Liccardi v. Stolt Terminals, Inc.

• Citation: 687 N.E.2d 968,178 Ill.2d 540,227 Ill.Dec. 486
• Decision Date: 25 September 1997
• Docket Number: No. 81930,81930
• Court: Supreme Court of Illinois
• Parties: , 227 Ill.Dec. 486 Ardis LICCARDI et al. v. STOLT TERMINALS, INC., et al. (Stolt Terminals, Inc., Appellee, v. Gundersen/Viking, Inc., Appellant).

Page 968

687 N.E.2d 968

178 Ill.2d 540, 227 Ill.Dec. 486

Ardis LICCARDI et al. v. STOLT TERMINALS, INC., et al. (Stolt Terminals, Inc. Appellee, v. Gundersen/Viking, Inc., Appellant).

No. 81930.

Supreme Court of Illinois.

Sept. 25, 1997.

Rehearing Denied Dec. 1, 1997.

Jeremy P. Sackmann, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, for Gundersen/Viking, Inc.

Hugh C. Griffin, Lord, Bissell & Brook, Chicago, for Stolt Terminals (Chicago), Inc.

Justice HARRISON delivered the opinion of the court:

This appeal is before the court on a certificate of importance from the First District of the Appellate Court. 155 Ill.2d R. 316. Two questions are presented for our consideration: (1) whether an employer may contractually waive the cap on contribution liability recognized by this court in Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991), and (2) whether the contractual provisions in this case do waive the Kotecki cap or are, instead, void and unenforceable under the Construction Contract Indemnification for Negligence Act (740 ILCS 35/0.01 et seq. (West 1994)) on the grounds that they require the employer to indemnify a third party for the third party's own negligence. For the reasons that follow, we continue to hold, as we did in Braye v. Archer-Daniels-Midland Co., 175 Ill.2d 201, 222 Ill.Dec. 91, 676 N.E.2d 1295 (1997), that an employer may enter into a valid and enforceable contractual agreement to waive the Kotecki limitation on an employer's contribution liability. We further conclude that one of the contractual provisions in this case is valid and does operate to waive the Kotecki cap. These are the facts. Stolt Terminals (Stolt) hired Gundersen/Viking, Inc. (Gundersen), to clean the interior of one of its storage tanks. During the course of the cleaning operation, Arthur Farmer, a Gundersen employee, was knocked from the scaffolding where he was working. Farmer died from his injuries, and his family sued Stolt under the Structural Work Act (740 ILCS 150/0.01 et seq. (West 1994)).

Stolt subsequently brought a third-party action against Gundersen. Stolt's complaint was in three counts. Counts I and II were based on the provisions of the written contract between Gundersen and Stolt for the cleaning work. Count I invoked paragraph seven of the contract, which states:

"If Vendor performs services * * * 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."

According to Stolt, this paragraph obligated Gundersen to indemnify Stolt for all costs, fees losses or payments incurred by or awarded against Stolt in the underlying proceeding "to the extent said costs, fees losses or payments are the proximate result of the wrongful acts or omissions of [Gundersen]."

Count II sought damages based on Gundersen's alleged breach of paragraph eight of the complaint, which provides:

"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."

Unlike counts I and II, count III of Stolt's third-party complaint was not premised on the parties' contract. It asserted a contribution claim against Gundersen for that portion of any damage award received by plaintiffs attributable to Gundersen's acts or omissions.

Gundersen moved to strike certain portions of count III, asserting that under this court's decision in Kotecki v. Cyclops Welding Co., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991), Gundersen's contribution liability could not exceed the amount of workers' compensation benefits paid in connection with Farmer's injury and death. The circuit court granted Gundersen's motion in part, agreeing that Kotecki limited the company's contribution liability to the amount of its workers' compensation liability.

