Schmidt v. Milburn Brothers, Inc.
Annotate this Case
Fourth Division
April 30, 1998
No. 1-97-1353
HERBERT R. SCHMIDT and STELLETTE ) APPEAL FROM THE
SCHMIDT, ) CIRCUIT COURT OF
) COOK COUNTY.
Plaintiffs-Appellants, )
)
v. )
)
MILBURN BROTHERS, INC. and ERIC AGASE, ) HONORABLE
) SOPHIA H. HALL,
Defendants-Appellees. ) JUDGE PRESIDING.
JUSTICE WOLFSON delivered the opinion of the court:
The issue in this case is whether Herbert R. Schmidt's
personal injury action is barred by the exclusive remedy
provision of the Workers' Compensation Act.
To answer the question we are required to determine whether
two separate and independent corporations should be regarded as
joint employers, or whether the two corporations were engaged in
a joint enterprise at the time Schmidt was injured. If the
answer to either one of these questions is yes, Schmidt's lawsuit
cannot proceed. Because we believe these are issues that should
be decided by the trier of fact, we reverse the trial court's
grant of summary judgment to the defendants and remand this cause
for further proceedings.
BACKGROUND
On June 17, 1992, Herbert R. Schmidt (Schmidt), who was
employed by Plote, Inc. (Plote), was driving a tractor-trailer
which displayed Plote identifying marks. At the intersection of
Route 72 and Bartlett Road in Barrington, Illinois, the traffic
light was not working due to stormy weather. Schmidt stopped,
then proceeded through the intersection. As he did so, Schmidt's
vehicle was struck from behind by a tractor-trailer driven by
Eric Agase (Agase). Agase was employed by Milburn Brothers Inc.
(Milburn) and the truck he was driving bore identifying marks
indicating it belonged to Milburn.
As a result of the collision, Schmidt's head hit the
windshield and he sustained injury to his back and neck. He
filed a workers' compensation claim with Plote and received
$102,000 in temporary disability benefits and more than $43,000
in medical benefits, as well as a lump sum settlement award in
excess of $81,000.
On April 16, 1993, Schmidt and his wife, Stellette, filed a
negligence action against Milburn and Agase, seeking recovery for
damages suffered as a result of the June 17, 1992, collision.
On December 18, 1996, after discovery had been completed,
Milburn and Agase (defendants) filed a motion for summary
judgment pursuant to section 2-1005 of the Code of Civil
Procedure. See 735 ILCS 5/2-1005 (West 1996). In the motion
defendants contended Plote and Milburn were two of five
individual companies which made up a single enterprise --- the
"Plote companies family." This Plote family of companies, said
defendants, shared the same centralized offices; the trucks owned
by the companies were dispatched from the same facility yard; the
same mechanics, working at the facility yard, repaired and
maintained all of the Plote Companies' trucks; and all truck
drivers, regardless of the company that paid them, were directed
and controlled by the same managerial staff. Based on these and
other factors, defendants contended Schmidt and Agase were joint
employees of both Plote and Milburn and, for this reason, the
exclusive remedy provision in the Workers' Compensation Act (WCA
or Act) barred plaintiffs from recovering from Milburn or Agase
in the civil negligence action.
On March 10, 1997, the trial court entered an order granting
defendants summary judgment. The order does not say why the
court granted summary judgment. Though a hearing was held on the
motion, no transcript of this hearing is included in the record.
We do not know the trial court's reason for granting summary
judgment in defendants' favor.
Schmidt and his wife appeal. The only issue is whether the
trial court wrongly determined plaintiffs' claims against Milburn
and Agase are barred by the exclusive remedy provision in the
WCA.
Standard of Review
An appellate court reviews the grant of summary judgment de
novo. Barraza v. Tootsie Roll Industries, Inc., --- Ill. App. 3d
---, 690 N.E.2d 612 (1997). When no genuine issue of fact is
present and the moving party is entitled to judgment as a matter
of law, summary judgment is appropriate. Guerino v. Depot Place
Partnership, 273 Ill. App. 3d 27, 652 N.E.2d 410 (1995). Summary
judgment should not be granted if reasonable persons could draw
divergent inferences from undisputed facts. Pyne v. Witner, 129 Ill. 2d 351, 358, 543 N.E.2d 1304 (1989). Summary judgment is a
drastic means of disposing of litigation and should be allowed
only when the moving party's right to judgment is clear and free
from doubt. Zekman v. Direct American Marketers, Inc., 286 Ill.
App. 3d 462, 675 N.E.2d 994 (1997); Ralls v. Village of Glendale
Heights, 233 Ill. App. 3d 147, 151, 598 N.E.2d 337 (1992).
DECISION
Defendants advance two arguments in support of their claim
that the exclusive remedy provision of the Workers' Compensation
Act, 820 ILCS 305/1(a)(4) (West 1996), bars the Schmidts'
lawsuit. They say either contention is sufficient to support
summary judgment.
First, defendants contend Plote and Milburn, though legally
separate companies, are part of a "single enterprise" -- the
"Plote family of companies." Thus, Schmidt and Agase were co-
workers of this single enterprise. Put another way, Milburn and
Plote were joint employers of Schmidt and Agase.
Second, defendants contend both Schmidt and Agase were
working for Plote/Milburn joint ventures at the time of the
accident, thus barring this negligence action because the
liability for Milburn must be, as a matter of law, the same as it
is for Plote.
Plaintiffs, of course, disagree with both arguments.
Despite the commonalities between the two companies, say
plaintiffs, the legal distinction created by the separate
corporate structures of Plote, Inc. and Milburn Bros., Inc.
should bar Milburn from claiming immunity under the WCA.
Plaintiffs also reject the "joint venture" argument because
Schmidt and Agase were engaged in different joint venture
projects at the time of the accident.
