Terrence A. Borneman v. Corwyn Transport, Ltd.

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SUPREME COURT OF WISCONSIN Case No.: 96-2511 Complete Title of Case: Terrence A. Borneman, as surviving spouse of Jason S. Borneman, deceased, Plaintiff-Appellant, v. Corwyn Transport, Ltd. and Great West Casualty Company Defendants-Respondents-Petitioners, Employers Insurance of Wausau, a mutual company, Defendant-Respondent. ON REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at: 212 Wis. 2d 25, 567 N.W.2d 887 (Ct. App. 1997-PUBLISHED) Opinion Filed: Submitted on Briefs: Oral Argument: Source of APPEAL COURT: COUNTY: JUDGE: June 25, 1998 March 3, 1998 Circuit Marathon Raymond Thums JUSTICES: Concurred: Dissented: Not Participating: ATTORNEYS: For the defendants-respondents-petitioners there were briefs by Jeffrey J. Strande and Terwilliger, Wakeen, Piehler & Conway, S.C., Wausau and oral argument by Jeffrey J. Strande. For the plaintiff-appellant there was a brief by Randy L. Frokjer and Ament, Wulf & Frokjer, S.C., Merrill and oral argument by Randy L. Frokjer. No. 96-2511 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 96-2511 STATE OF WISCONSIN : IN SUPREME COURT FILED Terrence A. Borneman, as surviving spouse of Jason S. Borneman, deceased, JUN 25, 1998 Plaintiff-Appellant, Marilyn L. Graves Clerk of Supreme Court Madison, WI v. Corwyn Transport, Ltd. and Great West Casualty Company Defendants-RespondentsPetitioners, Employers Insurance of Wausau, a mutual company, Defendant-Respondent. REVIEW of a decision of the Court of Appeals. ¶1 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE. Affirmed. This is a review of a published decision of the court of appeals, Borneman v. Corwyn Transp., Ltd., 212 Wis. 2d 25, 567 N.W.2d 887 (Ct. App. 1997). The court of appeals reversed a judgment of the Circuit Court for Marathon County, Raymond F. Thums, Judge. The circuit court granted the motion of Corwyn Transport, Ltd., for summary judgment and dismissed the complaint of Terrence A. Borneman, the plaintiff, for wrongful death as the surviving spouse of Jason S. Borneman. at the time and place of The circuit court concluded that the accident resulting in Jason Borneman's death, Monty Szydel was an employee loaned by Corwyn 1 No. 96-2511 Transport to Major Industries, Inc., making Szydel a co-employee of Jason Borneman, an employee of Major Industries. Therefore, the circuit court ruled that Wis. Stat. § 102.03 (1993-94), the exclusive remedy provision of the Worker's Compensation Act,1 precluded the plaintiff from recovering damages from Szydel and Szydel's general employer, Corwyn Transport. ¶2 The court of appeals reversed the judgment of the circuit court, concluding as a matter of law that no genuine issue of loaned material fact exists employee defense. circuit Transport court from to enter asserting to The support court summary the of appeals judgment loaned Corwyn Transport's directed precluding employee the Corwyn defense and remanded the cause to the circuit court for trial on the issue of Szydel's negligence. ¶3 The only issue before this court is whether Szydel, an employee of Corwyn Transport, became a loaned employee of Major Industries when he assisted employees of Major Industries in loading a flatbed trailer. If Szydel was a loaned employee of Major Industries at the time and place of the accident, then Jason Borneman and Szydel were co-employees of Major Industries and the plaintiff is precluded under Wis. Stat. § 102.03(2) from 1 Wisconsin Stat. § 102.03(2) (1993-94) provides in pertinent part that "the right to the recovery of compensation under this chapter shall be the exclusive remedy against the employer, any other employe of the same employer and the worker's compensation insurance carrier." All references to the Wisconsin Statutes are to the 1993-94 version unless otherwise indicated. 2 No. 96-2511 suing Szydel and Szydel's general employer, Corwyn Transport, for negligence. employee of Alternatively, Major Industries if at Szydel the time was not a and place loaned of the accident, then the plaintiff can pursue a wrongful death action against Corwyn Transport, Szydel's employer. ¶4 For the reasons set forth, we hold that Szydel was not a loaned employee of Major Industries at the time and place of the accident. Accordingly, we affirm the decision of the court of appeals. I ¶5 The relevant facts including those that are in dispute are set forth below. The material facts and the reasonable inferences therefrom necessary to a resolution of the loaned employee defense in this case are undisputed. ¶6 Corwyn Transport contracted with Major Industries to furnish a trailer truck to haul two loads for Major Industries from Marathon County, Wisconsin, to Georgia. Monty Szydel, a truck driver for Corwyn Transport, dropped off the trailer truck at Major Industries on