{ "id": 5451669, "name": "CHARLES HUGHEY, Plaintiff-Appellant, v. HOFFMAN ROSNER CORPORATION et al., Defendants-Appellees", "name_abbreviation": "Hughey v. Hoffman Rosner Corp.", "decision_date": "1982-09-29", "docket_number": "No. 81-2417", "first_page": "633", "last_page": "639", "citations": [ { "type": "official", "cite": "109 Ill. App. 3d 633" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "195 N.E.2d 287", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "45 Ill. App. 2d 192", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5241451 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/45/0192-01" ] }, { "cite": "167 S.E.2d 817", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "5 N.C. App. 150", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8548523 ], "opinion_index": 0, "case_paths": [ "/nc-app/5/0150-01" ] }, { "cite": "242 Miss. 775", "category": "reporters:state", "reporter": "Miss.", "case_ids": [ 1351848 ], "weight": 6, "pin_cites": [ { "page": "785" }, { "page": "528" }, { "page": "788" }, { "page": "529-30" } ], "opinion_index": 0, "case_paths": [ "/miss/242/0775-01" ] }, { "cite": "631 F.2d 536", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10590511 ], "pin_cites": [ { "page": "538" } ], "opinion_index": 0, "case_paths": [ "/f2d/631/0536-01" ] }, { "cite": "233 N.E.2d 163", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "79 Ill. App. 2d 48", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2564244 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/79/0048-01" ] }, { "cite": "244 F. Supp. 151", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 403782 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/f-supp/244/0151-01" ] }, { "cite": "354 N.E.2d 626", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "41 Ill. App. 3d 595", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2490420 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/41/0595-01" ] } ], "analysis": { "cardinality": 620, "char_count": 12794, "ocr_confidence": 0.762, "pagerank": { "raw": 7.121144645030219e-08, "percentile": 0.4274563883840332 }, "sha256": "8cae87702b9b54c5d39d065049707cc5c5f06d14bc6b8e40406dc4f074ae4d21", "simhash": "1:4def5386f78edfcf", "word_count": 2029 }, "last_updated": "2023-07-14T21:00:34.731811+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "CHARLES HUGHEY, Plaintiff-Appellant, v. HOFFMAN ROSNER CORPORATION et al., Defendants-Appellees." ], "opinions": [ { "text": "JUSTICE WILSON\ndelivered the opinion of the court:\nPlaintiff, Charles Hughey, appeals from the trial court\u2019s order granting defendant\u2019s motion to dismiss. On appeal, plaintiff contends that: (1) The Hoffman Group, Inc. (Hoffman), is a distinct and separate corporate entity from the Western Construction Company (Western); (2) Western Construction Company and not Hoffman should be considered plaintiff\u2019s employer as a matter of law; and (3) since Western is a subsidiary of The Hoffman Group, Inc., it is not immune by virtue of the Workmen\u2019s Compensation Act (Ill. Rev. Stat. 1979, ch. 48, par. 138.5(a)) to an action for damages sustained in the course of plaintiff\u2019s employment. We affirm the trial court\u2019s decision.\nThe Hoffman Group, Inc., is a holding company and general contractor engaged in the business of developing, building and selling residential properties. It has a number of subsidiaries that do development work.\nWestern Construction Company, Inc., handles carpentry and concrete projects. Incorporated in January 1977, it was a wholly owned subsidiary of Hoffman Enterprises. Hoffman Enterprises is a wholly owned holding company of The Hoffman Group, Inc.\nIn June 1977, The Hoffman Group, Inc., merged Western and TriCo Builders Supply Company, another wholly owned subsidiary, into itself. All of Western\u2019s and Tri-Co Builders\u2019 stock was retired and cancelled to form a new corporation bearing the same name as the old one, Western Construction Company. Except for its president, the divisional officials of Western were elected to hold the same respective offices in the new corporation. All of the shares of the new corporation were owned by The Hoffman Group, Inc.\nPlaintiff was hired as a carpenter by Western Construction Company prior to its merger in 1977. He was injured on October 10, 1978, while working on a scaffold. He subsequently filed a claim under the Workmen\u2019s Compensation Act as well as a cause of action for his injury in the circuit court of Cook County against The Hoffman Group. Although plaintiff received a lump sum settlement from the Workmen\u2019s Compensation Board, his action in the circuit court was dismissed.\nIn reaching its decision, the trial court stated that plaintiff had failed to present any counteraffidavits to rebut defendant\u2019s evidence that (1) at the time of plaintiff\u2019s injury, Western was no longer a subsidiary but had been merged to become a wholly owned division of The Hoffman Group, Inc., (2) that the sole purpose of the newly formed corporation was to protect the name of Western in Illinois, (3) that by virtue of the merger, The Hoffman Group and not Western was plaintiff\u2019s employer, and (4) plaintiff\u2019s cause of action against Hoffman was therefore barred by the workmen\u2019s compensation statute.