Utah Home Fire Insurance Co. v. Manning, et al
Annotate this Casepublication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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Utah Home Fire Insurance
Company,
Plaintiff and Appellee,
v.
Patrick J. Manning;
William R.Green, dba Green
Services;
Carol L. Green dba C.B.Construction;
and Holmes & Narver
Services, Inc.,
Defendants and Appellant.
No. 970516
F I L E D
August 24, 1999
1999 UT 77
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Third District, Salt Lake
Dep't
The Honorable David S. Young
Attorneys:
Eric K. Davenport, Lowell
V. Smith, Salt Lake City, for plaintiff
Roger Taylor Nuttall, Scott
D. Brown, Midvale, for Manning
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RUSSON, Justice:
¶1
Defendant Patrick J. Manning
appeals from the district court's grant of summary judgment in favor of
Utah Home Fire Insurance Company declaring that (1) Utah Home Fire's insureds,
William R. Green dba Green Services and Carol L. Green dba C.B. Construction,
are immune from Manning's suit against them pursuant to the exclusive remedy
provision of the Workers' Compensation Act, and (2) the insurance policy
issued by Utah Home Fire excludes coverage of Manning's work-related injury.
BACKGROUND
¶2
In 1990, Holmes & Narver
Services, Inc., entered into a government contract to perform construction
work at the Tooele Army Depot. Holmes & Narver thereafter entered into
an agreement with William Green, dba Green Services, wherein Green would
install siding at the project. The agreement purported to designate Green
as an independent contractor.
¶3
Before completion of the
siding, Holmes & Narver fired Green and excluded him from the job site.
In accordance with their agreement, Holmes & Narver retained the scaffolding
Green had erected for use in installing the siding. Holmes & Narver
hired temporary employees to complete the siding, and on or about February
1, 1993, one of those employees, Manning, suffered serious injuries when
the scaffolding collapsed.
¶4
Manning received workers'
compensation benefits from Holmes & Narver. In addition, in May of
1996, he filed an action in federal court against Green and Green's insurer,
Utah Home Fire Insurance Company. Manning alleged that Green negligently
constructed the scaffolding, thereby causing his injuries. Manning also
asserted that he was an intended third-party beneficiary of the liability
insurance policy Utah Home Fire had issued to Green and was entitled to
breach of contract damages for Utah Home Fire's denial of coverage with
respect to his personal injury claims. In response, Utah Home Fire filed
an action in state court requesting a declaratory judgment that, under
its insurance policy, it was not obligated to defend or indemnify Green(1)
in Manning's federal lawsuit. The federal court stayed Manning's action
pending resolution of the state proceedings.
¶5
In state court, Utah Home
Fire and Manning filed cross-motions for summary judgment. Utah Home Fire
contended that, as a matter of law, Green functioned as an employee of
Holmes & Narver because of the level of control Holmes & Narver
retained and exercised over his work; as a result, Manning, also an employee
of Holmes & Narver, could not maintain his federal court action against
Green because of the exclusive remedy provision of the Workers' Compensation
Act, which states:
The right to recover
compensation pursuant to the provisions of this title for injuries sustained
by an employee . . . shall be the exclusive remedy against the employer
and shall be the exclusive remedy against any officer, agent or employee
of the employer . . . and no action at law may be maintained against an
employer or against any officer, agent or employee of the employer based
upon any accident, injury or death of an employee.
Utah Code Ann. § 35-1-60
(1988).(2) Utah Home Fire argued that because
this provision protected Green against Manning's suit, Green could not
become "legally obligated" for Manning's injuries and, thus, there was
no potential liability triggering coverage under the insurance policy.
Utah Home Fire argued alternatively that even if the exclusive remedy provision
did not bar Manning's action against Green, the insurance policy nonetheless
excluded coverage of Manning's personal injury claims.
¶6
Manning countered that he
could maintain his federal action against Green because Green was an independent
contractor of Holmes & Narver, not an employee. Manning relied on Utah
Code Ann. § 35-1-62, which provides in relevant part:
When any injury
or death for which compensation is payable under this title shall have
been caused by the wrongful act or neglect of a person other than an employer,
officer, agent, or employee of said employer, the injured employee . .
. may claim compensation and . . . may also maintain an action for damages
against subcontractors, general contractors, independent contractors,
property owners or their lessees or assigns, not occupying an employer-employee
relationship with the injured or deceased employee at the time of his injury
or death.
Utah Code Ann. § 35-1-62
(1988)(3) (emphasis added). Manning also
argued that, as a matter of law, Utah Home Fire's policy did not exclude
coverage of his personal injury claims.
