Cherry v. Tanda, Inc.

Howard CHERRY v. TANDA, INC., and
Transcontinental Insurance Co.

96-1229                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                Opinion delivered March 17, 1997


1.   Workers' compensation -- tort immunity -- immunity under
     statute extends to insurance carrier. -- According to the
     Workers' Compensation Act, an employee's remedy against his
     employer for injuries sustained on the job is to file a claim
     with the Workers' Compensation Commission; the employer's tort
     immunity under the exclusive-remedy provision, Ark. Code Ann.
      11-9-105(a) (Supp. 1995), extends to the employer's
     insurance carrier.       

2.   Workers' compensation -- exception to exclusivity provision --
     indemnitee may enforce express indemnity agreement against
     employer. -- There is an exception to the exclusivity
     provision of the Workers' Compensation Act for the enforcement
     of indemnity contracts such that an indemnitee to an express
     indemnity contract may seek indemnity from an employer who 
     has already paid the injured employee full workers'
     compensation benefits.  

3.   Workers' compensation -- indemnity exception -- expanded to
     situations where employer's indemnity obligation is implied by
     law. -- The "indemnity exception" has been expanded to
     situations where the employer's indemnity obligation is
     implied by law and is not part of an express contract; in such
     a situation, the indemnitees are permitted to sue the
     employers for reimbursement of damages they paid to the
     injured employees; the indemnitees are allowed to sue on the
     indemnity contract, and not in tort, and thus their claims are
     not barred by the exclusive-remedy provision found at Ark.
     Code Ann.  11-9-105 (Supp. 1995).

4.   Workers' compensation -- when implied-indemnity agreement will
     arise -- no such obligation arises under a sales contract. --
     An implied-indemnity agreement will only arise when there is
     a special relationship carrying with it the obligation to
     indemnify; no such "special relationship" exists between
     parties to a mere sales contract, thus there can be no implied
     obligation for indemnity; when the relation between the
     parties involves no contract or special relation capable of
     carrying with it an implied obligation to indemnify, the basic
     exclusiveness rule generally cannot be defeated by dressing
     the remedy itself in contractual clothes, such as indemnity.

5.   Contracts -- presumption that parties contract only for
     themselves -- when contract is actionable by third parties. -- 
     There is a presumption that parties contract only for
     themselves, and a contract will not be construed as having
     been made for the benefit of third parties unless it clearly
     appears that such was the intention of the parties; however,
     a contract is actionable by a third party where there is
     substantial evidence of a clear intention to benefit that
     third party; it is not necessary that the person be named in
     the contract if he is a member of a class of persons
     sufficiently described or designated in the contract.  

6.   Contracts -- when indemnitor's obligation to reimburse against
     loss generally becomes due -- there can be no third-party
     beneficiary to an indemnity contract. -- As a general
     proposition, an indemnitor's obligation to reimburse against
     loss does not become due until after the indemnitee has paid
     damages to a third party; once the indemnitee has made such
     patments, the third party's claim will have been satisifed;
     therefore, there can be no third-party beneficiary to an
     indemnitee contract.

7.   Workers' compensation -- appellee's liability did not arise
     until city sustained loss -- appellant not an intended third-
     party beneficiary to contract -- suit in tort barred by
     exclusivity provision. --  Where appellee's liability under
     its indemnity contract with the city did not arise until the
     city sustained a loss or expense, the city's payment of
     damages resulted in satisfaction of the third party's claim;
     appellant was merely an incidental, and not intended, third-
     party beneficiary to the indemnity contract.

8.   Workers' compensation -- appellant suing appellee in tort --
     exclusivity provision barred his action. -- Because appellant
     was suing appellee in tort, and no on the indemnity contract,
     the exclusivity provision of the Workers' Compensation Act
     barred his action against his employer; the employer could not
     be held liable indirectly in an amount that could not be
     recovered directly, for this would run counter to one of the
     fundamental purposes of the compensation law.

