Agricultural Group-Compensation Self-Insured Fund v. Polk County Circuit Court

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AGRICULTURAL GROUP-COMPENSATION SELF-INSURER
FUND v. POLK COUNTY CIRCUIT COURT

97-252                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered January 15, 1998


1.   Prohibition, writ of -- when appropriate. -- A writ of prohibition is
     an extraordinary writ that is appropriate only when the lower
     court is wholly without jurisdiction; when considering the
     propriety of issuing the writ, the supreme court's review of
     jurisdiction is limited to the pleadings.

2.   Prohibition, writ of -- encroachment on workers' compensation jurisdiction
     -- writ warranted. -- Where an encroachment on workers'
     compensation jurisdiction is clear, a writ of prohibition is
     warranted.

3.   Prohibition, writ of -- jurisdiction tested on pleadings. -- In
     considering whether a petition for writ of prohibition lies,
     jurisdiction is tested on the pleadings, not the proof. 

4.   Prohibition, writ of -- appellant failed to prove it was clearly entitled
     to remedy -- writ denied. -- Where it was disputed whether
     workers' compensation law was implicated in the case, the
     supreme court concluded that appellant had failed to meet its
     burden of demonstrating that it was clearly entitled to the
     remedy of prohibition; accordingly, the court denied the writ.


     Petition for Writ of Prohibition; denied.
     Friday, Eldredge & Clark, by:  Robert S. Shafer and Guy Alton
Wade, for petitioner.
     Mary M. Rawlins, for real party in interest Wellco Enters.,
Inc., d/b/a Wellco Feed Mill.

     W.H. "Dub" Arnold, Chief Judge.
     This is a petition for a writ of prohibition filed by petitioner Agricultural Group-
Compensation Self-Insurer Fund (þAgComp SIFþ), the workersþ compensation carrier for Wellco
Enterprises, Inc., d/b/a Wellco Feed Mill.  The respondent is the Polk County Circuit Court.  We
deny the writ.
     On February 26, 1993, Wellco employee Donald Kenyon was injured while on the job. 
He filed a claim with the Workersþ Compensation Commission against Wellco and AgComp SIF,
a trust that provides workersþ compensation benefits to its members as a self-insured fund.  See
Ark. Code Ann.  11-9-404 (Repl. 1997).  When no further action was taken by any party, the
commission dismissed Mr. Kenyonþs claim without prejudice.  
     Thereafter, Wellco and its individual owner, John E. Wells, filed an action in Polk County
Circuit Court against AgComp SIFþs agent, the Agricultural Council of Arkansas, alleging that
Mr. Kenyon was an employee of Wellco at the time of his injury and that he was covered by
AgComp SIF insurance.  Wellco further alleged that the council fraudulently collected premium
payments and breached the partiesþ contract by refusing to pay compensation to Mr. Kenyon.  
     Wellco subsequently amended its complaint, substituting AgComp SIF as the sole
defendant.    Alleging breach of contract, Wellco sought  $7,821.28 in damages, representing the
amount it had paid for Mr. Kenyonþs medical expenses.  Attached to and incorporated in the
amended complaint was a copy of the AG-COMP SIF trust agreement.  AgComp SIF denied the
material allegations of the complaint and amended complaint and pleaded affirmatively that
Wellcoþs action was barred by the exclusive-remedy provision of the Workersþ Compensation
Act.  According to AgComp SIF, the Polk County Circuit Court lacked jurisdiction to determine
Mr. Kenyonþs status as an employee or independent contractor and thus decide the case. 
AgComp SIF filed a motion to dismiss and a motion to reconsider on this basis, but the circuit
court denied both motions.  This petition for writ of prohibition followed.  
     In Travelers Ins. Co. v. Smith, 329 Ark. 336, 339-340, 947 S.W.2d 382 (1997), we
outlined the applicable standard of review in these cases as follows:
     A writ of prohibition is an extraordinary writ that is appropriate only when the lower
     court is wholly without jurisdiction.  Nucor Holding Corp. v. Rinkines, 326 Ark. 217, 931 S.W.2d 426 (1996); West Memphis Sch. Dist. No. 4 v. Circuit Court, 316 Ark. 290, 871 S.W.2d 368 (1994).  When considering the propriety of issuing the writ, this courtþs
     review of jurisdiction is limited to the pleadings.  Western Waste Indus. v. Purifoy, 326
     Ark. 256, 930 S.W.2d 348 (1996); Nucor Holding Corp. v. Rinkines, supra.  Where the
     encroachment on workersþ compensation jurisdiction is clear, a writ of prohibition is
     warranted.  Western Waste Indus. v. Purifoy, supra; Nucor Holding Corp. v. Rinkines,
     supra.

