GERALDINE D. DURHAM v. SOUTH STATE, INC.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2232-08T32232-08T3

GERALDINE D. DURHAM,

ADMINISTRATRIX OF THE ESTATE

OF ELWOOD DURHAM,

Plaintiff-Appellant,

v.

SOUTH STATE, INC. and SOUTH

STATE, INCORPORATED DREDGE AND

PLANT,

Defendants-Respondents,

and

PROVIDENCE WASHINGTON INSURANCE

COMPANY,

Defendant/Intervenor-

Respondent.

__________________________________

 

Submitted March 23, 2010 - Decided

Before Judges Parrillo and Ashrafi.

On appeal from Superior Court of New Jersey,

Law Division, Cumberland County, Docket No. L-492-07.

Brown & Connery, L.L.P., attorneys for appellant

(Michael R. Mignogna, on the brief).

Margolis Edelstein, attorneys for respondents South State, Inc. and South State, Incorporated Dredge and Plant (Lisa A. Green and Scott A. Sheldon, on the brief).

PER CURIAM

Plaintiff Geraldine D. Durham, administratrix of the estate of her late husband, decedent Elwood Durham, appeals from the summary judgment dismissal of her wrongful death lawsuit against defendant South State, Inc. (South State or defendant). The motion judge found that defendant was decedent's "special employer" and thus immune from common law tort liability by virtue of the New Jersey's Workers' Compensation Act (Act), N.J.S.A. 34:15-1 to -142. We agree and affirm.

This matter arises from Elwood Durham's death following a March 15, 2005 accident at defendant's Bridgeton facility where decedent, who was employed by Soil Remediation Technology (SRT) at the time, was working to ready defendant's dredge pond and mine for the upcoming mining season. The following facts are as developed in the summary judgment record.

South State, wholly owned by Chester Ottinger, Jr. (Ottinger), runs a sand and gravel operation at its Bridgeton facility, which consists of an asphalt plant, a crushing facility, a shop, offices, and a quality control lab. Sand and gravel are mined from a pond on site using a dredging machine. The dredged material is pumped to a plant where it is crushed, screened, and stockpiled. The finished product is used in the construction industry. In March 2005, South State employed anywhere from fifty to two hundred employees.

In the mid 1990s, Ottinger, his father, and two other individuals formed SRT, a separate, limited liability company to process contaminated soil for reuse. Ottinger is its principal manager. SRT performs its work at South State's Bridgeton facility and all its business operations, including payroll, are run out of the same office, by the same individuals, as South State's business operations.

From its inception, SRT had other customers in addition to South State, but since the market for soil remediation declined, SRT conducts most of its business with South State. In fact, SRT does not make a profit. It is structured so that its accounts balance at year's end, with funds provided directly by South State commensurate to the sums SRT expends for its payroll. However, SRT does have its own means to bill those few customers for the remediation services performed, and SRT employees receive separate paychecks.

At the time of decedent's accident, SRT employed about twenty persons, including decedent, who was hired as a "front end load" operator approximately two years earlier. All SRT employees are of equal rank, directly supervised by South State's senior staff, and hired and terminated by Ottinger, on the recommendations of South State's supervisors.

Due to a decreasing customer base, while still performing soil remediation work, SRT employees, including decedent, also performed tasks for South State under the direction and instruction of defendant's higher ranking employees, specifically David Spoltore, South State's Quality Control Director, and Roger Smith, head of South State's Materials Operation. Especially during the winter months when South State's mining operation shut down, employees of SRT and South State would work together, doing maintenance and other related tasks in South State's yard. According to Smith, SRT employees were at his disposal whenever he needed them to perform work at South State's yard. Thus, in addition to his duties for SRT, decedent would assist Chris Biscoglio, a South State employee, with maintenance duties.

On the morning of March 14, 2005, Spoltore assigned decedent, Biscoglio, and Howard Gandy, another South State employee, the task of retrieving a dredge anchor which had become lodged in the bottom of the dredge pond at the end of the previous year's mining season, the final winter maintenance task that needed to be performed at South State's yard. Decedent had assisted in retrieving anchors on about four or five past occasions.

In the course of retrieving the anchor, decedent and Biscoglio were working aboard South State's dredge boat in the middle of the dredge pond, while Gandy attempted to assist the retrieval efforts from a ten-ton mobile crane stationed on the shoreline. While Gandy was repositioning the crane to take up the additional slack in the cable, the workboat capsized, throwing decedent and Biscoglio, who were not wearing the life preservers provided in the boat, into the dredge pond. Decedent sustained various injuries which eventually led to his death on March 24, 2005. Decedent's estate received death benefits from the same workers' compensation carrier under the same policy for both SRT and South State.