9.   Contracts -- appellee was not in business of insurance --
     appellant could not maintain direct action against appellee as
     insurer of city. -- Appellant's argument that the City of Fort
     Smith obtained "insurance" by executing the agreement whereby
     appellee agreed to indemnify the city and obtain insurance to
     cover this indemnity responsibility was without merit; an
     insurer is "every person engaged as indemnitor, surety, or
     contractor in the business of entering into contracts of
     insurance"; it was clear that appellee was "in the business"
     of construction, not insurance, and the indemnification
     agreement was a mere incidental obligation of its contractual
     relationship with the city as a contractor; appellee was not
     "in the business of entering into contracts of insurance" as
     required by statute, and, thus, appellant could not maintain
     a direct action under Ark. Code Ann.  23-79-210 against
     appellee as an insurer of an immune entity.

10.  Insurance -- insurance defined -- three factors considered to
     determine whether particular agreement fits definition. --
     Insurance is any agreement, contract, or other transaction
     whereby one party, the "insurer," is obligated to confer
     benefit of pecuniary value upon another party, the "insured"
     or "beneficiary," dependent upon the happening of a fortuitous
     event in which the insured or beneficiary has, or is expected
     to have at the time of such happening, a material interest
     that will be adversely affected by the happening of such
     event; Ark. Code Ann.  23-60-102 (Repl. 1994); in deciding
     whether a particular agreement fits this definition, the
     appellate court looks to the following three factors:  (1)
     whether the plan is mandatory; (2) whether a profit motive
     exists in offering the plan; and (3) whether the plan is
     intended to be actuarially sound. 

11.  Contracts -- parties never intended appellee to be city's
     insurer -- indemnity agreement not insurance contract. --
     Where appellee was not receiving money in exchange for its
     promise to indemnify, nor was the plan actuarially sound, and
     where, in the construction contract, the city agreed to obtain
     its own liability and property insurance, it was clear that
     the parties never intended appellee to be the "insurer" of the
     city; the indemnity agreement was not an insurance contract,
     and thus appellant was not entitled to maintain a direct
     action against appellee as an "insurer" of the city.

12.  Workers' compensation -- action barred under exclusive-remedy
     provision -- appellant not entitled to sue appellee for
     alleged breach of contractual duty to supply safe place to
     work. -- Appellant's assertion that it was suing appellee for
     its implied contractual duty to supply a safe place to work
     was without merit; the argument was clearly contrary to the
     plain meaning of the exclusive-remedy provision, which
     unequivocally states that the rights and remedies granted to
     an employee, on account of injury or death, are exclusive of
     all other rights and remedies of the employee; Ark. Code Ann.
      11-9-105(a) (Supp. 1995); appellant's action was barred
     under the exclusive-remedy provision.  

13.  Workers' compensation -- protection of exclusive-remedy
     provision never waived -- trial court's dismissal of
     appellant's lawsuit against appellee affirmed. --   
     Appellant's argument that appellee waived the protection of
     the exclusive-remedy provision when it agreed to a particular
     clause in the construction contract was without merit where 
     appellant misconstrued the common-sense meaning of the
     contract; the clause related to the amount of liability to the
     city, and not to an employee; in no way did the provision
     relate to or affect appellee's obligations to its employees;
     the trial court's dismissal of appellant's lawsuit against
     appellee was affirmed. 

14.  Insurance -- direct-action statute -- necessary elements. --
     In order for the direct-action statute to apply the following
     elements must exist: (1) the liability insurance must be
     carried by a nonprofit corporation; (2) a person must suffer
     injury or damage on account of negligence or wrongful conduct;
     and (3) the damage or injury must be on account of the
     negligence or wrongful conduct of "servants, agents, or
    employees" of the nonprofit corporation acting within the
    scope of their agency or employment. 

14.  Insurance -- insurance contract not carried by immune city --
     first necessary element not met. -- Where the insurance
     contract was "carried by" appellee, not the immune city,
     appellant failed to establish the first element of the
     statute; appellant's attempt to circumvent the immunity
     provision by directly suing an insurance company for acts done
     by an entity other than the named insured was rejected.

