United States District Court, Northern District of Illinois
September 17, 1985
U.S. HOME CORPORATION, PLAINTIFF,
GEORGE W. KENNEDY CONSTRUCTION COMPANY, INC., ET AL., DEFENDANTS. MACKIE CONSULTANTS, INC., ET AL., THIRD PARTY PLAINTIFFS, V. ARMCO, INC., THIRD PARTY DEFENDANT.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
This multiparty litigation was originally launched by U.S. Home
Corporation ("U.S. Home"), whose First Amended Complaint (the
"Complaint") runs against George W. Kennedy Construction
Company, Inc. ("Kennedy"), Mackie Consultants, Inc. ("Mackie"),
William Lorek ("Lorek") and American States Insurance Company
("American"). U.S. Home charges:
1. Kennedy and Mackie with breach of contract,
2. Kennedy with breach of express and implied warranties and
3. Kennedy, Mackie and Lorek with negligence, all arising out
of the construction of sanitary sewers that serve the
single-family Waterford Woods residential development in
Lindenhurst, Illinois. Kennedy and Mackie and Lorek have in
turn filed two-count Third Party Complaints (the "Kennedy
Complaint" and the "Mackie-Lorek Complaint") against Armco,
Inc. ("Armco"),*fn1 seeking recovery via contribution and
Armco now moves to dismiss each of the Kennedy Complaint and
the Mackie-Lorek Complaint under Fed.R.Civ.P. ("Rule")
12(b)(6). For the reasons stated in this memorandum opinion and
order, the motion is granted in principal part and denied in
U.S. Home, a real estate developer, suffered more than $450,000
in damages when the sanitary sewer installation for its major
single-family residence development in Lindenhurst proved
defective and actually collapsed in part. Mackie had designed
the system (its employee Lorek was the responsible professional
engineer) and Kennedy had installed it, each under a separate
contract with U.S. Home. Armco truss pipe and other
Armco-manufactured accessory components were used in
construction of the system. No contractual arrangement existed
between Armco and either Kennedy or Mackie-Lorek.
Kennedy, Mackie and Lorek contend any liability any of them
might have to U.S. Home would be occasioned not by their own
delinquency but rather by the defective conditions of the Armco
products involved. That, they say, entitles each of them to
contribution and indemnity. Armco retorts none of Kennedy,
Mackie and Lorek states a cause of action for either such
Section 302(a) of the Illinois Contribution Among Joint
Tortfeasors Act (part of the "Act," Ill.Rev.Stat. ch. 70, §§
Except as otherwise provided in this Act, where 2 or more
persons are subject to liability in tort arising out of the
same injury to person or property, or the same wrongful death,
there is a right of contribution among them, even though
judgment has not been entered against any or all of them.
Thus the Act expressly requires each party to the
contribution action to be "subject to liability in tort," and
the sensible reading of that phrase connotes liability to the
injured party — here U.S. Home. In those terms each of Kennedy,
Mackie and Lorek has a viable contribution claim only as to a
portion of U.S. Home's potential sources of recovery.
1. Kennedy's and Mackie's Potential Contract Liability to U.S.
Armco is quite right in urging no contribution would lie if
Kennedy's or Mackie's liability to U.S. Home were established
on a breach of contract theory. Even were Armco then determined
to be a tortfeasor as to U.S. Home, no contribution would be
available to Kennedy or Mackie because the requisite "2 or more
persons . . . subject to liability in tort" would be lacking.
Intamin, Inc. v. Figley-Wright Contractors, Inc., 605 F. Supp. 707
709-10 (N.D.Ill. 1985).
Both Kennedy and Mackie purport to find shelter against that
fatal conclusion in Maxfield v. Simmons, 96 Ill.2d 81, 70
Ill. Dec. 236, 449 N.E.2d 110 (1983). But Maxfield
distinguished carefully between claims sounding in contract and
those sounding in tort, holding that only the latter would
trigger rights of contribution or indemnification. Indeed, the
very portion of the Maxfield opinion quoted at Kennedy Mem. 3
makes plain the only predicate for contribution there was that
(adapting the quotation to this case) "the liability, if any,
imposed on [Kennedy or Mackie] will be the result not of breach
of contract, but of tortious conduct" (id. at 87, 70 Ill.Dec.
at 238, 449 N.E.2d at 112).
