Valerio v. R & R CONSTRUCTION CO.

Citations: 312 N.E.2d 713; 20 Ill. App. 3d 48; 1974 Ill. App. LEXIS 2388Docket: 72-364

Court: Appellate Court of Illinois; June 17, 1974; Illinois; State Appellate Court

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Samuel E. Valerio filed a personal injury lawsuit against R. R Construction Company after he was injured when a beam broke and caused him to stumble over debris. Valerio was employed by Ceco Steel Products Corporation, the subcontractor for the project at Southern Illinois University, where R. R was the general contractor. The lawsuit included claims of negligence and violations of the Scaffold Act. R. R responded with a third-party complaint against Ceco, comprising two counts: one for contractual indemnity and the other regarding the 'active-passive' fault of the parties. The jury found R. R actively at fault for Count II, while Count I was ruled in favor of Ceco, leading to this appeal.

Ceco and R. R had a contractual relationship established by a standard contract form initiated on May 9, 1967. R. R later added a two-page document, which was returned to Ceco for approval, and both documents were ultimately signed by Ceco on June 6, 1967. The signed contracts included general conditions that were previously established between R. R and the Illinois Building Authority, which incorporated indemnity provisions. Specifically, Paragraph 39 of the general conditions required R. R to purchase insurance to hold the owner, user, project architect, and their representatives harmless from any claims or liabilities resulting from their work, ensuring protection against accidents and damages associated with the project.

The Contractor is liable for protection if the insurance fails to provide specified coverage. Ceco's indemnification obligations, as outlined in Paragraph 31 of the Ceco contract form 110, hold Ceco responsible for any claims or liabilities arising from its negligent acts or omissions, protecting the contractor and owner from such liabilities. This indemnification also extends to injuries to Ceco's personnel not caused by the contractor or owner's negligence. In a related case, a jury determined R. R was negligent under the Scaffold Act, prompting questions of indemnity in a third-party complaint. The trial court concluded that the contract comprised the Ceco document, R. R document, and general conditions, ruling in favor of Ceco based on Paragraph 31. R. R contended that their May 18, 1967 document represented the contract, but testimony indicated the need to reference the May 9 document for work specifications. The court affirmed that both documents and general conditions constituted the contract, reflecting the parties' intent. Ceco argued that indemnification clauses like those in Paragraph 39 of the general conditions are void under Illinois law, which prohibits indemnification for one's own negligence. However, precedent established that such clauses were upheld prior to the statute’s enactment, which was after the contract formation in 1967. Thus, the statute did not apply to this case, given the contract was executed before the law came into effect, and at that time, public policy did not support indemnification for negligence unless explicitly stated.

The intention of the contracting parties must be determined through a comprehensive examination of the entire contract, as established in Gay v. S.N. Nielsen Company. The court in De Tienne v. S.N. Nielsen Company emphasized that contracts should be interpreted as a whole, giving effect to every provision since all elements are presumed to be included deliberately. R. R argues that paragraph 5 of the contract governs the agreement, seeking to disregard paragraph 31 of the Ceco form contract 110. However, the court asserts that it must consider the entire document and cannot selectively ignore clauses. An ambiguity arises as paragraph 31 conflicts with paragraph 39 of the general conditions, leading to a strict construction of the contract against the party seeking indemnity for its own negligence, as indicated in Westinghouse Electric Elevator Company v. LaSalle Monroe Building Corporation. The court concludes that the contract does not clearly express the mutual intent of both parties regarding Ceco's indemnity for R. R's negligence, affirming that the agreement is ambiguous and must be construed against R. R. Consequently, the trial court's ruling in favor of Ceco on Count I of the third-party complaint is upheld.