¶7
In an order of declaratory
judgment dated September 23, 1997, the district court granted Utah Home
Fire's motion for summary judgment and denied Manning's motion. The court
ruled that for purposes of the Workers' Compensation Act, Green was an
employee of Holmes & Narver and was therefore immune from Manning's
suit under the exclusive remedy provision. The court also ruled that Utah
Home Fire properly denied coverage of Manning's claims pursuant to certain
provisions in the insurance policy that excluded coverage. This appeal
followed.
STANDARD OF REVIEW
¶8
In reviewing the district
court's grant of summary judgment, we are presented with questions of law,
namely, whether Manning is precluded under the Workers' Compensation Act
from suing Green for his work-related injuries and, if not, whether Utah
Home Fire's insurance policy nevertheless excludes coverage of Manning's
claims in his federal court action. We do not defer to the district court's
rulings on these issues, but review them for correctness. See Averett
v. Grange, 909 P.2d 246, 248 (Utah 1995). Specifically, we review the
correctness of the district court's holding that there were no disputed
issues of material fact and its application of the governing law. Seeid.
DISCUSSION
¶9
Our threshold inquiry is
whether Green functioned as an independent contractor or an employee of
Holmes & Narver for purposes of the Workers' Compensation Act (the
"Act"). The Act defines "independent contractor" as
any person engaged
in the performance of any work for another who, while so engaged, is independent
of the employer in all that pertains to the execution of the work, is not
subject to the rule or control of the employer, is engaged only in the
performance of a definite job or piece of work, and is subordinate to the
employer only in effecting a result in accordance with the employer's design.
Utah Code Ann. § 35-1-42(2)(b)
(Supp. 1992).(4) The Act defines "employee"
as
each person in the
service of any employer [which employer] employs one or more workers or
operatives regularly in the same business, or in or about the same establishment,
under any contract of hire, express or implied, oral or written, . . .
but not including any person whose employment is casual and not in the
usual course of the trade, business, or occupation of his employer.
Utah Code Ann. § 35-1-43(1)
(1988).(5)
¶10
In determining whether a
worker acted as an employee as opposed to an independent contractor for
purposes of the Workers' Compensation Act, our inquiry has long focused
on whether the employer had the right to control the worker. See, e.g.,
Averett,
909 P.2d at 249-50; Stricker v. Industrial Comm'n, 188 P. 849, 851
(Utah 1920). Regardless of how the parties intended to structure their
relationship, a worker is considered to have been an employee if the employer
had the right to control the worker's manner or method of executing or
carrying out the work. See, e.g., Bambrough v. Bethers, 552 P.2d 1286, 1291-92 (Utah 1976); Sommerville v. Industrial Comm'n,
196 P.2d 718, 720 (Utah 1948); Parkinson v. Industrial Comm'n, 172 P.2d 136, 139 (Utah 1946); see also Averett, 909 P.2d at
250 (explaining that inquiry focuses not on intended relationship, but
on relationship in fact created). We have consistently held that "it is
the right to control which is determinative; the degree of control
[actually asserted] is not essential." Bambrough, 552 P.2d at 1291
(emphasis in original); see also Hinds v. Herm Hughes & Sons,
Inc., 577 P.2d 561, 562 (Utah 1978).
¶11
In Harry L. Young &
Sons v. Ashton, 538 P.2d 316 (Utah 1975), this court explained that,
in general,
an employee is one
who is hired and paid a salary, a wage, or at a fixed rate, to perform
the employer's work as directed by the employer and who is subject to a
comparatively high degree of control in performing those duties. In contrast,
an independent contractor is one who is engaged to do some particular project
or piece of work, usually for a set total sum, who may do the job in his
[or her] own way, subject to only minimal restriction or controls and is
responsible only for its satisfactory completion.
The main facts to be considered as bearing on the relationship here are: (1) whatever covenants or agreements exist concerning the right of direction and control over the employee, whether express or implied; (2) the right to hire and fire; (3) the method of payment . . . ; and (4) the furnishing of equipment. Id. at 318; see alsoStricker, 188 P. at 851 (explaining that independent contractors utilize their own methods of bringing about contracted result). In assessing a given relationship, not only do we consider whatever agreements exist concerning the right of control, but we also take into account the actual dealings between the parties and the control that was in fact asserted. See, e.g., Averett, 909 P.2d at 249-50 (considering parties' contractual arrangements and on-site activities to conclude defendant was an employee).
¶12
In the case at hand, there
are no disputed issues of material fact concerning Holmes & Narver's
right to control Green's work: the parties' agreement specifies such right,
and the actual control exercised is not in controversy. In view of the
uncontested evidence, it is clear that Holmes & Narver retained and
exercised the right to control Green's work conduct. For instance, the
parties' agreement stated that "[Green] agrees to perform [the] work as
directed by [Holmes & Narver] in accordance with the contract documents"
and that "all rights, privileges, options and exercise of discretion with
respect to said work reserved by or given to [Holmes & Narver] may
be maintained and exercised with or against [Green]." (Emphasis added.)
