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Christy-Foltz, Inc. v. Safety Mutual Casualty Corp.

January 07, 2000

CHRISTY-FOLTZ, INC., PLAINTIFF-APPELLANT,
v.
SAFETY MUTUAL CASUALTY CORPORATION, N/K/A SAFETY NATIONAL CASUALTY CORPORATION, DEFENDANT-APPELLEE, AND BITUMINOUS CASUALTY CORPORATION, DEFENDANT.



Appeal from Circuit Court of Macon County No. 98MR253 Honorable James A. Hendrian, Judge Presiding.

The opinion of the court was delivered by: Justice Knecht

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

In July 1998, plaintiff, Christy-Foltz, Inc. (Christy-Foltz) sought a declaratory judgment to determine whether its contribution liability in excess of the so-called Kotecki cap (see Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 165, 585 N.E.2d 1023, 1027-28 (1991)) was covered by its workers' compensation and employer's liability insurance policy issued by defendant, Safety Mutual Casualty Corporation, now known as Safety National Casualty Corporation (Safety National). Safety National contended plaintiff's contribution liability in excess of the Kotecki cap was a loss "voluntarily assumed" by the plaintiff under a May 1991 contract between plaintiff as a subcontractor and a third-party contractor and is, therefore, excluded from coverage under the terms of the policy. On cross-motions for summary judgment, the trial court agreed with Safety National. We agree with the defendant as well and affirm the judgment of the trial court.

I. BACKGROUND

The record reveals the following undisputed facts. On November 26, 1986, the defendant, Safety National, issued a workers' compensation and employer's liability insurance policy to the plaintiff, Christy-Foltz, with effective dates from November 26, 1990, through November 26, 1991.

On July 8, 1991, Marc Bohanan, an employee of Christy-Foltz, sustained injuries while working on a construction project in which Christy-Foltz was engaged as a subcontractor by Litton Industrial Services, Inc. (LISI).

A. Suit for Negligence and Structural Work Act Violations: Peoria County Case No. 93-L-108

On June 27, 1995, Bohanan filed a common-law action against LISI in Peoria County case No. 93-L-108, alleging negligence and willful violations of the Structural Work Act (Ill. Rev. Stat. 1991, ch. 48, pars. 59.90 to 69 (see 740 ILCS 150/0.01 et seq. (West 1994), repealed by Pub. Act 89-2, §5, eff. February 14, 1995 (1995 Ill. Laws 7))).

On August 18, 1995, LISI filed a third-party action against Christy-Foltz for contribution pursuant to the Joint Tortfeasor Contribution Act (Contribution Act) (Ill. Rev. Stat. 1991, ch. 70, pars. 300 to 305 (now 740 ILCS 100/0.01 et seq. (West 1998)). In response to LISI's third-party complaint, Christy-Foltz raised the Workers' Compensation Act (Compensation Act) (Ill. Rev. Stat. 1991, ch. 48, pars. 138.1 to 138.30 (now 820 ILCS 305/1 et seq. (West 1998))) as an affirmative defense and requested judgment against it be confined to the amount of its liability under the Compensation Act as provided in Kotecki. In Kotecki, decided on April 18, 1991, the Supreme Court of Illinois held an employer's contribution liability to a third-party plaintiff is limited to the amount of workers' compensation benefits paid to the injured party under the Compensation Act (Ill. Rev. Stat. 1989, ch. 48, par. 138.5 (now 820 ILCS 305/5 (West 1998))). Kotecki, 146 Ill. 2d at 165, 585 N.E.2d at 1027-28.

In response, LISI filed a motion to strike the plaintiff's affirmative defense and argued Christy-Foltz waived the right to invoke Kotecki as an affirmative defense to contribution liability by executing a contract with LISI, apparently on May 30, 1991, in which Christy-Foltz agreed to remain liable for any losses attributable to Christy-Foltz's own negligence. In support of this contention, LISI cited Braye v. Archer-Daniels-Midland Co., 175 Ill. 2d 201, 212-13, 676 N.E.2d 1295, 1301 (1997), in which the supreme court held an employer may contractually waive the limited liability afforded by Kotecki. LISI premised its argument on the following May 1991 contractual provision:

"SUBCONTRACTOR [(Christy-Foltz)] shall indemnify and hold harmless LISI and OWNER, their agents and employees, from any and all claims, suits, losses[,] and expenses, including attorneys' fees, provided that such claim, suit, loss[,] or expense is attributable to bodily injury, sickness, disease or death, or injury to property, which is caused by (a) negligence of SUBCONTRACTOR [Christy-Foltz], its agents, employees, subcontractors[,] or suppliers; or (b) a defect in material or workmanship of the work or any portion thereof."

In March 1996, the Peoria County circuit court found Christy-Foltz waived the Kotecki cap for the purposes of contribution liability to LISI by virtue of its contractual agreement.

B. The Instant Case for Declaratory Judgment: Macon County Case No. 98-MR-253

In July 1998, Christy-Foltz initiated the instant litigation in Macon County circuit court No. 98-MR-253 for declaratory judgment against Safety National, which demanded Safety National provide insurance coverage for all contribution liability arising under LISI's third-party action against Christy-Foltz. On September 1, 1998, Safety National filed a motion for summary judgment, acknowledging responsibility to Christy-Foltz for contribution liability up to the Kotecki cap, but denying responsibility for contribution liability in excess of the Kotecki cap. Safety National relied on a provision of the insurance policy issued to Christy-Foltz, which excluded coverage for "any [l]oss or [c]laim [e]xpenses voluntarily assumed by the EMPLOYER [Christy-Foltz] under any contract or agreement, expressed or implied." ...


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