RALPH McLAIN v. DANA CORPORATION; BAY DESIGN, INC.; THE PASLIN COMPANY; and I.S.I. INDUSTRIES
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RENDERED: October 15, 1999; 2:00 p.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-002831-MR
RALPH McLAIN
v.
APPELLANT
APPEAL FROM HARDIN CIRCUIT COURT
HONORABLE HUGH W. ROARK, JUDGE
ACTION NO. 97-CI-01901
DANA CORPORATION;
BAY DESIGN, INC.;
THE PASLIN COMPANY; and
I.S.I. INDUSTRIES
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
JOHNSON, McANULTY, and MILLER, JUDGES.
JOHNSON, JUDGE: Ralph McLain’s tort claim against his employer,
Dana Corporation, and his products liability claims against Bay
Design, Inc. and The Paslin Company were summarily dismissed by
the Hardin Circuit Court.
Since all of McLain’s arguments
concerning the constitutionality of the workers’ compensation
laws have either already been rejected by the Supreme Court of
Kentucky or are not ripe for our review, and since his products
liability claims were not timely filed, we affirm.
On January 3, 1997, McLain was injured at work when he
was hit in the head by a piece of machinery that allegedly
malfunctioned.
McLain, who was employed by the appellee, Dana
Corporation, applied for and obtained workers’ compensation
benefits.1
McLain also filed a lawsuit in the Hardin Circuit
Court in which he named as defendants, Dana Corporation and the
appellee, I.S.I. Industries, the alleged manufacturer of the
defective equipment.
With respect to his employer, McLain alleged that Dana
Corporation “negligently operated, maintained and controlled
[its] business by failing to provide [him] with a safe place to
work and with safe equipment to operate.”
The remainder of his
complaint alleged that Chapter 342 of the Kentucky Revised
Statutes, “as rewritten in 1996,” violated several sections of
the Kentucky Constitution; that the “‘new’ workers’ compensation
law [KRS 342] no longer provides adequate, sufficient, equitable
and/or fair benefits” to workers so as to be a “valid alternative
to [his] rights [ ] under traditional tort law and under the
Constitution of Kentucky”; and, that the manner in which benefits
are currently calculated is “arbitrary, unjust, against public
policy, vague, inconsistent with the traditional policy
objectives of compensating injured workers, unconstitutional,
illegal, immoral and a total sham.”
In its answer, Dana Corporation claimed that McLain
had failed to exhaust his administrative remedies; that McLain’s
claim against it was barred by the exclusive remedy provisions of
1
There is no question that Dana Corporation’s insurer paid
McLain temporary total disability income benefits as well as his
medical expenses. The record does not reveal the amount, if any,
of permanent disability income benefits awarded.
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the workers’ compensation scheme; and that McLain’s injuries were
caused by his “own negligence” or by “the breach of warranty or
other contract or duty of defendant ISI [sic] Industries or some
other manufacturer of the product in question . . . .”
Dana
Corporation also filed a cross-claim against I.S.I. to recover
payments made to, or on behalf of, McLain within the context of
McLain’s workers’ compensation claim.
With respect to I.S.I., McLain alleged in his complaint
that the manufacturer “negligently designed, manufactured,
assembled, tested, inspected, warranted, instructed ultimate
users, warned of dangers, repaired and provided a piece of
equipment located at the Dana Corporation.”
McLain further
alleged that I.S.I. breached its warranties “both express and
implied” and, that I.S.I. was strictly liable to him for selling
a machine which “was in a defective condition and which was
dangerous and defective” and “unreasonably dangerous to the
user.”
I.S.I. denied these allegations and claimed that McLain’s own
negligence was the “cause of his alleged injuries” and that the
machine “was not in its original, unaltered and unmodified
condition at the time of the subject accident.”
On April 20, 1998, Dana Corporation moved for a partial
summary judgment and sought a dismissal of that portion of
McLain’s tort action that alleged it was negligent in failing to
provide him with a safe place to work.
It argued that regardless
of the constitutionality of the 1996 amendments to KRS Chapter
342, McLain’s tort claim was barred by the exclusivity provisions
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contained in KRS 342.690(1), a statute not among those changed by
the Legislature in 1996.2
The trial court agreed with the
employer and summarily dismissed McLain’s negligence claim
against Dana Corporation on October 20, 1998.
Meanwhile, McLain learned through the discovery process
that I.S.I. had not manufactured the machine that caused his head
injury, but merely had made one of its components.
On May 18,
1998, McLain filed an amended complaint to add as defendants the
entities which designed, manufactured, and installed the machine
at Dana Corporation, the appellees, Bay Design and Paslin.
McLain made the same allegations against these defendants that he
had previously asserted solely against I.S.I.