The agreement also provided that (1) "[Green] shall not employ any workmen
whose employment and performance of the work is objected to by [Holmes
& Narver] for any reason"; (2) "[Green] must submit a written daily
report to [Holmes & Narver's] Quality Control Representative"; and
(3) "[w]orking hours are Monday through Thursday, 6:30 a.m. to 5:00 p.m."
Thus, under the express terms of their agreement, Holmes & Narver retained
the right to direct the performance or execution of Green's work, to exercise
its full discretion with respect to Green's work, to control which workmen
Green employed, to fire Green's employees for any reason, to monitor Green's
work on a daily basis, and to dictate the days and hours Green worked.
¶13
Not only did Holmes &
Narver retain the right to control Green's work, it systematically exercised
that right. Representatives of Holmes & Narver inspected Green's work
two or three times each day. If the representatives considered something
to be wrong with the work, they required Green to make corrections. The
required corrections did not relate simply to the contracted result of
Green's work but also to the details and method of the work. Green's uncontroverted
testimony is that the representatives of Holmes & Narver repeatedly
gave him directions and instructions concerning the details of his work
rather than simply the contemplated result. Holmes & Narver even mandated
that Green install the siding from right to left rather than from left
to right.
¶14
Holmes & Narver also
required that Green obtain its approval with respect to each worker Green
employed. In fact, on one occasion, Holmes & Narver prevented Green
from hiring a particular individual. As stated in Rustler Lodge v. Industrial
Commission, "'An independent contractor can employ others to do the
work and accomplish the contemplated result without the consent of the
contractee, while an employee cannot . . . .'" 562 P.2d 227, 228 (Utah
1977) (quoting Ludlow v. Industrial Comm'n, 235 P. 884, 888 (Utah
1925)).
¶15
Finally, in the daily reports
that Holmes & Narver required, Green had to report extensive information
concerning his work, including the hours each of his men worked on the
job, the duties they performed, what, if anything, went wrong on the job,
the results of Holmes & Narver's daily inspections, the corrections
made in connection with those inspections, the equipment left on the job
site, the equipment not left on the job site, the equipment and materials
received on the job site, and whether Holmes & Narver had inspected
and approved such equipment and materials. From the information Green submitted,
Holmes & Narver in turn issued various instructions and directions
for Green to follow in performing the job. Hence, despite the fact that
the parties' agreement specified payment of a lump sum for completing the
job and that Green would furnish his own equipment, the evidence as a whole
supports the district court's determination that, as a matter of law, Green
acted as Holmes & Narver's employee.
¶16
Manning contends that irrespective
of the traditional "right-to-control" test, Green does not qualify as an
employee of Holmes & Narver under section 35-1-42(6)(a) of the Code,
which provides:
If any person who
is an employer procures any work to be done wholly or in part for him by
a contractor over whose work he retains supervision or control, and this
work is a part or process in the trade or business of the employer,
the contractor, all persons employed by him, all subcontractors under him,
and all persons employed by any of these subcontractors[] are considered
employees of the original employer.
Utah Code Ann. § 35-1-42(6)(a)
(Supp. 1992) (emphasis added).(6) Manning
maintains that under this provision, even if Holmes & Narver retained
control or supervision over Green's work, that work was not a part or process
of Holmes & Narver's trade or business;(7)
thus, Green was not an employee but must instead be considered a subcontractor
or an independent contractor subject to suit pursuant to section 35-1-62,
which provides that an injured employee "may claim compensation [under
the Act] and . . . may also maintain an action for damages against subcontractors,
general contractors, independent contractors . . . not occupying an employer-employee
relationship with [him] at the time of his injury or death." Utah Code
Ann. § 35-1-62 (1988).
¶17
Manning's argument is premised
on the faulty assumption that one who does not qualify as an employee under
section 35-1-42(6)(a) must be considered by default a subcontractor or
an independent contractor subject to suit under section 35-1-62. Section
35-1-42(6)(a) is limited in application to its specific purpose, which,
as this court has explained, is "'to protect employees of irresponsible
and uninsured subcontractors by imposing ultimate liability on the presumably
responsible principal contractor, who has it within his power, in choosing
subcontractors, to pass upon their responsibility and insist upon appropriate
compensation protection for their workers.'" Bennett v. Industrial Comm'n,
726 P.2d 427, 431 (Utah 1986) (quoting 1C A. Larson, Workmen's Compensation
Law § 49.14 (1986)). The provision safeguards against "unscrupulous
principal contractors" who may attempt to avoid responsibility for insuring
workers on their projects by "'subdivid[ing] their regular operations among
subcontractors, thus escaping direct employment relations with the workers
and relegating them for compensation protection to small contractors who
fail to carry . . . compensation insurance.'" Pinter Constr. Co. v.
