If Walsh undertook to produce a certain result but was not controlled as to the
method in which it was to obtain that result, then it was an independent contractor. See
Lang vy, Silva, 715 N.E.2d 708, 716 (LIL App. 1999), On the other hand, if Jackson
and/or Intell had the right to control the manner and method in which Walsh performed
its work, then Walsh was an agent of Jackson and/or Intell, See id. Whether or not
Walsh is an agent versus an independent contractor is a question of fact. Stewart v.
Jones, 742 N.E.2d 896, 903 (Ill. App. 2001). Nevertheless, “the question may be
decided as a matter of law when the relationship is so clear as to be indisputable.” Jd.
Because Jackson and Intell have offered extensive evidence of an independent
contractor relationship, which has not been refuted by Hinkle, the Court miles as a
matter of law that Walsh was an independent contractor.

The fact that Walsh was an independent contractor does not end the inquiry into
Hinkle’s negligence claims against Jackson and Intell. Hinkle has alleged that, in
addition to being indirectly liable on account of Walsh’s negligence, Jackson and Intell
are directly liable on account of their own negligence. Nothing in Jackson’s and
Intell’s motion addresses their own alleged negligence and to this extent their motion

is denied.

-13-



LOCAL RULE 56.1

L LEGAL STANDARD

Local Rule 56.1 places certain burdens on parties making and opposing motions
for summary judgment. Local Rule 56.1(a) (3) requires the moving party to submit “a
statement of material facts to which the moving party contends there is no genuine
issue and that entitle the moving party to ajudgment as a matter of law. ...” N.D. TIL
L.R. 56.1(a)(3). Local Rule 56.1(b)(3) requires each opposing party to submit “a
concise response to the movant’s statement... .” N.D, Tll. L.R. 56.1(b)(3). Notably,
any material facts set forth in the movant’s statement “will be deemed to be admitted
unless controverted by the statement of the opposing party.” N.D. Ml, L.R.
56.1(b)(3)(B). The Court has discretion in deciding whether or not to strictly enforce
this local rule. See Bordelon v. Chicago Sch. Reform Bd. of Trustees, 233 F.3d 524,
527 (7th Cir. 2000) (“Given their importance, we have consistently and repeatedly
upheld a district court's discretion to require strict compliance with its local rules

governing summary judgment.”).

Tl, DISCUSSION
Local Rule 56.1 is designed to isolate the material facts that arc actually in

dispute. Unless the opposing party is forced to admit or deny the specific contentions



DICTIONARY 55 (5th ed. 1979); See also 5 WRIGHT & MILLER, FEDERAL PRACTICE AND
PROCEDURE § 1270 (2d ed. 1990) (stating that an affirmative defense stems from the
common law “which permitted a defendant who was willing to admit that plaintiffs
declaration demonstrated a prima facie case to then go and allege additional new
material that would defeat plaintiffs otherwise valid cause of action.”). Jackson and
Intell have not alleged any new matter, They have merely concluded that Hinkle failed
to state a claim for punitive damages. The court has already ruled that Hinkle’s claim
for punitive damages is legally sufficient. February 6, 2002, Order. For Jackson to
assert the opposite of what this Court has already ruled and back it up with zero

allegations is a waste of everyone’s time.

B. —_Hinkle’s Motion And Jackson’s and Intell’s Cross-Motion For Summary
Judgement on Jackson’s and Intell’s Counterclaims

Jackson and Intell assert counterclaims against Hinkle based on three provisions
of the Lease, paragraphs 9(a), 9(b), and 9(c). Specifically, Jackson and Intell allege

that they have sustained and will continue to sustain damages because Hinkle failed to

hold them harmless and insure them from negligence liability.



Fed. R. Civ. P. 56(c). The moving party bears the initial burden of showing that no
genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The burden then shifts to the non-moving party to show through specific
evidence that a triable issue of fact remains on issues on which the non-movant bears
the burden of proof at trial. /d@. The non-movant may not rest upon mere allegations
in the pleadings or upon conclusory statements in affidavits; it must go beyond the
pleadings and support its contentions with proper documentary evidence. Jd, The
court considers the record as a whole and draws all reasonable inferences in the light
most favorable to the party opposing the motion. Bay v. Cassens Transport Co., 212
F.3d 969, 972 (7th Cir, 2000). A genuine issue of material fact exists when "the
evidence is such that a reasonable jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). It is with these principles
in mind that we address Hinkle’s motion for summary judgement and Jackson’s and

Intell’s cross-motion for summary judgment.

