Court Opinion

ID: 3142338
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:56:09.740992+00
Date Added: 2024-06-11T09:17:01.039135
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                        Appellate Court

           Enterprise Leasing Co. of St. Louis v. Hardin, 2011 IL App (5th) 100201

Appellate Court            ENTERPRISE LEASING COMPANY OF ST. LOUIS, Plaintiff-
Caption                    Appellant, v. LINDA HARDIN, Defendant-Appellee.

District & No.             Fifth District
                           Docket No. 5-10-0201

Filed                      September 8, 2011

Held                       In an action that arose from an automobile accident that occurred while
(Note: This syllabus       defendant was driving a car she rented from plaintiff for a business trip
constitutes no part of     and two passengers who were her coworkers were injured, the trial court
the opinion of the court   properly entered summary judgment for defendant when plaintiff paid
but has been prepared      claims to the two passengers and then sought indemnification from
by the Reporter of         defendant pursuant to the rental contract, since the payments plaintiff
Decisions for the          made to the passengers were not within the scope of the rental contract’s
convenience of the         indemnity clause and requiring defendant to pay to settle her coworkers’
reader.)
                           claims would be at odds with the Workers’ Compensation Act.

Decision Under             Appeal from the Circuit Court of Williamson County, No. 09-LM-312;
Review                     the Hon. Ronald R. Eckiss, Judge, presiding.

Judgment                   Affirmed.
Counsel on                  Jeffrey S. Deutschman, of Deutschman & Associates, P.C., of Chicago,
Appeal                      for appellant.

                            James B. Bleyer, of Bleyer & Bleyer, of Marion, for appellee.

Panel                       PRESIDING JUSTICE CHAPMAN delivered the judgment of the court,
                            with opinion.
                            Justices Welch and Spomer concurred in the judgment and opinion.

                                              OPINION

¶1           The defendant, Linda Hardin, rented a vehicle from the plaintiff, Enterprise Leasing
        Company of St. Louis, for a business trip. Two of her coworkers were passengers in the
        vehicle. Both passengers were injured in an accident while Hardin was driving in Kentucky.
        The plaintiff paid claims to the two passengers and then sought indemnification from the
        defendant pursuant to the rental contract. The trial court granted the defendant’s motion for
        summary judgment, finding that (1) once the plaintiff paid the coworker/passengers’ claims,
        it “stepped into [their] shoes” and (2) their claims against the defendant would be barred
        under the Workers’ Compensation Act (820 ILCS 305/1 et seq. (West 2006)). The plaintiff
        appeals that ruling, arguing that (1) its claim is not barred by the Workers’ Compensation Act
        because it is a claim for indemnification, not subrogation, and (2) the voluntary-payment
        doctrine is not applicable. We affirm.
¶2           The defendant rented a car from the plaintiff for a business trip. She was driving in
        Kentucky when she collided with a median, injuring her two passengers. Both passengers
        were the defendant’s coworkers, and all three were acting in the course of their employment
        when the collision occurred. The passengers, Christopher Cagle and Jeremy Hess, filed
        workers’ compensation claims for their injuries. They also submitted personal injury claims
        to the plaintiff. The plaintiff paid Cagle and Hess $16,250 in settlement of those claims.
¶3           The plaintiff subsequently filed a complaint against the defendant seeking to recover the
        $16,250 it paid on her behalf. The complaint alleged that the defendant had breached the
        contract by driving the vehicle outside the State of Illinois and that she had driven
        negligently. The complaint further alleged that the plaintiff paid claims of $16,250 as a result
        of the defendant’s negligence. Attached to the complaint was the rental contract. In relevant
        part, the contract provided that the defendant was to indemnify and hold harmless the
        plaintiff for any losses it sustained as a result of her use of the car, including claims of third
        parties.
¶4           The defendant filed a motion for summary judgment, arguing that (1) the plaintiff’s
        claimed right to payment from the defendant was derivative of Cagle and Hess’s cause of