Frisby, 678 P.2d 305, 307-08 (Utah 1984) (quoting Larson, Workmen's
Compensation Law § 49.11). Thus, section 35-1-42(6)(a) applies
to the limited circumstance of assigning responsibility for workers' compensation
coverage: those who qualify as "employees" under it are so considered only
insofar as the principal contractor of the project is ultimately responsible
for procuring workers' compensation coverage for them. See, e.g.,
Bennett,
726 P.2d at 431-33 (explaining that this provision makes principal contractor
liable for securing workers' compensation coverage for person hired by
subcontractor). For all other purposes of the Workers' Compensation Act,
the right-to-control test determines whether a worker is considered an
employee.(8)
¶18
We conclude, therefore,
that the district court did not err in ruling as a matter of law that Green
was an employee of Holmes & Narver for purposes of the Workers' Compensation
Act. This conclusion accords with this court's long-standing policy that
the Workers' Compensation Act should be liberally construed to effectuate
its purposes.
See, e.g., Smith v. Alfred Brown Co., 493 P.2d 994, 995 (Utah 1972). In line with that policy, we have stated that it
is "proper to resolve doubt as to whether a worker was an employee in favor
of [the worker being an] employee." Bennett, 726 P.2d at 430. It
would indeed be inconsistent to resolve doubts in favor of a worker being
considered an employee when the worker is seeking coverage but not in other
situations, such as here, where the worker is being sued by another employee.
¶19
As an employee under the
Workers' Compensation Act, Green is entitled to the protections the Act
affords, including the protection against suit for injuries sustained by
other employees of Holmes & Narver. The exclusive remedy provision
states that an injured employee may not maintain an action at law for his
or her injuries "against any officer, agent or employee of the employer."
Utah Code Ann. § 35-1-60 (1988). Although Manning was a temporary
employee, he is considered an employee of Holmes & Narver. SeeGhersi
v. Salazar, 883 P.2d 1352, 1357 (Utah 1994). Consequently, the exclusive
remedy provision precludes Manning from suing any other employee of Holmes
& Narver for his injuries, including Green. Thus, there was no potential
liability in Manning's federal court action triggering coverage under Utah
Home Fire's insurance policy.
¶20
The dissent argues that
since Manning's accident occurred after Green's employment with Holmes
& Narver terminated, Manning can sue Green for his injuries. The dissent
raises this argument, and would use it to reverse the district court's
rulings, despite the fact that it was not addressed before the district
court nor by the parties on appeal. That aside, the dissent is not in accord
with the exclusive remedy provision (section 35-1-60), section 35-1-62,
Professor Larson's treatise on the subject, the holding of Riddle v.
Mays, 780 P.2d 1252 (Utah 1989), or the underlying purposes of the
workers' compensation laws of the state of Utah.
¶21
The Workers' Compensation
Act is intended not only to compensate employees for job-related injuries,
but also to protect them against liability for job-related conduct. The
exclusive remedy provision of the Act makes this latter purpose clear:
The right to recover
compensation pursuant to the provisions of this title for injuries sustained
by an employee . . . shall be the exclusive remedy against any officer,
agent or employee of the employer . . . and no action at law may be maintained
against an employer or against any officer, agent or employee of
the employer based upon any accident, injury or death of an employee.
Utah Code Ann. § 35-1-60
(1988) (emphasis added). The protection against suit provided by this section
extends to
any employee; there is no distinction between current
and former employees of the same employer on the same project. Under the
dissent, however, if an employee is negligent but his employment happens
to end before that negligence injures another employee, the injured employee
would be free to sue the negligent employee for tort damages. There is
no rational justification for allowing an injured employee in such a circumstance
to collect benefits under the Act and pursue common law damages while limiting
the remedy of other injured employees to workers' compensation. Moreover,
the dissent's proposed restriction on the scope of the exclusive remedy
provision is not contained in the provision's plain language.
¶22
Under the dissent's interpretation,
to protect themselves against liability, employees would need to purchase
liability insurance for their work on prior jobs despite the fact that
they were covered by workers' compensation insurance when they performed
that work. In addition, whenever workplace injuries occur, investigations
would be required to determine whether the injuries were caused by former
employees who could be sued and from whom the employer or its workers'
compensation carrier could seek indemnification. The legislature could
not have intended such results.
