Articles Posted in Construction Contracts

Plaintiffs Lenny and Tracy Chapman filed a lawsuit against Hiland Partners GP Holdings LLC, et al. who owned and operated a natural gas plant in North Dakota. Missouri Basin offers trucking services to gas companies in North Dakota. Hiland entered into a Master Service Contract (Hiland MSC) with Missouri Basin in 2008 whereby Missouri Basin, as “Contractor,” agreed to perform various services for Hiland.

As part of the agreement, Missouri Basin agreed to “indemnify, defend and save harmless Hiland Group . . . from and against any and all claims, demands, judgments, defense costs, or suits . . . in any way, directly or indirectly, arising out of or related to the performance of this Contract.”  The Hiland MSC also included an Oklahoma choice-of-law provision.

On Oct. 18, 2011, Hiland requested Missouri Basin to remove water from condensation tanks at the Watford plant. Missouri Basin contacted B&B Heavy Haul LLC who sent the plaintiff Lenny Chapman to the gas plant. Chapman arrived shortly after midnight.  He and an employee of Hiland began connecting the tank to the B&B truck that Chapman was driving. An explosion occurred and Chapman was seriously injured.

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Heron Salgado was a construction worker employed by Abel Building & Restoration. He was assigned to work at a job site at 51st Street on a scaffold that was designed, built, erected and maintained by the defendant Designed Equipment Corp. While working at that construction site, he was injured twice.

The first time Salgado was injured was on Jan. 17, 2011 when a heavy bucket fell and struck him.  Then he was injured two days later when he fell into an “opening” in the scaffolding.

Salgado filed a lawsuit against Designed Equipment Corp. in December 2012. Designed tendered its defense of the case, first to its own insurance company and then to Pekin Insurance Co., which was Abel’s insurers, arguing that Abel was an “additional insured” under Abel’s policy of insurance with Pekin.

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Heron Salgado, a construction worker, was employed by Abel Building & Restoration in January 2011 when he was assigned to work at a job site at 51st Street. He was working on a scaffold design that was built, erected and maintained by Designed Equipment Acquisition Corp. While he was working at that site, he was injured twice. Once on Jan. 17, 2011, Salgado was injured when a heavy bucket fell and struck him. Two days later he was injured again when he fell into an “opening” in the scaffolding.

Salgado filed a lawsuit against Designed Equipment in December 2012. Designed tendered its defense for this case first to its own insurance company and then to Pekin Insurance Co. who were Abel’s insurers, maintaining that Abel was an “additional insured” under Abel’s policy with Pekin.

Pekin rejected the tender of defense and filed a complaint seeking declaratory judgment. Pekin first claimed that Designed was not an additional insured under the contractor’s endorsement and also that the lease between Abel and Designed was an “insured contract” and therefore void under the Construction Contract Indemnification for Negligence Act.

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Sandra Gibbs hired the defendant Blu-Sky Industries to do work on a septic tank on her property at 30658 S. Ashland Ave. in Beecher, Ill. The Village of Beecher is located in Chicago-area suburbs in Will County, Ill. On Dec. 8, 2009, Gibbs, 31 years old at the time, stood in her driveway supervising the work as the defendant Blu-Sky Industries’ workers completed the project. She was walking back toward her house when a Blu-Sky employee, Jacob Courtney, began backing up his truck, which was attached to a trailer.

Courtney did not see Gibbs and hit her twice, causing her to fall onto the trailer with a direct blow to her outstretched right arm. The truck continued in reverse with Gibbs halfway on the trailer and halfway on the ground for 10 additional feet before the truck finally stopped.

Gibbs suffered a right shoulder impingement with a partial thickness tear of the supraspinatus tendon in the rotator cuff, requiring injections and eventually surgery that consisted of arthroscopic distal clavicle excision and subacromial decompression. A subacromial decompression of the shoulder is a surgery designed to increase the size of the subacromial, which is designed to reduce the pressure on the muscle. In order to make room, the surgery involves cutting the ligament and shaving away the bone spur on the subacromial bone. This permits the muscle in that space to heal.

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Late in 2002, the developer of 1717 S. Prairie Ave. in Chicago, Ill., retained the defendant Hansen & Hempel Co. to complete the masonry work for a 23-story condominium complex. When the building was nearly finished in March 2004, it started to experience water leakage. The condominium association, Board of Directors of the Prairie District Homes Tower Condominium Association, hired an engineering firm to design and implement a repair that was estimated to cost over $6,500,000.

Because of the report on the defects to the building, the association filed a lawsuit wherein the case was tried to a jury on the sole issue of breach of implied warranty of habitability.

The plaintiff board of directors of the condominium association contended that 90% of the through-wall flashing in dams installed by the defendant masonry company were either missing or installed improperly and claimed that because of those material defects it allowed water to penetrate the inner cavity of the building.

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Robert Lodholtz was seriously injured in 2011 while working at a plant owned by Pulliam Enterprises in Indiana. Lodholtz filed a personal-injury lawsuit against Pulliam in the Indiana state court. Pulliam called on Granite State Insurance Co., its primary liability insurer, along with New Hampshire Insurance Co., to defend and indemnify it against the lawsuit.

