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United States District Court, Northern District of Illinois, E.D

October 27, 1980


The opinion of the court was delivered by: Shadur, District Judge.


Stephen Pelinski ("Pelinski") and Pamela Pelinski brought this diversity-based personal injury action against Goodyear Tire and Rubber Company ("Goodyear"), owner of the Norfolk, Nebraska premises on which the alleged injury occurred, and Behlen Manufacturing Company ("Behlen"), general contractor for construction of a plant on Goodyear's property. In turn, Goodyear and Behlen filed third party complaints against Spacemark, Inc. ("Spacemark"), Pelinski's employer and Behlen's subcontractor.

Spacemark has moved (1) "to dismiss for lack of cause of action" and (2) to transfer this action to the District Court for the District of Nebraska.*fn1 For the reasons stated in this memorandum opinion and order, Spacemark's motions are denied.

Applicable Law

Except for a few oblique references, none of the parties really addresses the question of what law applies to the questions before the Court. Each essentially assumes the applicability of Nebraska law, though there are some references in the briefs to Illinois law as well. Because this Court cannot indulge such an assumption, the choice of law question will be addressed briefly.

In this diversity action, Illinois choice of law doctrine of course applies under familiar Erie v. Tompkins principles, Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Whichever party's view of the controversy prevails, Illinois doctrines lead to the application of the substantive law of Nebraska:

  1. If Spacemark is right, the third party complaints
     are essentially tort actions. Because Nebraska was
     the place where the injury occurred and Illinois
     has no more significant relationship with the
     occurrence and with

     the parties, Nebraska law would apply. Ingersoll
     v. Klein, 46 Ill.2d 42, 45, 262 N.E.2d 593, 595

  2. If Goodyear and Behlen are right, the third party
     complaints would rest on grounds that are either
     impliedly contractual or arise out of a "special
     relationship" among the parties. In either case,
     the conflict of laws test would look to the
     jurisdiction having the most significant contacts
     (plainly Nebraska), and once again Nebraska law
     would apply. Arnold v. Industrial Commission,
     21 Ill.2d 57, 61, 171 N.E.2d 26, 28-29 (1960).

Motion to Dismiss

Spacemark's motion to dismiss is based on its argument that the Nebraska Workmen's Compensation Act (the "Act"), Neb.Rev.Stat. § 48-148, bars any third party actions against an employer:

  If any employee, or his dependents in case of death,
  of any employer subject to the provisions of section
  48-109 to 48-147 files any claim with, or accepts any
  payment from such employer, or from any insurance
  company carrying such risk, on account of personal
  injury, or makes any agreement, or submits any
  question to the court under said sections, such
  action shall constitute a release to such employer of
  all claims or demands at law, if any, arising from
  such injury.

That statute was definitively construed in Vangreen v. Interstate Machinery & Supply Co., 197 Neb. 29, 246 N.W.2d 652 (1976).

In Vangreen an employee filed a personal injury action against a fellow employee and against the lessor of equipment leased to plaintiff's employer, also making the employer a party to determine its subrogation rights under the Act. After the lessor had settled with plaintiff it cross-claimed against plaintiff's employer, seeking indemnity and contribution.

Although the lessor had denied any negligence, the Nebraska Supreme Court found that such denial had "little, if any, validity in view of the nature of its settlement with Vangreen" and that in any case it was required to assume that the third party defendant was also guilty of negligence contributing to the accident. Accordingly the Court stated (246 N.W.2d at 654):

  Interstate does not urge a right to recover under an
  express or implied contract of indemnity but seeks
  recovery on the theory that PPG is a joint
  tort-feasor. Under such circumstances, is the
  exclusive remedy provision contained in the Nebraska
  statutes circumvented? The statute, section 48-148,
  R.R.S. 1943, provides that a workmen's compensation
  action "shall constitute a release to such employer
  of all claims or demands at law, if any, arising from
  such injury." Section 48-118, R.R.S. 1943, awards to
  the employer subrogation rights against third
  parties. It is evident that the exclusive-remedy
  provision is not confined to the injured party but is
  designed to cover all claims "arising from such
  injury." Interstate's cross-claim is based on
  negligence and necessarily arises from the injury.
  The statute is not limited to claims for damages and
  it will not avail to assert that this is a claim for
  indemnity rather than damages.