¶23
The dissent relies on section
35-1-62 for support. That provision, however, speaks nothing about immunity
against suit between co-employees. Rather, it states that an injured employee
may sue certain "third-party" entities, including "subcontractors, general
contractors, independent contractors, [and] property owners . . . not
occupying an employee-employer relationship with the injured or deceased
employee at the time of his injury or death." Utah Code Ann. § 35-1-62
(1988) (emphasis added). Green acted in none of these enumerated capacities;
as already discussed, he functioned as an employee of Holmes & Narver.
¶24
The dissent also mistakenly
relies on section 65.13 of Professor Larson's treatise on workers' compensation
law. That section states that in determining whether an employee is barred
from suing his or her employer, "[t]he controlling fact . . . is
the relationship of the parties at the time of occurrence of the injury."
6 Arthur Larson & Lex. A. Larson, Larson's Workers' Compensation
Law § 65.13, at 12-17 (1998). This section of the treatise and
the cases cited therein have nothing to do with immunity from suit between
co-employees; nevertheless, the dissent adds bracketed language to its
quotation of this section indicating otherwise. See infra
¶ 37. The error in this is that co-employee immunity is addressed
in a completely different part of the treatise in a manner that contradicts
the dissent's position. See id. §§ 72.00 to 72.34.
In reference to a typically worded exclusive remedy provision, equal in
scope to section 35-1-60 of the Utah Act, the treatise provides, "It is
now well established that the effect of this general type of clause is
to bar all suits against coemployees by injured employees." Id.
§ 72.21, at 14-146 (emphasis added). The treatise further states that
"immunity attaches to the coemployee only when the coemployee is acting
in the course of his employment." Id. § 72.23, at 14-154. Thus,
if the co-employee's injury-causing conduct occurred in the course of employment,
the co-employee is protected against suit. The cases cited in section 72.23
of the treatise uphold this principle. No distinction is made with regard
to whether the co-employee is still employed at the time of injury.
¶25
In any event, our determination
is governed by the statutes at issue, which also indicate that as long
as an employee's injury-causing conduct occurred in the course and scope
of employment, he or she is immune from suit by other employees. For instance,
in defining "third persons" subject to suit, section 35-1-62 states, "When
any injury or death . . . shall have been caused by the wrongful act or
neglect of a person other than an employer, officer, agent, or employee
of said employer, the injured employee . . . may [sue] such third person."
Utah Code Ann. § 35-1-62 (1988). This language focuses the inquiry
on whether the person who caused the injury was an officer, agent, or employee
at the time of his or her wrongful act or neglect. The clear implication
is that if a person engages in wrongful or neglectful conduct while as
an employee, then that person is not a "third person" whom the injured
employee may sue, regardless of when the injury occurs. Cf.Fields v.
Jantec, Inc., 857 P.2d 95, 99-100 (Or. 1993) (holding that employee
may not sue former employer based on alleged negligence that occurred during
employment relationship even though employee's injury did not occur until
after new employer took over business). Here, Green's alleged negligence
occurred while he was an employee of Holmes & Narver. Accordingly,
Manning cannot sue Green for his injuries.(9)
¶26
Because coverage is not
triggered under Utah Home Fire's liability insurance policy, we need not
consider the applicability of the policy's exclusions. The district court
correctly entered summary judgment in favor of Utah Home Fire.
¶27
Affirmed.
---
¶28
Chief Justice Howe, Associate
Chief Justice Durham, and Justice Zimmerman concur in Justice Russon's
opinion.
1. Utah Home Fire also contended that it did not have to defend or indemnify Green's wife, Carol L. Green dba C.B. Construction, to whom it had issued an identical insurance policy. Carol Green apparently assisted in installing the siding. Given their unity of interests, and for purposes of clarity, we will refer only to William Green and the insurance policy issued to him.
2. This section is now found at Utah Code Ann. § 34A-2-105 (1997).
3. This provision is now found at Utah Code Ann. § 34A-2-106(1) to -106(4) (1997).
4. This provision is now found at Utah Code Ann. § 34A-2-103(2)(a) (Supp. 1998).
5. This provision is now found at Utah Code Ann. § 34A-2-104(1)(b) (Supp. 1998).
6. This provision is now found at Utah Code Ann. § 34A-2-103 (1997).
7. In arguing that Green's work was not a part or process of Holmes & Narver's trade or business, Manning relies on the following provision in effect at the time of his injury: A portion of a construction project subcontracted to others may be considered a part or process in the trade or business of the general building contractor, only if the general building contractor, without regard to whether . . . it would need additional employees, would perform the work in the normal course of its trade or business. Utah Code Ann. § 35-1-42(6)(c) (Supp. 1992). Manning contends that Holmes & Narver did not install siding in the normal course of its business, but subcontracted such work to others as a matter of course. Manning's argument, however, is misguided. As explained herein, the right-to-control test determines whether a worker is an employee protected by the exclusive remedy provision.