Both new
defendants moved for summary judgment on the grounds that
McLain’s claims of negligence and strict liability were barred by
the one-year statute of limitations, KRS 413.140(1)(a),3 and that
his breach of warranty claim was barred by lack of privity.
McLain responded to these motions by arguing that he
filed his amended complaint as soon as he discovered the actual
2
The exclusivity statute provides, in part, as follows :
If an employer secures payment of
compensation as required by this chapter, the
liability of such employer under this chapter
shall be exclusive and in place of all other
liability of such employer to the employee,
his legal representative, husband or wife,
parents, dependents, next of kin, and anyone
otherwise entitled to recover damages from
such employer at law or in admiralty on
account of such injury or death.
3
Since it was undisputed that each defendant did not have
any knowledge of McLain’s lawsuit prior to its receipt of a
summons, the relation back rule did not apply. Kentucky Rules of
Civil Procedure (CR) 15.03
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designers and manufacturers of the alleged defective machine.
He
contended that as to his negligence and strict liability claims
he should be given the benefit of the “discovery rule” as defined
in Louisville Trust Co. v. Johns-Manville Products Corp., Ky.,
580 S.W.2d 497 (1979).
He contended that his breach of warranty
claim was timely filed because of the four-year statute of
limitations provided in KRS 355.2-725.
He claimed he should come
within the coverage of the language of KRS 355.2-318 for breach
of warranty “to the buyer of the defective product and to any
natural person who is in the family or household of the buyer or
who is a guest in his home.”
McLain argued that to give the
statute the interpretation urged by Bay Design and Paslin would
result in the statute becoming “meaningless” when the injured
party is an employee of a corporation/buyer of the defective
product.
On October 20, 1998, the trial court granted Bay
Design’s and Paslin’s motions for summary judgment.
The order
dismissing McLain’s complaint against these defendants, as well
as the summary judgment in favor of Dana Corporation, included
finality language which allowed McLain to proceed with this
appeal.
I.
CONSTITUTIONALITY OF THE WORKERS’ COMPENSATION ACT
McLain advances several arguments in support of his
contention that the Workers’ Compensation Act is
unconstitutional.
He argues that the Act impairs an employee’s
jural rights to recover against his employer for his injury or
death and claims support from the recent Supreme Court case of
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Williams v. Wilson, Ky., 972 S.W.2d 260 (1998).
However, as the
Dana Corporation correctly asserts, McLain’s constitutional
attack on the Workers’ Compensation Act is not new.
Certainly,
if the Act were mandatory, the jural rights doctrine would be
implicated, as was reflected in our highest Court’s review of the
original act passed in 1914.4
We recognize that “[t]he right of
every individual in society to access a system of justice to
redress wrongs is basic and fundamental to our common law
heritage, protected by Sections 14, 54, and 241 of our Kentucky
Constitution.”5
However, when the Legislature re-enacted the
Worker’s Compensation Act in 1916, it provided that coverage
under the Act is not compulsory, but rather allows a worker to
reject participation in the no-fault scheme and to maintain his
right to seek common law remedies.
Since this 1916 enactment,
our courts have consistently held the Workers’ Compensation Act
to be constitutional.6
precedent.7
This Court is, of course, bound by this
Furthermore, there is nothing in the Supreme Court’s
discussion of jural rights in Williams v. Wilson, supra, a case
which held that KRS 411.184(1) offended the constitutional right
to seek punitive damages, that implicates the viability of the
4
See Kentucky State Journal Co. v. Workmen’s Compensation
Board, 161 Ky. 562, 170 S.W. 1166 (1914).
5
O’Bryan v. Hedgespeth, Ky., 892 S.W.2d 571, 578 (1995).
6
See Greene v. Caldwell, 170 Ky. 571,
Wells v. Jefferson County, Ky., 255 S.W.2d
Co. v. Varney, Ky., 695 S.W.2d 400 (1985),
grounds by U.S. Fidelity & Guaranty Co. v.
Inc., Ky., 934 S.W.2d 266, 269 (1996); and
Ladder, Ky.App., 957 S.W.2d 290 (1997).
7
186 S.W. 648 (1916);
462 (1953); M. J. Daly
overruled on other
Technical Minerals,
Edwards v. Louisville
Rules of the Supreme Court 1.030(8)(a).
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Workers’ Compensation Act, or that would justify this Court’s
failure to follow the settled precedent concerning the Act’s
constitutionality.