In sum, contribution on any U.S. Home contract-breach recovery
is simply unavailable. This opinion turns then to the same
question in the tort arena.
2. Kennedy's, Mackie's and Lorek's Potential Tort Liability to
None of the litigants has dealt properly with the
tort-contribution subject. Because the Act treats with the
topic so plainly (though that could not be guessed from the
parties' memoranda), no extended discussion is required.
Armco really glosses over (or ignores entirely) the negligence
theories advanced by U.S. Home against the third-party
plaintiffs, as referred to in the two Third Party Complaints.
To the extent U.S. Home is successful against any of Kennedy,
Mackie and Lorek on such negligence grounds*fn3 and Armco is
also found negligent or strictly liable*fn4 as to U.S. Home,
the "2 or more persons . . . subject to liability in tort"
would be present. And that of course is all the Act requires
for contribution from Armco.
But each of the third-party plaintiffs is equally guilty of
glossing over the relevant provision of the Act.*fn5 As
already indicated, what "subject to liability in tort" means is
liability to the original plaintiff (here U.S. Home), not
liability of the third-party disputants inter sese. Intamin,
605 F. Supp. at 710.
Yet Kennedy's Complaint sets out a contribution claim full of
irrelevant allegations as to Armco's duty to others than U.S.
Home (Count I ¶ 5):
That Armco, Inc. had a duty to Kennedy, Mackie Consultants,
Inc. and William F. Lorek and U.S. Home to exercise due care in
the design, manufacture and marketing of Armco truss pipe.
And Kennedy's Count I ¶ 4 asserts various potential strict
liability or negligence breaches by Armco, without identifying
how any of those violated a duty owed to U.S. Home. Even worse,
the Mackie-Lorek Complaint may be searched in vain for any hint
of how Armco's asserted misconduct impinged on a duty running
from it to U.S. Home.
Despite those flaws in the third-party complaints, the fact
remains Armco may be subject to contribution claims for the
reason stated at the outset of this section. Consequently it
seems most efficient*fn6 to deny Armco's motion to dismiss
on condition each of the Third Party Complaints is amended on
or before September 30, 1985 to conform to this opinion.
As contrasted with contribution and its risk-sharing approach,
indemnity is an all-or-nothing concept. Implied (that is, not
expressly contractual) indemnity was originally a product of,
and largely a judicial response to, the era when the rule
against contribution among joint tortfeasors — coupled with a
plaintiff's absolute choice of whom to sue — sometimes left a
more culpable party free of liability while a lesser wrongdoer
bore the entire cost of plaintiff's injuries. As to Illinois'
adoption of the indemnity concept in the area of strict
products liability, see Suvada v. White Motor Co., 32 Ill.2d 612,
624, 210 N.E.2d 182, 188-89 (1965). And as to the
identical rationale for the judicial creation of the
active-passive negligence theory of indemnity, see Skinner v.
Reed-Prentice Division Package Machinery Co., 70 Ill.2d 1,
12-13, 15 Ill.Dec. 829, 833, 374 N.E.2d 437, 441 (1970).
In this case U.S. Home had originally joined Armco as a
defendant on strict liability grounds. After this Court had
upheld that cause of action (solely in pleading terms) against
Armco's Rule 12(b)(6) attack, 565 F. Supp. 67 (N.D.Ill. 1983),
U.S. Home nonetheless dismissed out Armco. Now the third-party
plaintiffs, urging Armco was the real culprit because of its
defective product, seek to shift all their potential liability
But it should be obvious from the very origins of implied
indemnity that passage of the Act, which removed a good part of
the policy underpinnings from the indemnity doctrine, would
work some dramatic changes in indemnity as well as
contribution. And that has in fact taken place. Earlier this
year this Court rejected the Mackie-Lorek cross-claim for
indemnity against Kennedy because post-Act case law (most
importantly Morizzo v. Laverdure, 127 Ill. App.3d 767, 83
Ill.Dec. 46, 469 N.E.2d 653 (1st Dist. 1984)) "has specifically
held Illinois' common-law cause of action for active-passive
indemnity has not survived passage of the . . . Act." U.S.
