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Sharp v. Gallagher

OPINION FILED MARCH 26, 1981.

RUSSELL DEAN SHARP, PLAINTIFF-APPELLANT,

v.

ROBERT GALLAGHER ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. MYRON GOMBERG, Judge, presiding.

MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff, Russell Dean Sharp, appeals from an order of the circuit court of Cook County dismissing with prejudice his two-count action brought against defendants, Robert Gallagher and Daniel Henry, individually and doing business as Orchard Hill Building Company. *fn1 On appeal, plaintiff contends the trial court erred in granting defendants' motion to dismiss on the grounds that section 5(a) of the Workmen's Compensation Act (Ill. Rev. Stat. 1977, ch. 48, par. 138.5 (a)) barred both counts of the cause of action.

We reverse and remand.

Count I of plaintiff's amended complaint is based on the statutory cause of action for violations of the Structural Work Act (Ill. Rev. Stat. 1977, ch. 48, pars. 60 through 69). In this amended complaint, plaintiff alleges that on January 16, 1978, the defendants were in charge of the construction of a building located near 67th and Springside Streets in Downers Grove, Illinois. Plaintiff also asserts that the defendants willfully failed to erect, place, and operate, in a safe manner as required under the Structural Work Act (Ill. Rev. Stat. 1977, ch. 48, par. 60), the scaffold from which plaintiff fell. Plaintiff, who was employed to work on the scaffold, also contends that he was injured seriously when he slipped and fell from the scaffold. Plaintiff further alleges that the proximate cause of his injuries was the defendants' willful failure "to erect, place and operate the said scaffold in a safe, suitable and proper manner * * *."

Count II, based on common law negligence, reasserts the facts alleged in count I. It also sets forth specifically that the defendants failed to erect the scaffold in a safe manner, provided icy planks for use as scaffolding, and failed to warn plaintiff of the dangerous condition of the scaffold.

Defendants filed a section 48(1)(i) motion to dismiss (Ill. Rev. Stat. 1977, ch. 110, par. 48(1)(i)) on the grounds that plaintiff previously had instituted proceedings before the Industrial Commission against his employer, Farmingdale Millwork (Farmingdale), "a wholly owned service organization" of defendant Orchard Hill, whose partners are defendants Gallagher and Henry. The motion concluded that, by virtue of the Farmingdale-Orchard Hill relationship, Orchard Hill was plaintiff's employer and section 5(a) *fn2 of the Workmen's Compensation Act barred the civil suit.

Plaintiff responded to defendants' motion by filing an affidavit containing a copy of defendant Gallagher's deposition in which Gallagher stated that plaintiff was an employee of Farmingdale. Gallagher also indicated that Orchard Hill owned the beneficial interest in the property upon which the building and scaffold were being constructed *fn3 when plaintiff was injured. Gallagher described Farmingdale as a "conduit" window service organization which supplied windows for buildings being constructed by Orchard Hill. Gallagher also asserted that Orchard Hill owned Farmingdale and that they (Orchard Hill and Farmingdale) were "the same thing." He further stated that Farmingdale's name appeared on plaintiff's paychecks and that plaintiff was an employee of Orchard Hill through Farmingdale.

In addition to his affidavit, plaintiff also submitted a copy of his claim for adjustment of workmen's compensation benefits which named Farmingdale as his employer. He also tendered copies of his 1977 and 1978 wage and tax statement forms which listed Farmingdale as his employer. After receiving certain information from defendants, plaintiff also filed copies of Farmingdale's and Orchard Hill's "Employer's Quarterly Federal Tax Returns" which indicated that they had separate employer identification numbers for this tax purpose.

Defendant Gallagher then filed his affidavit in which he asserted that Farmingdale was wholly owned by Orchard Hill. He also indicated that, in both 1977 and 1978, Farmingdale had a total of four employees, who were "carpenter helpers" employed in a nonsupervisory capacity. These four employees were supervised by foremen of Orchard Hill. He also asserted that Farmingdale was not a separate entity from Orchard Hill for income tax purposes and that all of Farmingdale's losses and profits were absorbed by Orchard Hill. Orchard Hill also paid the premiums for Farmingdale's workmen's compensation insurance policy.

Defendants also submitted an affidavit from Orchard Hill's accountant, Sam Levensen. He served as an auditor and maintained the financial books and records of Orchard Hill. Levensen claimed that Orchard Hill was the sole owner of Farmingdale. He also asserted that no separate Federal or State income tax was prepared on behalf of Farmingdale and that Farmingdale was not a separate business entity for general accounting or Federal income tax purposes. He further noted that all costs and expenses incurred by Farmingdale were totally reimbursable from the operation of Orchard Hill.

The trial court subsequently granted defendants' motion to dismiss on the grounds that Orchard Hill was plaintiff's employer and therefore entitled to immunity under section 5(a). This appeal followed.

OPINION

I

Plaintiff first contends that whether Farmingdale and Orchard Hill are separate business entities, and therefore separate employers, for purposes of the Workmen's Compensation Act is a question of fact which ...


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