We review the undisputed facts:
The "Plote Companies," as listed on the employee manual
which is distributed to all new employees, are: (1) Plote, Inc.,
(2) Milburn Bros., Inc., (3) Allied Asphalt, Inc., (4) Higgins
Asphalt, Inc., and (5) Beverly Gravel, Inc. These five companies
are involved in various aspects of construction. Plote
specializes in excavation, while Milburn specializes in mixing
and pouring concrete.
Though there is obviously some connection among the five
"Plote Companies," nothing in the record indicates that a formal
affiliation exists. It appears there is a common shareholders'
ownership of all the corporations, but there is no "parent"
corporation or holding company. "Plote family of companies" has
no separate corporate existence.
We do know "Plote, Inc." and "Milburn Brothers, Inc." are
separately incorporated and listed separately in the Illinois
Corporation Book. The two companies have different employer tax
identification numbers. Both Plote and Milburn have their own
employees, whom they pay from separate payrolls. The companies
use different letterheads and reporting forms.
The companies share the same corporate officers and are
located at the same corporate address. A single trucking
facilities yard is maintained, from which all company trucks are
dispatched. When hired, a truck driver for any one of the "Plote
Companies" receives a "Plote Companies" employee manual. All
drivers receive the same training and participate in the same
safety meetings.
With regard to the accident which is the basis for the
lawsuit, plaintiffs and defendants agree Schmidt was injured when
the tractor-trailer he was driving was struck from behind by a
tractor-trailer driven by Agase. At the time of the accident,
Schmidt was on Plote's payroll and Agase was on Milburn's
payroll. Title to the tractor-trailer driven by Schmidt was held
by an entity identified as RDD Leasing (located at the same
corporate address as the Plote Companies). "Plote, Inc.,"
however, was listed as owner on the title to the tractor-trailer
driven by Agase.
On the day of the accident, Schmidt was assigned to the
"Route 72 and Elmhurst" project. Agase was working on the
"Medinah Road" project. At about 3:30 p.m., when the accident
occurred, both Schmidt and Agase were returning to the company
truck facilities yard. Schmidt was hauling a full load of broken
concrete, which he picked up from the "Route 72 and Elmhurst"
project. Agase was returning to the yard empty, after having
delivered a load of gravel to the "Medinah Road" project. When
bids for these projects were submitted, the Route 72 and Elmhurst
project was bid by "Plote, Inc. and Milburn Bros., Inc., a joint
venture." The Medinah Road project was bid on by "Plote, Inc.,
Milburn Bros., Inc., Allied Asphalt, Inc., a joint venture, an
Illinois corporation."
Dan Plote, Vice President of both Plote and Milburn, gave a
deposition. He believed the only distinction between an employee
of Plote and an employee of Milburn was the name on the paycheck.
The hierarchy of the two companies, he said, is shared. The
dispatch schedule for all trucks is completed by Dan Bethke, a
Plote employee. Another Plote employee, Jay Kissack, is the
"truck boss" (or foreman). Kissack posts the truckers' schedule
at the facilities yard office. The Safety Director and Truck
Supervisor for the entire truck facility yard, however, is
William Ryan, an employee of Milburn.
William Ryan also was deposed. He said he became employed
by Milburn in 1985. He started out as a driver, moved up to a
foreman position, and then, in 1989, became a supervisor. His
current position as Truck Supervisor and Safety Director requires
him to ensure OSHA regulations are being followed at the job
sites. He also supervises the truck foremen and assists with the
dispatch of trucks in the morning. He reports directly to Dan
Plote.
Ryan said he supervises all truck drivers, whether they are
employed by Milburn or Plote. The drivers receive the same
training and are treated the same, even with regard to seniority.
Ryan also said he never was an employee of Plote, Inc. or
any other corporation that is part of the "Plote family." He was
always paid by Milburn and considered himself a Milburn employee.
Schmidt, Ryan said, was and is employed by Plote. Agase was
employed by Milburn and was discharged after the accident in
accord with "company procedure approved by the union" and part of
"progressive discipline." Ryan said he and Jay Kissack (a
foreman paid by Plote, Inc.) jointly made the decision to
discharge Agase.
It was established by affidavit that all Plote companies
were covered by a single workers' compensation insurance policy.
The record is silent as to who paid the premiums. It is safe to
assume Milburn would have told us it paid all or some of the
premiums if that were the fact. A copy of the policy is included
in the record, however. It shows the policy was issued by
Casualty Insurance Company to "Plote, Inc., Beverly Gravel Co."
The "operating entities" listed in the policy are: Plote, Inc.;
Beverly Gravel, Inc.; East Riverdale Gravel Co.; Cary Gravel,
Inc.; Higgins Asphalt, Inc.; Milburn Brothers, Inc.; Repco
Development, Inc.; Allied Asphalt Paving Co., Inc.; Par
Development, Inc.; and Fairway Realty, Inc. Additional insureds
were: "Allied Asphalt Paving Co., Inc., Plote, Inc., & Milburn
Brothers, Inc., a joint venture"; "Plote, Inc., Milburn Brothers,
Inc. & Higgins Asphalt, Inc., a joint venture"; and "Plote, Inc.,
Allied Asphalt, Paving Co., Inc. & Milburn Brothers, Inc., a
joint venture."
A. "Single enterprise" theory
Plote and Milburn, the defendants say, are actually parts of
a single enterprise and Schmidt and Agase were joint employees of
this single enterprise. For this reason, both Milburn and Agase
would be immunized from suit by the exclusive remedy provision of
the WCA.
In support of this theory, defendants rely on Dildine v.