Home Corp. v. George W. Kennedy Construction Co., 601 F. Supp. 84,
86 (N.D.Ill. 1985).
In an important sense the Kennedy and Mackie-Lorek claims
against Armco are, on the third-party plaintiffs' own
of those claims, of that same active-passive type. And to that
extent the logic of this Court's earlier opinion bars such
claims. However, the third-party claimants also urge Armco's
vulnerability in strict liability terms renders it liable in
indemnity to them for any exposure they may have to both (1)
U.S. Home's breach of contract and breach of warranty claims
and (2) U.S. Home's negligence claims.
As to contract-type claims (including warranty claims), that is
simply wrong. It is based on a flat-out misreading of
Maxfield, which — after speaking of indemnification (as well
as contribution) as being triggered by tortious conduct on the
part of the third-party defendants — said, again adapting the
quotation to this case (96 Ill.2d at 87, 70 Ill.Dec. at 238,
449 N.E.2d at 112):
The implied contract of indemnity arose from the contractual
relationship between the parties, but the liability, if any,
imposed on [Kennedy or Mackie] will be the result not of breach
of contract, but of tortious conduct.
And see the discussion of Maxfield in Chicago College of
Osteopathic Medicine v. George A. Fuller Co., 719 F.2d 1335,
1341 (7th Cir. 1983). To that extent too, then, the indemnity
That leaves only potential indemnification for U.S. Home's
tort-based claims. On that front Mackie-Lorek seek to urge the
active-passive characterization in Morizzo does not apply to
a strict liability claim, because the latter concept was
developed to avoid the need to measure levels of fault. But
that argument misses the real sense of the "active-passive"
dichotomy, which simply reflected the idea that (in an era of
all-or-nothing rather than shared liability) it was more fair
for the principal wrongdoer to bear the total liability than a
lesser tortfeasor. And of course the same idea had supported
the shifting of total liability from the installer (say) of a
dangerous product to its producer, when some third party was
injured by the product and sought to recover under strict
liability. In both instances the shifting of liability had to
take the form of indemnity, simply because the law had
developed no technique for divided liability.
Today, with a contribution regime in place, the rationale for
any kind of full shifting of responsibility (under any label)