Friday, September 24, 1994. The trailer was to be loaded by employees of Major Industries, and Szydel was to pick up the loaded trailer truck the following Monday morning. ¶7 Because of inclement weather, the loaded and ready for pickup on Monday morning. to pick up the trailer mid-morning on trailer was not Szydel was told Monday. When Szydel arrived at Major Industries sometime between 9:00 a.m. and 10:00 3 No. a.m. that morning, Major Industries had not yet 96-2511 loaded the trailer. ¶8 After Szydel's arrival, four Major Industries employees began to load the trailer in heavy mist conditions. Major Industries' employees. standard Although loading four Major procedure required employees Industries four were available, Szydel participated in the loading. ¶9 Szydel It is stated participate Corwyn that in services. unclear he the why helped load unsure was Szydel whether he loading process or the was simply trailer. asked offered to his Szydel was not compensated by Major Industries or Transport arrangement for existed helping between to load Major the trailer. Industries Transport for Szydel to help load the trailer. and No Corwyn Szydel's only obligation was to secure the load once it was placed on the trailer and to drive the truck delivering the load in the to its intended destination. ¶10 process. The parties dispute Szydel's role loading One employee of Major Industries claimed that Szydel was on top of the load immediately before it fell and that Szydel was in the best position to determine the stability of the load. According to another employee of Major Industries, Szydel had directed the Major Industries' foreman in the loading process, had made suggestions about how to position the aluminum boxes and trailer. had helped the foreman position the boxes on the Both Szydel and the foreman claim that Szydel did not 4 No. 96-2511 direct the sequence, method, manner or any other detail of the loading process. ¶11 The accident occurred around 1:00 p.m., when Borneman was placing the last box or two onto the load. Jason Part of the load weighing more than one ton fell on him, tragically causing his death. ¶12 On April 3, 1995, Jason Borneman's surviving spouse, Terrence Borneman, filed a wrongful death action against Corwyn Transport, alleging that Szydel negligently caused the death of Jason Borneman. ¶13 The circuit court granted Corwyn Transport's motion for summary judgment, concluding on the basis of the facts and reasonable inferences therefrom that as a matter of law Szydel was a loaned employee of Major Industries at the time and place of the accident. ¶14 The court of appeals reversed the judgment of the circuit court and remanded the cause to the circuit court with directions that the circuit court enter summary judgment precluding the loaned employee defense and set the matter for trial on the issue of Szydel's negligence. II ¶15 In reviewing a summary judgment, this court applies the same methodology as used by the circuit court, which is set forth in Wis. Stat. § 802.08(2). Ctr., 183 Wis. 2d 667, 672, 515 See Jeske v. Mount Sinai Med. N.W.2d 705 (1994). Under § 802.08(2), summary judgment must be entered "if the pleadings, depositions, answers to interrogatories, and admissions on file, 5 No. 96-2511 together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." ¶16 Although there are numerous facts in dispute in this case, all the material facts necessary to a resolution of the loaned employee defense are undisputed. When the material facts are undisputed, the determination of whether an employee is a loaned employee is a question of law which this court determines independent of the circuit court benefiting from their analyses. and the court of appeals, See Bauernfeind v. Zell, 190 Wis. 2d 701, 714, 528 N.W.2d 1 (1995) (citing Gansch v. Nekoosa Papers, Inc., 158 Wis. 2d 743, 753, 463 N.W.2d 682 (1990)). III ¶17 We begin with a regarding loaned employees. brief summary of Wisconsin law It is well settled that an employee of one employer (sometimes referred to as the general employer) may under certain circumstances become the employee of another employer (sometimes referred to as the borrowing employer or special employer). ¶18 The rationale of the loaned employee doctrine as it relates to worker's compensation is that an employee who is on loan to a borrowing employer becomes a loaned employee of the borrowing employer and should, for worker's compensation purposes, be treated as an employee of the borrowing employer. The loaned compromises Act. employee doctrine and policies is underlying one the way promoting Worker's See Bauernfeind, 190 Wis. 2d at 713-14. 