West Bend Mutual Insurance Company v. Talton

2013 IL App (2d) 120814, 997 N.E.2d 784

• Court: Appellate Court of Illinois
• Decided: September 27, 2013
• Docket: 2-12-0814
• Status: Unpublished

Opinion

2013 IL App (2d) 120814 No. 2-12-0814 Opinion filed September 27, 2013 ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT ______________________________________________________________________________

WEST BEND MUTUAL INSURANCE ) Appeal from the Circuit Court COMPANY, ) of Winnebago County. ) Plaintiff-Appellee, ) ) v. ) No. 09-MR-628 ) MAURICE TALTON, ROBERT J. LASH, ) and JAA VALENTINE, ) ) Defendants-Appellants ) ) (Championship Investments, LLC; the ) Honorable Rock River Raptors; and the Raptors ) Eugene G. Doherty, Football Owners Club, LP, Defendants). ) Judge, Presiding. ______________________________________________________________________________

JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Zenoff and Schostok concurred in the judgment and opinion.

OPINION

¶1 Defendants, Maurice Talton, Robert J. Lash, and Jaa Valentine, appeal the trial court’s order

denying their motion for summary judgment and granting summary judgment in favor of plaintiff,

West Bend Mutual Insurance Company. On appeal, defendants argue that the trial court erred: (1)

because there is a genuine issue of material fact regarding whether defendants were employees of

plaintiff’s insured, Championship Investments, LLC (Championship); and (2) by ruling that 2013 IL App (2d) 120814

defendants’ claims were not compensable under Wisconsin’s workers’ compensation law. We

affirm for the reasons stated below.

¶2 I. BACKGROUND

¶3 The following facts are taken from the pleadings and attached documents. On November 12

and 18, and December 4, 2008, defendants signed individual contracts to play football for the Rock

River Raptors (Raptors) indoor football team for the 2009 season. The Raptors were part of the

Continental Indoor Football League (CIFL), which played its home games in Rockford, Illinois. On

March 7 and 20, and April 11, 2009, Talton, Lash, and Valentine, respectively, were injured while

playing home games in Rockford. In June 2009, defendants filed applications for benefits with the

Illinois Workers’ Compensation Commission.

¶4 The injuries were reported to plaintiff and coverage was sought under a policy issued to

Championship. When Talton’s and Lash’s claims were reported to plaintiff, plaintiff was advised

that Talton and Lash were employed by Championship and that Championship owned both the

Raptors and the Wisconsin Wolfpack, an outdoor football team that was a member of the North

American Football League (NAFL). Plaintiff began paying Talton and Lash workers’ compensation

benefits. Plaintiff did not pay Valentine workers’ compensation benefits, because, shortly after his

injury was reported to plaintiff, it was advised that Championship did not own the Raptors and that

defendants’ injuries had occurred in Illinois. As a result, plaintiff also stopped paying benefits to

Talton and Lash.

¶5 The headings on Valentine’s and Lash’s contracts state, “Championship Investments, LLC

—CIFL Employment Agreement.” The heading on Talton’s agreement states, “Championship

Sports—CIFL Employment Agreement.”

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¶6 Jordan Kopac, the president of Championship, provided the following deposition testimony.

Championship was a limited liability company formed in 2006 in Wisconsin by Kopac to operate

the Wisconsin Wolfpack, a football team that participated in the NAFL, an outdoor summer league.

Kopac was also the owner of JFK2, LLC. Around September 2008, Kopac entered into discussions

with Robert Lowe, one of the owners of the Raptors Football Owners Club, LP, the owner and

operator of the Raptors, a CIFL team. These discussions led to JFK2, LLC, becoming a general

partner of the Raptors Football Owners Club, LP, for the 2009 season.

¶7 During Kopac’s deposition he was asked the following questions and provided the following

answers.

“Q. [Paragraph 2 of the] agreement states team employs employee as a skilled

employee. Employee accepts such employment. That’s what the document states, correct?

A. Yes.

Q. And the teams referred to in Paragraph 2 is the Rock River Raptors, correct?

***

A. It’s a typo. It’s a typo. In my opinion, that’s a typo. This is a Championship

Investment contract. Somebody made a typo.”