15.  Workers' compensation -- Workers' Compensation Act given
     priority as exclusive remedy -- appellant court not maintain
     direct action against appellee's insurer. -- Appellant's
     argument that pursuant to Ark. Code Ann.  23-79-210 (Repl.
     1992), it could directly sue the appellee's insurer because
     the exclusive-remedy provision found at Ark. Code Ann.  11-9-
     105 (Supp. 1995) made appellee "immune" from tort liability
     was without merit; other statutes must yield to the Workers'
     Compensation Act because it is in the interest of the public
     policy to give that act priority as an exclusive remedy; the
     exclusive-remedy provision also applied to insulate the
     employer's insurance carrier from tort liability; hence,
     appellant could not maintain a direct action against the
     appellee's insurance carrier.


     Appeal from Sebastian Circuit Court, Fort Smith District;
Floyd "Pete" Rogers, Judge; affirmed.
     R. Theodore Stricker, for appellant.
     Jones, Jackson & Moll, PLC, by:  J. Scott Hardin, for
appellees.

     Annabelle Clinton Imber, Justice.
     Howard Cherry, as administrator of David H. Cherry's estate,
appeals the dismissal of his wrongful death action against the
decedent's former employer, Tanda, Inc., and the employer's
insurance carrier, Transcontinental Insurance Co.  We affirm.
     On June 22, 1993, the City of Fort Smith ("City") entered into
a contract with Tanda, Inc. ("Tanda"), for the construction of a
sanitary landfill.  As part of the contract, Tanda agreed to
indemnify the City for all claims and damages for injuries or
deaths arising out of the performance of the contract.  In
addition, Tanda agreed to carry general liability insurance which
it subsequently obtained from Transcontinental Insurance Company
("Transcontinental").
     On September 13, 1993, the walls of the excavation site
collapsed causing the death of David H. Cherry.  On November 30,
1996, Howard Cherry, as administrator of David Cherry's estate,
filed in the Sebastian County Circuit Court a wrongful death action
against Tanda and Transcontinental.
     Tanda filed a Rule 12(b)(6) motion to dismiss in which it
alleged that the exclusive-remedy provision of the Workers'
Compensation Act, Ark. Code Ann.  11-9-105 (Supp. 1995), immunized
Tanda from Cherry's tort action.  Likewise, Transcontinental filed
a motion for summary judgment in which it claimed that Tanda, not
the City of Fort Smith, was the insured, and thus the estate could
not maintain a direct action against the insurance carrier pursuant
to Ark. Code Ann.  23-79-210 (Repl. 1992).  The trial court
granted both motions and Cherry appeals.
          I.  Immunity of Employer From Suit Under the
          Exclusive Remedy Provision of Ark. Code Ann.
                      11-9-105  (Supp. 1995)
     Cherry's first point on appeal is that the trial court erred
when it dismissed Cherry's complaint against Tanda on the grounds
of the "exclusive remedy" provision of Ark. Code Ann.  11-9-105
(Supp. 1995) of the Workers' Compensation Act.  According to the
Workers' Compensation Act, an employee's remedy against his or
her employer for injuries sustained while on the job is to file a
claim with the Workers' Compensation Commission.  Specifically,
the statute declares that:
          The rights and remedies granted to an employee
     subject to the provisions of this chapter, on account
     of injury or death, shall be exclusive of all other
     rights and remedies of the employee, his legal
     representative, dependents, next of kin, or anyone
     otherwise entitled to recover damages from the
     employer...on account of the injury or death, and the
     negligent acts of a coemployee shall not be imputed to
     the employer.  No role, capacity, or persona of any
     employer...other than that existing in the role of
     employer of the employee shall be relevant for
     consideration for purposes of this chapter, and the
     rights and remedies provided by this chapter shall in
     fact be exclusive regardless of the multiple roles,
     capacities, or personas the employer may be deemed to
     have.
Ark. Code Ann.  11-9-105(a) (Supp. 1995) (emphasis added).    
Moreover, the employer's tort immunity under this provision
extends to the employer's insurance carrier.  Burkett v. PPG
Indus., Inc., 294 Ark. 50, 740 S.W.2d 621 (1987).      
     Cherry attempts to circumvent the immunity created by Ark.
Code Ann.  11-9-105(a) by asserting that his lawsuit sounds in
contract, and not tort, and thus is not barred by this statutory
provision.  
     A. Third-Party Beneficiary to the Express Indemnity
     Agreement.
     As mentioned above, Tanda contractually agreed to indemnify
the City for any injuries or damages resulting from the
construction of the landfill.  The relevant contract provisions
provide that:
          6.30.  To the fullest extent permitted by Laws and
     Regulations, CONTRACTOR [Tanda] shall indemnify and
     hold harmless OWNER [City of Fort Smith] and ENGINEER
     and their consultants, agents and employees from and
     against all claims, damages, losses and expenses,
     direct, indirect or consequential...arising out of or
     resulting from the performance of the Work, provided
     that any such claim, damage, loss or expense (a) is
     attributable to bodily injury, sickness, disease or
     death...and (b) is caused in whole or in part by any
     negligent act or omission of CONTRACTOR, and
     subcontractor, any persons or organization directly or
     indirectly employed by any of them to perform or
     furnish any of the Work...regardless of whether or not
     it is caused in part by a party indemnified hereunder
     or arises by or is imposed by Law and Regulations
     regardless of the negligence of any such party.