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       action against her and (2) the exclusivity provision of the Workers’ Compensation Act bars
       claims against a coworker for injuries sustained in the course of employment due to the
       negligence of the coworker. See 820 ILCS 305/5(a) (West 2006); Ramsey v. Morrison, 175
       Ill. 2d 218, 224, 676 N.E.2d 1304, 1307 (1997).
¶5          The plaintiff filed a response to the defendant’s motion. In the response, the plaintiff
       alleged that the rental agreement required the defendant to indemnify it for any losses it
       sustained as a result of her negligence. The plaintiff further alleged that the defendant
       declined supplemental liability coverage, which would have paid for the claims, and that she
       had not submitted the claims to her own car insurance company. It also alleged that its
       representative did not know that the accident was work-related or that Cagle and Hess were
       the defendant’s coworkers. The plaintiff argued that it was required to settle Cagle’s and
       Hess’s claims under the mandatory insurance law (625 ILCS 5/9-101 et seq. (West 2006))
       and that the Workers’ Compensation Act was not relevant because there was no employment
       relationship between the plaintiff and the defendant or her injured coworkers.
¶6          The defendant filed a reply to the plaintiff’s response in which she argued that Hess and
       Cagle did not have common law claims against the defendant due to the exclusivity provision
       of the Workers’ Compensation Act. See 820 ILCS 305/5(a) (West 2006). As a result, she
       argued, the plaintiff was not obliged to pay their claims on her behalf. Thus, she argued,
       payment of the claims was a voluntary payment for which she had no obligation to indemnify
       the plaintiff.
¶7          The plaintiff responded, repeating its allegations that the representative who handled
       Cagle’s and Hess’s claims did not know that the passengers were the defendant’s coworkers
       or that the accident occurred in the course of their employment. The plaintiff argued that, as
       such, the mistake-of-fact exception to the voluntary-payment doctrine applied. Finally, the
       defendant responded with an affidavit from the attorney who represented Cagle and Hess.
       He averred that the medical records he submitted in support of their claims clearly indicated
       that it was a work-related accident. As previously mentioned, the court granted the
       defendant’s motion for summary judgment. This appeal followed.
¶8          Our review of a ruling on a motion for summary judgment is de novo. Summary
       judgment is appropriate when the pleadings, depositions, and affidavits on file, viewed in the
       light most favorable to the nonmoving party, show that there is no genuine issue of material
       fact and the moving party is entitled to a judgment as a matter of law. Home Insurance Co.
       v. Cincinnati Insurance Co., 213 Ill. 2d 307, 315, 821 N.E.2d 269, 275 (2004). We may
       affirm the trial court’s decision to grant or deny a motion for summary judgment on any basis
       appearing in the record, even if it is not the basis the trial court gave for its ruling. Home
       Insurance Co., 213 Ill. 2d at 315, 821 N.E.2d at 275-76.
¶9          The plaintiff first argues that the trial court erred in finding its claim barred by the
       Workers’ Compensation Act. We disagree.
¶ 10        Section 5(a) of the Workers’ Compensation Act provides, in relevant part:
            “No common law or statutory right to recover damages from the employer *** or the
            agents or employees of [the employer] for injury *** sustained by any employee while
            engaged in the line of his duty as such employee, other than the compensation herein

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           provided, is available to any employee who is covered by the provisions of this Act ***.”
           820 ILCS 305/5(a) (West 2006).
       This provision gives employees immunity from liability for negligence that injures their
       coworkers. Ramsey, 175 Ill. 2d at 224, 676 N.E.2d at 1307.
¶ 11       As previously noted, the plaintiff argued to the trial court that this statutory provision was
       inapplicable because it did not have an employer-employee relationship with the defendant
       or the injured passengers. However, courts that have considered this provision in the context
       of third-party claims have generally concluded that the rights of third parties yield to this
       provision where it is necessary to promote the goals of the Workers’ Compensation Act.
¶ 12       In Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 585 N.E.2d 1023 (1991), our
       supreme court considered to what extent an employer could be liable to a third party where
       both the third party and the employer are responsible for an employee’s injury. There, the
       employee was injured operating a machine in the course of his employment. He brought a
       products-liability claim against the manufacturer of the machine. Kotecki, 146 Ill. 2d at 156,
       585 N.E.2d at 1023. The manufacturer in turn brought a third-party claim against the
       plaintiff’s employer. Kotecki, 146 Ill. 2d at 156, 585 N.E.2d at 1023-24.
¶ 13       There, as here, the third party had no employment relationship with the injured worker.
       However, this did not mean that the Workers’ Compensation Act was irrelevant to the issue
       of the employer’s potential liability to the third party, the manufacturer of the machine.
       Instead, the court had to balance the interest of the employer, as a participant in the workers’
       compensation system, and the interest of the manufacturer in not paying more than its
       proportionate share of the liability for the plaintiff’s injuries. Kotecki, 146 Ill. 2d at 164, 585
       N.E.2d at 1027.
¶ 14       In determining how best to strike this balance, the court considered that one of the key
       purposes of the workers’ compensation system is that both employees and employers
       “ ‘receive the benefits of a guaranteed, fixed-schedule, nonfault recovery system.’ ” Kotecki,
       146 Ill. 2d at 162-63, 585 N.E.2d at 1026 (quoting Lambertson v. Cincinnati Corp., 257
       N.W.2d 679, 684 (Minn. 1977)). The court ultimately adopted a rule previously promulgated
       by the Minnesota Supreme Court that the third party’s right to seek contribution from the
       employer was limited to the amount of the employer’s liability to the injured employee under
       the Workers’ Compensation Act. Kotecki, 146 Ill. 2d at 164, 585 N.E.2d at 1027 (citing
       Lambertson, 257 N.W.2d at 689). The reason for this rule is that requiring the employer to
       contribute more than that amount to the employee “ ‘through the conduit of the third-party
       tortfeasor’ ” would be at odds with the limitation on employer liability, a key provision of
       the workers’ compensation system. Kotecki, 146 Ill. 2d at 162-63, 585 N.E.2d at 1026
       (quoting Lambertson, 257 N.W.2d at 684).
¶ 15       In Ramsey v. Morrison, the court again considered the tension between the right to
       contribution from joint tortfeasors and the workers’ compensation system, this time in a
       context closer to the facts of the case before us. There, the plaintiff was a passenger in a truck
       driven by his coworker when they were involved in a collision with another vehicle. Both the
       plaintiff and his coworker were acting in the course of their employment when the collision
       occurred. Ramsey, 175 Ill. 2d at 220, 676 N.E.2d at 1305. The plaintiff received workers’

