FOURTH DIVISION
May 26, 2005

JUSTICE GREIMAN delivered the opinion of the court:

Third-party plaintiff Kiferbaum Construction Corp. (Kiferbaum) appeals from an order ofthe trial court finding a settlement agreement between plaintiff Debbie McDaniel and third-partydefendant Decking & Steel, Inc. (Decking & Steel), to be in good faith and dismissingKiferbaum's third-party complaint for contribution against Decking & Steel with prejudice. Forthe reasons that follow, we affirm.

In 1999, Kiferbaum was designated as the general contractor for the construction of abuilding in Vernon Hills for Educational Testing Associates. Kiferbaum entered into asubcontract with Arlington Structural Steel Corp. (Arlington) to fabricate and erect structuralsteel for the project. Paragraph 7 of the subcontract stated in part:

"The Subcontractor agrees to assume entire responsibility and liability, tothe fullest extent permitted by law, for all damages or injury to all persons,whether employees or otherwise, and to all property, arising out of it,resulting from or in any manner connected with, the execution of the workprovided for in this Subcontractor [sic] *** and the Subcontractor, to thefullest extent permitted by law, agrees to indemnify and save harmless theContractor *** from all such claims including, without limiting thegenerality of the foregoing, claims for which the Contractor may be or maybe claimed to be, liable and legal fees and disbursements paid or incurred toenforce the provisions of this paragraph ***."

The Kiferbaum-Arlington indemnity provision did not require Arlington to indemnifyKiferbaum against its own negligence. It also stated, under paragraph 11, that where any"provision of the General Contract documents between the Owner and Contractor is inconsistentwith any provision of this Agreement, this Subcontract shall govern."

Arlington in turn entered into a subcontract with Decking & Steel to erect the structuralsteel Arlington had fabricated. The subcontract, written on a 1978 standard form, identifiedArlington as the "Contractor" and Decking & Steel as the "Subcontractor" and stated that itsdocuments consisted of "this Agreement" as well as "the Agreement between the GeneralContractor and Contractor."

The general conditions stated that "the Subcontractor" would assume toward "theContractor" all the obligations and responsibilities which "the Contractor" assumed toward "theOwner" and would have the benefit of all rights against "the Contractor" which "the Contractor"had against "the Owner," but that where any provision of the contract between the "Owner" andthe "Contractor" was inconsistent with a provision of the immediate subcontract, the subcontractbetween Arlington and Decking & Steel would govern.

The subcontract contained an indemnification provision in Article 11.11.1, which read, inpart, as follows:

"the Subcontractor shall indemnify and hold harmless the Owner, theArchitect and the Contractor and all of their agents and employees fromand against all claims, damages, losses, and expenses *** arising out of orresulting from the performance of the Subcontractor's work under thisSubcontract, provided that any such claim *** is attributable to bodilyinjury *** to the extent caused in whole or in part by any negligent act oromission of the Subcontractor of anyone directly or indirectly employed byhim or anyone for whose acts he may be liable, regardless of whether it iscaused in part by a party indemnified hereunder."

Paragraph 11.11.2 of the subcontract stated as follows:

"In any and all claims against the Owner, the Architect, or the Contractoror any of their agents or employees by any employee of the Subcontractor,anyone directly or indirectly employed by him or anyone for whose acts hemay be liable, the indemnification obligation under this Paragraph 11.11shall not be limited in any way by any limitation on the amount or type ofdamages, compensation or benefits payable by or for the Subcontractorunder workers' or workmen's compensation acts, disability benefit acts orother employee benefit acts."

The subcontract also included an insurance rider that required Decking & Steel to nameArlington, "the General Contractor, the Owner, the Architect, the Engineer and the Lender" asinsureds on its general liability policies and specifically stated that Kiferbaum was to be named asone of the additional insureds. The insurance rider did name Kiferbaum as the general contractor.