6 of the Compensation No. ¶19 Over the years the court has decided 96-2511 many cases involving the application of the loaned employee doctrine. The test to determine whether an employee remains in the employ of the general employer or becomes the loaned employee of the borrowing employer was first set forth 67 years ago in Seaman Body Corp. v. Industrial Comm'n, 204 Wis. 157, 163, 235 N.W. 433 (1931). The Seaman loaned employee test has two aspects: three elements and four vital questions as follows: The relation of employer and employee exists as between a special employer to whom an employee is loaned whenever the following facts concur: (a) Consent on the part of the employee to work for a special employer; (b) Actual entry by the employee upon the work of and for the special employer pursuant to an express or implied contract so to do; (c) Power of the special employer to control the details of the work to be performed and to determine how the work shall be done and whether it shall stop or continue. The vital questions in controversies of this kind are: (1) Did the employee actually or impliedly consent to work for a special employer? (2) Whose was the work he was performing at the time of injury? (3) Whose was the right to control the details of the work being performed? (4) For whose benefit primarily was the work being done? Seaman, 204 Wis. at 163. ¶20 Although the two aspects of the Seaman test are, as the court of appeals decision recognized, closely related, most of the cases interpreting emphasized the four vital and applying questions the Seaman rather than test the have three elements. ¶21 The Seaman test is often difficult to apply to determine whether Employer A's employee who gives some temporary 7 No. help to Employer B becomes B's loaned employee. See Braun v. Jewett, 1 Wis. 2d 531, 536, 85 N.W.2d 364 (1957). cases are difficult "fact-oriented." ¶22 Over to fit together because 96-2511 the The prior test is so Gansch, 158 Wis. 2d at 750. the years this court has acknowledged the deficiencies of the Seaman test as well as the confusing and sometimes conflicting case law interpreting and applying it.2 On more than one occasion the court has expressed dissatisfaction with the application of the Seaman test, declaring that "this court, as well as others, has found the question of the 'loaned employee' troublesome. The definition and factual essentials necessary the to establish legal relationship of the loaned employee are not uniform in all the reported cases, nor is the same emphasis always to the necessary elements." Wis. 2d at 751. Gansch, 158 Although the test is "readily comprehensible, when applied to specific factual situations, the distinctions are sometimes slight and the decisions well-nigh 2 The following decisions have recognized the confusion and conflict in the case law applying the Seaman test. See, e.g., Meka v. Falk Corp., 102 Wis. 2d 148, 158 n.13, 306 N.W.2d 65 (1981); DePratt v. Sergio, 102 Wis. 2d 141, 145, 306 N.W.2d 62 (1981); Huckstorf v. Vince L. Schneider Enter., 41 Wis. 2d 45, 49, 163 N.W.2d 190 (1968); Braun v. Jewett, 1 Wis. 2d 531, 536, 85 N.W.2d 364 (1957); Rhinelander Paper Co. v. Industrial Comm'n, 206 Wis. 215, 217, 239 N.W. 412 (1931). Commentators also note that the law of loaned employees is confusing and conflicting. See J. Dennis Hynes, Chaos and the Law of Borrowed Servant: An Argument for Consistency, 14 J. L. & Com. 1 (1994); Jack B. Hood, Benjamin A. Hardy, Jr. & Harold S. Lewis, Jr., Workers' Compensation and Employee Protection Laws in a Nutshell 45 (2d ed. 1990). 8 No. irreconcilable." 96-2511 Freeman v. Krause Milling Co., 43 Wis. 2d 392, 394, 168 N.W.2d 599 (1969). ¶23 Despite the difficulties in applying the Seaman test, neither courts nor commentators have devised a better one, and this court has declined to revise the Seaman test.3 ¶24 In this case Corwyn Transport attacks the court of appeals decision on two grounds: (1) that the court of appeals decision incorrectly applied the Seaman test; and (2) that the court of appeals decision significantly modified the Seaman test. ¶25 First, Corwyn Transport asserts that the court of appeals incorrectly applied the Seaman test by emphasizing the three-elements aspect of the test rather than the four vital questions. We disagree with Corwyn Transport's reading of the court of appeals decision. Although many of the loaned employee cases four refer specifically test, the questions only to discuss cases are the the questions three-elements implicitly intended vital to recognize facilitate aspect that and of not of the Seaman four the analysis do vital the three- elements aspect of the Seaman test. ¶26 In this case the court of appeals started with the three-elements aspect of the Seaman test and then used the four vital questions to analyze the three elements. The court of appeals suggested courts should "use the three-element test of 3 See DePratt, 102 Wis. 2d at 146-47; Freeman v. Krause Milling Co., 43 Wis. 2d 392, 394 n.2, 168 N.W.2d 599 (1969). 