          6.31.  In any and all claims against OWNER or
     ENGINEER...by any employee of CONTRACTOR...the
     indemnification obligation under paragraph 6.30 shall
     not be limited in any way by any limitation on the
     amount or type of damages, compensation or benefits
     payable by or for CONTRACTOR...under workers' or
     workmen's compensation acts, disability benefit acts or
     other employee benefit acts. 
For his first argument on appeal, Cherry alleges that he was a
third-party beneficiary to this indemnity agreement, and thus, he
may sue Tanda for enforcement of this contract without running
afoul of Ark. Code Ann.  11-9-105 (Supp. 1995).  
     Tanda is correct that this court recognized in C & L Rural
Elec. Coop. Corp. v. Kincaid, 221 Ark. 450, 256 S.W.2d 337
(1953), an exception to the exclusivity provision of the Workers'
Compensation Act for the enforcement of indemnity contracts. In C
& L, a contractor entered into an express indemnity agreement
with the site owner before beginning construction.  Id.  During
the performance of the contract, one of the contractor's
employees was injured. Id.  The employee received workers'
compensation benefits from the employer/contractor and then sued
the site owner for damages.  Id.  The site owner paid the injured
employee, and then sued the contractor for reimbursement under
the indemnification agreement. Id.  The employer asserted that
Ark. Code Ann.  11-9-105 provided the exclusive remedy for both
the employee and "anyone otherwise entitled to recover damages
from the employer" which in this case was the site owner.  Id. 
     This court rejected the employer's contention, and found
that the exclusive remedy provision did not apply because "the
present suit is one on an indemnity contract and not an action in
tort." Id.  Hence, according to C & L, an indemnitee may enforce
an express indemnity agreement against an employer even though
the employer has already paid the injured employee full workers'
compensation benefits, and such is not a violation of the
exclusivity provision contained in the Workers' Compensation Act. 
See also, Nabholtz Const. Co. v.  Graham, 319 Ark. 396, 892 S.W.2d 456 (1995) (reaching the same result without addressing
the exclusivity provision).
     Likewise, this court has expanded this "indemnity exception"
to situations where the employer's indemnity obligation is
implied by law, and not part of an express contract. Smith v.
Paragould Light & Water Comm'n, 303 Ark. 109, 793 S.W.2d 341
(1990); Oaklawn Jockey Club, Inc. v. Pickens-Bond Const. Co., 251
Ark. 1100, 477 S.W.2d 477 (1972).  In Oaklawn, this court found
an implied indemnity contract existed between the site owner and
the employer/contractor because the service contract implied a
duty on the employer/contractor to perform the work with care and
to indemnify the site owner for damages flowing from the breach
of that obligation.  Oaklawn, supra.  Likewise, in Smith, this
court held that a duty imposed on the city/employer by a
statutory provision carried with it an implied promise that the
city/employer would indemnify another who might be held liable
for its failure to properly discharge that duty. Smith, supra. 
     Because this court found the existence of implied indemnity
agreements in both Oaklawn and Smith, the indemnitees were
permitted to sue the employers for reimbursement of damages they
paid to the injured employees.  As with express indemnity
agreements, in both cases the court found that the indemnitees
were suing on the indemnity contracts, and not in tort, and thus
their claims were not barred by the exclusive-remedy provision
found at Ark. Code Ann.  11-9-105 (Supp. 1995).
     Recently, however, this court declined to find the existence
of an implied indemnity agreement in Mosely Mach. Co. v. Gray