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       compensation benefits for his injuries from his employer. Ramsey, 175 Ill. 2d at 220-21, 676
       N.E.2d at 1305. He subsequently filed a suit against the driver of the second car. The second
       driver filed a third-party complaint seeking contribution from the employer. Ramsey, 175 Ill.
       2d at 221, 676 N.E.2d at 1305. The court emphasized that the driver of the truck was immune
       from liability to his coworker under the Workers’ Compensation Act. The court then framed
       the issue before it as “whether a third party sued by an injured employee may recover
       contribution from a coemployee who is immune from a direct suit by the plaintiff” under the
       Workers’ Compensation Act. Ramsey, 175 Ill. 2d at 224, 676 N.E.2d at 1307.
¶ 16       In deciding this question, the court once again considered the purpose of the relevant
       provision of the Workers’ Compensation Act and the tension between that provision and the
       third party’s right to contribution from a party who may be jointly liable. The court explained
       that the essential purpose of the workers’ compensation system is “ ‘to place the cost of
       industrial accidents upon the industry.’ ” Ramsey, 175 Ill. 2d at 227, 676 N.E.2d at 1308
       (quoting Rylander v. Chicago Short Line Ry. Co., 17 Ill. 2d 618, 628, 161 N.E.2d 812, 818
       (1959)). The court further explained that coworker immunity is a key component of this
       essential purpose. Ramsey, 175 Ill. 2d at 229, 676 N.E.2d at 1309. This is because allowing
       a contribution claim against an otherwise immune coworker would shift the burden of
       compensating the injured employee from the employer to the coworker. It would thus
       “entirely defeat the effect of the immunity granted to coemployees and would thereby defeat
       a central purpose of the Workers’ Compensation Act.” Ramsey, 175 Ill. 2d at 229, 676
       N.E.2d at 1309. The court concluded that the coworker immunity “prevails over the right to
       contribution” and held that it is a bar to third-party contribution claims against coworkers.
       Ramsey, 175 Ill. 2d at 230, 676 N.E.2d at 1310.
¶ 17       The defendant contends that Ramsey controls our decision. The plaintiff argues, however,
       that Ramsey is distinguishable because it involved contribution rather than indemnification.
       In a related argument, the plaintiff contends that the trial court erred in finding that it had
       “stepped into the shoes” of Cagle and Hess after it paid claims to them on behalf of the
       defendant. It argues that this is so because its claim is one for indemnification rather than
       subrogation. That is, the plaintiff sued the defendant in its own right based on the defendant’s
       contractual obligation to reimburse or indemnify the plaintiff for any losses it sustained as
       a result of her negligence.
¶ 18       In one sense, this is correct. Contribution (which was at issue in both Ramsey and
       Kotecki), subrogation, and indemnification are distinct causes of action. Home Insurance
       Co., 213 Ill. 2d at 315-16, 821 N.E.2d at 276. Contribution is a remedy that allows jointly
       liable tortfeasors to hold other culpable parties responsible for their proportionate share of
       the joint liability. Ramsey, 175 Ill. 2d at 224, 676 N.E.2d at 1307. By contrast, both
       indemnification and subrogation place “the entire burden for a loss on the party ultimately
       liable or responsible for it and by whom it should have been discharged.” (Emphasis in
       original.) Home Insurance Co., 213 Ill. 2d at 316, 821 N.E.2d at 276. A party seeking
       indemnification does so in its own right, while a party seeking subrogation does so as a
       successor to another party’s right to payment. Home Insurance Co., 213 Ill. 2d at 316, 821
       N.E.2d at 276. Thus, the plaintiff did not truly “step into the shoes” of the defendant’s
       coworkers when it paid their claims.