9 No. 96-2511 Seaman as it was originally stated, with a focus on whether a special employment contract has been created, considering not only the 'vital questions' of Seaman in the inquiry, but all queries and determination." inferences Borneman, that 212 assist Wis. 2d in at 34. making Although that the court of appeals' statement of the Seaman test does not use the same language used in prior cases, its summary of the Seaman test is consistent with the application of the Seaman test in prior cases. ¶27 "whether The court of appeals in the present case focused on a new employment contract employee and the borrowing employer. 33. was created" between the Borneman, 212 Wis. 2d at The court of appeals restates the reasoning of prior cases in which this court has declared that the consent of an employee to enter into a new employment relationship with a borrowing employer is the most critical inquiry in the Seaman test.4 4 The court has stated the importance of this inquiry as follows: In compensation law, the spotlight must now be turned upon the employee, for the first question of all is: Did he make a contract of hire with the special employer? If this question cannot be answered "yes," the investigation is closed, and there is no need to go on into the tests of relative control and the like. 3 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law, § 48.12, at 8-440 (cited by Ryan, Inc. v. ILHR Dep't, 39 Wis. 2d 646, 650-51, 159 N.W.2d 594 (1968); Skornia v. Highway Pavers, Inc., 39 Wis. 2d 293, 299, 159 N.W.2d 76 (1968); Springfield Lumber, Feed & Fuel Co. v. Industrial Comm'n, 10 Wis. 2d 405, 410, 102 N.W.2d 754 (1960)). 10 No. ¶28 96-2511 The court has often stated that an employee cannot become a loaned employee of a borrowing employer without the employee's consent.5 prior cases, a The court of appeals recognized, as have presumption that employ of the general employer. an employee remains in the See Ryan, Inc. v. ILHR Dep't, 39 Wis. 2d 646, 650, 159 N.W.2d 594 (1968); Skornia v. Highway Pavers, Inc., 39 Wis. 2d 293, 299-300, 159 N.W.2d 76 (1968) (quoting with approval Restatement (Second) of Agency § 227 cmt. b (1958)).6 ¶29 The essence of the Seaman test, therefore, lies in determining whether an employee consented to leave his or her general employment and to enter into a new employer-employee relationship, if only of a temporary nature. See Escher v. ILHR Dep't, 39 Wis. 2d 527, 533, 159 N.W.2d 715 (1968). Emphasizing the consent of the employee acknowledges that the employee loses See also Meka, 102 Wis. 2d at 152-53; Nelson v. L. & J. Press Corp., 65 Wis. 2d 770, 779 n.7, 223 N.W.2d 607 (1974); Escher v. ILHR Dep't, 39 Wis. 2d 527, 533, 159 N.W.2d 715 (1968). 5 See Skornia, 39 Wis. 2d at 298; Rhinelander, 206 Wis. at 217. 6 Restatement (Second) of Agency § 227 cmt. b, at 501 (1958) states: b. Inference that original service continues. In the absence of evidence to the contrary, there is an inference that the actor remains in his general employment so long as, by the service rendered another, he is performing the business entrusted to him by the general employer. There is no inference that because the general employer has permitted a division of control, he has surrendered it. 11 No. 96-2511 and gains rights when a new employment relationship is forged.7 The distinction between the mere consent of an employee to perform certain acts for a borrowing employer and the employee's consent to enter into a new employment relationship with the borrowing employer is important.8 ¶30 We conclude that the three elements and the four vital questions related, court of of the Seaman as the court appeals of properly test are appeals focused intertwined opinion its and closely demonstrates. principal inquiry The on whether Szydel, an employee of Corwyn Transport, consented to a new employee-employer relationship with Major Industries. ¶31 Corwyn Transport's second challenge to the decision of the court of appeals is that the decision significantly modified the Seaman contract employer. test between by adding the a new general requirement employer and of the a "formal" borrowing According to Corwyn Transport, the court of appeals has ruled that in the absence of a formal arrangement between the two employers, the employee will always remain the employee of the general employer. Corwyn Transport contends that this modification of the Seaman test conflicts with the traditional rationale for the loaned employee doctrine, which is to address 7 See Meka, 102 Wis. 2d at 152-53 n.9; 3 Arthur Larson & Lex L. Larson, Larson's Workers' Compensation Law, § 48.12, at 8-440 (1991). 8 See Escher, 39 Wis. 2d at 533; Elmer H. Blair, Workmen's Compensation, § 5.07, at 5-22 (1974). 