Il, DISCUSSION

A. — Hinkle’s Motion For Summary Judgement on Jackson's and Intell’s Affirmative
Defenses

Hinkle moves for summary judgment on Jackson and Intell’s affirmative

defenses. As an initial matter, Jackson and Intell fail to understand their obligations

-6-



that are posed to it, the rule fails to fulfill its function. In paragraphs 18, 21, and 27 of
its Local Rule 56.1(a)(3) statement, Hinkle makes specific contentions:
18. After the term of the Lease expired on January 31, 2000, Hinkle

continued to occupy and rent the Offices with the consent of
Jackson and Intell.

21. Hinkle never agreed to any modifications or alterations of the
Lease’s terms for Hinkle’s tenancy in the Offices following
January 31, 2000.

27. Hinkle knew about the renovation project before it started.
However, Hinkle did not know that the renovation project would
involve either holes being punched in the roof or flooding in the
Offices.

Hinkle L.R. 56.1(a)(3) St. at {4 18, 21, and 27. In the corresponding paragraphs of
their Local Rule 56.1(b)(3) statement, Jackson and Intell did deny paragraph 21 by

offering a controverting statement but did not deny paragraphs 18 and 27.

Consequently, the contentions in paragraphs 18 and 27 are deemed admitted,

SUMMARY JUDGMENT
1. LEGAL STANDARD
Summary judgment is appropriate when the record, viewed in the light most
favorable to the nonmoving party, reveals that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment as a matter of law.

-5-



2. Assumption of Risk

Jackson’s Second Affirmative Defense and Intell’s First Affirmative Defense are
neatly identical and claim that Hinkle, “by remaining in the building during the
construction period, therefore assumed the risk of any damage it might sustain from the
construction taking place on the roof.” Jackson’s Answer at 8; Intell’s Answer at 7.

Under Illinois law, “an assumption of the risk defense can prevail only if the
plaintiff subjectively knew of the risk when agreeing to encounter it.” TRW Title Ins.
Co. v. Security Union Title Ins. Co. 887 F. Supp. 1029, 1031 (N.D, Ill. 1995). Jackson
and Intell admit that Hinkle did not know that the renovation project would involve
either holes being punched in the roof or flooding in the Offices. Thus, the assumption
of risk defense is unavailable.
3. Punitive Damages

Jackson’s Third Affirmative Defense and Intell’s Second Affirmative Defense
are identical and state in their entirety: “The plaintiff has failed to state a claim for
punitive damages upon which relief may be granted.”

This is not an affirmative defense, An affirmative defense is “new matter which

assuming the complaint to be true, constitutes a defense to it.” BLACK’s LAW

? Because Hinkle does not scck punitive damages from Intell, Intell’s “Second Affirmative
Defense” is irrelevant and hereby stricken.

-8-



‘Minute Order Form (06/97)

United States District Court, Northern District of Tlinois

Name of Assigned Judge ] “OT: Sitting Judge if Othe
= or Magistrate sludge Charles P. Kocoras than Assigned dudge
CASE NUMBER 01 C 5078 DATE 10/2/2002
: CASE Hinkle Engineering, Inc. vs. 175 Jackson L.L.C. et al
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd purty plaintiff, and (b) state briefly the natuee

MOTION: of the motion being presented, }

DOCKET ENTRY:

@M oa Filed motion of [ use listing in “Motion” box above. }

Q ao Brief in support of motion due

(3) Oo Answer bricfto motion duc____. Reply to answer briefdue___

(4) Q Ruling/Hearingon set for__— at

(5) oO Status hearing[held/continued to] [sct for/re-sct for] on ____setfor__at

(6) o Pretrial conference[held/continucd to) [set for/re-set for]on___setfor__—at__.
(7) 0 Trial|set for/re-set for]on at

(8) oOo [Bench/Jury trial] [Hearing] held/continued to. at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

CM FRCP4(m) OLocal Rule 41.1 OFRCP41(a)(1) 0 FRCP41(a)(2).