Hunt Transportation, Inc., 196 Ill. App. 3d 392, 553 N.E.2d 801
(1990). In Dildine, plaintiff was injured while he was making
repairs on a Happy Cab Company (Happy Cab) automobile. He filed
for and received workers' compensation benefits through Happy Cab
and then filed a negligence action against Hunt Transportation,
Inc. (Hunt), the company which owned the building where Happy Cab
housed its garage. Hunt moved to dismiss the complaint.
According to uncontested affidavits filed in Dildine, the
following facts were established: plaintiff's salary was paid by
Happy Cab; Hunt and Happy Cab were both wholly-owned subsidiaries
of Butler Holding Company, Inc.; Butler filed consolidated tax
returns on behalf of Hunt and Happy Cab; Happy Cab was an
additional insured on Hunt's workers' compensation insurance
policy, which paid plaintiff's claim; Happy Cab did not pay Hunt
rent for the use of the garage area; a regional marketing manager
for Hunt, who had authority over all operations at the building
where the Happy Cab garage was located, had the power to direct
plaintiff to work for Hunt whenever necessary; though plaintiff
typically repaired Happy Cab automobiles he also repaired truck
trailers, rearranged trailer loads, or drove loaded trucks for
Hunt.
Based on the totality of circumstances presented, the
Dildine court held plaintiff was the "joint employee" of Happy
Cab and Hunt and was barred by the exclusive remedy provision in
the WCA from bringing a common law action against Hunt. To reach
the conclusion that plaintiff was a "joint employee," the Dildine
court considered factors set forth in Clark v. Industrial Comm'n,
54 Ill. 2d 311, 297 N.E.2d 154 (1973).
Clark, however, was a case in which the court decided
whether the plaintiff was an employee or an independent
contractor. Application of Clark to the circumstances in Dildine
is problematic. Also, Dildine never discussed whether it was
appropriate to disregard the separate corporate identities of
Happy Cab and Hunt.
Our Supreme Court recently held the test for joint
employment is whether two or more employers exert significant
control over the same employees. That is, does the evidence show
the employers share or co-determine those matters governing
essential terms and conditions of employment? Village of
Winfield v. Illinois State Labor Relations Board, 176 Ill. 2d 54,
60, 678 N.E.2d 1041 (1997). Winfield was a bargaining case,
decided under the State labor laws, and did not involve two
private, independently organized corporations. Still, we see no
reason why a trier of fact in any joint employment case cannot
consider a "putative joint employer's role in 'hiring and firing,
promotions and demotions; setting wages and work hours; and other
terms and conditions of employment; discipline; and actual day-
to-day supervision and direction of employees on the job.'"
Village of Winfield, 176 Ill. 2d at 60, quoting Orenic v.
Illinois State Labor Relations Board, 127 Ill. 2d 453, 475, 537 N.E.2d 784 (1989). Of course, in a case such as the one before
us, the trier of fact would have to consider the separate
corporate existence of each of the purported joint employers.
We have attempted to steer clear of the "borrowed" or
"loaned" employee decisions. Those cases ordinarily deal with
the employee's contractual expectations, a matter that is of
little import in this case. See Barazza v. Tootsie Roll
Industries, Inc., --- Ill. App. 3d ---, 690 N.E.2d at 615-16.
In Nutt v. Pierce Waste Oil Service, Inc., 112 Ill. App. 3d
612, 615-16, 445 N.E.2d 928 (1983), the court distinguished
"joint" employees and "borrowed" employees. A "joint employee"
relationship will exist, said the court, "[w]here control of an
employee is shared by two employers and both benefit from the
work." A "loaned employee" relationship is one where the
employee is assigned to perform special services for the
borrowing employer and the borrowing employer exercises direction
and control over the employee.
In Freeman v. Augustine's Inc., 46 Ill. App. 3d 230, 360 N.E.2d 1245 (1977), cited in Nutt, a determining factor between
"joint employee" and "borrowed employee" status was who hired the
employee and paid the salary. If the employee was not jointly
paid, the court seemed to indicate a joint employee relationship
did not exist.
The parties in this case do not claim a "loaned" or
"borrowed" employee situation existed. This case, therefore, is
not about "loaned" or "borrowed" employees. Nor is this a case
which seeks to employ the dual capacity doctrine. See Sharp v.
Gallagher, 95 Ill. 2d 322, 447 N.E.2d 786 (1983); Goins v. Mercy
Center for Health Care Services, 281 Ill. App. 3d 480, 667 N.E.2d 652 (1996). This is a case where two legally separate
corporations seek to cast off their corporate identity and pierce
their own corporate veils.
We believe the controlling question for the trier of fact is
whether, at the time of the injury, Herbert Schmidt "was engaged
in the performance of duties for two employers, pursuant to a
joint employment." See American Stevedores Co. v. Industrial
Comm'n, 408 Ill. 445, 448, 97 N.E.2d 329 (1951) (error to find
joint employment in worker's compensation proceedings where
injured employee was not rendering service for both corporations
when injured).
Plote and Milburn characterize themselves as part of "one,
big, happy family" which is the "Plote family of companies."
Defendants ask us to shield them from liability by disregarding
the separate corporate identities of Plote and Milburn.
Milburn and Plote, however, are separate corporations
performing separate functions. Presumably, their separate
corporate identities produce certain legal benefits. We see no
reason to allow Plote and Milburn to organize as individual
corporations and then pierce their own corporate veils at their
convenience. See In re Rehabilitation of Centaur Insurance Co.,
158 Ill. 2d 166, 172, 632 N.E.2d 1015 (1994)(a corporation should
not be allowed to pierce its own corporate veil for the benefit
of the corporation or its shareholders); Flynn v. Allis Chalmers
Corp., 262 Ill. App. 3d 136, 140, 634 N.E.2d 8 (1994)(a
corporation may not use the fiction of separate corporate
existence to frustrate creditors). See also, Volb v. G.E.