Stolt moved for reconsideration, arguing that through its contract with Stolt, Gundersen had waived the Kotecki limitations on its contribution liability. Gundersen, in turn, moved for summary judgment as to counts I and II of Stolt's third-party complaint, asserting that the contractual provisions on which those counts were based violated the Construction Contract Indemnification for Negligence Act (740 ILCS 35/0.01 et seq. (West 1994)), which provides:

"With respect to contracts or agreements, either public or private, for the construction, alteration, repair or maintenance of a building, structure, highway bridge, viaducts or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise or agreement to indemnify or hold harmless another person from that person's own negligence is void as against public policy and wholly unenforceable." 740 ILCS 35/1 (West 1994).

The circuit court agreed with Gundersen's argument and granted its motion for summary judgment as to counts I and II. In the same order, the court denied Stolt's motion for reconsideration, adhering to its previous determination that Kotecki limited the company's contribution liability to the amount of its workers' compensation liability. Because Gundersen had tendered its workers' compensation lien to the court, the court further held that Stolt's contribution claim, set forth in count III, should be dismissed with prejudice.

In disposing of these matters, the court made an express written finding pursuant to Supreme Court Rule 304(a) (155 Ill.2d R. 304(a)) that there was no just reason to delay enforcement or appeal. Stolt thereupon appealed to the appellate court. In that appeal, Stolt did not take issue with the circuit court's entry of summary judgment against it on counts I and II of its third-party complaint. Rather, it challenged only the court's determination that Kotecki limited Gundersen's contribution liability to the amount of its workers' compensation liability and that Gundersen was therefore entitled to dismissal of Stolt's contribution claim in count III after tendering its workers' compensation lien.

The appellate court reversed and remanded. 283 Ill.App.3d 141, 218 Ill.Dec. 666, 669 N.E.2d 1192. Following Herington v. J.S. Alberici Construction Co., 266 Ill.App.3d 489, 203 Ill.Dec. 348, 639 N.E.2d 907 (1994), and Braye v. Archer-Daniels-Midland Co., 276 Ill.App.3d 1066, 213 Ill.Dec. 514, 659 N.E.2d 430 (1995), aff'd in part, rev'd in part, 175 Ill.2d 201, 222 Ill.Dec. 91, 676 N.E.2d 1295 (1997), the court accepted Stolt's argument that an employer can, by contract, elect to waive the contribution limit available to it under Kotecki. The court further determined that Gundersen had waived that limit under its contract with Stolt here.

In reaching this conclusion, the court looked to the same provisions of the contract that were at issue in counts I and II of Stolt's third-party complaint and the subject of Gundersen's successful motion for summary judgment. The appellate court agreed with the circuit court that paragraph seven, the contractual provision involved in count I, was void and unenforceable under the Construction Contract Indemnification for Negligence Act because it allowed Stolt to be indemnified for its own negligence. The court opined, however, that paragraph eight, the provision at issue in count II, was, in effect, a call for contribution rather than indemnity; that it was not invalid under the Act; and that its effect was to permit contribution from Gundersen unrestricted by the workers' compensation liability cap.

On Gundersen's application, the appellate court granted a certificate of importance pursuant to Supreme Court Rule 316 (155 Ill.2d R. 316), and the matter is now before us for review. As noted at the outset of this disposition, two basic issues have been presented to us. First is the question of whether an employer may contractually waive the cap on contribution liability recognized by this court in Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991). This issue will not detain us for long, because it has already been decided by our court. In the recent case of Braye v. Archer-Daniels-Midland Co., 175 Ill.2d 201, 222 Ill.Dec. 91, 676 N.E.2d 1295 (1997), we held, as did the appellate court here, that an employer may relinquish by contract the liability limitation set forth in Kotecki. We continue to adhere to that view.

The second issue before us is whether the particular contractual provisions in this case operated as a waiver of the Kotecki cap on Gundersen's contribution liability or whether they are void and unenforceable under the Construction Contract Indemnification for Negligence Act on the grounds that they require Gundersen to indemnify Stolt for Stolt's own negligence. In addressing this issue, we begin by noting an anomaly that the appellate court overlooked, but that will seem obvious once we point it out.

In order to have a contractual waiver of the Kotecki cap, there must, of course, be some valid contractual provision by which the waiver is made. In this case, Stolt's claim of contractual waiver is founded exclusively on paragraphs seven and eight of its...