(ao) «of [Other docket entry] Ruling held. ENTER MEMORANDUM OPINION: The Court grants in
part and denies in part Hinkle’s motion (Doc 67-1) to strike, grants in part and denies in part Hinkle’s
motion (Doe 59-1) for summary judgment, grants in part and denies in part Jackson’s and Intell’s cross-
motion (Doc 74-1) for summary judgment, and denies Hinkle’s motion (Doc 60-1) motion for sanctions.
Partics are given to November 14, 2002 to file a joint Final Pretrial Order.

al) ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. 1

number of notices

cT 03 2002

Notices muiled by judge's staff.

Notitied counsel by telephone.

; ©

v Docketing to mail notices,

Mail AO 460 form yrs

poe Tate

Copy tof eV magistrate ple.

courtroont
Scr depuly’s
initials

Datestime received in
central Clerk's Office

‘mailing deputy initials



Jackson’s claim that Hinkle had a duty to insure itself (e.g. Hinkle) under
paragraph 9(b) fails to state a claim upon which relief can be granted. Paragraph 9(b)
requires Hinkle to obtain property insurance for itself, not liability insurance for
Jackson. The fact that an injury is insured against does not mean that liability is
avoided, For example, even if Jackson negligently caused Hinkle damages and those
damages were completely covered by Hinkle’s insurance, Jackson would still be
exposed to negligence liability. Thus, even 1f Jackson can prove that Hinkle breached
paragraph 9(b), it cannot prove any damages,

Jackson’s claim that the insurance, which Hinkle was obligated to purchase

3g

pursuant to paragraph 9(c), was Hinkle’s “sole form of relief” is without merit. The
Court has already ruled that paragraph 9(c) “does not provide the sole remedy for the
parties as to claims against each other.” October 18, 2001, Order at 11. Again,
Jackson should refrain from arguing directly contrary to the law of the case as
established under this Court’s earlier rulings unless the narrow exception to the law of
the case doctrine applies.

Jackson’s claim that Hinkle had a duty to insure Jackson and itself under
paragraph 9(c) does contain a promise, which if breached, could cause Jackson

damage. Paragraph 9(c) requires Hinkle to obtain liability insurance of $250,000 for

property damage naming Jackson and Hinkle as insureds. The policy only names

-ll-



As an initial matter Intell’s claim that Hinkle owed contractual duties to it is
without merit as Intell was not a party to the Lease. Additionally, Intell is not a third
party beneficiary of the promises contained in paragraphs 9(b) and 9c)?

Jackson’s claim that Hinkle has a duty to hold it harmless is without merit. The
Court in its October 18, 2001, Order held that “paragraph 9(a) of the Lease between the
parties is void as against public policy according to the Illinois Landlord and Tenant
Act.” October 18, 2001, Order at 9. In the same order, the Court also held that
paragraph 9(b), to the extent that it would exculpate Jackson from negligence liability
is “void against public policy according to the Illinois Landlord and Tenant Act.”
October 18, 2001, Order at 10. The October 18, 2001, Order is the law of the case, and
“under the law of the case doctrine, we do not reopen issues decided in carlicr stages
of the same litigation unless we have a strong conviction that the earlier ruling was
wrong and the party that benefitted from the earlier ruling would not be unduly
harmed.” White v. Godinez, 301 F.3d 796, 803 (7th Cir. 2002). It is imperative that
Jackson and Intell not attempt to revisit issues this Court has already decided unless the

narrow exception to the law of the case doctrine applies, which it clearly does not.

3 Whether or not Intell was a third party beneficiary of the promises contained in paragraph
9(c) is moot as that provision is void.

-10-



for defeating a summary judgment motion. In their brief they offer an entire section
entitled “Federal Courts Require Notice Pleading and Nothing More”. Jackson’s and
Intell’s Response at 5-6. Such a position would be appropriate to defeat a Rule

12(b)(6) or 12(c) motion, but is clearly off the mark in this Rule 56 motion.

1. Waiver of Recovery

Jackson’s First Affirmative Defense alleges that Hinkle “waived any right of
recovery it might have had against defendant under the lease. . ,,” Jackson’s Second
Amended Answer (“Jackson’s Answer’) at §]7. Upon expiration of the original Lease
term, Jackson consented to Hinkle’s continued tenancy. No new written instrument has
been alleged by either party with respect to the continued tenancy. Under such
circumstances, the new lease is a month to month tenancy governed by the terms of the
original Lease “except insofar as those terms and conditions [of the Lease] were
modified by the parties.” See Bismarck Hotel Co. v. Sutherland, 529 N.E.2d 1091,
1096 (Ill. App. 1988). Jackson admits that Hinkle did not know that the renovation
project would involve either holes being punched in the roof or flooding in the Offices.
Thus, the Court finds as a matter of law that Hinkle could not have implicitly waived

any rights to sue under the Lease with respect to flood damages caused by the holes.



which was then used to make a connection upon which a platform for the new HVAC
system was erected. Because of the holes, the Offices periodically flooded from
February through May 2000. The flooding allegedly caused substantial damage to
Hinkle’s property and severely disrupted its business activities.