Supply Co., 310 Ark. 214, 833 S.W.2d 772 (1992).  In Mosley, this
court explained that an implied indemnity agreement will only
arise when there is "a special relationship carrying with it the
obligation to indemnify." Id. Moreover, this court held that in a
sales contract, the implied duties or warranties do not run from
the purchaser (employer) to the manufacturer, but from the
manufacturer to the purchaser.  Id. This court further found that
in contrast to the services contract in Oaklawn, no such "special
relationship" existed between parties to a mere sales contract,
and thus there could be no implied obligation for indemnity. Id. 
Most importantly, because there was neither an implied nor an
express indemnity agreement between the parties, the
manufacturer's action for reimbursement for damages it paid to
the employer's injured worker was a mere tort action and thus
barred by the exclusivity provision of the Workers' Compensation
Act.  Id.  This court explained that:
     [w]hen the relation between the parties involves no
     contract or special relation capable of carrying with
     it an implied obligation to indemnify, the basic
     exclusiveness rule generally cannot be defeated by
     dressing the remedy itself in contractual clothes, such
     as indemnity.
Id.  See also,  Elk Corp. v. Builders Transport Inc., 862 F.2d 663 (8th Cir. 1988) and Dubin v. Circle F. Industries, Inc., 558 F.2d 457 (8th Cir. 1979) (refusing to find the existence of an
implied indemnity agreement, thus the exclusivity provision of
the Workers' Compensation Act precluded the shipper or
manufacturer from seeking indemnity from the injured employee's
employer); W.M. Bashlin Co. v. Smith, 277 Ark. 406, 643 S.W.2d 526 (1982) (refusing to hold an employer liable to a manufacturer
or supplier upon a joint tortfeasor theory).
     Regardless of whether the indemnity contract is express or
implied, the common thread among these cases is that the
indemnitee sued the employer/indemnitor for enforcement of the
indemnity agreement.  Cherry's argument is unique in that it asks
this court to expand the "indemnity exception" to the exclusivity
provision by allowing the injured employee, and not the
indemnitee, to sue the employer for enforcement of the indemnity
contract.  Cherry alleges that he may do so as a third-party
beneficiary to the express indemnity agreement between Tanda and
the City.
     Under Arkansas law, there is a presumption that parties
contract only for themselves, and a contract will not be
construed as having been made for the benefit of third parties
unless it clearly appears that such was the intention of the
parties.  Little Rock Wastewater Util. v. Larry Moyer Trucking,
321 Ark. 303, 902 S.W.2d 760 (1995).  However, a contract is
actionable by a third party when there is substantial evidence of
a clear intention to benefit that third party. Id. It is not
necessary that the person be named in the contract if he is a
member of a class of persons sufficiently described or designated
in the contract. Id.  
     Cherry asserts that he is a third-party beneficiary to the
indemnity contract between Tanda and the City because the
language clearly contemplates the payment of damages for injuries
to the contractor's employees, such as himself.  Whether there
may be a third-party beneficiary to an indemnity contract is a
matter of first impression for this court.  As a general
proposition, an indemnitor's obligation to reimburse against loss
does not become due until after the indemnitee has paid damages
to a third party.  Larson Machine v. Wallace, 268 Ark. 192, 600 S.W.2d 1 (1980).  In other words:
     A mere promise to indemnify against damages must also
     be distinguished.  Here the promisor's liability does
     not arise until the promisee has suffered loss or