\nPlaintiff filed a motion for rehearing, which was granted. Upon rehearing, the trial court affirmed its earlier decision and denied plaintiff\u2019s motion to vacate the order of dismissal. Plaintiff appealed.\nOpinion\nPlaintiff\u2019s main argument is that The Hoffman Group is a distinct and separate corporation from Western Construction Company and that it should not be considered plaintiff\u2019s employer as a matter of law. This factual determination rests with the trial court since it is well established in Illinois that section 5(a) of the Workmen\u2019s Compensation Act (Ill. Rev. Stat. 1979, ch. 48, par. 138.5(a)) serves as a bar to all other remedies of an employee against his employer (Walker v. Berkshire Foods, Inc. (1976), 41 Ill. App. 3d 595, 354 N.E.2d 626). We believe that the trial court correctly reached its decision that at the time of the injury Hoffman and Western were not separate corporate entities and that plaintiff is therefore barred by the workmen\u2019s compensation statute from bringing this cause of action.\nThere is ample evidence in the record to support the trial court\u2019s decision. A significant fact is that the merger changing Western\u2019s status from a subsidiary to a division occurred the year prior to plaintiff\u2019s injury, not during the aftermath of his workmen\u2019s compensation or circuit court claim for damages. The reason for the merger, aside from \u201cprotecting the name of Western Construction Company in Illinois,\u201d is not clear in the record, but, nonetheless, defendant\u2019s argument that the merger produced a new division was uncontradicted by counter affidavits. Also, as the court pointed out upon rehearing, plaintiff did not present any persuasive information concerning the relationship between Hoffman and Western.\nExcept for its president, Western has the same officers as The Hoffman Group. Hoffman\u2019s treasurer, James K. Baumann, testified in a deposition that Western\u2019s payroll checks are issued with The Hoffman Group\u2019s name printed on them. These payroll funds are drawn under The Hoffman Group account. In addition, financial returns for Western were not filed separately after the merger with The Hoffman Group, Inc. The trial court properly relied on these unchallenged facts in reaching its decision to dismiss plaintiff\u2019s cause of action.\nPlaintiff next contends that defendant should not be allowed to pierce its own corporate veil in order to disregard the separate entities of Western and Hoffman.\nDefendants have uniformly been denied the opportunity to pierce their own corporate veil in order to avoid liability (see Thomas v. Hycon, Inc. (D.D.C. 1965), 244 F. Supp. 151). Moreover, the equitable doctrine of piercing the corporate veil has been used in Illinois as a remedy in instances where the facts establish that the existence of separate corporations is a mere fiction and the observance of this fiction would, in effect, sanction a fraud (Edwards v. Chicago & Northwestern Ry. Co. (1967), 79 Ill. App. 2d 48, 233 N.E.2d 163). An allegation of fraud was not made in the instant case, however. Plaintiff merely states that nonrecognition of Hoffman and Western as separate entities would present an obstacle to his cause of action. This statement, without more, is unpersuasive. Plaintiff failed to show how or in what way Hoffman, the principal corporation, treated Western as a separate, albeit wholly owned entity. See C M Corp. v. Oberer Development Co. (7th Cir. 1980), 631 F.2d 536, 538, wherein the court of appeals held that there must be proof of the prerequisites to piercing the corporate veil in order for the doctrine to be invoked.\nIn the absence of proof that Western retained its corporate status as a separate entity from The Hoffman Group after its merger on June 10,1977, we must affirm the trial court\u2019s decision.\nPlaintiff relies on cases which hold that employees of a subsidiary corporation may sue a parent corporation despite the existence of a workmen\u2019s compensation statute. This reliance is inappropriate because they are distinguishable from the present case.\nIn Thomas v. Hycon, Inc. (D.D.C. 1965), 244 F. Supp. 151, the defendant was a wholly owned subsidiary with business interests different and distinct from the parent company. The two entities maintained separate accounts, did not share profits and losses and had no joint proprietary interest or right of mutual control over the subject matter of the enterprise. These facts are inapplicable to the case at bar. James K. Baumann, treasurer of The Hoffman Group, Inc., stated in a discovery deposition that Western\u2019s payroll is drawn from the Hoffman account and that a consequence of the merger was that Hoffman assumed Western\u2019s financial liabilities. He further testified that The Hoffman Group filed one Federal income tax return, one State income tax return and one unemployment and social security return for itself and Western. Baumann\u2019s testimony strengthens defendant\u2019s argument that Western is a wholly owned division and not a subsidiary, as it once was.