First District Affirms Summary Judgment in GC's Favor for Construction Accident

Posted on June 28, 2011 by FGPP Construction Group

 

This spring, in O’Connell v. Turner Construction Co., the First District of the Illinois Appellate Court decided that a company serving as construction manager had no liability for injuries sustained by an employee of a subcontractor with whom the construction manager did not have a written contract. The case originated from the construction of a new high school campus undertaken by Grayslake Community High School District 127 which began in 2002.

The School District retained Turner Construction Company to manage the project. By its agreement with the School District, Turner, among other duties, assisted in preparing construction contracts, advised as to the acceptability of subcontractors, and reviewed and coordinated safety programs of contractors. There existed a written agreement between Turner and the School District; however, Turner did not have agreements with any of the contractors or subcontractors. In July 2003, the plaintiff, an employee of Linden Erectors, was injured on the construction site. Linden was a subcontractor of Waukegan Steel, a contractor of the School District. The plaintiff brought a lawsuit against several parties, including Turner, claiming liability on the basis of negligence and premises liability.

The court did not find that Turner entrusted any of the independent contractors with work; the School District, not Turner, selected the contractors and executed contracts with them. Thus, the court held that the exception alleged by the plaintiff was inapplicable.

Likewise, the court found no liability on the part of Turner with respect to plaintiff’s claim for premises liability. In exploring the legal concepts of possession and occupancy of land, the court contrasted the act of exercising dominion and control over the land with that of control over individuals and/or activities on the land. The court, focusing on the specifics of plaintiff’s allegations, found the record contained insufficient evidence showing Turner’s degree of control extended to the land at-large (as opposed to merely the activities and individuals upon it) and ruled that Turner was not the “possessor” of the construction site because its authority over the land did not exceed that of the School District.

This case provides guidance regarding the risk, and limitations thereof, associated with oversight and/or consultation of a construction project. Construction companies in a managerial, consultative, and/or supervisory role must ensure that the scope of their authority is not perceived to supersede that of the owner/developer.

 

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Subcontractors As Additional Insureds: Check the Contract!

Posted on June 8, 2011 by Robert Boylan

Recently, in Westfield Insurance Co. v. FCL Builders, Inc., the First District considered whether a contractor was an additional insured under an insurance policy issued by Westfield to a third party.  This case arose out of the all too common situation where a general contractor requires a subcontractor to obtain insurance as part of its agreement to perform work on a particular project.  In this case, FCL subcontracted the steel fabrication out to Suburban Ironworks, Inc. and required Suburban to obtain liability insurance which would cover not only Suburban but FCL as well.  Suburban in turn subcontracted the steel erection work to JAK Ironworks, Inc.  The agreement between Suburban and JAK was incorporated by reference a master agreement between the two parties which required JAK to obtain insurance that would cover JAK, Suburban and FCL in the event of an accident on the steel erection project.

The project progressed and one of JAK’s employees was injured.  Westfield, which issued the insurance policy to JAK was asked by FCL to defend and indemnify it against the allegations made by the injured employee in a lawsuit.  Westfield refused to do so claiming that FCL did not qualify as an additional insured under the policy issued to JAK.  The JAK policy contained an endorsement which required two conditions to be met before a third party could become an additional insured.  Those conditions were:  1) the entity seeking coverage must be one “for whom you [JAK] are performing operations;” and 2) JAK and the entity seeking insurance coverage must have agreed “in writing in a contract or agreement” that the entity seeking coverage must be added to the policy as an additional insured. 

The First District found that Westfield had no duty to defend FCL under the policy it issued to JAK because there was no agreement in writing between JAK and FCL for FCL to be an additional insured.  Because the policy explicitly and unambiguously required a direct written agreement between the insured, JAK and the prospective additional insured, FCL and no such written agreement existed, the court found that FCL did not become an additional insured.

This case represents another example of the variety of coverage issues which arise out of multi party construction projects and the distribution of risk between the participants and their insurers.  It emphasizes the importance to not only review the contracts for indemnity, insurance and other risk allocation provisions but also the importance of reviewing not only contracts but any applicable insurance policies when involved in construction projects. 

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