Capital Corp., 139 N.J. 110, 651 A.2d 1002, 1008 (1995)("in
suits brought by an injured employee against corporations that
are parents, subsidiaries, or affiliates of the plaintiff's
employer, the general rule consistently applied by federal and
state courts has been to deny workers' compensation immunity on
the ground that separate corporate identity of affiliated
corporations should not be disregarded").
As this court recently held in Daley v. American Drug
Stores, Inc., --- Ill. App. 3d ---, 691 N.E.2d 846 (1998), even
where two corporations are wholly-owned by a single parent
corporation, the corporations must be deemed separate legal
entities unless it is shown "that one corporation is the mere
instrumentality or dummy of the other and that, under the
circumstances, the observance of the fiction of separate
corporate existence will sanction a fraud or injustice."
In the present case there is no dispositive evidence Schmidt
was an employee of any corporation other than Plote. He was
hired by Plote in 1968 and had been a Plote employee since that
time. He was paid by Plote and no one else. Schmidt drove a
truck which displayed markings indicating it belonged to Plote.
Schmidt performed duties for the benefit of Plote. At the time
of the accident Schmidt was hauling concrete, which was Plote's
business.
We don't agree Dildine requires a finding of "joint
employment." Dildine is distinguishable. In Dildine, the
workers' compensation insurance policy was issued to Hunt, the
named defendant. Hunt paid the premium. Happy Cab was an
additional insured on the policy. Hunt, therefore, was the
actual party in interest in plaintiff's workers' compensation
claim. In the present case, the workers' compensation insurance
policy was issued to "Plote, Inc., Beverly Gravel, Inc."
Milburn, along with others, was an additional insured. Milburn,
therefore, was not the true party in interest in Schmidt's
workers' compensation claim against Plote, Inc. Milburn took no
part in the worker's compensation proceeding.
In their brief, Milburn and Agase emphasize the amount of
control exercised over Plote employees by Ryan. It is true that
Ryan was a high-level supervisor, ranking above the Plote
supervisors in the single yard both corporations shared. In
addition, Plote and Milburn employees shared washrooms, lunch
rooms, meeting rooms, and were given the same employee handbook -
- the "Plote Companies Employee Manual."
Yet, Plote and Milburn maintained separate and distinct
identities. The workers' compensation insurance policy was
issued to Plote. Presumably, Plote paid the premium. Plote, not
Milburn, defended the workers' compensation action and was
responsible for whatever benefits were paid to Schmidt.
We do not believe the degree of control and supervision
exercised by Milburn and other joint effort circumstances in this
case are enough, as a matter of law, to protect the defendants
under the exclusive remedy provision of the WCA. The workers'
compensation statutory scheme is effective because employers are
able to spread the risk of loss. See Rosales v. Verson Allsteel
Press Co., 41 Ill. App. 3d 787, 789, 354 N.E.2d 553 (1976).
Employers should not have to provide workers' compensation and
also have to pay out in common law tort actions. But here, if
defendants are right, Milburn pays nothing for the negligence of
its driver -- no workers' compensation premiums, no workers'
compensation benefits, no tort liability. That would turn the
exclusive remedy provision of the WCA into a sword, instead of a
shield. No useful societal purpose would be served. Milburn
would receive all the benefits the law provides to a separate and
distinct corporate body with none of the usual detriments --
tort liability for the negligence of its agent, for instance.
We do not believe this is an appropriate case for a judge to
conclude the joint employer theory defeats the plaintiffs' common
law action. Because reasonable persons could draw different
inferences from the undisputed facts, summary judgment should
have been denied. See Davis v. Pak-Mor Manufacturing Co., 284
Ill. App. 3d 214, 220, 672 N.E.2d 771 (1996).
B. "Joint Venture" theory
The second claim made by defendants is that Schmidt and
Agase were working on joint ventures which involved both Plote
and Milburn. Therefore, say the defendants, the liability of
Milburn and Plote is identical and the exclusive province of the
WCA.
On the day of the accident, Schmidt was assigned to the
"Route 72 and Elmhurst" project and Agase was working on the
"Medinah Road" project. These were two different joint venture
projects, each bid on separately. The bid for the Route 72 and
Elmhurst project was made by "Plote, Inc. and Milburn Bros.,
Inc., a joint venture." The Medinah Road project was bid on by
"Plote, Inc., Milburn Bros., Inc., Allied Asphalt, Inc., a joint
venture, an Illinois corporation." Nothing in the record
discloses any relationship between these two projects, except
that they both involved Plote and Milburn. The projects appear
to be two distinctly different joint ventures.
Defendants rely on Moran v. Gust K. Newberg/Dugan & Meyers,
268 Ill. App. 3d 999, 645 N.E.2d 489 (1994), to support their
claim of immunity. Moran does not control.
In Moran, plaintiff was injured when he was working at a
baseball stadium construction site. The single construction
project was a joint venture between Newberg and Dugan & Meyers.
Plaintiff was employed to work on this project and was paid by
joint venture funds. Under these circumstances, the court found
the liabilities of the joint venture and the members of the joint
venture to be co-extensive.
There is no evidence that either Schmidt or Agase was
actually employed by the joint ventures, though their employers
were co-adventurers. Both Schmidt and Agase were paid by their
separate employers, not by joint venture funds. Furthermore, at
the time of the accident, Schmidt and Agase were working on
different joint ventures. The Schmidts are not bringing their
cause of action against Milburn in its capacity as a joint
venturer with Plote on the Route 72 and Elmhurst project.
Whether the defendants' joint venture theory will ultimately be
successful is a matter for the trier of fact to determine.
CONCLUSION
The trial court order granting defendants summary judgment
in their favor is reversed and the cause remanded for further
proceedings consistent with this opinion.
REVERSED AND REMANDED.