\nIn Index Drilling Co. v. Williams (1962), 242 Miss. 775, 137 So. 2d 525, a case also cited by plaintiff, the court held that an employee of one of five wholly owned, separate corporations could bring an action for injuries against the parent. The Mississippi Supreme Court upheld a lower court\u2019s decision that the parent conducted its business through separate corporations and not, as Index Drilling argued, as five departments or divisions. (242 Miss. 775, 785, 137 So. 2d 525, 528.) A decisive factor in the court\u2019s opinion which was addressed at length was that the injured employee had never been hired by and had always worked for only one of the five corporations. The court said that since the employee had not been expressly or impliedly \u201cloaned\u201d as a worker to the parent corporation, he retained his status as an employee of one of the corporation\u2019s subsidiaries. (242 Miss. 775, 788, 137 So. 2d 525, 529-30.) The court held that the employee could bring his cause of action against the parent corporation despite his workmen\u2019s compensation lump sum settlement.\nIn the case at bar, however, plaintiff\u2019s focus is on the relationship between two corporations, Western and Hoffman, and not, as in Index Drilling Co., on the \u201clent servant doctrine\u201d which addresses the employment status of an employee. Index Drilling is therefore unpersuasive on the issue of Western\u2019s relationship to The Hoffman Group.\nPlaintiff cites additional cases, including Phillips v. Stowe Mills, Inc. (1969), 5 N.C. App. 150, 167 S.E.2d 817. The court held in Phillips that the plaintiff\u2019s employer was a wholly owned subsidiary and not immune by virtue of the workmen\u2019s compensation statute from a common-law action. In Phillips, however, the subsidiary and parent were separate entities for all tax and accounting purposes, each charged the other for services actually rendered, and on the day of the injury the employee was performing work under the supervision and control of her employer. The distinctions between corporate entities in Phillips are not present in the facts of the instant case. There is no evidence that Hoffman or Western charged the other for jobs that were performed; the unitary accounting and tax reporting methods Hoffman used were verified by its treasurer and remained uncontested. Again, we are unpersuaded by Phillips as well as plaintiffs remaining cases.\nWe recognize the general rule that holding companies and subsidiaries are separate legal entities. (Divco-Wayne Sales Financial Corp. v. Martin Vehicle Sales (1963), 45 Ill. App. 2d 192, 195 N.E.2d 287.) Before this rule can be applied to the case at bar, however, there must be evidence to support the allegation that a parent-subsidiary relationship exists. Such evidence is absent here.\nFurther, the record does not show whether plaintiff raised a question in the hearing before the Industrial Commission as to whether Hoffman or Western was responsible for payment of the award for his injury, although the record does disclose that plaintiff told the trial court that defendant\u2019s attorneys had prepared the workmen\u2019s compensation claim form. Apparently, nothing more was said about Hoffman\u2019s name remaining on this form. We can only assume that plaintiff acquiesced to Hoffman\u2019s acceptance of liability. Failure to address this point by counter affidavit weakens plaintiff\u2019s argument that Hoffman and Western are distinctly separate corporate entities.\nAdditionally, the trial court found nothing to rebut the affidavits of Karen Meehan or Hoffman treasurer, James K. Baumann. Both affidavits state that Western was incorporated solely to protect its name in Illinois.\nUpon rehearing, the court\u2019s primary concern was whether plaintiff had any new evidence. Plaintiff presented excerpts of James K. Baumann\u2019s earlier deposition and his affidavit and again relied on Karen Meehan\u2019s affidavit. Defendant argued, as before, that Western was a division and not a subsidiary of The Hoffman Group, Inc., that it functions solely as a name-holder corporation and that Hoffman and Western are one and the same legal entity for the purposes of the workmen\u2019s compensation statute. The trial court held that defendant\u2019s evidence remained essentially uncontradicted and denied plaintiff\u2019s motion to vacate the order of dismissal.\nAccordingly, we hold that the trial court did not err in dismissing the complaint against The Hoffman Group, Inc., as barred by section 5(a) of the Workmen\u2019s Compensation Act (Ill. Rev. Stat. 1979, ch. 48, par. 138 \u2014 5(a)).\nThe order of dismissal entered by the circuit court of Cook County is affirmed.\nAffirmed.\nLORENZ and MEJDA, JJ., concur.", "type": "majority", "author": "JUSTICE WILSON" } ], "attorneys": [ "Cooney and Stenn, of Chicago (Kevin J. Conway, of counsel), for appellant.", "French, Rogers, Kezelis & Kominiarek, P. C., of Chicago (Algimantas Kezelis and Lew J. Campione, of counsel), for appellees." ], "corrections": "", "head_matter": "CHARLES HUGHEY, Plaintiff-Appellant, v. HOFFMAN ROSNER CORPORATION et al., Defendants-Appellees.\nFirst District (5th Division)\nNo. 81\u20142417\nOpinion filed September 29, 1982.\nCooney and Stenn, of Chicago (Kevin J. Conway, of counsel), for appellant.\nFrench, Rogers, Kezelis & Kominiarek, P. C., of Chicago (Algimantas Kezelis and Lew J. Campione, of counsel), for appellees." }, "file_name": "0633-01", "first_page_order": 655, "last_page_order": 661 }