Ioerger et al., v. Halverson Construction Company, Inc. (Il. Sup. Ct., Doc. Nos. 105912 and 105917 cons.)
Deciding how you’re going to structure your business and with whom you want to work is an important aspect of any transaction in this industry. Partnering up with someone in a joint-venture is a common arrangement - whether it be to gain better footing in a bidding scenario, or to accomplish a task that you couldn’t take on alone. But apart from increasing profits and minimizing loss, did you know it could eradicate a liability? Well, this case will be of interest:
Two companies came together in the summer of 1999 to form a joint venture in connection with an IDOT project to repair the McCluggage Bridge over the Illinois River in Peoria. The terms of their joint venture were set forth in a written agreement that 
stated the two were joint venturers for bidding, performing under the contracts and completing the project. If the bids were awarded, they were to be entered into in the names of the parties as joint venturers. They were to share losses and profits. Party A would provide all the labor and payroll and taxes and worker’s compensation and was entitled to reimbursement for those expenses from the JV before it and Party B split profits. IDOT awarded the JV the contract and in 2000 an accident occurred at the project where employees of Party A, employees of Party A and whose worker’s compensation premiums were paid by Party A were injured. The injured workers filed for and received their workers’ compensation benefits through Party A’s workers’ compensation insurer. This was their sole remedy against Party A under the Illinois Workers’ Compensation Act (820 ILCS 305/5(a)). With the help of attorneys they then sued Party B, the JV and a whole host of other entities.
The attorneys for Party B and the JV moved for and won their motion which argued that they had the same immunity afforded to Party A under the Workers’ Compensation Act because they were joint venturers. The injured workers appealed and the appellate court reversed the decision so the JV and Party B appealed to the Illinois Supreme Court. The SC found that because joint ventures are governed by the principals of partnerships and because in partnerships, the partners are agents of the partners and of each other, and because the immunity afforded by the Workers’ Compensation Act applies to the agents of the employer there was immunity for Party B and for similar reasons for the JV. So they couldn’t be sued for the injuries to the workers.
So, what the injured workers wanted, which was more money from Party B and the JV even though half of the JV – Party A, was immune, was not available because the parties had a written joint venture agreement where the JV reimbursed the expenses for the workers’ compensation insurance and the principals of partnership applied.
This decision opens the door to some interesting questions regarding the collaborative processes proposed by certain standard form agreements. Could this be a lesson that the drafters of the Integrated Project Delivery contracts should learn from? Would an IPD between entities that created a separate LLC (the AIA-C195 for example) for the project be able to offer the same immunity from suit by an injured worker to its members as a joint-venture could under this structure?