Kopac also testified that Championship paid defendants and that Championship was reimbursed by

the Raptors Football Owners Club, LP, for each payment.

¶8 Lowe, an attorney, provided the following deposition testimony. In 2008 and 2009, Lowe’s

“entity, Lowe Entertainment, was [a] general partner in the Raptors Football Owners Club, LP.” The

Raptors Football Owners Club, LP, was formed to operate the Raptors. Lowe Entertainment was

an “S corp.” Lowe was president of Lowe Entertainment. In late 2008, JFK2, LLC, became the

second general partner of the Raptors Football Owners Club, LP. There were also five limited

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partners. The Raptors Football Owners Club, LP, operated the Raptors. For the 2009 season the

“Raptors Football Owners Club[, LP’s,] involvement for the Raptors and the Wolfpack was ‘putting

on the show.’ ” “The employer” referred to in defendants’ contracts is Championship. The Raptors

“is not a legal entity”; it is a name. It was the position of Championship and the Raptors Football

Owners Club, LP, that the individual players for the Raptors for the 2009 season were employees

of Championship. In the 2008 season, the Raptors Football Owners Club, LP, applied for and

obtained workers’ compensation insurance coverage for the Raptors for the 2008 season, but not for

the 2009 season.

¶9 Plaintiff had issued a workers’ compensation insurance policy to Championship that covered

August 7, 2008, to August 7, 2009. Kopac testified that when he obtained the policy he had an

interest only in the Wolfpack football team. The policy applied to injuries to employees of

Championship. The policy provided that plaintiff would pay workers’ compensation benefits as

required by the workers’ compensation law of Wisconsin. The policy issued to Championship was

issued through the Wisconsin Workers’ Compensation Insurance Pool.

¶ 10 On August 8, 2008, Championship submitted an application to the Wisconsin Workers’

Compensation Insurance Pool. Kopac signed the application as president of Championship. He

testified that he signed the application on behalf of Championship. Under “Nature of

Business/Description of Operations,” the application states “football team.”

¶ 11 On August 5, 2009, plaintiff filed a declaratory judgment action against defendants,

Championship, the Raptors, and the Raptors Football Owners Club, LP. Plaintiff sought a

declaration that: its policy issued to Championship did not provide coverage for defendants’

workers’ compensation claims for injuries suffered as players for the Raptors; plaintiff was not

obligated to pay workers’ compensation benefits to or on behalf of defendants for the injuries they

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claimed to have suffered while employed as players for the Raptors; plaintiff was not obligated to

defend Championship, the Raptors, or the Raptors Football Owners Club, LP, in any Illinois

Workers’ Compensation Commission proceeding; and plaintiff was not obligated to indemnify

Championship, the Raptors, or the Raptors Football Owners Club, LP, for defendants’ workers’

compensation claims. The parties filed cross-motions for summary judgment.

¶ 12 On May 16, 2012, the trial court issued a memorandum opinion denying defendants’ motion

for summary judgment and granting plaintiff’s motion for summary judgment. The trial court

determined that defendants were not employed by Championship, stating, in part:

“[T]he employment contracts identify each ‘Employee’ and also the ‘Team,’ and the latter

is specified as the Rock River Raptors. The contracts also state that the ‘Team employs

Employee,’ i.e., the Rock River Raptors employ each of the three employees. It is true that

the contract is labeled ‘Championship Investments, LLC—CIFL EMPLOYMENT

AGREEMENT,’ but this label can hardly control over the express definitions of the contract.

It is clear from the contract that each player is an employee of the Rock River Raptors.

Defendants asks this court to look outside the four corners of the document to draw

a different conclusion. They note that the players could be shuttled between teams; they

point out that Championship ultimately paid salaries via reimbursement; and they reference

testimony about what certain individuals thought the employment relationship was. None

of this parol evidence is sufficient to override the clear language of an express contract.”

(Emphases in original.)