12 No. 96-2511 employment arrangements established between employers on an ad hoc basis to meet problems that arise during the work day. ¶32 We conclude that Corwyn Transport mischaracterizes the court of appeals decision. We do not read the decision of the court of appeals as establishing a new requirement of a "formal" contract between employer. the general employer and the borrowing The word "formal" is found nowhere in the court of appeals decision. Rather the court of appeals considered the existence of an express or implied agreement, or lack thereof, between Corwyn Transport and Major Industries as a factor bearing on the issue of whether Szydel consented to work for Major Industries. working "Knowledge of the two employers [about the arrangement] certainly has a bearing on the establishment of any new, temporary contractual relationship." Borneman, 212 Wis. 2d at 36. ¶33 The court of appeals did not rewrite the Seaman test but rather properly applied a factor that Wisconsin courts have long considered in determining whether an employee consented to work for loaned a borrowing employer. employees some In arrangement previous or cases understanding involving existed between the two employers about the work to be performed by the employee for the borrowing employer. In determining the status of an employee, the court has considered the arrangement between the two employers.9 9 See, e.g., Springfield, 10 Wis. 2d at Wis. 2d at 538; Rhinelander, 206 Wis. at 217. 13 412; Braun, 1 No. ¶34 96-2511 We conclude, as did the court of appeals, that the existence of an arrangement or understanding between a general employer and a borrowing employer is relevant to the issue of an employee's consent to enter into a new employment relationship with the borrowing employer. ¶35 In the case at bar the two employers did not have a prior arrangement or understanding to loan Szydel or any other employee to Major Industries to load the trailer. Szydel's job as truck driver did not require him to help load the trailer. He was not compensated by either employer for helping to load the trailer. Szydel was paid only for delivery of the load to the intended destination. ¶36 Furthermore, Szydel's help in the loading process was not needed. It was standard practice for Major Industries to use four employees to load a trailer, and in this case Major Industries had four employees on site to load the trailer. If the employee was instructed by the general employer to perform some work for the borrowing employer and, in so doing, the employee carried out the general employer's orders, no new employment relationship was created. See Rhinelander, 206 Wis. at 217. Consent cannot be inferred merely by the fact that the employee obeyed the commands of the general employer in entering the services of the borrowing employer. See Bauernfeind v. Zell, 190 Wis. 2d 701, 715, 528 N.W.2d 1 (1995) (citing Rhinelander, 206 Wis. at 218). "While the employee may be subject to the direction of the temporary master, he is there in obedience to the command of his employer, and in doing what the new master directs him to do he is performing his duty to the employer who gave the order." Rhinelander, 206 Wis. at 217. See also Springfield, 10 Wis. 2d at 412; Restatement (Second) of Agency § 227 cmt. d, at 503 (1958). 14 No. 96-2511 Szydel's only obligation with respect to the load was to secure and deliver it to the intended destination. ¶37 It is one thing for Szydel to have assisted the employees of Major Industries with loading the trailer and an entirely different matter for Szydel to have consented to enter into an employment relationship with Major Industries. The record does not support an inference that Szydel consented to employment with Major Industries for purposes of loading the trailer. Szydel's cooperation with the employees of Major Industries in the loading process was not sufficient to rebut the presumption that Szydel remained in the employ of Corwyn Transport. ¶38 dispute We agree with the court of appeals that the factual about Szydel's role in the loading process does not present a genuine issue of material fact for purposes of this summary judgment and is insufficient Transport's loaned employee defense. to support Corwyn We conclude as a matter of law that Szydel did not consent to establish employment with Major Industries immediately before the fatal accident. ¶39 Because we conclude that Szydel did not consent to enter a new employment relationship, we need not, and do not, address the other elements or vital questions of the Seaman test. ¶40 employee In conclusion, we hold that Szydel was not a loaned of Major Industries at the time accident resulting in Jason Borneman's death. and place of the For the foregoing reasons we affirm the decision of the court of appeals which 15 No. 96-2511 remanded the cause to the circuit court for trial on the issue of Szydel's negligence. By the Court. The decision affirmed. 16 of the court of appeals is 1

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