Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-16-01294/USCOURTS-ca7-16-01294-0/pdf.json

Parties Involved:
Administrative Employer Services, Inc.
Appellee
Lend Lease (US) Construction Inc.
Appellant
Technology Insurance Company, Inc.
Appellee

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

Nos. 16‐1294 and 16‐1739

LEND LEASE (US) CONSTRUCTION INC.,

Plaintiff‐Appellant,

v.

ADMINISTRATIVE EMPLOYER SERVICES, INC. and TECHNOLOGY

INSURANCE COMPANY, INC.,

Defendants‐Appellees.

____________________

Appeals from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:15‐cv‐04318 — Samuel Der‐Yeghiayan, Judge.

____________________

ARGUED SEPTEMBER 16, 2016 — DECIDED OCTOBER 20, 2016

____________________

Before POSNER, RIPPLE, and ROVNER, Circuit Judges.

POSNER, Circuit Judge. In 2014, Lend Lease construction

company, the construction manager of the River Point Tow‐

er Project—a project to build an ultramodern office building

in downtown Chicago—hired Cives Corporation to be a

subcontractor on the project. Cives in turn hired Midwest

Steel, Inc., to be a sub‐subcontractor. Midwest had, years be‐

fore, hired Administrative Employer Services, Inc. (AES) to

Case: 16-1294 Document: 49 Filed: 10/20/2016 Pages: 4
2 Nos. 16‐1294 and 16‐1739

supply Midwest with additional workers, who would be co‐

employed by Midwest and AES. These workers would work

on the River Point Project.

In order to provide workers’ compensation insurance to

all the workers on the project, Lend Lease entered into what

is called a “contractor controlled insurance program” with

an insurance company named Starr Liability & Indemnity

Co. The Starr policy provided for a $500,000 deductible; that

is, Lend Lease would have to pay the first $500,000 of any

claims, covered by the policy, of injured workers. All sub‐

contractors were supposed to join in the policy; Lend Lease

alleges that Midwest enrolled and therefore its workers were

covered. Lend Lease also alleges that AES had several years

earlier obtained workers’ compensation for its workers from

Technology Insurance Co. (referred to by the parties as

“TIC”), which meant that injured AES‐Midwest workers

could obtain workers’ compensation from either Starr (or

Lend Lease if it hadn’t used up its deductible) or TIC.  

Later in 2014, four ironworkers, jointly employed by

Midwest and AES and performing work for Midwest (and

thus indirectly for Lend Lease, as the overall contract man‐

ger) were injured on the job and sought workers’ compensa‐

tion. Starr accepted coverage but under a reservation of

rights, because of the $500,000 deductible. The workers’

claims ultimately exceeded $500,000 (though by how much

we haven’t been told), so Lend Lease has had to pay its full

deductible and Starr has paid the remaining claims.

But with Midwest and AES having acknowledged that

they were the co‐employers of the injured workers, Lend

Lease filed a diversity suit against TIC, AES’s insurer, and

AES as well, seeking reimbursement of the $500,000 in

Case: 16-1294 Document: 49 Filed: 10/20/2016 Pages: 4
Nos. 16‐1294 and 16‐1739                                                             3

workers’ compensation benefits that Lend Lease had paid to

the four workers. The district court dismissed the suit, how‐

ever, precipitating this appeal to us by Lend Lease.

Lend Lease alleges that the four injured workers were in‐

sured both by Starr and by TIC, and if this is right there

would be an argument for splitting the workers’ compensa‐

tion benefits between the two insurers—and indeed we

learned at oral argument that Starr has filed its own lawsuit

against AES and TIC. See Home Insurance Co. v. Cincinnati

Insurance Co., 821 N.E.2d 269, 316 (Ill. 2004) (“Contribution

as it pertains to insurance law is an equitable principle aris‐

ing among coinsurers ... and is only available where the con‐

current policies insure the same entities, the same interests,

and the same risks.”) (emphasis added). But that’s not this

case; and in this case Lend Lease is not asking for a split be‐

tween coinsurers—what good would that do it? Instead it

argues that because it is a policyholder that paid a deducti‐

ble in conformity to the Starr policy, it is entitled to contribu‐

tion, or in the alternative to indemnification, from TIC, in the

amount of $500,000, which would erase Lend Lease’s de‐

ductible. Had it not been for the deductible, Starr would

have had to pay the entire workers’ compensation benefits

due the injured employees, so it saved money—but so did

Lend Lease, though probably less than the deductible. For

the deductible, by reducing Starr’s risk, doubtless had re‐

duced the insurance premiums charged Lend Lease by Starr,

by reducing Starr’s potential liability to workers injured

while employed on Lend Lease’s construction project. Any‐

way, Lend Lease made a deal with Starr and is bound by it.

Lend Lease also asks for a declaratory judgment that TIC

is obligated to pay the workers’ compensation benefits for

Case: 16-1294 Document: 49 Filed: 10/20/2016 Pages: 4
4 Nos. 16‐1294 and 16‐1739

the four injured workers, as well as the benefits for any fu‐

ture AES‐Midwest workers who are injured on the project.

Since we’ve rejected its claim for contribution or indemnifi‐

cation from TIC, there is no ground for the declaratory

judgment that it seeks.

Lend Lease makes a separate and distinct argument that

AES has been unjustly enriched because it “has paid less

premium for its workers compensation insurance policy (i.e.,

the TIC Policy), it has not had to satisfy any applicable de‐

ductible or self‐insured retention on the TIC Policy, and/or it

has not had the claims of the Injured Workers counted

against its insurance loss runs [reports that document claims

activity].” But AES was not obligated to purchase an insur‐

ance policy that would get Lend Lease out of paying its de‐

ductible.

Last, Lend Lease appeals the denial of its motion under

Federal Rule of Civil Procedure 59(e) asking the district

judge to change judgment from dismissal with prejudice to

dismissal without prejudice in order to allow Lend Lease to

file a fourth complaint that would add Starr as a plaintiff

and Midwest as a defendant, and assert new claims against

AES. But Lend Lease has already had three chances to plead

correctly—making this a case of three strikes and you’re

out—and Starr can litigate its own claims against TIC.

The judgment of the district court is

AFFIRMED.

Case: 16-1294 Document: 49 Filed: 10/20/2016 Pages: 4