Articles Posted in Construction Contracts

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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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The 7th Circuit Court of Appeals in Chicago has reversed a district court judge’s decision in a case involving an indemnification clause in a contract.

Robert Krien was an employee of Riley Construction.  Riley was the general contractor on a construction project located in Wisconsin.  Riley in turn, hired Harsco Corporation to supply the scaffolding for the construction work.  Krien was injured when he fell from the scaffolding after a plank broke beneath him.  The parties settled Krien’s injury claim for $900,000.

Before the settlement, Harsco had filed a third-party complaint against Riley seeking indemnification for any damages Harsco might pay by way of judgment or settlement.  Then the parties filed cross-motions for summary judgment, and the district court judge granted Riley’s motion.  Harsco took this appeal to the U.S. Court of Appeals in Chicago.

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In October 2007, John Walls suffered a work injury at I-Maxx Metalworks Inc. when “a stair stringer and/or perimeter cable protection failed.”

Walls filed suit against I-Maxx, Turner Construction, Frontier Construction and against Waukegan Steel Sales. The lawsuit alleged that Waukegan Steel negligently chose not manage, operate and maintain the work premises in a safe way, failed to inspect, failed to provide a safe workplace or provide proper fall protection.

By the contract with subcontractors, I-Maxx was solely responsible for the “means, method and safety of employees while on the job site.”

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Archon Construction Co. was hired by the defendant U.S. Shelter to install a sewer system for a development, which was a small residential subdivision in Elgin. The contract between the parties was signed on June 5, 2005 and specified the types and quantities of material to be used by Archon. 

For example, PVC piping was specified. Any additional work beyond the original scope was, according to the contract, to be completed at an agreed upon price, time and materials. The City of Elgin was to review the work done by Archon within a year after completion of the work. U.S. Shelter hired a civil engineering firm to oversee Archon’s installation of the sewer system.  This was to make sure that it met with both the contract’s specifications and the City of Elgin’s legal requirements.

After Archon completed the installation, the engineering company reported that the work was done satisfactorily and complied with the contract and Elgin’s requirements.

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