Granite State refused to indemnify Pulliam stating that Lodholtz as an employee should pursue his claim for worker’s compensation. Lodholtz disagreed arguing that he was employed by another company while he worked at Pulliam’s plant and therefore had no basis for a worker’s compensation claim.

Pulliam chose not to file an answer to the complaint, so Lodholtz moved for default judgment, which was granted. Lodholtz then agreed with Pulliam not to pursue the default judgment and in return Pulliam assigned to Lodholtz its rights against Granite State. Granite State then moved to intervene in Lodholtz’s lawsuit. The Indiana state court denied the motion to intervene.

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Stephen Wolkoff, 65, rented a self-storage unit from Sunshine Storage Inc. There was a loft storage unit above Wolkoff’s storage unit. The floor of the loft comprised the ceiling of Wolkoff’s storage unit. When Wolkoff was inside his unit, the ceiling above him collapsed crushing him beneath 3,000 pounds of material.

Wolkoff suffered a fractured pelvis, ruptured urethra and nerve damage to both of his legs. Wolkoff underwent open reduction surgery and reconstruction of his entire pelvis, procedures to reconnect his urethra and implant an artificial sphincter to drain his bladder and surgery to repair nerve damage in his legs.

Wolkoff also required a colostomy and wore the bag for three years. In addition, Wolkoff suffered complications, including infections to both ankles. Blood loss from the injuries caused permanent vision loss in his left eye and partial loss in his right eye. Wolkoff’s medical expenses totaled $3.2 million.

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Gamesa Technology Corp. entered into a contract with Minnesota-based Outland Renewable Energy to provide maintenance for Gamesa’s wind turbines. Iberdrola Renewables Inc. runs the Gamesa-made turbines at the Cayuga Wind Farm located in Livingston County, Ill.

While servicing a Cayuga turbine, one of Outland’s employees, Aaron McCoy, was electrocuted when the turbine unexpectedly re-energized. McCoy filed a personal injury lawsuit in state court against Iberdrola Renewables and Gamesa. The case was removed from state court to federal court on diversity of citizenship grounds. Iberdrola Renewables impleaded Outland Renewable Energy LLC, claiming indemnification based on the contract and the Illinois Joint Tortfeasor Contribution Act.

Outland then filed 22 counterclaims, which included indemnification raising federal and state anti-trust claims and other state law claims. Outland was not successful in seeking a preliminary injunction against Gamesa’s allegedly unfair competitive practices.

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According to the Illinois Appellate Court, a corporate condominium association that was dissolved is in a legal standing the same as that of a dead natural person such as found in the case of Markus v. Chicago Title & Trust, 373 Ill.557 (1940).

Under Illinois §12.80 of the Business Corporation Act of 1983, a five-year window is open for suing a corporation on any claim that existed or liability that was incurred before the dissolution of the company.

In this particular case, the issue was whether (a) two subcontractors who are dissolved and allegedly botched work on a condominium project and (b) the general contractor who wasn’t sued by the condominium association until more than five years after the subcontractors closed shop. Does §12.80 block the general contractor from filing an indemnification, contribution claim against the defunct contractors, or do “equitable considerations” extend the deadline?

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The plaintiff, Michigan Indiana Condominium Association, is a 119-unit residential condominium complex (the “Complex”).  Optima was the general contractor and selected a variety of subcontractors to do the construction work.  Construction was completed in June 2002.  One of the contractors was Jenni and Loucon.  Loucon was the masonry contractor.  On Sept. 2, 2003, Loucon was dissolved as an Illinois corporation.  Jenni was likewise dissolved on Jan. 1, 2006.

In the spring of 2010, the plaintiffs discovered latent defects in the Complex.  On Aug. 29, 2011, the plaintiffs filed a complaint for damages against Optima and other defendants.  Plaintiffs sought damages under breach of implied warranty of habitability and breach of implied warranty of good workmanship.  Optima added as third-party defendants Jenni and Loucon as well as others.  Optima alleged breach of contract and breach of implied warranties against Jenni and Loucon.  Optima sought indemnification and contribution.  Because both corporations had been dissolved, Optima served its notice upon the Secretary of State pursuant to Section 5.25 of the Illinois Business Corporation Act of 1983 (805 ILCS 5/1.01 et seq.)

Jenni and Loucon moved jointly to dismiss Optima’s third-party complaint pursuant to Section 2-615(a)(5) and (a)(9) of the Illinois Code of Civil Procedure.  Jenni and Loucon argued that since the third-party action against them was initiated more than 5 years after their dissolution (it was 6 years and 3 months after Jenni’s dissolution and 8 years and 8 months after Loucon’s dissolution), the Illinois Secretary of State was not authorized to act as the dissolved corporation’s agent under the Act.  Accordingly, they argued that service of summons on each was improper, and the court lacked personal jurisdiction.  On Nov. 29, 2012, the Circuit Court judge granted Jenni’s and Loucon’s joint motion to dismiss and dismissed them with prejudice. This appeal was taken by Optima.

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