The instant wrongful death lawsuit on behalf of decedent was filed against South State on February 12, 2007. Following discovery, defendant moved for summary judgment based on its claimed "special employment" relationship with decedent, arguing the Act, under which decedent's estate had recovered death benefits, affords South State immunity from tort liability. After a hearing, the motion judge agreed, granting summary judgment dismissal of plaintiff's complaint, and finding:

I think without going through all the factors, first of all, (inaudible) factors and you don't have to meet all five.

It's clear to me that he worked exclusively for South State.

And there was some issue where (inaudible) said that back at this point in time they may have had done -- SRT may have done a few other jobs.

But it's clear that in essence, an employee of SRT was an employee of South State by virtue of wage, expenses.

SRT being (inaudible) with South State, in reference to the fact that he reported to a South State location at all times.

And with reference to the fact that any decisions in terms of tasks, in terms of firing (inaudible) South State decisions.

And the issue of someone not being in charge on that particular day (inaudible) of an issue because in essence, he was going to do that which he hadn't done that day.

Regardless of whether somebody had to order them to do this or whether they took it upon themselves to deal with it, it's all part of his general employment duties.

. . . .

I think it's -- the Blessing [v. T. Shriver & Co., 94 N.J. Super. 426 (App. Div. 1967)] factors have been met . . . .

On appeal, plaintiff raises the following issues:

I. THE MOTION JUDGE ERRED IN GRANTING SUMMARY JUDGMENT TO SOUTH STATE BECAUSE SOUTH STATE WAS NOT DECEDENT'S "SPECIAL EMPLOYER," AND THEREFORE THE WORKERS' COMPENSATION ACT DOES NOT BAR SUIT AGAINST SOUTH STATE.

A. Standard of Review on a Grant of Summary Judgment.

B. Special Employers.

C. The Law Division Erred In Finding That Decedent Was a Special Employee When It Misapplied the Five-Factor Special Employee Test.

1. Decedent Did Not Have an

Employment Contract with South State.

2. The Work Decedent Performed

Was Not the Work of South State.

3. South State Did Not Have a Right to Control Decedent's Employment Such That It Could Have Ordered Him to Perform the Task Which Led to His Death.

4. SRT, Not South State, Paid Decedent's Wages.

5. Only Chester Ottinger, Acting In His Capacity as SRT Management, Had the Authority to Hire, Discharge, and Recall SRT Employees.

We are satisfied that, based on undisputed material facts, the motion judge correctly analyzed and decided the matter in light of the principles set forth in Blessing, supra.

Under the Act's exclusivity bar, an employee who receives workers' compensation benefits foregoes the right to seek additional recovery in common law tort against his or her employer:

Such agreement shall be a surrender by the parties thereto of their rights to any other method, form or amount of compensation or determination thereof than as provided in [the WCA] and an acceptance of all the provisions of [the WCA], and shall bind the employee . . . as well as the employer

. . . .

[N.J.S.A. 34:15-8.]

It is a fundamental principle that "'an employee, for the purposes of work[ers'] compensation, may have two employers, both of whom may be liable to him in compensation, and a recovery against one bars the employee from maintaining a common law tort action against either for the same injury.'" Santos v. Standard Havens, Inc., 225 N.J. Super. 16, 26 (App. Div. 1988) (quoting Blessing, supra, 94 N.J. Super. at 429-30). Thus, in addition to a "primary employer," our courts recognize an additional "special employer" for the purposes of the Act. Blessing, supra, 94 N.J. Super. at 429-30. In determining who qualifies as a special employer, our courts utilize a five-factor test, which we articulated in Blessing:

1. Whether there is an express or implied contract for hire between the employee and the employer;

2. Whether the work being done is that of the employer;

3. Whether the employer has a right to control the details of the work;

4. Whether the employer pays the employee's wages or benefits; and

5. Whether the employer can hire or fire the employee.

[Ibid.]

The determination is, of course, fact specific, based on the totality of the circumstances. Santos, supra, 225 N.J. Super. at 22. While no one factor is dispositive, and not all five factors need be present to find "special employment," nevertheless, the "right to control" is deemed "the most important factor in determining a special employee's status

. . . ." Volb v. Gen. Elec. Capital Corp., 139 N.J. 110, 116 (1995). See also Mahoney v. Nitroform Co., 20 N.J. 499, 506-07 (1956); Blessing, supra, 94 N.J. Super. at 430-31. "Under the control test, the actual exercise of control [over the special employee's work] is not as determinative as the right of control itself." Smith v. E.T.L. Enters., 155 N.J. Super. 343, 350 (App. Div. 1978) (citing Mahoney, supra, 20 N.J. at 506).