     expense.  Until then the promisee has no right of
     action, and consequently one claiming damages can
     assert no derivative right against the promisor, much
     less a direct right.  Nor can the promisee sue for the
     benefit of the persons claiming damages. 
2 Samuel Williston & Walter H. E. Jager, A Treatise on the Law of
Contracts  403 (3d ed. 1961).  See also 4 Arthur Linton Corbin,
Corbin on Contracts  821 (1951).
     Tanda's liability under its indemnity contract with the City
does not arise until the city sustains a loss or expense. 
Because a condition precedent to any action by the City against
Tanda for recovery under the indemnity contract is the City's
payment of damages to a third-party claimant, such as Cherry, it
follows that the City's payment of damages would also result in
satisfaction of the claim by the third party.  Under these
circumstances, we hold that Cherry is merely an incidental, and
not intended, third-party beneficiary to the indemnity contract. 
Therefore, as in Mosley, Bashlin, Dubin, and Elk, Cherry is suing
Tanda in tort, and not on the indemnity contract, and accordingly
the exclusivity provision bars his action.  Clearly, as in Elk,
supra, Cherry has attempted to dress his tort claim in
"contractual clothes" such that he may circumvent the immunity
provided to the employer by the exclusivity provision, Ark. Code
Ann.  11-9-105 (Supp. 1995).  Thus, we must reaffirm as stated
in C & L, that:
     The employer should not be held liable indirectly in an
     amount that could not be recovered directly, for this
     would run counter to one of the fundamental purposes of
     the compensation law.
C & L, supra (citing Baltimore Transit Co. v. Maryland, 39 A.2d 858 (1944).
     B.  Direct action against Tanda as the City's insurer.
     Next, Cherry attempts to avoid the exclusive remedy
provision found at Ark. Code Ann.  11-9-105 by claiming that
Tanda was in fact the City's insurer such that he may maintain a
direct action against Tanda as the insurer of an otherwise immune
municipality.
     According to Ark. Code Ann.  21-9-301 (Repl. 1996), cities,
such as Fort Smith, and other political subdivisions of the state
are immune from "suit for damages except to the extent that they
may be covered by liability insurance."  Although an immune
entity is not required to carry insurance, if it does so then an
injured party may sue the insurance carrier directly for the
extent of the coverage.  Ark. Code Ann.  23-79-210 (Repl. 1992).
     Based on these two statutes, Cherry argues that the City of
Fort Smith obtained "insurance" by executing the agreement
whereby Tanda agreed to indemnify the City and obtain insurance
to cover this indemnity responsibility.  The basic flaw in
Cherry's argument is that the Arkansas Insurance Code
specifically defines an insurer as "every person engaged as
indemnitor, surety, or contractor in the business of entering
into contracts of insurance."  Ark. Code Ann.  23-60-101 (Repl.
1994).
     Tanda is "in the business" of construction, not insurance,
and the indemnification agreement was a mere incidental
obligation of its contractual relationship with the City as a
contractor.  In other words, Tanda is not "in the business of
entering into contracts of insurance" as required by the statute,
and thus, Cherry cannot maintain a direct action under Ark. Code
Ann.  23-79-210 against Tanda as an insurer of an immune entity.
     Moreover, the indemnity agreement was not an "insurance"
agreement as provided by the statute which defines "insurance"
as:
     any agreement, contract or other transaction whereby
     one party, the "insurer," is obligated to confer
     benefit of pecuniary value upon another party, the
     "insured" of "beneficiary," dependent upon the
     happening of a fortuitous event in which the insured or