In considering whether a petition for writ of prohibition lies, jurisdiction is tested on the
pleadings, not the proof.  Nucor-Yamato Steel Co. v. Circuit Court, 317 Ark. 493, 878 S.W.2d 745 (1994); The Wise Company, Inc. v. Clay Circuit, 315 Ark. 333, 869 S.W.2d 6 (1993), rehþg
denied 315 Ark. 336-A, 869 S.W.2d 8 (1994).
     AgComp SIF claims that prohibition lies in this case because Wellcoþs suit is at odds with
the exclusive-remedy provision of the Workersþ Compensation Act.  See Ark. Code. Ann.  11-9-
105(a) (Repl. 1996).  This provision provides, in pertinent part, 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, or any principal, officer, director,
     stockholder, or partner acting in his capacity as an employer, or prime contractor of the
     employer, on account of the injury or death, and the negligent acts of a co-employee shall
     not be imputed to the employer.

In asserting that the circuit court is wholly without jurisdiction to hear Wellcoþs claim, AgComp
SIF relies primarily on two cases -- Cain v. National Union Life Ins. Co., 290 Ark. 240, 718 S.W.2d 244 (1986), and Seawright v. U.S.F. & G. Co., 275 Ark. 96, 627 S.W.2d 557 (1982).In
Cain, the claimant filed a complaint against the workersþ compensation carrier and pled that the
insurer stipulated that it was liable for all medical expenses but then failed to make payment. 
The claimant alleged that this failure caused him emotional distress.  The trial court dismissed
the complaint, and we affirmed the dismissal on grounds of exclusivity of the workersþ
compensation remedy.  Thus, Cain involved a claimantþs suit against the carrier, not a suit
between an insurer and its insured as in the case before us.
     In Seawright, an insured brought suit against his carrier for fraud and deceit, bad faith in
tort, breach of a fiduciary relationship, and intentional interference with a protected property
interest in handling his employeeþs workersþ compensation claim.  The unique fact in Seawright 
was that the employer was the husband of the employee-claimant.  He filed suit while his wifeþs
claim was pending before the commission, which subsequently found that the claim was barred
by the statute of limitations.  On appeal, we held that the employerþs liability as an employer was
discharged when his employeeþs claim was barred by limitations.  275 Ark. at 99.  As to the
liability of the employer as an individual, we said that, because the insurance policy was not in
the record, we could not determine that the policy covered any such general, individual liability. 
Thus, we held that the lower court correctly dismissed the employer-husbandþs complaint for
failure to state a cause of action.  In short, we fail to see how the unique facts in Seawright, a
case we decided on appeal, support AgComp SIFþs contention that prohibition is warranted in the
instant action.
     Turning to the pleadings, Wellcoþs amended complaint alleges that AgComp SIF breached
the partiesþ trust agreement by refusing to pay for Mr. Kenyonþs injuries.   When examining the
parties trust agreement incorporated in the amended complaint, we observe that it contains two
coverages -- Coverage A, entitled þWorkersþ Compensationþ coverage, and Coverage B, termed
þEmployersþ Liabilityþ coverage.  Article VII, paragraph 7.2(c)(4), of the partiesþ agreement
specifically excludes from Coverage B þ[a]ny obligation imposed by a workersþ compensation 
.  .  . law or any similar law.þ  Wellco specifically alleges in its complaint that Mr. Kenyonþs
injuries came within Coverage B of the policy, termed þEmployerþs Liability.þ  Thus, it is
disputed whether workersþ compensation law is implicated in this case. 
     When examining the pleadings together with the foregoing authority, we must conclude
that AgComp SIF has failed to meet its burden of demonstrating that it is clearly entitled to the
remedy of prohibition.  See Nucor-Yamato Steel Co. v. Circuit Court, supra.  Accordingly, we
deny the writ.
     Writ denied.