Ioerger v. Halverson Construction Company, Inc.

Docket Nos. 105912, 105917 cons.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

DANIEL IOERGER et al., Appellees, v. HALVERSON

CONSTRUCTION COMPANY, INC. (Midwest Foundation

Corporation, Appellant).

Opinion filed December 18, 2008.

JUSTICE KARMEIER delivered the judgment of the court, with

opinion.

Chief Justice Fitzgerald and Justices Freeman, Thomas, Garman,

and Burke concurred in the judgment and opinion.

Justice Kilbride dissented, with opinion.

OPINION

The issue in this case is whether the immunity afforded to an

employer by the exclusive remedy provisions of the Workers’

Compensation Act (the Act) (820 ILCS 305/5(a), 11 (West 2000))

extends to the employer’s co-venturer in a joint venture and to the

joint venture itself. The circuit court held that it does. The appellate

court reversed and remanded. 377 Ill. App. 3d 223. For the reasons

that follow, we reverse the appellate court’s judgment, affirm the

judgment of the circuit court, and remand to the circuit court for

further proceedings.

The relevant facts are these. During the summer of 1999, Midwest

Foundation Corporation (Midwest) entered into a joint venture

(hereinafter, the Joint Venture) with Halverson Construction

Company, Inc. (Halverson), in connection with a project undertaken

by the Illinois Department of Transportation (IDOT) to repair the

McCluggage Bridge over the Illinois River in Peoria. The terms of

this business arrangement were set forth in a written agreement

between Midwest and Halverson. The agreement provided that

Midwest and Halverson “constitute[d] themselves as joint venturers

for the purpose of submitting joint bids *** for the performance of

the construction contracts herein before described, and for the further

purpose of performing and completing such construction project.” If

the bids were awarded, they were to be “entered into in the names of

the parties as joint venturers.”

Under the agreement, profits and losses and liabilities resulting

from the project were to be shared 60/40, with the larger share going

to Midwest. The agreement required Midwest and Halverson to each

make periodic contributions of working capital to the Joint Venture

in proportion to their respective share of the profits and losses. It also

specified how various responsibilities and costs were to be allocated.

Pursuant to the agreement, Midwest was responsible for “the

performance of all labor for the Joint Venture, including payroll,

payroll taxes, fringes and other employee expenses, including, but not

limited to, the establishment of worker[s’] compensation insurance

and the payments of all premiums therefore.” Correspondingly,

Midwest was “entitled to reimbursement from the Joint Venture for

the costs incurred in performing the foregoing obligations; such

reimbursement to be paid at such time or times as the Joint Venture

shall determine.”

IDOT accepted the Joint Venture’s bid and the Joint Venture

began work on the bridge project. In accordance with the joint

venture agreement, Midwest furnished workmen for the project.

Throughout the course of the project, Midwest would pay the labor

costs, including workers’ compensation insurance premiums, then

submit statements to the Joint Venture for reimbursement.

Among the workers employed by Midwest on the bridge project

were ironworkers Daniel Ioerger, Randy McCombs, Robert L. Foulks,

Sr., and Ralph Bill. On April 24, 2000, while the four were working

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from a platform suspended above the river, the platform collapsed,

causing them to plummet into the river below. Ioerger, McCombs and

Bill were injured. Foulks was killed.

Ioerger, McCombs, Bill and Robert Lamar Foulks, as

administrator of the estate of Robert L. Foulks, Sr. (hereinafter

referred to collectively as plaintiffs), each applied for and received

workers’ compensation benefits through Midwest’s workers’

compensation insurer. It is undisputed that these workers’

compensation benefits were plaintiffs’ exclusive remedy with respect

to Midwest and that sections 5(a) and 11 of the Workers’

Compensation Act (820 ILCS 305/5(a), 11 (West 2000)) precluded

plaintiffs from bringing a common law action for negligence against

Midwest in circuit court. See Meerbrey v. Marshall Field & Co., 139

Ill. 2d 455, 462-63 (1990).

In addition to seeking workers’ compensation benefits from

Midwest, plaintiffs brought a civil action in the circuit court of Peoria

County against Halverson, the Joint Venture, and various other

defendants to recover damages for injuries they sustained as a result

of the accident. Their complaint, as amended, contained more than 40

counts. Counts I through V were directed against Halverson. Counts

I, II, and V, brought on behalf of Ioerger, McCombs and Bill,

respectively, alleged negligence. In counts III and IV, Robert Lamar

Foulks, as administrator of the estate of Robert L. Foulks, Sr.,

asserted claims under the Wrongful Death Act (see 740 ILCS

180/0.01 et seq. (West 2000)) and the Survival Act (755 ILCS 5/27-6

(West 2000)). Counts XI through XV paralleled courts I through V,

but were directed against the Joint Venture rather than Halverson. All

the remaining counts involved other defendants and are not relevant

to this appeal.