The deceased, Robert Willis II, an employee of Decking & Steel, fell from the building siteand suffered fatal injuries in October 1999. On behalf of his estate, plaintiff Debbie E. McDanielfiled suit for wrongful death against Kiferbaum and Arlington. Kiferbaum and Arlington in turnfiled third-party complaints against Decking & Steel seeking contribution in the amount of its prorata share of fault in the deceased's death. Decking & Steel filed a motion contending that itsshare of liability was limited to its maximum liability under the Workers' Compensation Act (820ILCS 305/1 et seq. (West 2000)), as held in Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155(1991).

Arlington responded that, in its subcontract with Arlington, Decking & Steel had waivedthe Kotecki cap when it agreed to the indemnification language in its subcontract with Arlington. Kiferbaum responded similarly, contending that the language applied to its claim for contributionsince it was a third-party beneficiary of the subcontract.

The trial court denied Decking & Steel's motion with regard to Arlington's complaint,finding that Decking & Steel had waived the Kotecki cap through its subcontract with Arlington,and granted the motion as to Kiferbaum's complaint, finding that Kiferbaum was not a third-partybeneficiary of the contract between Arlington and Decking & Steel.

The case went to trial in 2003, and soon thereafter, Arlington reached a settlementagreement with plaintiff and was dismissed as a defendant. Decking & Steel also reached asettlement, the terms of which were that Decking & Steel waived its workers' compensation lienas to the amounts already paid to plaintiff (totaling $137,000), but not as to a $150,000 lump sumto be paid in settlement for plaintiff's compensation claim for future benefits. Decking & Steelsought a finding that the settlement was in good faith pursuant to the Joint TortfeasorContribution Act (Contribution Act) (740 ILCS 100/1 et seq. (West 2000)) and that, as a result, itwas no longer subject to Kiferbaum's claim for contribution. Kiferbaum objected, arguing thatthe court's previous ruling on the Kotecki waiver issue was incorrect and that the settlement wastherefore not in good faith due to the disparity between the monetary value of Decking & Steel'ssettlement offer and its actual liability. The trial court did not consider whether the waiver issuewould affect a good-faith finding and entered an order finding Decking & Steel's settlement to bein good faith and dismissing Kiferbaum's complaint for contribution with prejudice. Plaintiffthereafter voluntarily dismissed the case. Kiferbaum now appeals.

Kiferbaum first contends that it was a direct and intended third-party beneficiary of thesubcontract between Arlington and Decking & Steel and that Decking & Steel therefore waivedthe Kotecki cap with respect to Kiferbaum's claim for contribution. It argues that, taken as awhole, the subcontract signifies an intent by Arlington and Decking & Steel to benefit Kiferbaumdirectly. Kiferbaum points out that it is expressly named as the general contractor in thesubcontract's insurance rider; that the subcontract incorporates by reference the subcontractbetween Kiferbaum and Arlington; that the Kiferbaum-Arlington contract also contained a clearKotecki waiver; that the subcontract contained a "flow-down" clause providing that Decking &Steel assumed with respect to Arlington all the obligations that Arlington had assumed withrespect to Kiferbaum; and that the Arlington-Decking & Steel subcontract contains a clearKotecki waiver. Neither party argues the validity of the last point.

In response, Decking & Steel contends that it did not waive the Kotecki cap as toKiferbaum's claim, pointing out that the indemnification provisions of its subcontract withArlington did not mention Kiferbaum by name or by description nor did they confer any waiverbenefit on Kiferbaum; that the contract between Kiferbaum and Arlington was not incorporatedinto the subcontract between Arlington and Decking & Steel because the subcontract stated that itwould govern any inconsistencies; that the Kiferbaum-Arlington contract did not contain aKotecki waiver; that the "flow-down" clause pertained only to the obligation to assume theresponsibilities of Arlington to Educational Testing Associates; and that the indemnificationprovisions of the Arlington-Decking & Steel subcontract did not flow to Kiferbaum.