8. The statutory standard of section 35-1-42(6)(a) is not the equivalent of the right-to-control test. Section 35-1-42(6)(a) expressly allows for employees of a subcontractor to be deemed employees of the person who hired the general contractor despite the fact that that person may not have retained or exercised any control over the subcontractor or its employees. Moreover, this court has explained that the "statutory employee" standard of section 35-1-42 cannot be equated with the common law right-to-control standard for distinguishing between employees and independent contractors. See Bennett, 726 P.2d at 431-32. An individual may be an "independent contractor" under the common law standard while at the same time qualifying as an employee for purposes of section 35-1-42(6)(a). See Pinter Constr. Co., 678 P.2d at 308. The "statutory employer provision is a legislatively created scheme by which conceded nonemployees are deliberately brought within the coverage of the [Act]." English v. Kienke, 848 P.2d 153, 158 (Utah 1993). To the extent the two standards can be compared, the level of control or supervision contemplated under section 35-1-42(6)(a) is less than the requisite degree of control to which one must be subject to qualify as an employee under the right-to-control test. SeeBennett, 726 P.2d at 432 (noting that "the term 'supervision or control' [under the statutory standard] requires only that the general contractor retain ultimate control over the project").
9. This case is clearly distinguishable from Riddle v. Mays, 780 P.2d 1252 (Utah 1989) (per curiam). Riddle held that pursuant to section 35-1-62, a direct employee of Owens-Corning was not precluded from bringing an action against an employee of a subcontractor of Owens-Corning. See id. at 1253. The situation here is significantly different: both Manning and Green were direct employees of Holmes & Narver. In relying on Riddle, the dissent draws no distinction between workers who are employees under the right-to-control test and workers who are "statutory employees." As explained fully herein, the two are not the same.
---
STEWART, Justice, dissenting:
¶29
I dissent.
¶30
The majority opinion flouts
the plain and controlling language of §§ 35-1-60(1)
and 35-1-62(2) of the Workers' Compensation
Act and misstates, and in effect overrules sub silentio, the holding of
Riddle
v. Mays, 780 P.2d 1252 (Utah 1989). The majority's view that it is
improper for the dissent to address the issue at hand is incorrect. The
issue has been raised, and it is our duty to address it, as I explain at
the end of this opinion.
¶31
The issue is whether Patrick
J. Manning, an injured employee of Holmes & Narver, Inc. (H&N),
has a common right of action against William R. Green, dba Green Services.
Green Services' public liability insurance carrier challenges Manning's
right to sue Green.
¶32
Green contracted to install
siding on a building for H&N but was discharged by H&N prior to
H&N's hiring of Manning. Green held itself out as an independent contractor
but, while working for H&N, was an employee and statutory employee
because H&N had far-reaching control of Green's conduct on the job,
as the majority states.(3) Manning was
never an employee of H&N at the same time that Green was an employee
(statutory or otherwise, it makes no difference) of H&N.
¶33
Manning was severely injured
while in the course and scope of his employment with H&N. He received
workers' compensation from H&N and then sued Green for negligence that
occurred prior to Manning's employment with H&N, and that allegedly
caused his injuries. At the time of Manning's accident, Green had no employment
relationship with H&N, either as an employee or as a statutory employee.
¶34
The majority opinion holds
that because Green Services had been an employee of H&N prior to the
time H&N hired Manning, Manning and Green were co-employees, although
they had never been employees of H&N at the same time, and therefore
Manning was barred under section 35-1-60 of the Act from suing Green.
¶35
Under the Act, an injured
employee is entitled to workers' compensation if he is injured by an accident
that
occurs in the scope and course of his employment. See
Utah Code Ann. § 35-1-45 (1988).(4)
If that test is met, it makes no difference whether the injury was caused
by the employer, a co-employee of the injured employee, or a third person.
Thus, "course and scope of employment" defines the applicability of the
Act as to both the right to compensation and the scope of the exclusive
remedy provision. Section 35-1-60 establishes the fundamental principle
that the "right to recover compensation . . . for injuries sustained
by an employee" in the course and scope of his employment by the employer
is the exclusive remedy "against the employer and shall be the exclusive
remedy against any officer, agent, or employee of the employer." (Emphasis
added.)
¶36
To reach the result the
majority does, it is necessary to add words to the statutory language in
section 35-1-60 that the Legislature did not employ. In effect the majority
adds the word "former" to the terms "employer," "officer," "agent," and
"employee," expanding the exclusive remedy provision far, far beyond what
the Legislature provided and even past rationality. To say that an employee
injured in the course and scope of his employment is a co-employee
of one who previously worked for the same employer is nonsense, especially
when the injured employee did not work for the employer at any time when
the prior employee worked for the employer and therefore was never a co-employee.