Halverson and the Joint Venture filed separate motions for

summary judgment pursuant to section 2–1005 of the Code of Civil

Procedure (735 ILCS 5/2–1005 (West 2000)), arguing that as co-

venturers with Midwest, they are cloaked with the same immunity

enjoyed by Midwest under the Workers’ Compensation Act. The trial

court agreed and entered summary judgment in their favor. In so

doing, it made an express written finding pursuant to Supreme Court

Rule 304(a) (210 Ill. 2d R. 304(a)) that there was no just reason to

delay enforcement or appeal.

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Plaintiffs appealed. The appellate court reversed and remanded,

with one justice dissenting. 377 Ill. App. 3d 223. Halverson and the

Joint Venture each petitioned for leave to appeal. 210 Ill. 2d R. 315.

We granted both parties’ petitions and consolidated them for briefing,

argument and decision.1

Summary judgment is appropriate where “the pleadings,

depositions, and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.”

735 ILCS 5/2–1005(c) (West 2000). Whether summary judgment was

properly granted in a particular case is a matter we review de novo.

Williams v. Manchester, 228 Ill. 2d 404, 416-17 (2008).

Under the express terms of the Workers’ Compensation Act, the

law’s exclusive remedy provisions extend not only to the employer,

but to various other specified entities, including agents of the

employer. 820 ILCS 305/5(a) (West 2000). The question of whether

an agency relationship exists is normally a question of fact. A court

may decide the issue as a matter of law, however, if only one

conclusion may be drawn from the undisputed facts. See Churkey v.

Rustia, 329 Ill. App. 3d 239, 243 (2002). This is such a case.

As described earlier in this opinion, Halverson was a co-venturer

with Midwest. Under Illinois law, joint ventures are governed by

partnership principles, “for a joint venture is essentially a partnership

carried on for a single enterprise.” In re Johnson, 133 Ill. 2d 516, 526

(1989); see Burtell v. First Charter Service Corp., 76 Ill. 2d 427, 438

(1979) (“[w]hen a joint venture is found to exist, the legal principles

pertaining to the relationship between partners govern”). Partners, in

turn, are agents of the partnership and of one another for purposes of

the business. That is so both as a matter of common law and under the

1

After plaintiffs filed their briefs, Halverson and the Joint Venture each

filed motions to strike them on the grounds that they failed to adequately

cite to the record as required by Supreme Court Rules 341(h)(6) and

341(h)(7) (201 Ill. 2d Rs. 341(h)(6), (h)(7)). Although we agree that the

briefs contain deficiencies, those deficiencies did not significantly impede

the ability of Halverson and the Joint Venture to respond to plaintiffs’

arguments, nor did they hamper our review to the merits of this case. The

motions to strike are therefore denied.

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Uniform Partnership Act, which Illinois has adopted (see 805 ILCS

205/1 et seq. (West 2000)). See Gilpin v. Lev, 70 Ill. App. 2d 66, 75

(1966). As a co-venturer with Midwest, Halverson was therefore

Midwest’s agent. Because Halverson was Midwest’s agent, it was, in

turn, entitled to invoke the same immunity afforded to Midwest by

the exclusive remedy provisions of the Workers’ Compensation Act

(820 ILCS 305/5(a), 11 (West 2000)). Smith v. Metropolitan Sanitary

District of Greater Chicago, 77 Ill. 2d 313, 318 (1979); see Moran v.

Gust K. Newberg/Dugan & Meyers, 268 Ill. App. 3d 999, 1005-06

(1994). Accordingly, the circuit court was correct to grant

Halverson’s motion for summary judgment based on the Act.

Our conclusion is the same with respect to the Joint Venture

itself. That is so for two reasons. The first is inherent in the nature of

the joint venture form of business organization. While a partnership

is treated as a separate entity for purposes of owning property, it is not

a separate legal entity. Because joint ventures are governed by

partnership principles, the same is true of them. See Palumbo Bros.,

Inc. v. Wagner, 293 Ill. App. 3d 756, 766 (1997). The Joint Venture

in this case was thus inseparable from its constituent entities,

Midwest and Halverson. Both of those entities being immunized by

the exclusive remedy provisions of the Workers’ Compensation Act,

it necessarily follows that the Joint Venture was likewise shielded by

the exclusive remedy provisions of the Act.