    The majority rule holds that, when the relation
  between the parties involves "no contract or special
  relation capable of carrying with it an implied
  obligation to indemnify, the basic exclusiveness rule
  generally cannot be defeated by dressing the remedy
  itself in contractual clothes, such as indemnity,
  since what governs is not the delictual or
  contractual form of the remedy but the question: is
  the claim `on account of' the injury, or on account
  of a separate obligation running from the employer to
  the third party?" 2A Larson, Workmen's Compensation
  Law, s. 76.44, p. 14-405.

Measured against that controlling standard, Goodyear's and Behlen's third party complaints are ambiguous. On the one hand, Paragraph 7 of each specifically incorporates the cross-plaintiff's answer, which denies any negligence (thus distinguishing the situation from Vangreen, where the Court had to assume the third party was guilty of negligence contributing to the accident). On the other hand, each third party complaint refers to Spacemark as "actively and primarily negligent" (emphasis added). Each is stated solely in terms of negligence on Spacemark's part and concludes (emphasis again added):

  If [Goodyear or Behlen] becomes liable for damages to
  plaintiff, it will be because of the active
  negligence or omissions of Spacemark, there being no
  active acts of negligence by [Goodyear or

And Behlen's brief refers to the "active-passive negligence" dichotomy that supports indemnity in some jurisdictions.

Thus the third party complaints could be read to bear the construction and the result urged by either party. Goodyear's and Behlen's claims could be viewed either as a claim "arising from such injury" (in which case Vangreen would plainly bar the third party complaint) or a claim on account of a separate obligation running from Spacemark to them (in which case it would not). But this Court is spared the difficult task of parsing the allegations of the third party complaint by the teaching of Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957), under which a complaint may not be dismissed for failure to state a claim unless it appears beyond any doubt that plaintiff can prove no set of facts in support of the complaint's allegations that would entitle plaintiff to relief. Nor is it fatal that plaintiff has failed to assert the proper legal theory if the allegations would permit relief on any possible theory. Garza v. Chicago Health Clubs, Inc., 347 F. Supp. 955, 959 (N.D.Ill. 1972).

Professor Larson, on whose text the Vangreen Court relied in reaching its decision, elsewhere states the operative principle in this way (2A Larson, Workmen's Compensation Law § 76.43, at 14-335 to 336):

  When the employer's relation to the third-party is
  that of a contractor doing work for the third-party,
  there may be an implied obligation to perform the
  work with due care. If, by failing to use such care,
  the employer causes an accident injuring his own
  employee, it may be said that the employer has
  simultaneously breached two duties of care. The one
  is toward an employee, and it is for this breach that
  compensation bars any common law remedy. The other is
  toward the third-party contractee, and among the
  damages flowing from the breach of this separate duty
  are any damages the third-party may be forced to pay
  the employee because of their relation.

See Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956), the leading case on the "implied obligation" theory to which Vangreen and the Larson text refer.

Because under Conley we must read the allegations of the third-party complaint in the manner most favorable to the cross-plaintiffs, and to determine if the allegations provide for relief under any possible theory, Spacemark's Fed.R.Civ.P. 12(b)(6) motion to dismiss must be denied.

Motion To Transfer to Nebraska

Spacemark's motion for a transfer of venue to the United States District Court for the District of Nebraska pursuant to 28 U.S.C. § 1404(a) must be denied. It is plain that third-party proceedings are considered ancillary to the main action and therefore do not require independent satisfaction of the venue statutes. 3 Moore's Federal Practice, ¶ 14.28[2] (2d ed. 1979); 6 Wright and Miller, Federal Practice and Procedure, § 1445 (1971). There is thus some question whether a third-party defendant can invoke the "in the interest of justice" standard of Section 1404(a). Id. at p. 242. But even assuming that it can, Spacemark has not made an adequate showing sufficient to overcome the paramount consideration given to the choice of forum by plaintiffs, Illinois residents, particularly when concurred in by defendants as well. Thompson v. United Artists Theatre Circuit, Inc., 43 F.R.D. 197, 201 (S.D.N.Y. 1967); see also United States v. Acord, 209 F.2d 709, 714 (10th Cir. 1954), cert. denied, 347 U.S. 975, 74 S.Ct. 786, 98 L.Ed. 1115 (1954).


Spacemark's motions to dismiss the third party complaints and to transfer this action are denied. Spacemark is ordered to answer the third party complaints on or before November 10, 1980.

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