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“The life of the law has not been logic; it has been experience.”

-Oliver Wendell Holmes, Jr.

McKenna Law Update & News – September 2014

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In This Issue...

 

2003 DEADLY LINCOLN PARK PORCH COLLAPSE RULED AS ONE OCCURRENCE LIMITING INSURER’S POLICY LIMIT

In the early hours of June 29, 2003, a three story porch collapsed on Wrightwood Avenue in Chicago. There was a party ongoing, with people on each of the three floors. The third floor collapsed onto the second and the second onto the first with no intervening acts. Thirteen individuals died and 29 others were injured. Many of the injuries did not manifest themselves until days or weeks after the collapse.

The building was insured by First Specialty Insurance. First Specialty issued a policy with an occurrence limit of $1 million and a general aggregate limit of $2 million. As part of a settlement agreement, the building’s excess carrier paid the various plaintiffs its policy limit of $15 million, First Specialty paid its per occurrence limit of $1 million, and First Specialty also executed an assignment of rights with the plaintiffs, which granted the plaintiffs a limited right to attempt to recover First Specialty’s remaining $1 million on its aggregate limit.

The plaintiffs filed a declaratory judgment action against First Specialty arguing that the collapse constituted more than one occurrence. First Specialty denied that allegation and argued that the plaintiffs’ injuries all stemmed from one occurrence, the collapse, and therefore it was not required to pay an additional $1 million. The parties filed summary judgment motions against each other and the trial court granted First Specialty’s motion. The trial court reasoned that there was simply one source for all of the plaintiffs’ injuries and resulting deaths -- the porch collapse. The trial court held that First Specialty was not obligated to pay plaintiffs the aggregate limit of $2 million. The plaintiffs appealed.

On appeal, the plaintiffs argued that several individual plaintiffs’ injuries and deaths did not occur until sometime after the collapse. Therefore, First Specialty could not establish that all of the injuries and deaths constituted one occurrence under the policy. The appellate court stated that under the clear and unambiguous language of the policy, the injuries in this case were all the result of a single occurrence.

Looking past the language of the policy, the court applied the cause theory instead of the effect theory. The cause theory holds that the time at which injuries manifest themselves is irrelevant to a determination of the number of occurrences. The only relevant question is how many separate events or conditions led to a party’s injury. The cause theory is also the majority test over the effect theory.

There was no dispute that the collapse was the sole and proximate cause of all of the plaintiffs’ injuries. There were no allegations of any separate or intervening acts or circumstances that contributed to the plaintiffs’ injuries. The appellate court reasoned that under the cause theory, all of the plaintiffs’ losses emanated from a single cause. Therefore, the appellate court affirmed the lower court’s decision. The Supreme Court of Illinois denied the petitioners leave to appeal. Ware v. First Specialty Insurance Corp, 2013 Ill. App. LEXIS 12.

For further information, contact Alex Sweis at 312.558.3994 or asweis@104.236.6.34.
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DUTY OF REASONABLE CARE IMPOSED UPON GENERAL CONTRACTOR UNDER "RETAINED CONTROL" EXCEPTION

In Lederer v. Executive Construction, Inc., 2014 IL App (1st) 123170, the First District Appellate Court of Illinois reversed the circuit court’s order granting defendant’s motion for summary judgment. The Court held that the degree of control over a construction project exercised by the defendant general contractor, and the fact that the defendant general contractor had knowledge of a dangerous condition, imposed a duty of reasonable care upon the defendant.

Executive Construction, Inc. (Executive) was the general contractor for the construction of office space in a Chicago office building. Executive subcontracted with Alliance Drywall and Acoustical Company (Alliance) for drywall and acoustical ceiling work at the site. The plaintiff, Roger Lederer, was a drywall taper employed by Alliance at the site.

While wearing stilts to work on the ceiling of a conference room, plaintiff fell after allegedly tripping over an exposed and unguarded electrical conduit or pipe protruding from the floor in the conference room. Plaintiff subsequently filed a personal injury action against Executive, along with the electrical subcontractor on the job. Plaintiff alleged negligence by Executive for failing to ensure that warning cones were placed over the electrical conduit, failing to remove construction debris from the area, failing to require the use of a scaffold, and otherwise failing to provide a safe workspace and follow job safety rules.

