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Indemnity clause at center of dispute (UPDATE)

By: Eric Heisig//March 14, 2014//

Indemnity clause at center of dispute (UPDATE)

By: Eric Heisig//March 14, 2014//

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A Kenosha-based construction company might be on the hook for more than $1 million in settlement and legal fees stemming from a 2009 injury at the St. Catherine’s Medical Center construction site.

Riley Construction Co. Inc. is responsible for paying $900,000 to settle with mason Robert Krien, even though he did not sue Riley, according to a 7th U.S. Circuit Court of Appeals opinion released Thursday that reversed a decision made by Eastern District Judge Lynn Adelman.

Riley Construction should pay the settlement, plus at least $250,000 in legal fees and 5 percent per year interest on the settlement, on behalf of the Pennsylvania industrial services company Harsco Corp., which had a valid indemnity clause in its contract, according to the opinion, which was written by Judge Richard Posner.

Krien, a Burlington resident, injured his leg in April 2009 after falling 7 feet from scaffolding at the Pleasant Prairie hospital’s 384,000-square-foot, $80 million vertical expansion project. Krien had stepped on a plank that broke.

The Occupational Safety and Health Administration later fined Riley Construction $2,450 for a scaffolding citation stemming from Krien’s fall.

Krien, along with his wife Geri, sued Harsco, claiming “a defective cross plank supplied by [Harsco] failed, causing Krien to fall to the ground …”

The Kriens already received their settlement from Harsco before the appellate court ruling, said their attorney, Paul Gagliardi Sr., of Gagliardi Law LLP.

But despite that, according to the court opinion, Harsco claimed Riley Construction was responsible for reimbursing Harsco because, according to a part of the contract between the companies, “[Harsco’s] obligations shall be limited to [Harsco’s] sole negligence and proportionate share of joint or concurrent negligence.”

Riley Construction representatives and the contractor’s attorney, Paul Pytlik, of Waukesha-based Hills Legal Group Ltd., did not immediately return phone messages Friday afternoon.

Adelman ruled against Harsco in May, pointing out that several parts of the contract were crossed out or altered.

But, according to the appellate court opinion, Adelman should have given more weight to the contract clause, rather than to those parts of the contract that were altered.

According to the appellate opinion, Riley Construction “insists that Krien’s settlement with Harsco proves that Harsco’s negligence was responsible for the accident.

“It proves no such thing, not only because the only relevant negligence would be in operating Harsco equipment … but also because a settlement is not a determination of liability.”

According to the appellate opinion, it would have been a violation of workers’ compensation laws for the Kriens to sue Riley Construction.

“Even if supplied by Harsco, the plank may not have been defective,” according to the opinion, “but simply carelessly laid by Krien’s co‐worker — an inference strengthened by the fact that OSHA determined that Riley’s ‘lack of proper training and inspections on the scaffold led to the accident.’”

Ken Gorenberg, an attorney with the Chicago-based firm Barnes & Thornburg LLP, which represents Harsco, said he and his client are “happy that the court vindicated Harsco’s position.”

Gagliardi said his client no longer can work as a mason but that Riley Construction paid for Krien to go back to school.


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