CERDA, P.J. and SOUTH, J., concur.
April 30, 1998
No. 1-97-1353
HERBERT R. SCHMIDT and STELLETTE ) APPEAL FROM THE
SCHMIDT, ) CIRCUIT COURT OF
) COOK COUNTY.
Plaintiffs-Appellants, )
)
v. )
)
MILBURN BROTHERS, INC. and ERIC AGASE, ) HONORABLE
) SOPHIA H. HALL,
Defendants-Appellees. ) JUDGE PRESIDING.
JUSTICE WOLFSON delivered the opinion of the court:
The issue in this case is whether Herbert R. Schmidt's
personal injury action is barred by the exclusive remedy
provision of the Workers' Compensation Act.
To answer the question we are required to determine whether
two separate and independent corporations should be regarded as
joint employers, or whether the two corporations were engaged in
a joint enterprise at the time Schmidt was injured. If the
answer to either one of these questions is yes, Schmidt's lawsuit
cannot proceed. Because we believe these are issues that should
be decided by the trier of fact, we reverse the trial court's
grant of summary judgment to the defendants and remand this cause
for further proceedings.
BACKGROUND
On June 17, 1992, Herbert R. Schmidt (Schmidt), who was
employed by Plote, Inc. (Plote), was driving a tractor-trailer
which displayed Plote identifying marks. At the intersection of
Route 72 and Bartlett Road in Barrington, Illinois, the traffic
light was not working due to stormy weather. Schmidt stopped,
then proceeded through the intersection. As he did so, Schmidt's
vehicle was struck from behind by a tractor-trailer driven by
Eric Agase (Agase). Agase was employed by Milburn Brothers Inc.
(Milburn) and the truck he was driving bore identifying marks
indicating it belonged to Milburn.
As a result of the collision, Schmidt's head hit the
windshield and he sustained injury to his back and neck. He
filed a workers' compensation claim with Plote and received
$102,000 in temporary disability benefits and more than $43,000
in medical benefits, as well as a lump sum settlement award in
excess of $81,000.
On April 16, 1993, Schmidt and his wife, Stellette, filed a
negligence action against Milburn and Agase, seeking recovery for
damages suffered as a result of the June 17, 1992, collision.
On December 18, 1996, after discovery had been completed,
Milburn and Agase (defendants) filed a motion for summary
judgment pursuant to section 2-1005 of the Code of Civil
Procedure. See 735 ILCS 5/2-1005 (West 1996). In the motion
defendants contended Plote and Milburn were two of five
individual companies which made up a single enterprise --- the
"Plote companies family." This Plote family of companies, said
defendants, shared the same centralized offices; the trucks owned
by the companies were dispatched from the same facility yard; the
same mechanics, working at the facility yard, repaired and
maintained all of the Plote Companies' trucks; and all truck
drivers, regardless of the company that paid them, were directed
and controlled by the same managerial staff. Based on these and
other factors, defendants contended Schmidt and Agase were joint
employees of both Plote and Milburn and, for this reason, the
exclusive remedy provision in the Workers' Compensation Act (WCA
or Act) barred plaintiffs from recovering from Milburn or Agase
in the civil negligence action.
On March 10, 1997, the trial court entered an order granting
defendants summary judgment. The order does not say why the
court granted summary judgment. Though a hearing was held on the
motion, no transcript of this hearing is included in the record.
We do not know the trial court's reason for granting summary
judgment in defendants' favor.
Schmidt and his wife appeal. The only issue is whether the
trial court wrongly determined plaintiffs' claims against Milburn
and Agase are barred by the exclusive remedy provision in the
WCA.
Standard of Review
An appellate court reviews the grant of summary judgment de
novo. Barraza v. Tootsie Roll Industries, Inc., --- Ill. App. 3d
---, 690 N.E.2d 612 (1997). When no genuine issue of fact is
present and the moving party is entitled to judgment as a matter
of law, summary judgment is appropriate. Guerino v. Depot Place
Partnership, 273 Ill. App. 3d 27, 652 N.E.2d 410 (1995). Summary
judgment should not be granted if reasonable persons could draw
divergent inferences from undisputed facts. Pyne v. Witner, 129 Ill. 2d 351, 358, 543 N.E.2d 1304 (1989). Summary judgment is a
drastic means of disposing of litigation and should be allowed
only when the moving party's right to judgment is clear and free
from doubt. Zekman v. Direct American Marketers, Inc., 286 Ill.
App. 3d 462, 675 N.E.2d 994 (1997); Ralls v. Village of Glendale
Heights, 233 Ill. App. 3d 147, 151, 598 N.E.2d 337 (1992).
DECISION
Defendants advance two arguments in support of their claim
that the exclusive remedy provision of the Workers' Compensation
Act, 820 ILCS 305/1(a)(4) (West 1996), bars the Schmidts'
lawsuit. They say either contention is sufficient to support
summary judgment.
First, defendants contend Plote and Milburn, though legally
separate companies, are part of a "single enterprise" -- the
"Plote family of companies." Thus, Schmidt and Agase were co-
workers of this single enterprise. Put another way, Milburn and
Plote were joint employers of Schmidt and Agase.
Second, defendants contend both Schmidt and Agase were
working for Plote/Milburn joint ventures at the time of the
accident, thus barring this negligence action because the
liability for Milburn must be, as a matter of law, the same as it
is for Plote.
Plaintiffs, of course, disagree with both arguments.
Despite the commonalities between the two companies, say
plaintiffs, the legal distinction created by the separate
corporate structures of Plote, Inc. and Milburn Bros., Inc.
should bar Milburn from claiming immunity under the WCA.
Plaintiffs also reject the "joint venture" argument because
Schmidt and Agase were engaged in different joint venture
projects at the time of the accident.
