October 01, 2012

Employee Injured at ‘Sister’ Corporation is Borrowed Servant

October 01, 2012

Moevanu Prodanic vs. Grossinger City Autocorp, Inc., et al. No. No. 1-11-0993

Prodanic filed suit against Grossinger City Autocorp, Inc. (City Autocorp) for the death of Milovan Prodanic who suffered fatal injuries while repairing a garage door on the premises of City Autocorp.  City Autocorp was one of several corporations and car dealerships within the same corporate family owned and operated by Gary and Caroline Grossinger.  The decedent was initially hired by Grossinger Chevrolet (Chevrolet) in Palatine and at the time of his death was working on the premises of City Autocorp which is located on North Wells Street in Chicago.  During discovery depositions, it was revealed that Chevrolet had hired the decedent with the understanding that he would work at both City Autocorp and Grossinger Chevrolet.  He received a weekly salary from Chevrolet.  The only person with authority to discharge decedent from his employment was Gary Grossinger, president of both corporations.

One workers’ compensation policy covered the employees of all Grossinger dealerships.  Each dealership paid its share; decedent was included in the payments made by Chevrolet, which also provided decedent a cell phone and an automobile.  Decedent used both his own tools and those purchased by Chevrolet.  When he needed to purchase items for repairs, the dealership that needed the repair gave him the money.  He had authority to obtain bids from contractors to perform work at either dealership but needed approval from the president or general manager of the respective dealership in order to hire a contractor.  The lift decedent was using at the time of the accident was owned by Chevrolet.  Chevrolet had a charge account decedent used to purchase gas.

The general manager of City Autocorp admitted that he and the service director at the Wells Street dealership would give orders to decedent but did not instruct him in how to complete his tasks.  Employees of the Wells Street dealership assisted him in performing maintenance.  Decedent generally came to the Wells Street dealership twice a week but, if he were needed on a different day, the general manager or service director would call him.  He had his own keys to the Wells Street dealership and knew the code to deactivate the alarm system.  The service director stated he had authority to stop decedent if he were working in an unsafe manner.

Based on the above facts, City Autocorp moved for summary judgment, arguing that the decedent was a borrowed employee over whom City Autocorp exercised complete control at the time of the accident.  City Autocorp cited the facts that its managers could stop decedent’s work if they believed his conduct was not safe, that other City Autocorp employees assisted him, and that he was provided tools.  City Autocorp argued further that decedent consented to employment with City Autocorp because he completed every assignment City Autocorp provided him.  The trial court granted the motion for summary judgment and the estate appealed, arguing that a genuine issue of material fact existed as to whether decedent was the borrowed employee of City Autocorp.  The Court rejected this argument, stating that while loaned-employee status is generally a question of fact, it constitutes a question of law if the facts are undisputed.  To determine this, the Court set out the test for employment:

  1. If the borrowing employer had the right to control and direct the manner in which the employee performed the work; and
  2. If a contract of hire existed between the borrowing employer and the employee.

The court then discussed the factors used to determine whether a borrowing employer has the right to control and direct the manner of decedent’s work:

  1. The employee works the same hours as the borrowing employer;
  2. The employee receives instruction from the borrowing employer’s foreman and is assisted by the borrowing employer’s employees;
  3. Were the loaning employer’s supervisors present;
  4. The borrowing employer is permitted to tell the employee when to start and stop working; and 
  5. The loaning employer relinquishes control of its equipment to the borrowing employer. 

Considering that the facts showed that City Autocorp had the right to control the manner of decedent’s work by providing him with the tasks he needed to complete, there was no genuine issue of material fact as to whether decedent was a borrowed employee of City Autocorp.  Further, the facts showed that City Autocorp had the authority to control decedent’s work – he took directions from the general manager and the service director of City Autocorp.  The managers agreed they could stop decedent from working and decedent could not hire out contracts without City Autocorp approval.  And it was apparent that Chevrolet had relinquished control of the lift on which decedent was working at the time of the accident.

Last, by appearing at City Autocorp’s facility, responding to instructions from City Autocorp’s supervisors, and the other indicia of employment – possession of keys, a credit card, and a car owned by the dealership – it was apparent that decedent knew that City Autocorp was in charge of his performance and accepted its direction.  Therefore, he acquiesced to an employment relationship with City Autocorp.

The Court also pointed out that it is not necessary for a loaning employer to be defined as such pursuant to Section 1(a)(4) of the Act which covers entities in the business of hiring, procuring or furnishing employees to other employers.  This is only one type of loaning employment and does not exclude any other.


Claimants will always attempt to locate a negligent third party from whom damages can be sought for an injured employee’s work-related accident.  Thus it was no surprise that the estate sued Grossinger’s ‘sister’ corporation, which was obviously a separate legal entity.  Rather than making a broad policy statement: a single workers’ compensation policy covering all Grossinger entities and employees should insulate City Autocorp from civil liability, the court relied on the loaning-borrowing analysis to strike down the lawsuit.  The court’s analysis of the factors which determine loaning-borrowing status and those which support a determination on the right to control and direct the manner of work are similar to those cited in numerous court decisions in workers’ compensation claims.  They are also similar to the analysis utilized in determining whether there is an employment relationship versus that of independent contractor.

The estate argued that the decedent was essentially an independent contractor vis a vis City Autocorp in an effort to manufacture civil liability.  The court was obviously not disposed to countenance the prospect that civil damages could be awarded against an entity which merely borrowed decedent’s services from one of its member organizations.