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Cooley v. Power Construction Co. LLC

Court of Appeals of Illinois, First District, First Division

June 11, 2018

POWER CONSTRUCTION COMPANY, LLC, Defendant and Third-Party Plaintiff-Appellee, Reflection Window Company LLC, d/b/a Reflection Window and Wall, LLC, Third-Party Defendant-Appellant.

          Appeal from the Circuit Court of Cook County. No. 15 L 8626 Honorable John H. Ehrlich Judge Presiding.

          GRIFFIN JUSTICE delivered the judgment of the court, with opinion. Presiding Justice Pierce and Justice Harris concurred in the judgment and opinion.



         ¶ 1 The trial court found that third-party defendant Reflection Window Company LLC (Reflection Window) as an employer waived its affirmative defense to limit its liability for an injury sustained by its employee. The trial court also found that Reflection Window waived its statutory workers' compensation lien. We hold that Reflection Window waived its limited liability status but not its lien rights. Accordingly, we affirm in part and reverse in part.

         ¶ 2 BACKGROUND

         ¶ 3 Plaintiff Timothy Cooley was working as an employee of third-party defendant Reflection Window on a construction project in Chicago. Plaintiff was injured when he was unloading a 600-pound window that Reflection Window was going to install at the project. He filed a workers' compensation claim and received benefits as a result.

         ¶ 4 Plaintiff also filed this case against defendant Power Construction Company, LLC (Power Construction), for negligence. Power Construction was the general contractor for the project. Power Construction had retained Elston Window and Wall, LLC (Elston Window), as a subcontractor, and Elston Window retained Reflection Window as a sub-subcontractor.

         ¶ 5 Power Construction filed a third-party complaint for contribution against Reflection Window. Power Construction asserted that Reflection Window was the negligent party. Appended to the third-party complaint are copies of the master agreement between Power Construction and its subcontractor Elston Window and also the sub-subcontract agreement between Elston Window and Reflection Window.

         ¶ 6 Reflection Window filed an answer and affirmative defenses to the third-party complaint brought against it by Power Construction. Reflection Window denied any liability, and it also asserted the "Kotecki cap" as an affirmative defense. The Kotecki cap is derived from the Illinois Supreme Court decision Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155 (1991), in which the court held that an employer's liability for its employee's injury is capped at an amount not greater than the employer's workers' compensation liability to its employee.

         ¶ 7 Power Construction responded with a motion to strike the Kotecki cap affirmative defense on the basis that Reflection Window had waived that defense under either the master agreement, the subcontract agreement, or both. Both the master agreement and subcontract agreement have indemnification provisions. More relevant here is the subcontract indemnification provision in which Reflection Window agrees to indemnify both Elston Window and Power Construction and which mentions workers' compensation.

"[Reflection Window] agrees to defend and indemnify [Elston Window], [Power Construction] *** and such other parties as [Elston Window] is required by the Contract Documents to defend and indemnify, from and against any and all claims *** which are caused by the negligence of [Elston Window], [Power Construction] ***. [Reflection Window] hereby expressly and specifically agrees that its obligations to indemnify, defend and save harmless shall not in any way be diminished by any statutory or constitutional immunity it enjoys from suits by its own employees or from limitations of liability or recovery under worker's compensation laws."

         ¶ 8 The trial court granted Power Construction's motion to strike Reflection Window's Kotecki cap affirmative defense under that indemnity provision in the contract. However, and this is the genesis of the issue on appeal, the trial court also included a statement in its order that, under the agreement, Reflection Window "explicitly waived [its] workers' compensation lien." That statement is the only one in the nine-page order that discusses a waiver of the workers' compensation lien. Power Construction did not move to strike the lien, nor did it otherwise address the lien in its motion to strike. Power Construction only moved the court for an order that Reflection Window's cap on the amount of the liability be found to be waived.

         ¶ 9 Reflection Window filed a motion to reconsider based on its belief that the court's reference to a lien waiver must have been a mistake, as it is not addressed in the rest of the order and no one asked the court for such a ruling. Reflection Window asked that the court modify its order by removing the language regarding a "lien waiver." The court did not order any additional briefing on the motion to reconsider and denied Reflection Window's motion "in ...

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