The Illinois Supreme Court established the concept of limiting a third-party employerdefendant's liability in contribution claims to its statutory liability under the Workers'Compensation Act in Kotecki. There the court held that the intent of the Workers' CompensationAct to establish the compensation it provided as the measure of an employer's responsibilityrequired that amounts recovered through the Contribution Act be limited to the amount ofworkers' compensation paid to the injured employee. Kotecki, 146 Ill. 2d at 163-66. Thesupreme court subsequently held that this affirmative defense could be waived where an employerenters into an agreement prior to the commencement of litigation to assume full liability fordamages commensurate with its relative degree of fault. Braye v. Archer-Daniels-Midland Co.,175 Ill. 2d 201, 208 (1997). In essence, a party who agrees to waive Kotecki as an affirmativedefense voluntarily assumes contribution liability in excess of the limitations provided under theCompensation Act. Christy-Foltz, Inc. v. Safety Mutual Casualty Corp., 309 Ill. App. 3d 686,693 (2000).

In order to have a contractual waiver of the Kotecki damage cap, a contract must have avalid provision by which the waiver is made. Liccardi v. Stolt Terminals, Inc., 178 Ill. 2d 540,546 (1997). A contract may affect also a party's liability limitations where its provisions violatethe Construction Contract Indemnification for Negligence Act (Indemnification Act). 740 ILCS35/1 (West 2002). The Indemnification Act renders void as against public policy any agreementthat indemnifies a party for that party's own negligence. 740 ILCS 35/1 (West 2002). Thepurpose of the provision is to protect workers and the public from attempts to avoid liabilitythrough the use of indemnity agreements and encourage worksite safety. W.E. O'NeilConstruction Co. v. General Casualty Co., 321 Ill. App. 3d 550, 556 (2001). Illinois courtsconstrue contractual provisions seeking partial indemnity as provisions seeking contribution. Stevens v. Silver Manufacturing Co., 70 Ill. 2d 41, 46 (1977); Herington v. J.S. AlbericiConstruction Co., 266 Ill. App. 3d 489, 494 (1994). Where an employer agrees to assumeunlimited liability, that employer agrees to waive the Kotecki limitation as to contribution claims. Braye, 175 Ill. 2d at 208.

Here, under paragraph 11.11.1 of the Arlington-Decking & Steel subcontract, Decking &Steel (as "Subcontractor) agreed to indemnify Arlington (as "Contractor") against claims of injury"caused in whole or in part by any negligent act or omission of the Subcontractor." Furthermoreparagraph 11.11.2 states that "the indemnification obligation under this Paragraph 11.11 shall notbe limited in any way by any limitation on the amount or type of damages, compensation orbenefits payable by or for the Subcontractor under *** workmen's compensation acts."

Reading this language, we agree with the circuit court that Decking & Steel waived theKotecki cap as to Arlington's claim for contribution. Whether that waiver extends to Kiferbaum'sclaim for contribution is another matter.

Kiferbaum contends that its subcontract with Arlington also contains a clear Koteckiwaiver. We do not agree. Paragraph 7 states that Arlington agreed to indemnify and assumeresponsibility for all damages or injury to employees resulting from the execution of its work "tothe fullest extent permitted by law." The words "shall not be limited," or other phrases purportingto indemnify either party for its own negligence, did not appear in that provision, as they did in theindemnification provisions of the Arlington-Decking & Steel subcontract. Therefore, we rejectKiferbaum's contention that its subcontract with Arlington contained a waiver of the Kotecki cap.

We also cannot agree with Kiferbaum's argument that the Kotecki waiver in theArlington-Decking & Steel subcontract extended to its own claim for contribution. Article I ofthe contract between Arlington and Decking & Steel specifically incorporates the contractbetween Kiferbaum and Arlington, making it a part of the subcontract by reference. See Branskyv. Schmidt Motor Sales, Inc., 222 Ill. App. 3d 1056, 1062 (1991) (where a contract incorporatesanother document by reference, its terms become part of the contract). Accordingly, we examineboth contracts in determining whether Kiferbaum was an intended third-party beneficiary of theArlington-Decking & Steel subcontract.