McLain also specifically challenges the
constitutionality of KRS 342.395(1), the “opt-out” provision of
the Act, which provides, in part, as follows:
Where an employer is subject to this chapter,
then every employee of that employer, as a
part of his contract of hiring . . . shall be
deemed to have accepted all the provisions of
this chapter and shall be bound thereby
unless he shall have filed, prior to the
injury or incurrence of occupational disease,
written notice to the contrary with the
employer; and the acceptance shall include
all of the provisions of this chapter with
respect to traumatic personal injury,
silicosis, and any other occupational
disease. However, before an employee’s
written notice of rejection shall be
considered effective, the employer shall file
the employee’s notice of rejection with the
Department of Workers’ Claims.
In his brief, McLain claims that he did not know that he
could reject coverage under the Act.
He argues that since the
statute provides for a worker’s implied consent to the statutory
scheme, the election was not, in fact, voluntary.
Dana Corporation claims that by accepting temporary
total disability income benefits and medical benefits totaling
nearly $60,000, McLain has “waived any constitutional challenge”
in this regard.
It also points to cases upholding the implied
consent aspects of the Act, particularly Wells v. Jefferson
County, supra, n.6, in which Kentucky’s highest Court unanimously
endorsed the Legislature’s 1952 amendment to provide for implied
consent to inclusion in the scheme:
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[T]he opportunity of the employe to reject
the Act by affirmative action on his part
assures him adequate freedom of choice as to
whether he will accept or reject the Act.
In those states in which compulsory
workmen’s compensation laws are not
permissible under the state constitution, it
has been held almost uniformly that a
requirement that the employe act
affirmatively in order to reject the law does
not make the law compulsory in nature.8
Again, it is clear that this specific provision has already
been held to be constitutional.9
We also note that the principle
of implied consent is used in another no-fault scheme,
specifically the Motor Vehicle Reparations Act, KRS 304.39 et
seq., legislation which survived a similar constitutional
challenge:
At the outset, the implied-consent
theory must be recognized for what it is. As
in the instance of contracts implied in law
vis-a-vis contracts implied in fact, it
necessarily stands on fiction rather than
fact. But it is not thereby degraded or
denigrated, because the venerated fictions of
the law have been deliberately created to
achieve what is right. The law simply
declares that as done which ought to have
been done. If implied-consent laws (or, for
that matter, any other laws) had to depend on
actual notice they could not exist. It seems
to us, therefore, that the proper test of
such a law is whether under all the
circumstances, considering the public purpose
sought to be accomplished and the nature and
extent of detriment to the individual, it is
reasonable for it to presume a consent where
none exists in fact.10
8
Id., 255 S.W.2d at 463.
9
See also Tri-Gem Coal Co. v. Whitaker, Ky.App., 661 S.W.2d
785 (1983).
10
Fann v. McGuffey, Ky., 534 S.W.2d 770, 776 (1975).
-8-
With these authorities as precedent, only our Supreme Court has
the power to declare the implied consent provision of the
Workers’ Compensation Act unconstitutional.
McLain’s arguments that the 1996 amendments to the Act
are unconstitutional must fail as well, since they are not ripe
for review.
It is McLain’s assertion that he no longer has a
“remedy” under the Act as amended in 1996, as any amount he will
recover in that forum will be “incomplete, inequitable, unjust,
unfair, [which] in no way, shape, form or fashion compensates or
redresses his loss to his person.”
He further insists that the
1996 version of the Act “is a sham and a fraud,” and that the
amendments have emasculated the scheme designed to compensate a
worker for his lost earning capacity and replaced it with one
that is “‘arbitrary’” and which “has absolutely no basis or
connection with reality.”11
He notes that the AMA guidelines for
determining impairment specifically state that they “should not
be used to make direct financial awards.”
Essentially, McLain’s
argument is that KRS Chapter 342 “is void and illegal because it
no longer provides a fair, equitable, complete, whole alternative
remedy to injured workers/servants.”
However, before McLain
would be entitled to appellate review of these issues, he must
11
Specifically, McLain earned in excess of $36,000 per year,
and claims to be totally disabled as a result of his injury at
Dana Corporation. Based on a life expectancy of 33.7 years,
McLain claims a loss of over $1.2 million in lost wages alone.
McLain does not state what he could recover in workers’
compensation benefits. However, Dana Corporation claims that
based on the 50% functional impairment rating that McLain
received from one physician, he could receive a permanent
disability award of $189,987.75, a sum considerably less than the
damages McLain seeks to recover in his common law tort action.
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have first exhausted his remedies through the administrative
process.12
Furthermore, the issue of the constitutionality of
the 1996 amendments is not germane to the issue of whether the
trial court erred in dismissing McLain’s tort claim against his
employer.