     beneficiary has, or is expected to have at the time of
     such happening, a material interest which will be
     adversely affected by the happening of such event.
Ark. Code Ann.  23-60-102 (Repl. 1994).  In deciding whether a
particular agreement fits this definition, this court has focused
on the following three factors:  1) whether the plan is
mandatory; 2) whether a profit motive exists in offering the
plan; and 3) whether the plan is intended to be actuarially
sound. Douglass v. Dynamic Enter. Inc., 315 Ark. 575, 869 S.W.2d 14  (1994); Waire v. Joseph, 308 Ark. 528, 825 S.W.2d. 594
(1992).
     In this case, Tanda was not receiving money in exchange for
its promise to indemnify nor was the plan actuarially sound. In
fact, the indemnity plan was a liability, not an asset to Tanda. 
Finally, in the construction contract, the City agrees to obtain
its own liability and property insurance.  Hence, it is clear
that the parties never intended Tanda to be the "insurer" of the
City.  Under these circumstances, we decline to construe the
indemnity agreement as an insurance contract, and thus Cherry is
not entitled to maintain a direct action against Tanda as an
"insurer" of the City.
          C.   Breach of a Contractual Duty of Care.
     Next, Cherry asserts that it is suing Tanda for its implied
contractual duty to supply a safe place to work.  Specifically,
Cherry alleges that several provisions of Tanda's construction
contract with the City required that Tanda follow the relevant
safety regulations and maintain appropriate safeguards.  Thus,
Cherry argues, it is entitled to sue Tanda for the alleged breach
of these contractual obligations.
     This argument is clearly contrary to the plain meaning of
the exclusive-remedy provision, which unequivocally states that
          The rights and remedies granted to an employee
     subject to the provisions of this chapter, on account
     of injury or death, shall be exclusive of all other
     rights and remedies of the employee....
Ark. Code Ann.  11-9-105(a) (Supp. 1995).  Whether Cherry
couches his complaint against Tanda in terms of contract, or
tort, his action is barred under the exclusive-remedy provision. 
See Gullett v. Brown, 307 Ark. 385, 820 S.W.2d 457 (1991)
(holding that the exclusive-remedy provision barred the
employee's suit against his employer for enforcement of an
underinsured-motorist insurance contract).  
          4.   Waiver of the Exclusive Remedy Protection
     For his final argument for reversal of the trial court's
dismissal of his lawsuit against Tanda, Cherry argues that Tanda
waived the protection of the exclusive-remedy provision when it
agreed to the following clause contained in the construction
contract:
     6.31 ...the indemnification obligation under paragraph
     6.30 shall not be limited in any way by any limitation
     on the amount or type of damages, compensation or
     benefits payable by or for CONTRACTOR or any such
     Subcontractor or other person or organization under
     workers' or workmen's compensation acts, disability
     benefit acts or other employee benefit acts.
     Cherry's argument here is erroneous because it simply
misconstrues the common sense meaning of the contract.  Clearly
by this provision, Tanda agreed to indemnify the City beyond what
it was required to pay an injured employee under the Workers'
Compensation Act.  In other words, this clause related to the
amount of liability to the City, and not to an employee.  In no
way does this provision relate to or affect Tanda's obligations
to its employees.  Hence, this argument also has no merit.
Accordingly, we affirm the trial court's dismissal of Cherry's
lawsuit against Tanda.
II. Direct Action Against the Employer's Insurance Carrier 
 as the "Insurer" of the City.