Another factor deemed significant is the "relative nature of the work" test. Santos, supra, 225 N.J. Super. at 23. "To qualify as a special employee under this test," there must ordinarily be "(1) substantial economic dependence upon the putative employer[;] and (2) . . . a functional integration of their respective operations." Ibid. (citing Smith, supra, 155 N.J. Super. at 352, and Caicco v. Toto Bros., Inc., 62 N.J. 305, 310 (1973)). In order to make such a determination, the following factors are generally considered:

[T]he character of the claimant's work or business how skilled it is, how much of a separate calling or enterprise it is, to what extent it may be expected to carry its own accident burden, and its relation to the employer's business, that is, how much it is a regular part of the employer's regular work, whether it is continuous or intermittent, and whether the duration is sufficient to amount to the hiring of continuing services as distinguished from contracting for the completion of a particular job.

[Buchner v. Bergen Evening Record, 81 N.J. Super. 121, 131 (App. Div. 1963).]

Whether we emphasize the "right to control" test or the "relative nature of the work" test, we are convinced that under the totality of the circumstances applied to all the Blessing factors, decedent was a special employee of South State at the time of the fatal accident so as to preclude plaintiff from instituting this common law wrongful death action against defendant.

With respect to the first two Blessing factors, namely the existence of an express or implied contract for hire and whether the work being done is that of the general or "special" employer, the undisputed fact is that over a continuous two-year period, decedent, while primarily employed by SRT, performed the normal work of SRT mainly for the benefit of South State, which was SRT's principal customer. As noted, SRT's business was the remediation of contaminated soil to be used largely in the making of South State's asphalt. Moreover, as outside demand for this service declined, SRT employees, joined by South State's employees, performed maintenance and mining work at South State's plant, which was exclusively for South State's benefit, and for which SRT had no continuing interest whatsoever. Significantly, at the time of the accident, decedent was working with South State's employees to ready the company's dredge pond for the upcoming mining season. This was a commonplace, but necessary, task that solely benefited South State and its mining operation, and not SRT or any of its outside clients. Under these circumstances, it may be said that decedent "willfully accepted" this joint-work arrangement and the day-to-day decisions of South State's management, Pacenti v. Hoffman-La Roche, Inc., 245 N.J. Super. 188, 192 (App. Div. 1991), and that the work performed by decedent when he suffered the fatal accident was the work of South State.

The facts also show indisputably that South State controlled decedent's work. All employees of SRT were of equal status and therefore reported to, and took instruction from, South State's supervisors, specifically Smith and Spoltore. Not only did SRT and South State share a common owner and facility, but management as well. Although an interlocking corporate structure is not dispositive of the issue, Volb, supra, 139 N.J. at 122, the degree of supervision and control exercised by South State over SRT employees by virtue of this relationship is, as noted, a highly significant factor. Here, SRT employees would receive daily instructions from Spoltore or Smith and on the day of the accident, Spoltore assigned the dredging task to decedent and two of South State's employees as part of the required and usual winter maintenance on South State's yard. Regardless of whether specific direction was given to the three men during the actual retrieval operation, South State, indisputably, retained the ability to control the work being done, which, as noted, inured to its sole benefit. And whether or not supervision was exercised on a day-to-day basis, SRT employees remained at South State's disposal at the company's request, regardless of SRT's consent.

The evidence also clearly demonstrates satisfaction of the last two Blessing factors. While SRT directly paid its own employees, South State thereafter paid SRT an amount which was equal to SRT's payroll, essentially reimbursing SRT for its employee payroll. Furthermore, SRT employees were hired, disciplined, and fired through a process largely controlled by South State's higher-ranking officers and culminating in a final decision by Ottinger, South State's owner.

Under the totality of facts and circumstances, the motion judge properly applied the Blessing factors and correctly concluded that decedent was a special employee of defendant South State at the time of his fatal accident, so as to preclude plaintiff from maintaining her wrongful death action against South State. We also find this holding in accordance with the rule that the Act is to be liberally construed in favor of its applicability. Santos, supra, 225 N.J. Super. at 25.

 
Affirmed.

(continued)

(continued)

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A-2232-08T3

April 23, 2010