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The trial court also determined that defendants’ claims were not compensable under the Wisconsin

Workers’ Compensation Act (Wisconsin Act), particularly, section 102.03(5) (Wis. Stat. § 102.03(5)

(2008)). Defendants filed their notice of appeal on July 23, 2012.1

¶ 13 II. ANALYSIS

¶ 14 Defendants argue that the trial court erred by granting plaintiff’s motion for summary

judgment, because there is a genuine issue of material fact as to whether defendants were employees

of Championship.

¶ 15 Summary judgment is proper where the pleadings, affidavits, depositions, admissions, and

exhibits on file, when viewed in the light most favorable to the nonmoving party, reveal that there

is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of

law. 735 ILCS 5/2-1005(c) (West 2012). We review de novo a trial court’s decision to grant or deny

a motion for summary judgment. See Pielet v. Pielet, 2012 IL 112064, ¶ 30.

¶ 16 In this case, plaintiff’s insurance policy was issued to Championship. Part one of the policy

states, “[w]e will pay promptly when due the benefits required of you by the workers compensation

law.” “Workers’ Compensation Law” is defined as the law “of each state or territory named in Item

3.A. of the Information Page.” The information page states: “Workers’ Compensation Insurance:

Part One of the policy applies to the Workers’ Compensation Law of the states listed here: WI.” A

1 Championship, the Raptors, and the Raptors Football Owners Club, LP, filed a motion for

summary judgment separate from defendants. The trial court denied the motion. Championship, the

Raptors, and the Raptors Football Owners Club, LP, did not appeal the trial court’s denial of their

motion for summary judgment and are not parties to this appeal.

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page titled “WISCONSIN LAW ENDORSEMENT” then specifies “Workers Compensation Law”

as “Chapter 102, Wisconsin Statutes [(the Wisconsin Act)].” Wis. Stat. § 102.01 et seq. (2008).

¶ 17 It is well settled that the Wisconsin Act imposes workers’ compensation liability on an

employer only when the employer has an employer-employee relationship with an injured person.

See Wis. Stat. § 102.03 (2008);2 see also Wendlandt v. Industrial Comm’n, 39 N.W.2d 854, 856

(Wis. 1949) (“The foundation of the Workmen’s Compensation Act is the existence of an actual

employer-employe [sic] relationship.”); Acuity Mutual Insurance Co. v. Olivas, 2007 WI 12, ¶ 84,

298 Wis. 2d 640, 726 N.W.2d 258 (“Clearly the Act does not impose workers’ compensation

liability on an employer when the employer does not have an employer-employee relationship with

an injured person.”). Thus, in the absence of liability on the part of an employer to an employee,

there can be no liability of a workers’ compensation carrier. Marlin Electric Co. v. Industrial

Comm’n, 148 N.W.2d 74, 79 (Wis. 1967) (citing Scholz v. Industrial Comm’n, 64 N.W.2d 204, 209

(Wis. 1954)).

¶ 18 In this case, the trial court determined that defendants were not employed by Championship

due to the express language of defendants’ employment contracts. Defendants argue that the

employment contracts are facially ambiguous regarding whether Championship is a party to the

2 Section 102.03 of the Wisconsin Act provides in part:

“102.03. Conditions of liability

(1) Liability under this chapter shall exist against an employer only where the

following conditions concur:

(a) Where the employee sustains an injury.” Wis. Stat. § 102.03 (2008).

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contracts. Defendants argue that the contracts are facially ambiguous because “Championship

Investments, LLC—CIFL Employment Agreement” (on Valentine’s and Lash’s contracts) or

“Championship Sports—CIFL Employment Agreement” (on Talton’s contract) is typed on the top

of the first page of each four-page contract. Plaintiff argues that the contracts unambiguously

provide that defendants were employees solely of the Raptors. Plaintiff argues that, therefore, there

was no need for the court to consider parol evidence.