Allowing the Joint Venture to invoke the exclusive remedy

provisions of the Act is also mandated by the principles underlying

the Act’s remedial scheme. We observed in Forsythe v. Clark USA,

Inc., 224 Ill. 2d 274, 298 (2007), quoting Forsythe v. Clark USA, Inc.,

361 Ill. App. 3d 642, 651 (2005), that allowing a party who has paid

nothing toward an injured employee’s workers’ compensation

benefits to nevertheless invoke the Act’s immunity to escape tort

liability for the employee’s injuries would be tantamount to allowing

the party “to have its cake and eat it too.” By the same token,

subjecting a party to tort liability for an employee’s injuries

notwithstanding the fact that the party has borne the costs of the

injured employee’s workers’ compensation insurance would be the

same as declaring that a party who has paid for the cake may neither

keep it nor eat it.

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As these metaphors illustrate, the immunity afforded by the Act’s

exclusive remedy provisions is predicated on the simple proposition

that one who bears the burden of furnishing workers’ compensation

benefits for an injured employee should not also have to answer to

that employee for civil damages in court. See Schmidt v. Milburn

Brothers, Inc., 296 Ill. App. 3d 260, 269 (1998). While the joint

venture agreement between Midwest and Halverson in this case

specified that Midwest was responsible for “the performance of all

labor for the joint venture, including payroll, payroll taxes, fringes

and other employee expenses, including, but not limited to, the

establishment of worker[s’] compensation insurance and the

payments of all premiums therefore,” the agreement further provided

that Midwest was “entitled to reimbursement from the Joint Venture

for the costs incurred in performing the foregoing obligations; such

reimbursement to be paid at such time or times as the Joint Venture

shall determine.” Ultimate responsibility for payment of the workers’

compensation insurance premiums therefore lay with the Joint

Venture. Because the Joint Venture bore the expense of the workers’

compensation premiums and was thus responsible for making

workers’ compensation benefits available to plaintiffs, it was entitled

to avail itself of the Act’s exclusive remedy provisions.

In reaching a contrary conclusion, the appellate court in this case

based its decision on the belief that the Joint Venture had not, in fact,

contributed to the payment of workers’ compensation premiums or

reimbursed Midwest for its payment of them before the accident.

According to the appellate court, defendants actually admitted “at the

time of oral arguments, months/years later *** that [Halverson and

the Joint Venture] had not reimbursed Midwest for any expenses

associated with the joint venture.” 377 Ill. App. 3d at 230. Moreover,

the appellate court held, Halverson and the Joint Venture could not

cure the lack of reimbursement after the fact. In the court’s view,

“it would be bad public policy to allow Halverson and/or the

joint venture, at this point, to now deliver or postdate a check

to Midwest for reimbursement of wages and workers’

compensation premiums to fulfull its obligations under the

joint venture agreement in order to obtain the protection of

the Act’s immunity.”

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With due respect to the appellate court, we believe that its

characterization of the facts underlying this case is incorrect.

Uncontradicted deposition testimony submitted by the Joint Venture

in support of its motion for summary judgment established that

Midwest and Halverson periodically sought and received

reimbursement for their labor costs from the Joint Venture as

specified in the joint venture agreement. The transcript of the oral

argument before the appellate court contains nothing that could be

construed as admission by defendants that the deposition testimony

was somehow erroneous or that the claimed reimbursements had

never been made. In addition, after the appellate court filed its

opinion containing its error, defendants adduced additional

documentation in support of their petition for rehearing which

showed specifically that the Joint Venture had reimbursed Midwest

for workers’ compensation premiums and other labor costs for

plaintiffs for the month in which the accident occurred.

The appellate court’s reasoning is flawed for another reason as

well. Even if the Joint Venture had not yet made reimbursement to

Midwest for the workers’ compensation premiums and other labor

costs, the fact remains that it was contractually obligated to do so.

Joint ventures arise solely through voluntary agreement (see Herst v.

Chark, 219 Ill. App. 3d 690, 694 (1991)) and are controlled by the

terms of the agreements through which they are created (Harmon v.

Martin, 395 Ill. 595, 612-13 (1947)). Where, as here, the agreement

requires the Joint Venture to reimburse the individual co-venturers for

workers’ compensation premiums and other labor costs, it is that

contractual obligation, not the timing of particular reimbursements,

which is dispositive.

For the foregoing reasons, the circuit court was correct when it

granted summary judgment in favor of Halverson and the Joint

Venture based on the exclusive remedy provisions of the Workers’

Compensation Act (820 ILCS 305/5(a), 11 (West 2000)). The

appellate court erred when it set the circuit court’s judgment aside.