Executive moved for summary judgment, which was granted by the circuit court. Plaintiff appealed that decision. On appeal, plaintiff argued that the evidence showed that Executive retained supervisory control over the operative details of his work, had the authority to halt work being done in an unsafe manner, had notice that he was using stilts and had notice of the unsafe conditions. Executive countered that it owed no duty of care to plaintiff as it did not retain sufficient control of plaintiff’s methods of work or operative details to impose such duty, and it had no knowledge of the allegedly unsafe conditions.

A general contractor is usually not liable for the negligence of an independent contractor it employs; however, Section 414 of the Restatement (Second) of Torts provides an exception to that rule. Section 414 provides that: "One who entrusts work to an independent contractor, but who retains the control of any part of the work, is subject to liability for physical harm to others for whose safety the employer owes a duty to exercise reasonable care, which is caused by his failure to exercise his control with reasonable care."

As the Court notes, a general contractor may be held vicariously liable for a subcontractor’s negligence under the principles of agency where the employer retains control over the operative details of any part of the contractor’s work. Alternatively, a general contractor may be found directly liable if the employer retains only supervisory control.

To determine whether Executive retained control over the subcontractor’s work, the Court looked to the contract between the parties and the actions and responsibilities of Executive employees. First, the contract between the parties demonstrated evidence of Executive’s control. The contract required Alliance to "report promptly any such improper conditions and defects to ECI (Executive) in writing." Alliance was obligated to perform their work in accordance with Executive’s safety program and attend weekly coordination meetings.

The rules and regulations attached to the contract required Executive to create and implement a safety program, required Alliance to adhere to it, and required Executive to appoint a project superintendent who was responsible for enforcing the program. Alliance was also required to have a safety representative to ensure compliance, train employees and hold weekly safety meetings. Finally, Executive’s own safety manual prohibited the use of stilts by any subcontractor’s employee.

The Court noted the significance of Executive prohibiting one means or method of performing work. Executive also exercised control through the actions and responsibilities of its employees. Executive employees retained the authority to stop unsafe work and order it remedied. Specifically, Executive’s superintendent for the project had the authority to stop work and ensure that subcontractors complied with safety policies. Based on these facts, the Court found that there was sufficient evidence to establish that Executive retained sufficient supervisory controls such that it had a duty to exercise this control with reasonable care, and could therefore be held liable for Plaintiff’s injury.

Additionally, the Court found that Executive knew or should have known of the unsafe working condition that led to Plaintiff’s injury and failed to exercise reasonable care in remedying it. The Court noted that the alleged unsafe condition existed for longer than one hour. Specifically, the congested conditions in the work area existed the day before and the day after the accident. Additionally, Plaintiff had complained to Executive’s superintendent about the unsafe conditions in the area where the accident took place. The Court also found it significant that the dangerous condition was present in a high traffic area, and that Executive’s superintendent was generally knowledgeable that the accumulation of debris and unguarded conduit could create a safety hazard.

Lederer is instructive because it provides a common fact pattern for construction workplace personal injury cases. General contractors should consider the facts applied by the Court in Lederer when determining the precise nature of their involvement with their subcontractors and the manner in which they exercise oversight at their jobsites.

For further information contact Timothy Hayes at 312.558.8325 or tmhayes@104.236.6.34.
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TRIALS AND CASE DISPOSITIONS

Dawn Ehrenberg obtained dismissal of her ambulance client in a case where they were sued by a suburb for the alleged failure of the ambulance company to provide timely treatment to a stabbing victim. Dawn filed motions to dismiss the complaint for failure to state a proper cause of action under the EMS statute, failure to provide a 2-622 report with regard to the medical allegations and also for improperly trying to seek contribution damages under the contract between the ambulance company and the suburb. The judge agreed that the plaintiff had not properly plead willful and wanton conduct by the ambulance company and had not provided sufficient medical testimony to prove there was a connection between the ambulance company’s actions and the death of the stabbing victim. The judge also agreed that contribution damages were not allowable under the contract claim.
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CONGRATULATIONS!!!!

Gregory Cochran has once again been named as a Leading Lawyer for 2014.

Jaime Dowell was nominated for the National Conference of Bankruptcy Judges' Blackshear Presidential Fellowship by Judge Thomas Lynch and Sara Cook. The award is given to young African American Bankruptcy attorneys who demonstrate the dedication, professionalism and skills that were exhibited by Judge Blackshear when he served as the first African American Bankruptcy judge. As a winner, Jaime attended a judges only breakfast and was introduced to the entire bench for her achievement. She was also a guest at the National Conference of Bankruptcy Judge’s Seminar, a premier annual bankruptcy event. Congratulations to Jaime!
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