¶ 19 When construing a contract, courts traditionally apply the “four corners rule” and look to the

language of the contract alone to give effect to the intent of the parties. Air Safety, Inc. v. Teachers

Realty Corp., 185 Ill. 2d 457, 462 (1999). If the language of a contract is clear and facially

unambiguous, the court interprets the contract as a matter of law without the use of extrinsic

evidence. Id.; see also Gallagher v. Lenart, 226 Ill. 2d 208, 233 (2007) (“A court must initially look

to the language of a contract alone, as the language, given its plain and ordinary meaning, is the best

indication of the parties’ intent.”). However, if the language of the contract is susceptible to more

than one meaning, it is ambiguous and a court may consider extrinsic evidence to determine the

intent of the parties. Air Safety, 185 Ill. 2d at 462-63; see also Gallagher, 226 Ill. 2d at 233. An

ambiguity is not created merely because the parties disagree. Thompson v. Gordon, 241 Ill. 2d 428,

443 (2011). Whether contract language is ambiguous and requires extrinsic evidence for

interpretation is a question of law subject to de novo review. River’s Edge Homeowners’ Ass’n v.

City of Naperville, 353 Ill. App. 3d 874, 878 (2004).

¶ 20 In this case, each contract provided the following, in relevant part:

“THIS AGREEMENT between [Valentine, Lash, and Talton], ‘Employee’ and the

Rock River Raptors, ‘Team’ which is a member of the Continental Indoor Football League,

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CFL [sic]. In consideration of the promises set forth in this agreement, the Employee and

Team agree as follows:

2. EMPLOYMENT & SERVICES, Team employs Employee as a skilled

Employee. Employee accepts such employment.”

¶ 21 Here, although the words “Championship Investments, LLC—CIFL Employment

Agreement” (on Valentine’s and Lash’s contracts) or “Championship Sports—CIFL Employment

Agreement” (on Talton’s contract) appear on the first page of each of defendants’ contracts, the

contracts clearly and unambiguously define the parties and their relationships. The contracts identify

each defendant as “Employee” and the Raptors as “Team.” Further, the contracts provide that the

“Team employs Employee.” Championship is not identified as a party, either as an employer or as

“Team.” Thus, the plain and unambiguous terms of the contracts provide that defendants were

employed only by the Raptors, and nothing in the contracts indicates that defendants were employed

by Championship. The labels typed at the tops of the first pages of the contracts do not render the

clear, plain, and ordinary language of the contracts ambiguous. See A. Epstein & Sons International,

Inc. v. Eppstein Uhen Architects, Inc., 408 Ill. App. 3d 714, 720 (2011) (the label on a contract will

not determine its legal effect; rather, the intention of the parties will govern). Accordingly, no facial

ambiguity exists regarding whether Championship employed defendants; thus, parol evidence need

not be considered. Thus, there is no genuine issue of material fact regarding whether Championship

was defendants’ employer.

¶ 22 Defendants argue that the trial court erred by failing to consider parol evidence under the

provisional admission approach to contract interpretation. In Air Safety, our supreme court explained

that under the provisional admission approach:

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“[A]lthough the language of a contract is facially unambiguous, a party may still proffer parol

evidence to the trial judge for the purpose of showing that an ambiguity exists which can be

found only by looking beyond the clear language of the contract.” Air Safety, 185 Ill. 2d at

463.

¶ 23 After explaining the provisional admission approach and acknowledging that it had been

applied by Illinois appellate courts, our supreme court declined to adopt it. Id. at 464. The court

reasoned that, because the contract at issue contained an integration clause, unlike the contracts in

this case, the four corners rule must be applied. Id. at 465. The court declined “to rule on whether

the provisional admission approach may be applied to interpret a contract which does not contain

an integration clause until such a case is squarely before the court.” Id. at 464 n.1.

¶ 24 Although such a case has yet to come squarely before the supreme court, it did come before

this court in River’s Edge Homeowners’ Ass’n, 353 Ill. App. 3d at 874, 880. In River’s Edge, we

discussed whether the provisional admission approach should be applied to a contract that, like the

contracts at issue here, did not contain an integration clause. Id. at 878. After acknowledging that

other courts had adopted the provisional admission approach, we declined to employ it and, instead,

employed the traditional four corners rule. Id. at 880. We reasoned that “[t]he holding in

[Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 106 (1921),] remains

binding precedent upon this court.” River’s Edge, 353 Ill. App. 3d at 880. In Armstrong Paint, the