We review the undisputed facts:
The "Plote Companies," as listed on the employee manual
which is distributed to all new employees, are: (1) Plote, Inc.,
(2) Milburn Bros., Inc., (3) Allied Asphalt, Inc., (4) Higgins
Asphalt, Inc., and (5) Beverly Gravel, Inc. These five companies
are involved in various aspects of construction. Plote
specializes in excavation, while Milburn specializes in mixing
and pouring concrete.
Though there is obviously some connection among the five
"Plote Companies," nothing in the record indicates that a formal
affiliation exists. It appears there is a common shareholders'
ownership of all the corporations, but there is no "parent"
corporation or holding company. "Plote family of companies" has
no separate corporate existence.
We do know "Plote, Inc." and "Milburn Brothers, Inc." are
separately incorporated and listed separately in the Illinois
Corporation Book. The two companies have different employer tax
identification numbers. Both Plote and Milburn have their own
employees, whom they pay from separate payrolls. The companies
use different letterheads and reporting forms.
The companies share the same corporate officers and are
located at the same corporate address. A single trucking
facilities yard is maintained, from which all company trucks are
dispatched. When hired, a truck driver for any one of the "Plote
Companies" receives a "Plote Companies" employee manual. All
drivers receive the same training and participate in the same
safety meetings.
With regard to the accident which is the basis for the
lawsuit, plaintiffs and defendants agree Schmidt was injured when
the tractor-trailer he was driving was struck from behind by a
tractor-trailer driven by Agase. At the time of the accident,
Schmidt was on Plote's payroll and Agase was on Milburn's
payroll. Title to the tractor-trailer driven by Schmidt was held
by an entity identified as RDD Leasing (located at the same
corporate address as the Plote Companies). "Plote, Inc.,"
however, was listed as owner on the title to the tractor-trailer
driven by Agase.
On the day of the accident, Schmidt was assigned to the
"Route 72 and Elmhurst" project. Agase was working on the
"Medinah Road" project. At about 3:30 p.m., when the accident
occurred, both Schmidt and Agase were returning to the company
truck facilities yard. Schmidt was hauling a full load of broken
concrete, which he picked up from the "Route 72 and Elmhurst"
project. Agase was returning to the yard empty, after having
delivered a load of gravel to the "Medinah Road" project. When
bids for these projects were submitted, the Route 72 and Elmhurst
project was bid by "Plote, Inc. and Milburn Bros., Inc., a joint
venture." The Medinah Road project was bid on by "Plote, Inc.,
Milburn Bros., Inc., Allied Asphalt, Inc., a joint venture, an
Illinois corporation."
Dan Plote, Vice President of both Plote and Milburn, gave a
deposition. He believed the only distinction between an employee
of Plote and an employee of Milburn was the name on the paycheck.
The hierarchy of the two companies, he said, is shared. The
dispatch schedule for all trucks is completed by Dan Bethke, a
Plote employee. Another Plote employee, Jay Kissack, is the
"truck boss" (or foreman). Kissack posts the truckers' schedule
at the facilities yard office. The Safety Director and Truck
Supervisor for the entire truck facility yard, however, is
William Ryan, an employee of Milburn.
William Ryan also was deposed. He said he became employed
by Milburn in 1985. He started out as a driver, moved up to a
foreman position, and then, in 1989, became a supervisor. His
current position as Truck Supervisor and Safety Director requires
him to ensure OSHA regulations are being followed at the job
sites. He also supervises the truck foremen and assists with the
dispatch of trucks in the morning. He reports directly to Dan
Plote.
Ryan said he supervises all truck drivers, whether they are
employed by Milburn or Plote. The drivers receive the same
training and are treated the same, even with regard to seniority.
Ryan also said he never was an employee of Plote, Inc. or
any other corporation that is part of the "Plote family." He was
always paid by Milburn and considered himself a Milburn employee.
Schmidt, Ryan said, was and is employed by Plote. Agase was
employed by Milburn and was discharged after the accident in
accord with "company procedure approved by the union" and part of
"progressive discipline." Ryan said he and Jay Kissack (a
foreman paid by Plote, Inc.) jointly made the decision to
discharge Agase.
It was established by affidavit that all Plote companies
were covered by a single workers' compensation insurance policy.
The record is silent as to who paid the premiums. It is safe to
assume Milburn would have told us it paid all or some of the
premiums if that were the fact. A copy of the policy is included
in the record, however. It shows the policy was issued by
Casualty Insurance Company to "Plote, Inc., Beverly Gravel Co."
The "operating entities" listed in the policy are: Plote, Inc.;
Beverly Gravel, Inc.; East Riverdale Gravel Co.; Cary Gravel,
Inc.; Higgins Asphalt, Inc.; Milburn Brothers, Inc.; Repco
Development, Inc.; Allied Asphalt Paving Co., Inc.; Par
Development, Inc.; and Fairway Realty, Inc. Additional insureds
were: "Allied Asphalt Paving Co., Inc., Plote, Inc., & Milburn
Brothers, Inc., a joint venture"; "Plote, Inc., Milburn Brothers,
Inc. & Higgins Asphalt, Inc., a joint venture"; and "Plote, Inc.,
Allied Asphalt, Paving Co., Inc. & Milburn Brothers, Inc., a
joint venture."
A. "Single enterprise" theory
Plote and Milburn, the defendants say, are actually parts of
a single enterprise and Schmidt and Agase were joint employees of
this single enterprise. For this reason, both Milburn and Agase
would be immunized from suit by the exclusive remedy provision of
the WCA.
In support of this theory, defendants rely on Dildine v.