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¶ 19       However, we find that the court reached the right result for two reasons. First, we find
       that requiring the defendant to pay for the cost of settling her coworkers’ claims would be
       at odds with a key provision of the Workers’ Compensation Act. Second, as the plaintiff
       points out, the indemnity it seeks is based on a contractual indemnity clause, and we find that
       the payments made to Cagle and Hess do not fall within the scope of that clause.
¶ 20       We previously discussed at length our supreme court’s rationale for finding that coworker
       immunity bars contribution claims by third parties. We believe that rationale applies with
       equal force to indemnification claims such as the one at issue here. Requiring the defendant
       to bear the cost of the claims paid by the plaintiff for which she would have been immune
       from liability if sued directly would shift the burden of these work-related injuries from the
       employer to the coworker. We also note that the claims could exceed the limits placed on the
       employer’s liability by the Workers’ Compensation Act. This would thereby defeat the
       purpose of the Workers’ Compensation Act just as surely as would allowing a third-party
       contribution claim under similar circumstances.
¶ 21       Our conclusion is further supported by the fact that the plaintiff seeks indemnification
       under a contractual provision. An indemnity clause in a contract is subject to the general
       rules of contract interpretation applicable to any other contractual provision. Virginia Surety
       Co. v. Northern Insurance Co. of New York, 224 Ill. 2d 550, 556, 866 N.E.2d 149, 153
       (2007). Our primary objective in interpreting such provisions is therefore to ascertain and
       effectuate the intent of the parties. The best indication of the parties’ intent is the language
       of the provision itself. If the provision is unambiguous, its words should be given their plain
       and ordinary meanings. Virginia Surety Co., 224 Ill. 2d at 556, 866 N.E.2d at 153.
¶ 22       The provision at issue here read as follows:
           “Renter shall *** indemnify and hold Owner harmless from all losses, liabilities,
           damages, injuries, claims, demands, costs, attorney fees and other expenses incurred by
           Owner in any manner from this rental transaction or from the use of Vehicle by any
           person, including claims of or liabilities to third parties. Renter may present a claim to
           Renter’s insurance carrier for such events or losses, but in any event, Renter shall have
           final responsibility to Owner for all such losses. This obligation may be limited if Renter
           purchases optional Damage Waiver and/or optional Supplemental Liability Protection.”
       The plaintiff points to the language stating that the clause is applicable to “all losses” arising
       “in any manner” from the use of the rental vehicle. While this language is very broad, we do
       not believe it is broad enough to encompass claims for which the defendant cannot be held
       liable under the law. We must interpret a contract to be consistent with the law and public
       policy of this state. See Swavely v. Freeway Ford Truck Sales, Inc., 298 Ill. App. 3d 969,
       976-77, 700 N.E.2d 181, 187 (1998) (explaining that courts cannot enforce contractual
       provisions that violate public policy but that “public policy itself strongly favors freedom to
       contract”). In addition, we note that the clause provides that the renter may submit a claim
       to her own automobile insurance company or purchase supplemental liability protection,
       either of which might cover the loss. Neither a driver’s own insurance nor a supplemental
       liability policy will pay claims for which a driver is not liable. Logically, the clause is meant
       to apply to the types of losses that would be covered by these forms of insurance–that is,

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       those losses for which the renter is liable. Thus, we find that the claims of Hess and Cagle
       were outside the scope of the indemnity clause.
¶ 23        Finally, the plaintiff contends that the voluntary-payment doctrine does not bar its claim
       for two reasons. First, the plaintiff points out that the voluntary-payment doctrine is
       applicable only to cases involving payments from the plaintiff to the defendant. See CIMCO
       Communications, Inc. v. National Fire Insurance Co. of Hartford, 407 Ill. App. 3d 32, 37-38,
       943 N.E.2d 276, 281-82 (2011); see also King v. First Capital Financial Services Corp., 215
       Ill. 2d 1, 36, 828 N.E.2d 1155, 1174 (2005) (finding the doctrine applicable where a benefit
       passed from the plaintiff to the defendant, although indirectly). The plaintiff also contends
       that an exception to the voluntary-payment doctrine for mistake of fact is applicable here.
¶ 24        We need not resolve these arguments. We first note that the trial court did not decide
       whether the voluntary-payment doctrine or the mistake-of-fact exception was applicable to
       this case. Moreover, we believe the principles we have discussed adequately resolve the
       question before us.
¶ 25        For the foregoing reasons, we affirm the judgment of the trial court.

¶ 26      Affirmed.

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