Illinois Supreme Court stated:

“When parties sign a memorandum expressing all the terms essential to a complete

agreement they are to be protected against the doubtful veracity of the interested witnesses

and the uncertain memory of disinterested witnesses concerning the terms of their agreement,

and the only way in which they can be so protected is by holding each of them conclusively

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bound by the terms of the agreement as expressed in the writing. All conversations and parol

agreements between the parties prior to the written agreement are so merged therein that they

cannot be given in evidence for the purpose of changing the contract or showing an intention

or understanding different from that expressed in the written agreement.” Armstrong Paint,

301 Ill. at 106.

Accordingly, in this case, we decline defendants’ invitation to employ the provisional admission

approach and refuse to consider parol evidence to determine the meaning of facially unambiguous

contracts.

¶ 25 Defendants cite Gassner v. Raynor Manufacturing Co., 409 Ill. App. 3d 995 (2011), to

support their argument. In Gassner, although this court discussed the provisional admission

approach, we did not adopt it. Id. at 1007. We considered the plain language of the contract and

held that the contract was facially ambiguous. Id. at 1010-12. Thus, Gassner is not persuasive.

¶ 26 However, even if we considered the extrinsic or parol evidence defendants rely upon, we

would come to the same conclusion; there is no genuine issue of material fact regarding whether

Championship was defendants’ employer.

¶ 27 Defendants urge this court to consider the following extrinsic or parol evidence. Kopac

testified that, although the contracts identified “the team” as the Raptors, he considered that a typo

and considered the agreements to be “Championship contracts.” This evidence would be

inadmissible under the provisional admission approach because it is not objective, as Kopac is not

a disinterested third party. See Ahsan v. Eagle, Inc., 287 Ill. App. 3d 788, 790-91 (1997) (“A party

that asserts extrinsic ambiguity is entitled to present to the court objective evidence, i.e., evidence

that cannot be faked and can be supplied by disinterested third parties.”). Thus, we need not consider

what this interested party thought about the contracts after defendants suffered injuries.

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¶ 28 Defendants also note that Lowe testified that the Raptors is merely a name and is “not a legal

entity.” Further, defendants point to Championship’s application to the Wisconsin Workers’

Compensation Insurance Pool, which indicated that the nature of the business was “football team”

and that Championship’s employees traveled out of state, were an “athletic team,” and played

“Contact Sports.” However, none of this evidence indicates that Championship employed

defendants. The application sought coverage for Championship’s only team at that time, the

Wolfpack, which played “away” games in other states. When the application was prepared, the

Raptors did not exist and Kopac had no connection to the team. Further, defendants ignore that the

record indicates that Championship had no legal interest in the Raptors. Championship was

connected to the Raptors only tangentially, through Kopac; Kopac owned JFK2, and JFK2 was a

general partner of the Raptors Football Owners Club, LP, which owned the Raptors.

¶ 29 Defendants also note that Championship paid defendants. However, the record indicates that

the Raptors Football Owners Club, LP, reimbursed Championship for these payments. Accordingly,

even after considering the parol evidence, we determine that there is no genuine issue of material fact

regarding whether Championship was defendants’ employer. The record indicates that there was no

employer-employee relationship between Championship and defendants. Thus, plaintiff was not

obligated to provide coverage for defendants under the terms of the policy that required coverage

under the Wisconsin Act. Therefore, the trial court properly granted plaintiff’s motion for summary

judgment and denied defendants’ motion for summary judgment.

¶ 30 Next, defendants argue that the trial court erred by determining that their claims were not

compensable under the Wisconsin Act. Specifically, defendants argue that the court erred by relying

on section 102.03(5) of the Wisconsin Act to determine that defendants’ claims were not

compensable. We have already determined that defendants’ claims were not compensable under the

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Wisconsin Act, because there was no employer-employee relationship between Championship and

defendants. Thus, we need not address defendants’ other argument.

¶ 31 III. CONCLUSION

¶ 32 For the reasons stated, we affirm the trial court’s grant of plaintiff’s motion for summary

judgment and denial of defendants’ motion for summary judgment.

¶ 33 Affirmed.

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