On June 29, 2001, Hinkle filed an action against Jackson, Intell, and Walsh.
Hinkle’s first amended complaint (the “Complaint”) alleges two counts. Count Tis
against only Jackson for breach of contract. Count Il is against Jackson, Intell, and
Walsh fornegligence. Under Count II, Hinkle secks punitive damages against Jackson
and Walsh, but not Intell.

Hinkle moved for summary judgment on Jackson’s and Intell’s affirmative
defenses and counterclaims and for Rule 11 and section 1927 sanctions against
Jackson, Intell, and their joint counsel with respect to their assertion of these
affirmative defenses and counterclaims. Hinkle also moved to strike three responses
of Jackson and Intell in their Local Rule 56.1(b) statement, and to deem admitted
Hinkle’s corresponding Local Rule 56.1(a) contentions. Jackson and Intell filed a
cross-motion for summary judgement on the Complaint and on their counterclaims.

We now tule on all four motions,



2. Breach of Contract

Jackson and Intell argue that summary judgment on the Complaint should be
granted because Hinkle was never actually or constructively evicted. Turning to the
contractual claim, Hinkle alleges that Jackson breached the covenant of quiet
enjoyment embodied in paragraph 20 of the Lease.* In order to establish a breach of
the covenant of quiet enjoyment, Iinkle must show that it was actually or
constructively evicted. See Shaker and Assocs., Inc. v. Medical Techs. Group, Ltd.,
733 N.E,2d 865, 872 (Ill. App. 2000) (“The claim of breach of the covenant of quiet
enjoyment requires actual or constructive eviction.”). “There can be no constructive
eviction without the vacating of the premises.” Jd. Hinkle did not vacate the Offices
until sometime in May of 2000. Hinkle’s Lease with Jackson admittedly ended on
May 31, 2000. It is unclear whether or not Hinkle vacated the Offices prior to
termination of the Lease. If this was the case, it was Hinkle’s burden to allege it and
to put forth facts in support of it. Because Hinkle has not alleged that it was
constructively evicted or put forth any facts in support of such an allegation, the Court

finds as a matter of law that it cannot prove its cause of action based on the Lease.

5 Hinkle states that Jackson mischaracterizes its breach of contract claim as being solely for
breach of the covenant of quict enjoyment. On the contrary, the Court find’s Jackson’s
characterization accurate.

-14-



rights. We assume that pleading the counterclaims in response to Hinkle’s (amended)
Complaint was done for that reason.
CONCLUSION

Based on the foregoing analysis, this Court grants in part and denies in part
Hinkle’s motion to strike, grants in part and denies in part Hinkle’s motion for
summary judgment, grants in part and denies in part Jackson’s and Intell’s cross-
motion for summary judgment, and denies Hinkle’s motion for sanctions. Paragraphs
18 and 27 of Hinkle’s Rule 56.1(a)(3) statement are deemed admitted. Judgment is
entered for Hinkle on all of Jackson’s and Intell’s affirmative defenses. Judgment is
entered for Hinkle on all of Jackson’s and Intell’s counterclaims except for Jackson’s
counterclaim for failure to obtain insurance pursuant to paragraph 9(c) of the Lease.
Judgement is entered for Jackson and Intell on Hinkle’s respondeat superior
negligence claim. Judgment is entered for Jackson on Hinkle’s breach of the covenant

of quiet enjoyment claim.

<p ee Pheewros

Charles P. Kocoras
Chief Judge
United States District Court

Dated: __ October 2, 2002

-16-



in part and deny in part Hinkle’s motion to strike, grant in part and deny in part
Hinkle’s motion for summary judgment, grant in part and deny in part Jackson’s and

Intell’s cross-motion for summary judgment, and deny Hinkle’s motion for sanctions,

BACKGROUND

Hinkle is an engineering firm with an office in Chicago. During the relevant
time period, Hinkle maintained office space in suite 2109 (the “Offices”) of the
Insurance Exchange Building, 175 West Jackson Blvd,, Chicago, Illinois (the
“Building”). Jackson and Hinkle had a written lease (the “Lease”) that governed
Hinkle’s tenancy at the Building. The Lease was to terminate on January 31, 2000, but
was renewed on a month to month basis by the mutual agreement of Jackson and
Hinkle.

