FREEMAN MECHANICAL v. JW Bateson Co.

447 S.E.2d 197 (1994)

FREEMAN MECHANICAL, INC., Appellant, v. J.W. BATESON CO., INC., Respondent.

No. 24116.

Supreme Court of South Carolina.

Heard June 8, 1994.

Decided July 5, 1994.

*198 Charles E. Carpenter, Jr., Francis M. Mack, and Deborah L. Harrison, of Richardson, Plowden, Grier & Howser, P.A., Columbia, for appellant.

Herbert W. Hamilton, of Kennedy, Covington, Lobdell & Hickman, Rock Hill, for respondent.

TOAL, Justice:

Appellant, subcontractor, claims the circuit court erred in granting summary judgment to the respondent, prime contractor, on appellant's action for common law indemnity where appellant paid workers' compensation benefits to its own employee for an on-thejob injury which was caused by the prime contractor's negligence. We affirm.

FACTS

J.W. Bateson Co., Inc. ("Bateson") was the general contractor for the construction of the McCormick Correctional Institution. Freeman Mechanical, Inc. ("Freeman") was a subcontractor to Bateson. Freeman was hired to install the heating and air conditioning portion of the project.

One of Freeman's employees was injured on the job. Freeman's workers' compensation carrier paid workers' compensation benefits to the employee. Freeman's workers' compensation carrier then sued Bateson for common law indemnity claiming the injury occurred as a result of Bateson's sole negligence. Bateson claimed the Workers' Compensation Act controlled, and Freeman did not have a common law remedy.

Both parties filed for summary judgment. For the purpose of summary judgment, the parties stipulated that the injury to Freeman's employee was caused by the sole negligence of Bateson. The trial judge granted Bateson's summary judgment motion.

Under the Workers' Compensation Act, the prime contractor is liable for workers' compensation where the sub-contractor's employee is injured on the job. S.C.Code Ann. § 42-1-410 (1985). The doctrine of "statutory employee" is well developed in South Carolina. See Long v. Atlantic Homes, ___ S.C. ___, 428 S.E.2d 711 (1993); see also S.C.Code Ann. § 42-1-410 (1985). The employee of the sub-contractor may look to the prime contractor for workers' compensation benefits without regard to whether the sub-contractor is covered by a workers' compensation insurance policy. See Long v. Atlantic *199 Homes, ___ S.C. ___, 428 S.E.2d 711 (1993); see also S.C.Code Ann. § 42-1-410 (1985). Where the prime contractor pays for the sub-contractor's employee's injuries through the doctrine of "statutory employee," the prime contractor is entitled to indemnification from the sub-contractor. S.C.Code Ann. § 42-1-440 (1985). Thus, under our workers' compensation scheme, the sub-contractor is primarily liable and the prime contractor secondarily liable for workers' compensation benefits to the sub-contractor's employee. See Long v. Atlantic Homes, ___ S.C. ___, 428 S.E.2d 711 (1993).

While the prime contractor is secondarily liable for work-related injuries to the employees of the sub-contractor, the subcontractor has no such secondary liability for employees of the prime contractor or employees of other sub-contractors on the job. See S.C.Code Ann. § 42-1-540 (1985) (receipt of workers' compensation benefits no bar to suit in tort by injured employee of contractor against sub-contractor or employee of subcontractor against other sub-contractor or their employees); see also 2A ARTHUR LARSON, LARSON'S WORKMEN'S COMPENSATION LAW § 72.32 (1993). As no statutory obligation exists under the Workers' Compensation Act, the sub-contractor does not enjoy the protection of the Act and may be sued in tort for injuries to the prime contractor or other subcontractor's employees. S.C.Code Ann. § 42-1-540. The majority rule is that one who has obligations under the Act enjoys the immunities under the Act. 2A ARTHUR LARSON, LARSON'S WORKMEN'S COMPENSATION LAW § 72.31 (1993).

The South Carolina Act entitles the prime contractor to indemnification by the sub-contractor for any workers' compensation benefits paid by the prime contractor on behalf of the sub-contractor's employee. S.C.Code Ann. § 41-1-440 (1985). The purpose of this dual liability together with the assignment of primary liability and secondary liability is to provide as many employees with workers' compensation as possible, while recognizing that where the sub-contractor has workers' compensation insurance, the contractor has indirectly paid the premiums through the contract price. See Long v. Atlantic Homes, ___ S.C. ___, 428 S.E.2d 711 (1993); see also 2A ARTHUR LARSON, LARSON'S WORKMEN'S COMPENSATION LAW § 72.31(b) (1993).

Adopting Freeman's position would create a curious result. Freeman could seek common law indemnification from Bateson. Once Bateson indemnified Freeman, Bateson could exercise its statutory right to indemnification from Freeman under S.C.Code Ann. § 42-1-440 (1985). Clearly, the legislature did not intend such a circular result. We hold that because Bateson was potentially liable under the Act for workers' compensation benefits paid to Freeman's employee, Bateson also enjoys the immunity created by the Act from common law claims. We AFFIRM.

HARWELL, C.J., and CHANDLER, FINNEY and MOORE, JJ., concur.