Even if a court were to determine that all of the 1996
amendments were unconstitutional, we would still be required to
affirm the summary judgment since McLain’s tort action would then
be governed by the statutes in effect at the time of the
amendment.13
Since the exclusive remedy provision of the Act,
KRS 342.690(1), was in effect prior to the 1996 amendments, a
judicial voidance of the 1996 amendments would only affect the
benefits to which McLain is entitled under the Act, which issue
is not before us; and not his ability to sue his employer in
tort, which issue is before us.
Thus, since there is no genuine issue as to any
material fact bearing on the application of the exclusivity
statute, we hold that the trial court did not err as a matter of
law in dismissing McLain’s common law tort action against Dana
Corporation.14
II.
PRODUCTS LIABILITY CLAIMS
In his appeal from the dismissal of his claims against
Bay Design and Paslin, McLain acknowledges that his complaint was
12
See Tharp v. Louisville & Nashville Railroad Co., 307 Ky.
322, 210 S.W.2d 954 (1948).
13
Vestal Lumber Co. v. Clark, Ky., 268 S.W.2d 954, 956
(1954).
14
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky.,
807 S.W.2d 476 (1991).
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filed after the applicable one-year statute of limitations.
However, he claims that “he filed his amended complaint as soon
as he ‘discovered’” the appropriate defendants and that the
“discovery rule” should be extended to situations where the
plaintiff has not yet discovered the identity of the alleged
tortfeasor.
We conclude that McLain’s argument lacks merit and
hold that the discovery rule does not apply to this case.
Under Kentucky law, the discovery rule provides that a
cause of action accrues when the injury is, or should have been,
discovered.15
However, the discovery rule does not operate to
toll the statute of limitations to allow an injured plaintiff to
discover the identity of the wrongdoer unless there is fraudulent
concealment or a misrepresentation by the defendant of his role
in causing the plaintiff’s injuries.16
A person who has
knowledge of an injury is put on “notice to investigate” and
discover, within the statutory time constraints, the identity of
the tortfeasor.17
Application of the discovery rule under
circumstances as in the case sub judice would defeat the very
purpose of the limitations.
As one court observed, “logic
dictates that such an exception is capable of swallowing the
rule.”18
15
Michels v. Sklavos, Ky., 869 S.W.2d 728, 732 (1994).
16
Resthaven Memorial Cemetery, Inc. v. Volk, 286 Ky. 291,
150 S.W.2d 908, 912 (1941).
17
McCollum v. Sisters of Charity of Nazareth Health Corp.,
Ky., 799 S.W.2d 15, 19 (1990).
18
See Simmons v. South Central Skyworker’s, Inc., 936 F.2d
268, 269 (6th Cir.1991).
-11-
McLain’s argument that we should construe KRS 355.2-318
so as to include him as a part of Dana Corporation’s “family,”
and thereby extend to him the privity necessary to pursue a
breach of warranty action against the manufacturers has already
been rejected by this Court in Halderman v. Sanderson Forklift
Co., Ky.App., 818 S.W.2d 270, 273 (1991).
In construing a
statute, the courts are “guided by the two paramount rules of
statutory construction, that is, that words must be afforded
their plain, commonly accepted meaning and that statutes must be
construed in such a way as to carry out the intent of the
legislature[.]”19
The statute, KRS 355.2-318, extends the
ability to assert a breach of warranty claim “to any natural
person who is in the family or household of his buyer or who is a
guest in his home if it is reasonable to expect that such person
may use, consume or be affected by the goods and who is injured
in person by breach of the warranty.”
It continues to be obvious
to this Court that the Legislature did not intend to include
employees of the buyer within the parameters of the statute.
As
our Supreme Court noted in Williams v. Fulmer, Ky., 695 S.W.2d
411, 414 (1985), the Legislature was aware, when enacting our
version of the Uniform Commercial Code, that other alternatives
to the statute existed which extended the concept of privity to
allow a broader range of injured persons to assert warranty
theories of recovery.
As Williams v. Fulmer, supra, makes clear,
19
Chambers v. Commonwealth, Ky.App., 723 S.W.2d 868, 870
(1986).
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“commercial sales law is statutory,”20 and our Legislature chose
to limit actions for breach of warranty as provided in KRS 355.2318.
It is not the function of the courts to extend the concept
of privity to include those whom the Legislature has not seen fit
to protect.
Accordingly, the summary judgment of the Hardin Circuit
Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE, DANA
CORPORATION:
John W. Bland, Jr.
Elizabethtown, KY
Steven D. Goodrum
Lexington, KY
BRIEF FOR APPELLEE, THE PASLIN
COMPANY:
David J. Kellerman
Louisville, KY
BRIEF FOR APPELLEE, BAY
DESIGN, INC.:
O. Lee Cave, III
Debbie D. Sandler
Louisville, KY
20
Id. at 414.
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