The judgment of the appellate court is therefore reversed, the

judgment of the circuit court is affirmed, and the cause is remanded

to the circuit court for further proceedings.

Appellate court judgment reversed;

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circuit court judgment affirmed;

cause remanded.

JUSTICE KILBRIDE, dissenting:

In my view, a question of material fact exists as to whether

Halverson and the Joint Venture paid for the workers’ compensation

benefits in this case and were, therefore, entitled to immunity from

tort liability under the Workers’ Compensation Act (Act) (820 ILCS

305/1 et seq. (West 2000)). I believe the appellate court properly

reversed the trial court’s grant of summary judgment. Accordingly, I

respectfully dissent.

Summary judgment is appropriate only when “the pleadings,

depositions, and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.”

735 ILCS 5/2–1005(c) (West 2000). In reviewing a grant of summary

judgment, this court must construe the pleadings, depositions,

admissions, and affidavits strictly against the moving party and

liberally in favor of the nonmoving party. Williams v. Manchester,

228 Ill. 2d 404, 417 (2008). Summary judgment is a drastic means of

disposing of litigation that should not be granted unless the movant’s

right to judgment is clear and free from doubt. Forsythe v. Clark

USA, Inc., 224 Ill. 2d 274, 280 (2007); Adams v. Northern Illinois

Gas Co., 211 Ill. 2d 32, 43 (2004).

In the summary judgment motions, defendants Halverson and the

Joint Venture asserted immunity from tort liability under the Act. In

Forsythe, this court examined the exclusive remedy provision in the

Act (820 ILCS 305/5(a) (West 2000)). Forsythe, 224 Ill. 2d at 296.

This court recognized that a party must contribute to providing

workers’ compensation benefits to receive the benefit of the Act’s

immunity. Forsythe, 224 Ill. 2d at 298. As noted by the majority, the

Act’s immunity from tort liability is based on “the simple proposition

that one who bears the burden of furnishing workers’ compensation

benefits for an injured employee should not also have to answer to

that employee for civil damages in court.” Slip op. at 5-6, citing

Schmidt v. Milburn Brothers, Inc., 296 Ill. App. 3d 260, 269 (1998).

Thus, the Act’s protection from tort liability is limited to the party

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that pays workers’ compensation premiums or otherwise provides

those benefits.

I believe this case presents a genuine question of material fact on

whether the defendants actually contributed to the workers’

compensation premiums. As noted by the appellate court, the

defendants did not produce conclusive evidence that they paid or

contributed to the workers’ compensation premiums before the

accident. The appellate court further noted that “at the time of oral

arguments, months/years later, it was admitted that [Halverson and

the Joint Venture] had not reimbursed Midwest for any expenses

associated with the joint venture.” 377 Ill. App. 3d at 230. I believe

the appellate court’s statement is supported by the transcript of the

oral argument. The transcript shows Halverson’s attorney asserted

that under the joint venture agreement:

“Midwest Foundation is obliged to acquire the workers’

compensation coverage, is required to pay that premium, and

is reimbursed that premium out of the joint venture proceeds.

*** Now, once, then, the Midwest Foundation is reimbursed

that premium out of the joint venture proceeds, then the

potential distributable profit of the joint venture is reduced,

and they share in it in that manner.”

We must construe this statement strictly against the defendants as

the moving parties, and liberally in favor of the plaintiffs. Williams,

228 Ill. 2d at 417. Consistent with the appellate court’s opinion, this

statement can be fairly construed to mean that Midwest paid the

workers’ compensation premiums and only anticipated

reimbursement of those amounts at the conclusion of the project. The

statement does not indicate that the defendants ever paid or

contributed to the payment of the workers’ compensation premiums.

The majority has identified evidence that may tend to show the

defendants contributed to providing workers’ compensation benefits.

The majority, however, relies in part on evidence submitted with the

defendants’ petition for rehearing in the appellate court. That

evidence was not part of the record before the trial court when it ruled

on the motions for summary judgment. Thus, that evidence should

not be considered in reviewing the trial court’s decision.

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In sum, the defendants, as the moving parties, must show their

right to relief is clear and free from doubt. Forsythe, 224 Ill. 2d at

280. Given this record, I believe a genuine issue of material fact

exists on whether the defendants actually bore the burden of

providing workers’ compensation benefits. The defendants, therefore,

have not shown clearly that they are entitled to the protection of the

Act’s exclusive remedy provision. Accordingly, I would affirm the

appellate court’s judgment reversing the grant of summary judgment

and remanding the cause to the trial court for further proceedings.

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