Cooley v. Power Construction Co., LLC
Cooley v. Power Construction Co., LLC
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.
,
¶ 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 *439 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 its entirety," noting that the court's prior order "stands as written." Reflection Window appeals.
¶ 10 ANALYSIS
¶ 11 On appeal, Reflection Window does not challenge the trial court's ruling on the issue framed by Power Construction's motion to strike-whether the affirmative defense under Kotecki was waived. Instead, the parties agree that the only issue presented on appeal is whether Reflection Window waived its workers' compensation lien as it relates to plaintiff's personal injury lawsuit.
¶ 12 Employees that are injured at work do not have a cause of action against their employer, and their exclusive remedy is to apply for benefits under the Workers' Compensation Act ( 820 ILCS 305/1
et seq.
(West 2016)).
Moran v. Gust K. Newberg/Dugan & Meyers
,
¶ 13 In turn, although the employee himself is barred from bringing suit directly against his employer, the third-party nonemployer may file suit against
*440
the employer for contribution.
Virginia Surety Co.
,
¶ 14 The
Kotecki
cap can be waived by the employer.
Estate of Willis v. Kiferbaum Construction Corp.
,
¶ 15 An employer is entitled to a workers' compensation lien on any recovery that its injured employee might get from a third party that caused or contributed to the injury. See 820 ILCS 305/5(b) (West 2016). A workers' compensation lien is statutorily imposed by section 5(b) of the Workers' Compensation Act.
Corley v. James McHugh Construction Co.
,
¶ 16 In this case, Reflection Window does not argue that the trial court erred when it struck its Kotecki affirmative defense. Reflection Window does, however, argue that the trial court erred when it held that its workers' compensation lien had been waived. It is unclear if the trial court simply considered the waiver of the Kotecki limitation on liability to also constitute a waiver of the workers' compensation lien or whether the court found some other basis for holding that the lien is waived. Accordingly, we will analyze both potential bases for the ruling.
¶ 17 The lien and the limited liability under
Kotecki
are separate concepts. "[A]n employer's negligence has nothing to do with its statutory right to recover workers' compensation payments under section 5(b) * * *."
Silva v. Electrical Systems Inc.
,
*441
¶ 18 We are yet to discover the identity of the "true offender." See
Gallagher
,
¶ 19 The existence of the lien does not mean that Power Construction cannot get contribution. The lien is not a mechanism to apportion fault between Power Construction and Reflection Window. The right of contribution exists only in favor of a tortfeasor who has paid more than his
pro rata
share of the common liability, and his total recovery is limited to the amount paid by him in excess of his
pro rata
share. 740 ILCS 100/2(b) (West 2016);
Claudy v. Commonwealth Edison Co.
,
¶ 20 The second possible basis for the trial court's ruling, and the one that Power Construction advances on appeal, is that the language of the subcontractor agreement itself constitutes a waiver of the workers' compensation lien. Although not addressed anywhere else in its nine-page order, the trial court did state that "[t]he agreement at issue in this case between a subcontractor and a sub-subcontractor-employer explicitly waived the latter's workers' compensation lien." We find that there is nothing in the agreement between Reflection Window and its subcontractor to demonstrate that Reflection Window waived its lien.
¶ 21 Waiver results from the intentional relinquishment of a known right.
Crum & Forster Managers Corp. v. Resolution Trust Corp.
,
¶ 22 In this case, the indemnification provision lacks any specific reference to the lien or an unmistakable reference to *442 any intention that the lien be waived. Power Construction argues that there is an express waiver because the indemnification provision "mentions both the workers' compensation statute and the rights Reflection Window enjoys under that statute." Power Construction points to the portion of the indemnification provision in which Reflection Window "agrees that its [indemnification] obligations shall not be in anyway diminished by any statutory or constitutional immunity it enjoyed from suits by its employees or from limitations of liability or recovery under worker's compensation laws." But the existence of the workers' compensation lien does not diminish any obligation Reflection Window has, nor is it a limitation on ultimate liability. The indemnification provision at issue cannot be read to express Reflection Window intentionally relinquishing its lien rights, as the lien is not mentioned and there is no reference to any waiver of the right.
¶ 23 Power Construction's significant reliance on the fact that the subcontractor agreement "mentions the Workers' Compensation Act" is misplaced. Our supreme court has held that more explicitness is required. Even general language purporting to release or waive a workers' compensation lien is not enough.
Gallagher
,
¶ 24 Power Construction also argues that Reflection Window waived its workers' compensation lien because it agreed not to use the Workers' Compensation Act to shield itself from liabilities. The
Kotecki
cap is a limitation on liability-the workers' compensation lien is not. Power Construction argues that "a workers' compensation lien is both a statutory right to reimbursement and also a statutory limitation of liability." The former assertion is accurate, but the latter is not. A workers' compensation lien is intended to reimburse the employer for the compensation benefits paid to the employee.
Gonzalez v. Evanston Fuel & Material Co.
,
¶ 25 CONCLUSION
¶ 26 Accordingly, we affirm in part and reverse in part. The case is remanded for further proceedings.
¶ 27 Affirmed in part and reversed in part.
¶ 28 Remanded.
Presiding Justice Pierce and Justice Harris concurred in the judgment and opinion.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.