During the relevant time period, Intell was Jackson’s managing agent for the
Building.

On August 7, 1999, Jackson contracted with Walsh to have Walsh perform a
$29 million renovation project (the “Project”) at the Building, including a renovation
of the Building’s HVAC system. The Project began in early 2000 and involved
construction work on the Building’s roofas well as heavy construction materials being

placed on the roof. During the Project, Walsh drilled holes in the roof to expose steel,

-2-



UNITED STATES DISTRICT COURT

sonoma emcronronos DOCKET
HINKLE ENGINEERING, INC., )
Plaintiff, ,
VS. 01 C 5078

175 JACKSON L.L.C., INTELL MANAGEMENT )
AND INVESTMENT COMPANY, and WALSH)
CONSTRUCTION COMPANY OF ILLINOIS, —)

)
Defendants. )

MEMORANDUM OPINION
CHARLES P. KOCORAS, Chief District Judge:

This matter comes before the court on four motions. Plaintiff Hinkle
Engineering, Inc. (“Hinkle”) moves (J ) for summary judgment against Defendants 175
Jackson LLC (“Jackson”) and Intell Management and Investment Company (“Intell”),
(2) for sanctions against Jackson, Intell, and their joint counsel, and (3) to strike three
paragraphs of Jackson’s and Intell’s Response to the Statement of Material Facts with
respect to Hinkle’s summary judgment motion, Defendants Jackson and Intell cross-
move for summary judgement, Defendant Walsh Construction Company of Illinois

(“Walsh”) is not a party to these motions.' For the reasons set forth below, we grant

‘The facts laid out in this opinion are not necessarily binding on Walsh.



Hinkle as an insured. Hinkle argues that Jackson nonetheless is covered by the policy.

That argument relates to causation and damages but not to the breach.*

C. — Jackson’s and Intell’s Motion For Summary Judgement on the Complaint

1. Negligence
Jackson and Intell argue that summary judgment on the Complaint should be
granted because Walsh was an independent contractor. A recent Illinois case explains
the significance of independent contractor status;
The primary issue in this case was whether Sarah Augsburger was
defendant's agent or merely an independent contractor. If an agency
relationship existed, then defendant can be held liable for Sarah
Augsburger's negligence under the doctrine of respondeat superior;
defendant is not liable if Sarah Augsburger was an independent
contractor. Lang v. Silva, 306Tll, App. 3d 960, 972, 240 Il. Dec, 21,715
N.E.2d 708, 716 (1999).
Commerce Bank v. Youth Services of Mid-Illinois, Inc., 2002 WL 1997876, *2 (Ill.
App. 2002). Thus, if Jackson and Intell can establish that Walsh was an independent

contractor, they cannot be found indirectly liable for any negligence Walsh may have

committed.

‘Ifthe issue of whether or not Jackson is covered by the policy does arise, the Court requests
Hinkle to implement a better system for referencing specific pages of the policy.

-12-



SANCTIONS

Hinkle moves for sanctions against Jackson, Intell, and their joint counsel under
Rule 11 of the Federal Rules of Civil Procedure and pursuant to 28 USC § 1927.
Hinkle alleges four instances of sanctionable behavior on the part of Jackson and Intell:

1. Asserting the affirmative defense of assumption of risk;

2. Asserting that the Lease was altered;

3. Asserting that Hinkle has failed to state a claim for punitive damages

upon which relief can be granted; and

4. Asserting Lease provisions that this Court had already ruled void and

asserting Lease provisions under interpretations this Court has already
rejected.

Jackson's and Intell’s purported defenses that Hinkle assumed the risk of injury
and implicitly modified the terms of Lease were clearly uphill battles from the start.
Significantly, however, they were not so without merit as to rise to the level of
sanctions.

Jackson’s and Intell’s affirmatives defenses regarding punitive damages and
some of their counterclaims based on paragraphs 9(a), 9(b), and 9(c) of the Lease were
in direct contradiction to the clearly established law of the case. However, this Court

will not impose sanctions on behavior that can be interpreted as preserving appellate

-15-