Quinn Johnston Wins Supreme Court Ruling for Halverson Construction
Gregory A. Cerulo and Adam P. Chaddock from Quinn Johnston recently obtained an Illinois Supreme Court victory for Halverson Construction Company in connection with claims arising out of the collapse of a work platform suspended from the McCluggage Bridge over the Illinois River between Peoria and East Peoria, IL. The Supreme Court’s ruling, in Ioerger v. Halverson Construction Co., extends the exclusive remedy provision of the Workers’ Compensation Act to the co-joint venturers of and any joint venture in which the injured party’s employer participates.
Nearly 9 years of work went into the case. Commencing on the day of the occurrence in April, 2000, Attorney Cerulo managed the legal aspects of the incident investigation, including communications with media, proper preservation of physical evidence, retention and utilization of consulting experts and interfacing with Federal Government investigators and experts. Once the matter moved into litigation, an exhaustive phase of deposition discovery was concluded and motion practice resulted in summary judgment for the firm’s client. However, the Third District Appellate Court found fault with that outcome and reversed the decision. It went much further in its opinion, deciding that the client was foreclosed from asserting the very defense that the trial court determined was the appropriate basis for the summary judgment.
The Illinois Supreme Court accepted a discretionary request that it review the decision of the Third District Appellate Court. The facts were that the firm’s client, Halverson Construction Company, and Midwest Foundation entered into a joint venture agreement to bid on a project to repair the McCluggage Bridge over the Illinois River in Peoria. The joint venture agreement set out that the parties intended to constitute themselves as joint venturers; that the parties would split the profits, losses and liabilities 60/40; and that the parties would make periodic contributions of working capital to the joint venture. The joint venture agreement also specified that Midwest was responsible for the performance of all labor on the project, including payroll, payroll taxes, fringe benefits, and other employee expenses, including but not limited to the establishment of workers’ compensation benefits and payments of all corresponding premiums. Under the agreement, Midwest was entitled to reimbursement directly from the joint venture for those labor costs, including workers compensation insurance premium payments. Thus, Halverson bore the expense of the insurance premiums payment since the joint venture’s reimbursement of the premiums either reduced Halverson’s share of any profits or increased Halverson’s responsibility for any losses.
The Halverson/Midwest Foundation Joint Venture won the bid on the project and commenced work. On April 24, 2000, Daniel Ioerger, Randy McCombs, Robert Foulks, and Ralph Bill were working on a platform suspended next the bridge and over the Illinois River. All of the men were employees of Midwest Foundation, with no employment relationship whatsoever to Halverson or the Joint Venture. The platform collapsed and Foulks was killed; Ioerger, McCombs and Bill (collectively as “Plaintiffs”) were injured. Plaintiffs filed suit against Halverson Construction and the Joint Venture, among others.
In the trial court, Quinn Johnston filed a Motion for Summary Judgment which sought to extend the exclusive remedy provision of the Workers’ Compensation Act which provides employers with immunity for any costs or damages greater than that amount paid under the Act. The trial court found that as a co-joint venturer, Halverson was an agent of Midwest and entitled to the immunity provided by the Act to Midwest. The trial court granted summary judgment on behalf of Halverson. Plaintiffs appealed. The Appellate Court, relying upon cases decided in the area of parent and subsidiary corporations, reversed the trial court’s grant of summary judgment. The Appellate Court held that for Halverson to be granted immunity, there would need to be evidence that Halverson actually paid a portion of the workers’ compensation insurance premiums. Halverson appealed to the Supreme Court.
The Supreme Court reversed the appellate court’s decision and restored the summary judgment in favor of Halverson. The Supreme Court, noting that joint ventures are governed by partnership law, held that Halverson, and Midwest Foundation were agents of each other for this project in the same manner that partners are agents of each other on any partnership matter. Plaintiffs’ employer Midwest Foundation was entitled to immunity from direct civil suits by its employees by the terms of the Workers Compensation Act. The Supreme Court concluded that Halverson was likewise entitled to the same immunity due to their status as an agent of Midwest Foundation by virtue of their participation as joint venturers on the bridge reconstruction project.
Links to the Supreme Court opinion and Third District Appellate Court Opinion are below:
Originally published in the Spring 2009 edition of Quinn Quarterly.