Illinois law holds a strong presumption against creating contractual rights in third parties,and this presumption can only be overcome by a showing that the language and circumstances ofthe contract manifest an affirmative intent by the parties to benefit the third party. Bates &Rogers Construction Corp. v. Greely & Hansen, 109 Ill. 2d 225 (1985). Illinois recognizes twotypes of third-party beneficiaries, intended and incidental. An intended beneficiary is intended bythe parties to the contract to receive a benefit for the performance of the agreement and has rightsand may sue under the contract; an incidental beneficiary has no rights and may not sue to enforcethem. MBD Enterprises, Inc. v. American National Bank of Chicago, 275 Ill. App. 3d 164(1995). "[T]he right of a third party benefited by a contract to sue thereon rests upon the liabilityof the promisor, and this liability must affirmatively appear from the language of the instrument***. The liability so appearing can not be extended or enlarged on the ground, alone, that thesituation and circumstances of the parties justify or demand further or other liability." CarsonPirie Scott & Co. v. Parrett, 346 Ill. 252, 258 (1931).

A third party has no rights to damages from a breach of a contract entered into by othersunless the agreed-to provision was intentionally included for the direct benefit of the third party. Itis not necessary that the contract specifically name the third-party beneficiary if it adequatelydefines a class of individual beneficiaries. Altevogt v. Brinkoetter, 85 Ill. 2d 44 (1981).

With respect to construction contracts, it is not enough to confer direct third partybeneficiary status where the parties to the contract know, expect, or intend that a third party willbenefit from the construction of a building in that they will be the users of it. The contract mustbe undertaken for the third party's direct benefit and the contract must affirmatively make such anintention clear. 155 Harbor Drive Condominium Assn. v. Harbor Point, Inc., 209 Ill. App. 3d 631(1991). However, if the terms of a promise for which the promisee bargained with the promisorare to render a performance directly to the third party, in nearly every case the third party who isto receive performance will be the party intended to be benefited. Village of Fox Lake v. AetnaCasualty & Surety Co., 178 Ill. App. 3d 887, 911-12 (1989).

Liability to a third party must appear affirmatively in the contract language and thecircumstances of the parties at the time of execution; it cannot be expanded simply because thecircumstances justify or demand further liability. Ball Corp. v. Bohlin Building Corp., 187 Ill.App. 3d 175, 177 (1989). Illinois courts require an express provision indicating third-party-beneficiary status because of the strong presumption against construing it, and the presumptioncan only be overcome by an implication so strong as to be practically an express declaration. BallCorp., 187 Ill. App. 3d at 177.

We recognize that in the construction industry, general contractors are likely to assumethat they are third-party beneficiaries of the agreements undertaken by their subcontractors. Illinois courts have held that subcontractors can acquire third-party beneficiary status in contractsbetween government entities and general contractors pursuant to the Public Construction BondAct (30 ILCS 550/2 (West 2002)) and where general contractors agree to obtain surety bonds toensure payment to third-party subcontractors. See Ardon Electric Co., Inc. v. WintersetConstruction, Inc., 354 Ill. App. 3d 28 (2004); Town & Country Bank of Springfield v. James M.Canfield Contracting Co., 55 Ill. App. 3d 91 (1978). Subcontractors may also obtaincompensation from public entities in the absence of a direct contract pursuant to the MechanicsLien Act. 770 ILCS 60/23 (West 2002). The Illinois Supreme Court has also held that anengineer retained by an owner to oversee a construction project, but who was not a party to thegeneral contract, was an intended third-party beneficiary of the contract where the agreementspecifically placed the engineer in charge of the management of the project and contained anexhaustive description of the engineer's responsibilities. Bates & Rogers Construction Corp., 109Ill. 2d at 233-34. Further, the supreme court has held that an owner may enforce a contract as athird-party beneficiary where the contract requires subcontractors to consult with the owner as tothe project's requirements and describes the method by which the third party may recover. People ex rel. Resnick v. Curtis & Davis, Architects & Planners, Inc., 78 Ill. 2d 381, 386-87(1980).

Conversely, Illinois courts have also held that building owners and subsequent purchasersmay not enforce the terms of subcontracts in the absence of specific references to or obligationstoward those owners. See 155 Harbor Drive Condominium Assn., 209 Ill. App. 3d at 648;Waterford Condominium Assn. v. Dunbar Corp.,, 104 Ill. App. 3d 371, 374-75; Ball Corp., 187Ill. App. 3d at 178-79. While we have not uncovered any case law explicitly stating so, webelieve that the privity of contract between general contractors and third-party contractors oughtto be closer than that between building owners and subcontractors. However, this court is loatheto rewrite the rules of determining third-party beneficiary status merely on the basis of the identityof the litigants.

