National Union Fire Ins. v. Tri-State Iron and Metal

NATIONAL UNION FIRE INSURANCE v. TRI-STATE
IRON AND METAL

94-1435                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 5, 1996


1.   Workers' compensation -- dual-employment doctrine --
     conditions of liability. -- Where a general employer lends an
     employee to a special employer, the special employer becomes
     liable for workmen's compensation only if (a) the employee has
     made a contract for hire, express or implied, with the special
     employer; (b) the work being done is essentially that of the
     special employer; and (c) the special employer has the right
     to control the details of the work; when all three of the
     above conditions are satisfied in relation to both the general
     and special employers, both employers are liable for workers'
     compensation.

2.   Workers' compensation -- dual-employment doctrine -- no
     negligence liability for special employer under circumstances.
     -- Although both the general and the special employer could
     have been liable under the Workers' Compensation Act for the
     employee's on-the-job injuries, that did not occur under the
     circumstances of the present case, where there simply was no
     separate contract for hire between the employee and appellee,
     which did not have to share in paying the employee's workers'
     compensation benefits; additionally, nothing in the act
     reflected that its exclusivity provision was not applicable to
     appellee as a "special employer," since appellee might well
     have been liable for workers' compensation claims had the
     three conditions of dual-employment liability been met.

3.   Workers' compensation -- dual-employment doctrine -- special
     employer fell within exclusivity provision of Workers'
     Compensation Act -- neither a negligence nor contract action
     could be filed against appellee under circumstances. -- Where
     the supreme court held that appellee was a special employer
     and fell within the exclusivity provision of the Worker's
     Compensation Act, neither a negligence nor contract action
     could be filed against appellee by the employee or by
     appellant as a subrogee because the exclusivity provision made
     no exceptions for contract actions; the supreme court ruled,
     moreover, that appellant insurance company could not bring an
     action under Ark. Code Ann.  11-9-410(b) because that section
     only provided for a carrier liable for compensation to
     maintain an action in tort rather than contract and then only
     against a third party rather than an employer; finally, the
     supreme court ruled that appellant could not bring a contract
     action as subrogee of its insured because the insured never
     brought a contract action.


     Appeal from Miller Circuit Court; Jim Hudson, Judge; affirmed.
     Huckabay, Munson, Rowlett & Tilley, P.A., by: James E. Tilley
and Julia L. Busfield, for appellant.
     Smith, Stroud, McClerkin, Dunn & Nutter, by:  Nelson V. Shaw,
for appellee.

     Tom Glaze, Justice. *ADVREP4*






NATIONAL UNION FIRE INSURANCE,
                    APPELLANT,

V.

TRI-STATE IRON AND METAL,
                    APPELLEE.