has lost much of its force. And so it is that Morizzo, 127
Ill.App.3d at 774, 83 Ill.Dec. at 51, 469 N.E.2d at 658 teaches
that, absent an express contract for indemnification (and none
is involved here), implied indemnification is not even arguably
viable after passage of the Act except perhaps in two
However, none of these [post-Act] cases [including Van Jacobs
v. Parikh, 97 Ill. App.3d 610, 52 Ill.Dec. 770, 422 N.E.2d 979
(1st Dist. 1981) and Lowe v. Norfolk & Western Railway Co.,
124 Ill. App.3d 80, 79 Ill.Dec. 238, 463 N.E.2d 792 (5th Dist.
1984) ] addressed the question raised by the failure of the
legislature to provide for the specific preservation of the
right of express or implied indemnity. As we interpret Van
Jacobs, this court held that implied indemnity is not
extinguished by the passing of the Contribution Act for cases
involving some pre-tort relationship between the parties which
gives rise to a duty to indemnify, e.g., in cases involving
vicarious liability (lessor-lessee: employer-employee; owner
and lessee; master and servant). In Lowe, this court held
that implied indemnity was still viable with respect to
"upstream" claims in a strict liability action. Except possibly
for those causes of action based on the theories of indemnity
just enumerated, it is our opinion that the Contribution Act
extinguished a cause of action for active-passive indemnity in
Morizzo's reference in that quotation to "active-passive
indemnity" is no more than a characterization of the basic
concept of indemnification, under which it is thought the
substantial difference in degrees of fault means the indemnitee
should be wholly freed from liability and the indemnitor should
be saddled with the entire liability instead. There is no more
and no less
reason to apply that all-or-nothing concept in the
greater-and-lesser fault situation of the manufacturer and
installer of a strict-liability-type product than there is in
the active-passive fault situation. Morizzo's lesson as to
the latter type of indemnity is equally applicable to the
For the reason stated in its earlier opinion (601 F. Supp. at
86), then, this Court follows Morizzo. Surely no pre-tort
relationship of the type identified by Morizzo exists here —
U.S. Home's claims assert direct and not vicarious liability.
As for "upstream" claims in strict liability actions, as
referred to in Lowe and mentioned in Morizzo, any potential
for such indemnification in this case would depend on two
1. Kennedy's or Mackie-Lorek's liability to U.S. Home on
strict liability grounds for incorporation of the defective
Armco products into the sewer installation.
2. Imposition of that same liability "upstream" from Kennedy,
Mackie or Lorek to Armco.
There is some question whether U.S. Home's tort claims against
Kennedy or Mackie or Lorek fit the first requirement. For
analytical purposes, however, this opinion will assume that
some — though certainly not all — the allegations of breaches
of duty to U.S. Home can be argued to do so:
1. As to Kennedy, Count III ¶ 23 alleges Kennedy "failed to
produce completed construction was workmanlike and acceptable
in every detail; and failed to fulfill the minimum standards
of performance and workmanship for sewer installations in
2. As to Mackie and Lorek, Count VI ¶ 18 is more
problematical, but some of its allegations (perhaps
subparagraphs (a), (b) and (g)) might arguably meet the
description of a strict liability claim.
So each Third Party Complaint for indemnity might partly pass
scrutiny at the first step.
But Kennedy, Mackie and Lorek founder on the second requirement
in any case. Chicago College, 719 F.2d at 1341-42 parsed the
Illinois case law as of late 1983, emphasizing that potentially
conflicting cases (including Maxfield ) were reconcilable on
the ground that the right to indemnification must stem from a
contractual relationship (id. at 1342, emphasis added):
As we interpret these cases, we hold that Illinois law as it
now stands does allow a third party action for indemnity where
the third party plaintiff and the third party defendant were
contracting parties and the third party plaintiff bears no
independent fault in the harm to the original plaintiff.
That analysis tracks with the Illinois case law since then, for
it accounts not only for Maxfield and Lowe (decided before
Chicago College, though the Lowe case was not specifically
referred to by our Court of Appeals) but also for Anixter
Bros., Inc. v. Central Steel & Wire Co., 123 Ill. App.3d 947,
952-53, 79 Ill.Dec. 359, 363, 463 N.E.2d 913
, 917 (1st Dist.
1984). Each of those Illinois cases upheld "upstream" indemnity
actions where, in the language of Chicago College, "the third
party plaintiff and the third party defendant were contracting
In this case, none of Kennedy, Mackie and Lorek had a
contractual relationship with Armco, and under the Chicago
College analysis that is fatal to their implied indemnity
claims. Mackie and Lorek ask this Court to disavow Chicago
College and its reading of Illinois law. This Court is not
about to do so.
It follows that none of the possible bases for indemnification
— for the full shifting of liability to Armco — exists.
Armco's motion to dismiss the indemnity-seeking portions of the
Kennedy Complaint and the MackieLorek Complaint is
Armco's motion is granted in part and denied in part, each to
the extent stated in this opinion. Though the Third Party
Complaints have thus survived Armco's current motion, that has
been a limited survival. All parties should be mindful of the
need, as and when the time for final pretrial order documents
arrives in preparation for trial, to prepare suitable special
verdict forms (Rule 49(a)) or special interrogatories (Rule
49(b)) to permit ascertainment of whether the jury's
determinations do or do not bring contribution into play.