April 02, 2007

Payments of Workers’ Compensation Benefits by Defendent Did Not Prevent Plaintiff from Pursuing Civil Action

April 02, 2007

Townsend v. James Fassbinder, et al No. 2-06-0226

Steve Townsend and his wife, Kristi Townsend, had a civil action against Fassbinder United Builders, Inc (United), owned by Jim Fassbinder, and Rainbow Painting Services, Inc. (Rainbow), owned by Mike Fassbinder, Jim’s brother, as a result of Townsend’s fall through an unguarded and unbarricaded hole in the floor while Townsend was working at a house that United had under construction.  The court entered a verdict awarding Steve $1,951,238 and Kristi $250,000 for loss of consortium, both of which were reduced by 10% contributory negligence.  Rainbow was dismissed from the action prior to verdict.  United appealed on the basis that it was Townsend’s employer at the time of the accident.


On February 2, 1999, Townsend was a 47 year old painter who reported for work at Rainbow, where he had worked for the past five years, at approximately 40 hours per week.  Each day he reported to the Rainbow shop where Mike Fassbinder, Rainbow’s owner, told the painters where they would be working that day.  The painters would then put the Rainbow equipment in the Rainbow truck and drive to the work site which was customarily a home.  Townsend was responsible for the equipment and for coordinating two to eight painters at the job site.  When Townsend arrived at Rainbow, Mike ordered Townsend and a crew of painters to paint the drywall at a house under construction by United, a company owned by Jim Fassbinder, Mike’s brother.  Upon his arrival, Townsend met with Jim and noted an uncovered and unbarricaded hole in the floor.  Jim told Townsend that he would cover or barricade the hole, but failed to do so and, shortly thereafter, Townsend fell approximately 15 feet to the floor below, thereby sustaining significant injuries.

After the accident, United’s carrier paid Townsend’s medical bills and approximately one year of temporary total disability benefits.  The benefits were discontinued after the carrier believed that Jim had made misrepresentations on his insurance policy.

The records of the company reflected that Townsend was paid by Rainbow and did not reflect that Townsend was an employee of United.  Instead, the records described the painters as subcontractors who did not have insurance certificates.  Just prior to the termination of his compensation benefits from United, Townsend signed a statement that described him as being regularly employed by Rainbow but that on the day of the accident he was not working for Rainbow.

During the civil litigation, United contended that because Townsend collected some workers’ compensation benefits from United, that United could invoke the exclusive remedy provisions of the Act, as described in Section 5.  Based on a statement by United’s attorney before the Industrial Commission that Townsend was not United’s employee, the court stated that United could not now take an inconsistent position that the exclusive remedy provided.  The court failed to note that Townsend had also previously taken the position that on the day in question, he was not an employee of Rainbow.  The court rejected United’s argument on this point, stating:

(Townsend’s) statement was conclusory and unsupported.  It could not necessarily be relied upon, given that (Townsend) is a lay person with no legal training and that, at the time he signed the statement, he had an overall IQ of 75, and impaired ability to make decisions, and the impression that he would lose workers’ compensation benefits.

The court was more inclined to rely upon a letter written by United’s attorney that denied that United was Townsend’s employer.  In response, United complained that the attorney was not authorized to issue such a denial, that his testimony was not a factual admission by United, and that he was without authority to waive the attorney-client privilege.  Nevertheless, after reviewing all of the testimony, it found for the plaintiff and the verdict was upheld.

The decision was rendered on a two-to-one basis.  A strong dissenting opinion emphasized the contradictory steps taken by Townsend.  The court noted as follows:

Approximately three months after his accident (Townsend) filed for workers’ compensation benefits against United.  While it is not clear what, if any, benefits he received prior to filing his claim, it is clear he was paid and accepted benefits for 12 months after he filed his claim.  It is also clear that (Townsend) took additional affirmative steps in the Commission to assure his ongoing receipt of benefits when he dismissed his claim against Rainbow for the admitted purpose of pursuing his claim against United.  (Townsend), therefore, took the express position that the injury was compensable under the Act and accepted benefits, thereby barring him from recovery in tort.  At the time of trial, (Townsend) was still taking the position that his injury was compensable under the Act.  He tried to reinstate his claim against Rainbow in the Commission, and that case was still pending in the Commission.

Editor’s Note:

The majority opinion makes no reference to the possibility that this case involved a “loaning-borrowing” set of facts.  The dissenting opinion points out that the majority concludes that if Rainbow was not Townsend’s employer, then United could not have borrowed Townsend from Rainbow.  Until Townsend dismissed his claim against Rainbow, saying Rainbow was not his employer, United did not dispute that Townsend was covered under the Act.

Townsend v. James Fassbinder, et al No. 2-06-0226, decided March 30, 2007

Frank J. Wiedner, Editor Wiedner & McAuliffe, Ltd One North Franklin, #1900 Chicago, IL 60606 (312) 855-1105