafted the contract with the following provisions:

"7. If vendor performs services or constructs, errects [sic ], inspects or delivers hereunder, Vendor agrees to indemnify and hold harmless Stolt Terminals (Chicago) Inc. from all loss or the payment of all sums of money by reason of all accidents, injuries, or damages to persons or property that may happen or occur in connection therewith.

8. Vendor represents and warrants that no Federal or State Statute or regulation, or municipal Ordinance, has been or will be violated in the manufacturing, sale, and delivery of any article or service sold and delivered hereunder, and if such violation has or does occur, Vendor shall indemnify and hold harmless Stolt Terminals (Chicago) Inc. from all loss, penalties, or the payment of all sums of money on account of such violation."

On October 17, 1990, Gundersen employee Arthur Farmer died while waterblasting Stolt's tank. Farmer's waterblasting gun sprang a leak, which caused a stream of high-pressure water to hit him in the neck, and Farmer fell from scaffolding erected in the tank.

On October 4, 1991, decedent's mother filed a complaint against Stolt, and decedent's seven brothers and sisters joined as plaintiffs in the fourth amended complaint filed on October 27, 1993. Count IV of that complaint alleged that Stolt had the right to supervise and control the activities of subcontractors, and that it failed to properly supervise and inspect the construction of the tank's scaffolding in violation of the Structural Work Act. The complaint's other counts were directed at defendants who were involved in the manufacture or sale of the waterblasting equipment.

On November 23, 1993, Stolt filed a third-party complaint against Gundersen. Counts I and II sought indemnity for all losses that were the proximate result of wrongful acts or breach of contract by Gundersen. Count III sought contribution to the extent that Gundersen's wrongful acts caused decedent's death.

On December 22, 1993, Gundersen moved to strike the ad damnum clause of count III of Stolt's complaint for its failure to limit Gundersen's contribution liability to Gundersen's workers' compensation liability, as dictated by Kotecki. The trial court granted the motion on September 6, 1994.

On September 16, 1994, Stolt moved for reconsideration of the order, relying on the August 1994 case of Herington. In Herington, the fifth district held that an employer's contractual agreement to indemnify for its own wrongful acts could waive the Kotecki contribution limit. Gundersen responded that (1) Herington was wrongfully decided, (2) paragraphs seven and eight of the contract sought indemnity rather than contribution and, thus, both violated the Construction Contract Indemnification for Negligence Act (Indemnity Act) (740 ILCS 35/1 (West 1994)), and (3) Gundersen could not have waived its Kotecki rights through a 1990 contract because Kotecki was decided in 1991. Gundersen also moved for summary judgment as to all three counts. On February 2, 1995, the trial court agreed with Gundersen's first rationale and denied the motion to reconsider, stating that it was not persuaded by the logic of Herington and felt constrained to follow Kotecki instead. Gundersen tendered its lien to the court on its worker's compensation payments, and the contribution count against it was dismissed with prejudice. The court also granted summary judgment to Gundersen as to counts I and II.

Stolt filed its notice of appeal on May 3, 1995. Stolt has only challenged the dismissal of its count III for unlimited contribution. Stolt concedes that even if counts I and II seeking indemnity could be construed as requesting contribution, they would be redundant and repetitive of count III. In this appeal, Stolt claims that (1) Herington properly decided that the Kotecki limit could be waived, (2) Herington properly concluded that contracts entered into before the Kotecki decision could affect the Kotecki limit, and (3) Stolt's contract with Gundersen called for contribution and did not violate the Indemnity Act.

I

The trial court felt that Herington was wrongfully decided because it violated public policy as established in Kotecki. We disagree. The fourth district recently followed Herington in Braye v. Archer-Daniels-Midland Co., 276 Ill.App.3d 1066, 213 Ill.Dec. 514, 659 N.E.2d 430 (1995), appeal allowed, 166 Ill.2d 536, 216 Ill.Dec. 1, 664 N.E.2d 638 (1996), which stated, "Like the court in Herington, we are similarly convinced that the Kotecki liability cap provided to employers in third-party contribution actions can be waived by contract." Braye, 276 Ill.App.3d at 1070, 213 Ill.Dec. 514, 659 N.E.2d 430. Herington and Braye both reasoned that if an employer can elect to waive its defense under the Workers' Compensation Act (820 ILCS 305/1 et. seq. (West 1992)) after a case is filed (see Geise v. Phoenix Co. of Chicago, Inc., 159 Ill.2d 507, 514, 203 Ill.Dec. 454, 639 N.E.2d 1273 (1994); Doyle v. Rhodes, 101 Ill.2d 1, 10, 77 Ill.Dec. 759, 461 N.E.2d 382 (1984)), an employer can bargain away the Act's protection as part of a contract. Braye, 276 Ill.App.3d at 1069, 213 Ill.Dec. 514, 659 N.E.2d 430; Herington, 266 Ill.App.3d at 496, 203 Ill.Dec. 348, 639 N.E.2d 907. Parties often adjust their legal rights and give up defenses by contract. Braye, 276 Ill.App.3d at 1069, 213 Ill.Dec. 514, 659 N.E.2d 430; Herington, 266 Ill.App.3d at 496, 203 Ill.Dec. 348, 639 N.E.2d 907. Other cases have allowed employers to bargain away portions of their protection under the Workers' Compensation Act (see Braye, 276 Ill.App.3d at 1069, 213 Ill.Dec. 514, 659 N.E.2d 430; Fredericks v. Liberty Mutual Insurance Co., 255 Ill.App.3d 1029, 1033-34, 194 Ill.Dec. 445, 627 N.E.2d 782 (1994)), and we see no public policy that would be harmed by allowing employers the option of bargaining away their Kotecki limit.

Gundersen first contends that the Herington rule "would deprive the employer of the certainty and security provided by liability limitation." However, if the employer has chosen to bargain away this advantage, it must be receiving a benefit greater than this "certainty and security." Gundersen also argues that Herington undermines the public policies supporting the Joint Tortfeasor Contribution Act (740 ILCS 100/0.01 et seq. (West 1994)) by allowing for contractual contribution. Nevertheless, the contract at issue does not call for contractual contribution but rather eliminates the Kotecki exception to the Contribution Act, putting the employer in the same position as other joint tortfeasors just as if it had not raised the workers' compensation liability defense. See Braye, 276 Ill.App.3d at 1069, 213 Ill.Dec. 514, 659 N.E.2d 430; Herington, 266 Ill.App.3d at 496, 203 Ill.Dec. 348, 639 N.E.2d 907. Thus, the contract did not "allow parties to create their own Contribution Act" as Gundersen contends; rather, the contract allowed the parties to fall completely under the rubric of the Contribution Act and its important public policy of contribution by culpable parties to the full extent of their share of fault. See Kotecki, 146 Ill.2d at 164, 166 Ill.Dec. 1, 585 N.E.2d 1023.

Lastly, Gundersen claims that our decision violates the public policy of the Contribution Act by precluding its ability to settle with the plaintiffs and be dismissed from the case, putting Gundersen in a worse position than other tortfeasors. See 740 ILCS 100/2(d) (West 1994). Gundersen is correct that...