To say that an injured employee cannot sue at common law former employers
and former officers, agents, and employees constitutes a huge distortion
of the Act.
¶37
A corollary principle of
the right to compensation for an industrial accident is that all persons
sharing
the employment relationship at the time of the injury are immune from
a common law action for damages. Thus, for the purpose of determining the
employee's
right to compensation, and also for the purpose of determining an employee's
right to sue a third person for damages, the existence of the employment
relationship at the time the accident occurs determines both the employee's
right to compensation and the immunity of the employer and its officers,
agents, and employees from a common law action for the same accident. Professor
Larson states:
The controlling
fact in establishing exclusiveness [of the workers' compensation remedy]
is the relationship of the parties at the time of occurrence of the injury.
Their
relationship at other times, such as the time of the employer's [or co-employee's]
misconduct or the time of bringing the suit is immaterial.
6 Arthur Larson & Lex A.
Larson, Larson's Workers' Compensation Law § 65-13, at 12-17
(1998) (emphasis added). That is precisely what the following courts have
held: See Hall v. Auror Corp. of Ill., 89 A.D.2d 681, 454 N.Y.S.2d 39 (N.Y. App. Div. 1985);
Konken v. Oakland Farmer's Elevator
Co., 425 N.W.2d 302, 304-06 (Minn. Ct. App. 1988); Duvon v. Rockwell
Int'l, 807 P.2d 876, 878-79 (Wash. 1991) (en banc).
¶38
The majority opinion asserts
that I have misstated the content of Professor Larson's Treatise and have
erroneously referred to section 65.13 as support for the proposition that
the critical time for determining whether an injured employee can sue another
for damages is the time of the accident.
¶39
The majority's assertion
that I have misstated section 65.13 is simply wrong. To repeat the critical
language of section 65.13 at 12-17: "The controlling fact in establishing
exclusiveness [of the workers' compensation remedy] is the relationship
of the parties at the time of the occurrence of the injury."(5)
(Emphasis added.) Their relationship at other times "is immaterial." Id.
The majority states that this applies only with respect to determining
who an employer is. The above language simply does not say that. The caption
to section 63.13 states broadly: "Time of injury controls [the exclusivity]
defense." Furthermore, as a logical matter, if the time of injury controls
the determination of who is an employer, how can the time of injury not
control the determination of who is an employee? The same standard must
control both questions, and, as shown below, that is exactly what the Utah
Act provides.
¶40
The majority opinion, after
asserting erroneously that section 65.13 at 12-17 of Professor Larson's
treatise refers only to the determination of who an employer is,
then states that "[t]he error in this is that co-employee immunity is addressed
in a completely different part of the treatise in a manner that contradicts
the dissent's position. See id. §§ 72.00 to 72.34."
Supra
¶ 24. It is patently false to say, as the majority does, that those
sections contradict the dissent. Sections 72 to 72.34 do not address at
all the question of whether an injured employee may sue a prior employee
of the employer. That issue, as to when the necessary employment relationship
exists, is addressed, as stated above, in section 65.13.
¶41
Section 35-1-62 of the Utah
Act makes explicit that the time of the accident controls who is deemed
to be an employer and who is deemed to be an employee. The section states:
When any injury
or death for which compensation is payable under this title shall have
been caused by the wrongful act or neglect of a person other than an employer,
officer, agent, or employee of said employer, the injured employee . .
. may claim compensation and . . . may also have an action for damages
against such third person. . . . .
For the purposes of this section and notwithstanding the provisions of Section 35-1-42, the injured employee or his heirs or personal representative may also maintain an action for damages against subcontractors, general contractors, independent contractors, property owners or their lessees or assigns, not occupying an employer-employee relationship with the injured or deceased employee at the time of his injury or death. When any injury or death for which compensation is payable under this title shall have been caused by the wrongful act or neglect of a person other than an employer, officer, agent, or employee of said employer, the injured employee, or in case of death of his dependents may claim compensation and the injured employee or his heirs or personal representative may also have an action for damages against third persons. Utah Code Ann. § 35-1-62 (1988) (emphasis added).
¶42
Under section 35-1-62, Manning
"may claim compensation and . . . may also have an action for damages
against [a] third person" and may also "maintain an action . . .
against subcontractors, general contractors, independent contractors .
. . not occupying an employer-employee relationship with the injured
or deceased employee at the time of his injury or death." In short,
H&N did not have an "employer-employee relationship" with Green at
the time of Manning's injury. Green was a former employee at that time.
At the time of the injury, Green was both a third person and an independent
contractor. It follows that Manning has a statutory right to sue Green
for damages.
¶43
Much of the majority opinion
goes to great length to prove that Green was an employee of H&N. That
point is uncontested; but, although not critical in the above analysis
based on section 35-1-62, it is also true that Green was also a statutory
employee of H&N.