Hunt Transportation, Inc., 196 Ill. App. 3d 392, 553 N.E.2d 801
(1990). In Dildine, plaintiff was injured while he was making
repairs on a Happy Cab Company (Happy Cab) automobile. He filed
for and received workers' compensation benefits through Happy Cab
and then filed a negligence action against Hunt Transportation,
Inc. (Hunt), the company which owned the building where Happy Cab
housed its garage. Hunt moved to dismiss the complaint.
According to uncontested affidavits filed in Dildine, the
following facts were established: plaintiff's salary was paid by
Happy Cab; Hunt and Happy Cab were both wholly-owned subsidiaries
of Butler Holding Company, Inc.; Butler filed consolidated tax
returns on behalf of Hunt and Happy Cab; Happy Cab was an
additional insured on Hunt's workers' compensation insurance
policy, which paid plaintiff's claim; Happy Cab did not pay Hunt
rent for the use of the garage area; a regional marketing manager
for Hunt, who had authority over all operations at the building
where the Happy Cab garage was located, had the power to direct
plaintiff to work for Hunt whenever necessary; though plaintiff
typically repaired Happy Cab automobiles he also repaired truck
trailers, rearranged trailer loads, or drove loaded trucks for
Hunt.
Based on the totality of circumstances presented, the
Dildine court held plaintiff was the "joint employee" of Happy
Cab and Hunt and was barred by the exclusive remedy provision in
the WCA from bringing a common law action against Hunt. To reach
the conclusion that plaintiff was a "joint employee," the Dildine
court considered factors set forth in Clark v. Industrial Comm'n,
54 Ill. 2d 311, 297 N.E.2d 154 (1973).
Clark, however, was a case in which the court decided
whether the plaintiff was an employee or an independent
contractor. Application of Clark to the circumstances in Dildine
is problematic. Also, Dildine never discussed whether it was
appropriate to disregard the separate corporate identities of
Happy Cab and Hunt.
Our Supreme Court recently held the test for joint
employment is whether two or more employers exert significant
control over the same employees. That is, does the evidence show
the employers share or co-determine those matters governing
essential terms and conditions of employment? Village of
Winfield v. Illinois State Labor Relations Board, 176 Ill. 2d 54,
60, 678 N.E.2d 1041 (1997). Winfield was a bargaining case,
decided under the State labor laws, and did not involve two
private, independently organized corporations. Still, we see no
reason why a trier of fact in any joint employment case cannot
consider a "putative joint employer's role in 'hiring and firing,
promotions and demotions; setting wages and work hours; and other
terms and conditions of employment; discipline; and actual day-
to-day supervision and direction of employees on the job.'"
Village of Winfield, 176 Ill. 2d at 60, quoting Orenic v.
Illinois State Labor Relations Board, 127 Ill. 2d 453, 475, 537 N.E.2d 784 (1989). Of course, in a case such as the one before
us, the trier of fact would have to consider the separate
corporate existence of each of the purported joint employers.
We have attempted to steer clear of the "borrowed" or
"loaned" employee decisions. Those cases ordinarily deal with
the employee's contractual expectations, a matter that is of
little import in this case. See Barazza v. Tootsie Roll
Industries, Inc., --- Ill. App. 3d ---, 690 N.E.2d at 615-16.
In Nutt v. Pierce Waste Oil Service, Inc., 112 Ill. App. 3d
612, 615-16, 445 N.E.2d 928 (1983), the court distinguished
"joint" employees and "borrowed" employees. A "joint employee"
relationship will exist, said the court, "[w]here control of an
employee is shared by two employers and both benefit from the
work." A "loaned employee" relationship is one where the
employee is assigned to perform special services for the
borrowing employer and the borrowing employer exercises direction
and control over the employee.
In Freeman v. Augustine's Inc., 46 Ill. App. 3d 230, 360 N.E.2d 1245 (1977), cited in Nutt, a determining factor between
"joint employee" and "borrowed employee" status was who hired the
employee and paid the salary. If the employee was not jointly
paid, the court seemed to indicate a joint employee relationship
did not exist.
The parties in this case do not claim a "loaned" or
"borrowed" employee situation existed. This case, therefore, is
not about "loaned" or "borrowed" employees. Nor is this a case
which seeks to employ the dual capacity doctrine. See Sharp v.
Gallagher, 95 Ill. 2d 322, 447 N.E.2d 786 (1983); Goins v. Mercy
Center for Health Care Services, 281 Ill. App. 3d 480, 667 N.E.2d 652 (1996). This is a case where two legally separate
corporations seek to cast off their corporate identity and pierce
their own corporate veils.
We believe the controlling question for the trier of fact is
whether, at the time of the injury, Herbert Schmidt "was engaged
in the performance of duties for two employers, pursuant to a
joint employment." See American Stevedores Co. v. Industrial
Comm'n, 408 Ill. 445, 448, 97 N.E.2d 329 (1951) (error to find
joint employment in worker's compensation proceedings where
injured employee was not rendering service for both corporations
when injured).
Plote and Milburn characterize themselves as part of "one,
big, happy family" which is the "Plote family of companies."
Defendants ask us to shield them from liability by disregarding
the separate corporate identities of Plote and Milburn.
Milburn and Plote, however, are separate corporations
performing separate functions. Presumably, their separate
corporate identities produce certain legal benefits. We see no
reason to allow Plote and Milburn to organize as individual
corporations and then pierce their own corporate veils at their
convenience. See In re Rehabilitation of Centaur Insurance Co.,
158 Ill. 2d 166, 172, 632 N.E.2d 1015 (1994)(a corporation should
not be allowed to pierce its own corporate veil for the benefit
of the corporation or its shareholders); Flynn v. Allis Chalmers
Corp., 262 Ill. App. 3d 136, 140, 634 N.E.2d 8 (1994)(a
corporation may not use the fiction of separate corporate
existence to frustrate creditors). See also, Volb v. G.E.