     Prior to this lawsuit, Cherry attempted to sue the City of
Fort Smith for the wrongful death of David Cherry; however, the
case was dismissed because the City of Fort Smith is immune from
tort liability under Ark. Code Ann.  21-9-301 (Repl. 1996).
Although it is not clear from the record, it appears that the
City of Fort Smith did not obtain an insurance contract, and thus
Cherry could not avoid the City's immunity by proceeding directly
against the City's insurance carrier as provided by Ark. Code
Ann.  23-79-210 (Repl. 1992).
     Hence, Cherry sued Transcontinental, which is the insurance
carrier for Tanda, not the City.  As mentioned previously, the
trial court dismissed this action on summary judgment.  On
appeal, Cherry raises two arguments as to why it may proceed
directly against Transcontinental.  We find no merit to either
argument. 
                     A.  The City's Immunity
     First, Cherry argues that it may proceed against
Transcontinental as a quasi-insurer of the City, which is clearly
immune from suit under Ark. Code Ann.  21-9-301 (Repl. 1996). 
More specifically, Cherry argues that by virtue of the indemnity
agreement between Tanda and the City, Transcontinental agreed to
pay for the City's negligence.
     This argument is clearly against the policy of the direct-
action statute, and established caselaw.  In Rogers v. Tudor Ins.
Co., 325 Ark. 226, 925 S.W.2d 395 (1996), we recently held that
in order for the direct-action statute to apply the following
elements must exist:
         (1) the liability insurance must be carried by a
     nonprofit corporation;
         (2) a person must suffer injury or damage on account
    of negligence or wrongful conduct; and
         (3) the damage or injury must be on account of the
    negligence or wrongful conduct of "servants, agents, or
    employees" of the nonprofit corporation acting within the
    scope of their agency or employment.
(Emphasis added.)  In this case, the Transcontinental insurance
contract was "carried by" Tanda, not the immune City.  Thus,
Cherry fails to establish the first element of the statute. 
     Furthermore, rejection of Cherry's argument is consistent
with a federal decision on virtually identical facts.  As in this
case, in Lacey v. Bekaert Steel Wire Corp., 799 F.2d 434 (8th
Cir. 1986), the Bekaert Steel Wire Corp. ("Bekaert") entered into
a contract with the City of Van Buren, and pursuant to that
contract Bekaert agreed to indemnify the City and to obtain an
insurance contract which it subsequently obtained from CNA
Insurance.  Several years later, Rebecca Lacey was killed on the
Bekaert property, and her estate sued the City, Bekaert, and CNA
insurance.  Id.  The trial court found that the City was immune
from liability and dismissed Lacey's action against it.  Id. 
     As in this case, Lacey argued that it could directly sue CNA
Insurance for the City's negligence even though the listed
insured was Bekaert. Id.  The Eighth Circuit rejected Lacey's
argument and held that: 
     the narrow purpose of the statute serves only to permit
     direct action against insurance carriers issuing
     policies to enumerated immune organizations.
(Emphasis added.)  Hence, the court affirmed the district court's
dismissal of Lacey's direct action against CNA Insurance.
     As in Lacey, Cherry attempts to circumvent the immunity
provision by directly suing an insurance company for acts done by
an entity other than the named insured.  Surely, the drafters of
the Ark. Code Ann.  23-79-210 (Repl. 1992) never intended to
hold an insurance company directly liable for actions of a person
or entity the insurance company never agreed to insure.  
Therefore, we adopt the Eighth Circuit's holding in Lacey and
reject Cherry's argument for reversal.
                     B.  Immunity of Tanda.
     Finally, Cherry alleges that pursuant to Ark. Code Ann. 
23-79-210 (Repl. 1992), it may directly sue Transcontinental
because the exclusive remedy provision found at Ark. Code Ann. 
11-9-105 (Supp. 1995) makes Tanda "immune" from tort liability. 
As with Cherry's other points on appeal, this argument has no
merit.
     In Helms v. Southern Farm Bureau Casualty Ins., 281 Ark.
450, 664 S.W.2d 870 (1984), this court said that: 
     other statutes must yield to the Workers' Compensation
     Act because it is in the interest of the public policy
     to give that act priority as an exclusive remedy.
Thus, in Helms this court held that the exclusive remedy
prevented injured teachers from recovering under the school
district's automobile insurance agreement which it was required
by statute to maintain as an exception to the immunity doctrine. 
     Moreover, in Burkett v. PPG Indus. Inc., 294 Ark. 50, 740 S.W.2d 621 (1987), this court specifically held that the
exclusive-remedy provision also applied to insulate the
employer's insurance carrier from tort liability.  Hence, under
these two decisions, Cherry may not maintain a direct action
against Transcontinental as Tanda's insurance carrier.
     Affirmed.