October 01, 2007

All Members of a Joint Venture are not Necessarily Entitled to Immunity if the Terms of the Joint Venture

October 01, 2007

Ioerger vs. Halverson Construction Co., et al No. 3-06-0399

In the case of Ioerger v. Halverson Construction Co., et al, the plaintiffs were ironworkers who fell from a scaffold suspended above the Illinois River when the scaffold collapsed plunging the ironworkers into the river below.  Three ironworkers were injured and one was killed.  Suit was filed against Halverson Construction Co., individually and also against Midwest Foundation Corporation/Halverson Construction Company, a joint venture.  Halverson and the joint venture both claimed immunity as employers of the ironworkers.

Approximately one year prior to this accident, defendants, Midwest Foundation and Halverson Construction formed a joint venture entitled Midwest Foundation Corporation/Halverson Construction Company, in order to place a bid with the Illinois Department of Transportation on the bridge repair project.  At that time, Midwest and Halverson executed the Joint Venture Agreement, which provided that:

“the parties hereby agree to constitute themselves as joint venturers for the purpose of submitting joint bids … for the performance of the construction contracts herein described, and for the further purpose of performing and completing such construction project.

The agreement also provided that the profits and losses and liabilities resulting from the bridge project be shared 60% by Midwest and 40% by Halverson.  Pursuant to the agreement, Midwest was fully responsible for:

The performance of all labor for the Joint Venture, including the payment of all payroll, payroll taxes, fringes, and other employee expenses, including, but not limited to, the establishment of worker’s [sic] compensation insurance and the payment of all premiums therefore. *** Midwest Foundation Corporation shall be entitled to reimbursement from the Joint Venture for the costs incurred in performing the foregoing obligations; such reimbursement to be paid at such time or times as the Joint Venture shall determine.”

Halverson and Midwest performed separate duties on the bridge.  Midwest hired, paid and supervised the ironworkers, including the employees who worked on “Rampe,” the portion of the project that Halverson personnel supervised.  The joint venture did not hire or employ any workers nor did it pay the wages of any workers on the project, including the injured ironworkers.  All workers’ compensation premiums were paid by Midwest to its carrier.  The record shows that the joint venture had never reimbursed Midwest for any expenses it occurred on the bridge project.

The ironworkers received compensation benefits from their employer, Midwest.  A civil action was filed against Halverson, as well as the joint venture.  Nevertheless, the appellate court reversed the trial court and found that Halverson and the joint venture were not entitled to immunity.  The court emphasized that neither Halverson nor the joint venture contributed to the payment of the workers’ compensation premiums or reimbursed Midwest for its payment of them before the accident.  On appeal, the appellate court found:

We believe that it would be bad public policy to allow Halverson and/or the joint venture, at this point, to now deliver or postdate a check to Midwest for reimbursement of wages and workers’ compensation premiums to fulfill its obligations under the joint venture agreement in order to obtain the protection of the Act’s immunity.  The mere fact that Halverson and Midwest were co-joint venturers and part of the joint venture does not, in our view, provide them immunity under section 5(a).  In order to enjoy the Act’s immunity, they must also undertake its obligations.

Editor’s Note:

Your Editor’s position on this case is well expressed in the minority opinion.  One, because a question of fact existed, neither party should have been granted a motion for summary judgment and, as a result, the case should be remanded for a determination of the material facts.  Two, since the parties had not actually proceeded to trial before the trial court, the defendants did not have the opportunity to explain why they had not reimbursed Midwest for its costs up to that time.  There is no record on which the court could determine whether the project may have been completed or whether there were any gross profits from which to reimburse Midwest.  Three, the plaintiffs were granted a motion for summary judgment when they had not even filed a cross-motion.  In other words, the defendants never had the opportunity to know what the basis of the plaintiff’s motion for summary judgment might contain.  Unfortunately, the court has not remanded the case for further evidence.

Ioerger, et al v. Halverson Construction, et al o. 3-06-0399, decided October 12, 2007

Frank J. Wiedner, Editor Wiedner & McAuliffe, Ltd One North Franklin, #1900 Chicago, IL 60606

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