The Kiferbaum-Arlington contract contains no provisions granting Kiferbaum any rightsto enforce subcontracts between Arlington and other subcontractors nor does it contain anyprovisions directing that any subcontracts undertaken by Arlington contain language designatingKiferbaum as an intended third-party beneficiary. Moreover, the Arlington-Decking & Steelsubcontract contains no direct reference to Kiferbaum or any obligations by Decking & Steeltoward Kiferbaum. Therefore, we find that Kiferbaum has no rights to enforce the terms of theArlington-Decking & Steel subcontract.

Kiferbaum also argues that the Arlington-Decking & Steel subcontract shows a clearimplication of an intent to benefit Kiferbaum mainly because Kiferbaum is named as the generalcontractor in the insurance rider. We disagree. This court regards a promise to obtain insuranceas wholly different from a promise to indemnify. W.E. O'Neil Construction Co., 321 Ill. App. 3dat 557. Where there is a promise to obtain insurance, the promisor agrees to procure insurancebut does not agree to bear responsibility in the event of injury or loss. A promise in a subcontractto name a third party as an additional insured is not inextricably tied to that party's promise toindemnify the party with whom it enters into the overarching agreement. W.E. O'NeilConstruction Co., 321 Ill. App. 3d at 557. In the Arlington-Decking & Steel subcontract,Decking & Steel made no promise to indemnify Kiferbaum, only to name it as an additionalinsured on its general liability policy. Accordingly, Kiferbaum's argument on this point fails.

Furthermore, each subcontract states that, where the related provisions of anothercontract or subcontract differ, the terms of the immediate agreement govern. We believe thoseclauses manifest an intent to establish separate contractual relationships between Kiferbaum andArlington and between Arlington and Decking & Steel. See Ball Corp., 187 Ill. App. 3d at 178. Moreover, as stated above, the indemnification provisions of each subcontract differ in that theArlington-Decking & Steel agreement waives the limitation on claims for employee injuries whilethe Kiferbaum-Arlington agreement indemnifies Kiferbaum only "to the fullest extent permitted bylaw." Accordingly, we conclude that the terms of the Arlington-Decking & Steel indemnificationprovision, specifically the Kotecki waiver, apply only to those two parties and not to Kiferbaum.

We therefore find that Kiferbaum is not an intended third-party beneficiary of theArlington-Decking & Steel subcontract and that its claim for contribution from Decking & Steelwas limited to the amount allowed under the Workers' Compensation Act, pursuant to the rule ofKotecki.

We realize the importance of this decision in that its result can expose general contractorsto substantial loss for the lax judgment of subcontractors working under them. Here, we have aninstance where the subcontractors based their own agreement on a form drafted several yearsbefore Kotecki was decided and which conferred on Arlington, but not Kiferbaum, a right tounlimited contribution from Decking & Steel. While it certainly may not appear equitable to limitKiferbaum's right to contribution for its subcontractors' failure to use a current form contract, wemay not reach a different result without drastically rewriting the rules of contract interpretation.

While we realize it may be of little solace to Kiferbaum in this instance, we feel itincumbent upon us to advise general contractors to insert language into future standard contractsrequiring that their subcontractors designate the general contractor as an explicit third-partybeneficiary of all subcontracts entered into in furtherance of the general contract. We believe suchalterations would protect general contractors by providing them explicit rights of recovery in theirappurtenant subcontracts, and would prevent the future recurrence of the result we have justreached.

Having found above that Decking & Steel's liability for contribution to Kiferbaum waslimited by the Kotecki cap, we need not review of the propriety of the trial court's finding of agood-faith settlement between Decking & Steel and plaintiff and its subsequent dismissal order. Therefore, remand is unnecessary.

Affirmed.

REID, P.J., and THEIS, J., concur.