Capital Corp., 139 N.J. 110, 651 A.2d 1002, 1008 (1995)("in
suits brought by an injured employee against corporations that
are parents, subsidiaries, or affiliates of the plaintiff's
employer, the general rule consistently applied by federal and
state courts has been to deny workers' compensation immunity on
the ground that separate corporate identity of affiliated
corporations should not be disregarded").
As this court recently held in Daley v. American Drug
Stores, Inc., --- Ill. App. 3d ---, 691 N.E.2d 846 (1998), even
where two corporations are wholly-owned by a single parent
corporation, the corporations must be deemed separate legal
entities unless it is shown "that one corporation is the mere
instrumentality or dummy of the other and that, under the
circumstances, the observance of the fiction of separate
corporate existence will sanction a fraud or injustice."
In the present case there is no dispositive evidence Schmidt
was an employee of any corporation other than Plote. He was
hired by Plote in 1968 and had been a Plote employee since that
time. He was paid by Plote and no one else. Schmidt drove a
truck which displayed markings indicating it belonged to Plote.
Schmidt performed duties for the benefit of Plote. At the time
of the accident Schmidt was hauling concrete, which was Plote's
business.
We don't agree Dildine requires a finding of "joint
employment." Dildine is distinguishable. In Dildine, the
workers' compensation insurance policy was issued to Hunt, the
named defendant. Hunt paid the premium. Happy Cab was an
additional insured on the policy. Hunt, therefore, was the
actual party in interest in plaintiff's workers' compensation
claim. In the present case, the workers' compensation insurance
policy was issued to "Plote, Inc., Beverly Gravel, Inc."
Milburn, along with others, was an additional insured. Milburn,
therefore, was not the true party in interest in Schmidt's
workers' compensation claim against Plote, Inc. Milburn took no
part in the worker's compensation proceeding.
In their brief, Milburn and Agase emphasize the amount of
control exercised over Plote employees by Ryan. It is true that
Ryan was a high-level supervisor, ranking above the Plote
supervisors in the single yard both corporations shared. In
addition, Plote and Milburn employees shared washrooms, lunch
rooms, meeting rooms, and were given the same employee handbook -
- the "Plote Companies Employee Manual."
Yet, Plote and Milburn maintained separate and distinct
identities. The workers' compensation insurance policy was
issued to Plote. Presumably, Plote paid the premium. Plote, not
Milburn, defended the workers' compensation action and was
responsible for whatever benefits were paid to Schmidt.
We do not believe the degree of control and supervision
exercised by Milburn and other joint effort circumstances in this
case are enough, as a matter of law, to protect the defendants
under the exclusive remedy provision of the WCA. The workers'
compensation statutory scheme is effective because employers are
able to spread the risk of loss. See Rosales v. Verson Allsteel
Press Co., 41 Ill. App. 3d 787, 789, 354 N.E.2d 553 (1976).
Employers should not have to provide workers' compensation and
also have to pay out in common law tort actions. But here, if
defendants are right, Milburn pays nothing for the negligence of
its driver -- no workers' compensation premiums, no workers'
compensation benefits, no tort liability. That would turn the
exclusive remedy provision of the WCA into a sword, instead of a
shield. No useful societal purpose would be served. Milburn
would receive all the benefits the law provides to a separate and
distinct corporate body with none of the usual detriments --
tort liability for the negligence of its agent, for instance.
We do not believe this is an appropriate case for a judge to
conclude the joint employer theory defeats the plaintiffs' common
law action. Because reasonable persons could draw different
inferences from the undisputed facts, summary judgment should
have been denied. See Davis v. Pak-Mor Manufacturing Co., 284
Ill. App. 3d 214, 220, 672 N.E.2d 771 (1996).
B. "Joint Venture" theory
The second claim made by defendants is that Schmidt and
Agase were working on joint ventures which involved both Plote
and Milburn. Therefore, say the defendants, the liability of
Milburn and Plote is identical and the exclusive province of the
WCA.
On the day of the accident, Schmidt was assigned to the
"Route 72 and Elmhurst" project and Agase was working on the
"Medinah Road" project. These were two different joint venture
projects, each bid on separately. The bid for the Route 72 and
Elmhurst project was made by "Plote, Inc. and Milburn Bros.,
Inc., a joint venture." The Medinah Road project was bid on by
"Plote, Inc., Milburn Bros., Inc., Allied Asphalt, Inc., a joint
venture, an Illinois corporation." Nothing in the record
discloses any relationship between these two projects, except
that they both involved Plote and Milburn. The projects appear
to be two distinctly different joint ventures.
Defendants rely on Moran v. Gust K. Newberg/Dugan & Meyers,
268 Ill. App. 3d 999, 645 N.E.2d 489 (1994), to support their
claim of immunity. Moran does not control.
In Moran, plaintiff was injured when he was working at a
baseball stadium construction site. The single construction
project was a joint venture between Newberg and Dugan & Meyers.
Plaintiff was employed to work on this project and was paid by
joint venture funds. Under these circumstances, the court found
the liabilities of the joint venture and the members of the joint
venture to be co-extensive.
There is no evidence that either Schmidt or Agase was
actually employed by the joint ventures, though their employers
were co-adventurers. Both Schmidt and Agase were paid by their
separate employers, not by joint venture funds. Furthermore, at
the time of the accident, Schmidt and Agase were working on
different joint ventures. The Schmidts are not bringing their
cause of action against Milburn in its capacity as a joint
venturer with Plote on the Route 72 and Elmhurst project.
Whether the defendants' joint venture theory will ultimately be
successful is a matter for the trier of fact to determine.
CONCLUSION
The trial court order granting defendants summary judgment
in their favor is reversed and the cause remanded for further
proceedings consistent with this opinion.
REVERSED AND REMANDED.
CERDA, P.J. and SOUTH, J., concur.
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