94-1435

Opinion Delivered:  2-5-96

APPEAL FROM THE CIRCUIT COURT
OF MILLER COUNTY, ARKANSAS, NO.
CIV 94-39-4; HONORABLE JIM
HUDSON, CIRCUIT JUDGE 


AFFIRMED




                  TOM GLAZE, Associate Justice

     This case arose initially from a workers' compensation injury
claim by Victor Cox against his employer Express Temporary Services
(Express).  Express had assigned Cox as temporary contract help to
Tri-State Iron and Metal Company (Tri-State) to perform duties as
a tire stripper.  However, Cox was operating a forklift for Tri-
State when he was injured, so Express and its workers' compensation
insurance carrier, National Union Fire Insurance Company
(National), brought Tri-State into the action, alleging Tri-State
was the actual employer and liable for Cox's claim.  Eventually, an
administrative law judge and the Workers' Compensation Commission
held Express was Cox's general employer and therefore liable for
his workers' compensation claim.
     During the pendency of Cox's workers' compensation claim, he
filed a negligence suit against Tri-State in the Miller County
Circuit Court.  Because National had paid Cox over $20,000 in
workers' compensation benefits, it intervened in this action to
preserve its statutory lien rights under Ark. Code Ann.  11-9-410
(Supp. 1993).  Tri-State moved to dismiss this negligence action,
contending Cox's rights and remedies were exclusively covered under
the Workers' Compensation Act as provided under that act's
exclusivity statute, Ark. Code Ann.  11-9-105 (1987).  The circuit
court agreed with Tri-State and dismissed the negligence suit. 
Before the trial court's dismissal order was filed, National
amended its complaint-in-intervention, asserting Tri-State had
breached its contract with Express because Tri-State had worked Cox
as a forklift operator rather than a tire stripper.  Cox did not
join National's amended complaint which the trial court dismissed
as untimely, nor does he participate in National's appeal of the
trial court's rulings.
     National's primary point for reversal of the Miller County
Circuit Court's decisions is that the court erred in holding  11-
9-105, the exclusivity provision of the Workers' Compensation Act,
barred suit against Tri-State.  National argues that, under Ark.
Code Ann.  11-9-410 (Supp. 1993), the act does not affect the
right of an employee to bring an action against a third party who
is not an employer.  In sum, National submits that, because the
commission found Express to be Cox's employer for purposes of
paying his workers' compensation benefits, Tri-State was not an
employer within the meaning of the act's exclusivity provision, and
Tri-State was collaterally estopped from arguing it was in the
circuit court negligence action.
     The flaw in National's argument is the commission did not find
Tri-State was not an employer.  Instead, the commission found that
Tri-State was a "special employer," but under the facts of this
case, Tri-State was not liable for workers' compensation coverage. 
The commission analyzed Express's and Tri-State's status under the
dual employment doctrine, and in doing so relied on Daniels v.
Riley's Health and Fitness Centers, 310 Ark. 756, 840 S.W.2d 177
(1992), where this court stated the following:
          When a general employer lends an employee to a
     special employer, the special employer becomes liable for
     workmen's compensation only if 
          (a)  The employee has made a contract for hire,
     express or implied, with the special employer;
          (b)  The work being done is essentially that of the
     special employer, and
          (c)  The special employer has the right to control
     the details of the work.
     When all three of the above conditions are satisfied in
relation to both the general and special employers, both employers
are liable for workers' compensation.  See, 1B Larson, The Law of
Workmen's Compensation,  48.00 (1995).
     Obviously, in analyzing both Express's and Tri-State's status
under the Workers' Compensation dual employment doctrine, both very
well could have been liable under the act for Cox's on-the-job
injuries; however, that did not happen here.  There simply was no
separate contract for hire between Cox and his special employer,
Tri-State, so Tri-State did not have to share in paying Cox's
workers' compensation benefits.  Additionally, nothing in the act
reflects that its exclusivity provision is not applicable to Tri-
State as a "special employer," since Tri-State might well be liable
for workers' compensation claims if the three conditions in Daniels
are met.  See also Cash v. Carter, 312 Ark. 41, 847 S.W.2d 18
(1993) (implied contract found to meet first "contract for hire"
criteria of the dual employment doctrine).
     The present case is similar to Beaver v. Jacuzzi Brothers,
Inc., 454 F.2d 284 (8th Cir. 1972), and that case is helpful in
analyzing the factual situation.  There, Joyce Beaver worked for
Kelly Girl, Inc., a company whose business was supplying temporary
workers to other businesses.  While on temporary assignment to
Jacuzzi Brothers, Beaver slipped and fell, sustaining injuries. 
She claimed and received workers' compensation benefits from Kelly
Girl, but also filed a diversity, negligence action in federal
court against Jacuzzi Brothers.  The federal district court held
Beaver's sole remedy was under the Arkansas Workers' Compensation
Act.  Although the Eighth Circuit Court of Appeals never
specifically mentioned the dual employment doctrine by name, it
stated the following:
          As a matter of common experience and of present
     business practices in our economy, it is clear that an
     employee may be employed by more than one employer even
     while doing the same work.  Biggart v. Texas Eastern
     Transportation Corp., 235 So. 2d 443 (Miss. 1970).
          As Jacuzzi Brothers was an employer within the
     meaning of the statute, plaintiff's sole remedy is that
     provided by the Workers' Compensation Law.
     Although in Beaver, the court never discussed Jacuzzi Brothers
in terms of "special employer," other jurisdictions have.  For
example, the court in Thompson v. Grumann Aerospace Corp., 578 N.Y.S.2d 106 (Ct. App. 1991), considered a situation where the
plaintiff's general employer assigned plaintiff to work for
Grumann.  One year later, the plaintiff was injured while working
for Grumann.  The Beaver court ultimately held that the plaintiff's
receipt of workers' compensation benefits from his general employer
was his exclusive remedy and barred her bringing a negligence
action against special employer Grumann.  See also Sorenson v.
Colibri Corp., 650 A.2d 125 (R.I. 1994); Supp v. Erie Ins.
Exchange, 479 A.2d 1037 (Pa. Super. 1984). 
     In concluding the trial court correctly dismissed National's
negligence action against Tri-State as being barred by the Arkansas
Workers' Compensation Act, National's second argument must fail as
well.  In that argument, National urges the trial court erred in
dismissing its amended complaint below which alleged Tri-State had
breached its contract with Express since Tri-State used Cox as a
forklift operator, not a tire stripper.  Because we hold Tri-State
was a special employer and falls within the exclusivity provision
of the Worker's Compensation Act, neither a negligence nor contract
action can be filed against Tri-State by Cox or National as a
subrogee because the exclusivity provision makes no exceptions for
contract actions.  Gullett v. Brown, 307 Ark. 385, 820 S.W.2d 457
(1991).  Moreover, National may not bring an action under  11-9-
410(b) because that section only provides for a carrier liable for
compensation to maintain an action in tort, not contract, and then,
only against a third party, not an employer.  Finally, National may
not bring a contract action as subrogee of its insured, Express,
because Express never brought a contract action.
     Affirmed.
     JESSON, C.J., not participating.