¶44
Riddle v. Mays, 780 P.2d 1252 (Utah 1989), also compels the conclusion that Manning may sue
Green under section 35-1-62. Riddle was an employee of Owens-Corning Fiberglass
Corp. The defendant Mays was employed by Mountain States Insulation Corp.,
a subcontractor of Owens-Corning. Riddle was injured by Mays. The trial
court dismissed Riddle's action for damages against Mays and Mountain States
on the ground that Riddle's exclusive remedy was workers' compensation
under section 35-1-60. Riddle appealed on the ground that only his direct
and actual employer, Owens-Corning, and its agents and employees were immune
from suit under section 35-1-60. On appeal, this Court accepted the trial
court's finding that Owens-Corning was the statutory employer of Mays and
held that under Pate v. Marathon Steel Co., 777 P.2d 428 (Utah 1989),
Riddle could recover damages under section 35-1-62 against a statutory
employee who was also an independent contractor for other purposes. That
is precisely the situation here--Green was a statutory employee, and perforce
an independent contractor.
¶45
The majority dismisses Riddle
by asserting that Mountain States Insulation Corp. was a subcontractor
of Owens-Corning; but that did not obviate the fact that Mountain States
was also a statutory employee of Owens-Corning. Accordingly, Mays could
sue Mountain States under section 35-1-62 even though Mays and Mountain
States were both employees of Owens-Corning. The majority maintains that
Green was an employee, but not a statutory employee, because the test for
determining an employee--the right to control--is more stringent than the
test for determining a statutory employer. The point is incorrect. An independent
contractor can clearly meet the right to control test and still be a statutory
employee, as occurred with respect to Green. See Lee v. Chevron
Oil Corp., 565 P.2d 1128 (Utah 1977).
¶46
Finally, it is not improper
for the Court to address the issues discussed in the dissent. Patrick Manning,
in his brief, asserts that he has a claim "against Green Services" which
is actionable "pursuant to section 35-1-62(4), Utah Code Annotated." Indeed,
Manning relies specifically on the statutory language set out above that
is found in section 35-1-62. Thus, raising these issues is entirely appropriate.
Even if Manning had not raised the issue, addressing it would still be
proper. An appellate court, in discharging its sworn duty to decide a case
on the merits of the substantive law, is obligated to address those issues
"'necessary to a proper decision.'"
Kaiserman Assocs., Inc. v. Francis
Town, 977 P.2d 462, 464 (Utah 1998) (quoting Falk v. Keene Corp.,
113 Wash. 2d 645, 659, 782 P.2d 974, 982 (1989)). Courts ought never to
decide a case on the basis of which attorney scores the most points in
the contest between the parties. The obligation of this Court runs to the
parties, not the attorneys. If the attorneys have failed to argue an issue
precisely as it might best be framed, it is for an appellate court, nevertheless,
to decide the issue correctly: "We should not be forced to ignore the law
just because the parties have not raised or pursued obvious arguments."
Id.
at 464.
---
1. This provision has been renumbered and is now found at Utah Code Ann. § 34A-2-105 (1997).
2. This provision has been renumbered and is now found at Utah Code Ann. § 34A-2-106(1) to -106(4) (1997).
3. The majority opinion rules that Green was an employee of H&N. In actuality, Green was a "statutory employee" of H&N. See Utah Code Ann. § 35-1-42; Lee v. Chevron Oil Co., 565 P.2d 1128 (Utah 1977). Whether "employee" or "statutory employee," however, Manning is not barred from suing Green under the exclusive remedy provision of section 35-1-60. While H&N controlled much of Green's on-job conduct, the contract with Green provided for a lump sum payment to Green and for Green to provide the necessary equipment to perform the job. To say that Green was an employee and a statutory employee with respect to H&N is fully consistent with Green's also being an independent contractor for other purposes. See, e.g., Bennett v. Industrial Comm'n, 726 P.2d 427 (Utah 1986); Lee v. Chevron Oil, 565 P.2d 1128 (Utah 1977).
4. This provision has been renumbered and is now found at Utah Code Ann. § 34A-2-401 (1997).
5. The next sentence in section 65.13 at 12-17 states that the time "of the employer's misconduct" is an example of factors that are irrelevant in establishing the exclusiveness of the compensation remedy. It is absurd to suggest, as the majority implicitly does, that the time for determining who is an employee under the Act is different from the time for determining who an employer is. Indeed, the terms "employer" and "employee" are reciprocal. One cannot exist without the other. Furthermore, the use of a "for instance" by Professor Larson does not limit the applicability of the general principle stated in section 65.13. It is plainly disingenuous to suggest otherwise.
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