GARRITY_V_MANNING.94-222; 164 Vt 507; 671 A.2d 808
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Lawrence Garrity Supreme Court
On Appeal from
v. Windsor Superior Court
William Manning January Term, 1994
John P. Meaker, J.
Harry A. Black of Black Black & Davis, White River Junction, for
Lisa Chalidze of Hull, Webber & Reis, Rutland, for defendant-appellee
PRESENT: Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.
DOOLEY, J. Plaintiff Lawrence Garrity was employed as a truck driver
at Hartford Oil Company and was injured when he slipped and fell on a snow-
and ice-covered parking lot at his place of employment. After receiving
workers' compensation benefits, he sued William Manning, president and
majority stockholder of Hartford Oil Company, alleging that defendant
negligently failed to sand the parking lot or make arrangements for someone
else to do so. Concluding that plaintiff's exclusive remedy was fulfilled
by the receipt of workers' compensation benefits, the Windsor Superior
Court granted summary judgment to defendant. We affirm.
The facts bearing on summary judgment were derived from plaintiff's
deposition and defendant's affidavit and answers to interrogatories. They
show that Hartford Oil Company is a small business with "several
employees," all subject to the supervision of defendant. Apparently,
various employees cleared the parking lot of ice and snow or made it less
slippery by sanding or salting. According to defendant, he assisted in
maintaining the parking lot of the corporation's premises, including
sometimes by salting or sanding the lot. According to
defendant's answers to plaintiff's interrogatories, defendant did the
plowing and sanding "primarily" using his personal truck. Plaintiff
slipped and fell in the parking lot while crossing to the company office
from where he had parked the company truck.
Defendant's motion for summary judgment is based on 21 V.S.A. §§ 622 &
624(a), which state:
§ 622. Right to compensation exclusive
The rights and remedies granted by the provisions of this
chapter to an employee on account of a personal injury for which
he is entitled to compensation under the provisions of this chapter
shall exclude all other rights and remedies of such employee, his
personal representatives, dependents or next of kin, at common
law or otherwise on account of such injury.
§ 624. Dual liability; claims, settlement procedure
(a) Where the injury for which compensation is payable under
the provisions of this chapter was caused under circumstances
creating a legal liability to pay the resulting damages in some
person other than the employer, the acceptance of compensation
benefits or the commencement of proceedings to enforce
compensation payments shall not act as an election of remedies,
but the injured employee or the employee's personal representative
may also proceed to enforce the liability of such third party for
damages in accordance with the provisions of this section.
These two sections establish that an injured employee who has received
workers' compensation benefits may not bring a common-law negligence action
against the employer, but may bring such an action against any other party.
Lorrain v. Ryan, 160 Vt. 202, 211, 628 A.2d 543, 549 (1993). For purposes
of the workers' compensation statute, the term "employer" is defined to
include "any body of persons, corporate or unincorporated, public or
private." 21 V.S.A. § 601(3).
Plaintiff argues that because his employer is Hartford Oil Company,
and not its president or majority stockholder, there is no barrier against
suing defendant for personal negligence. Defendant's position is more
complicated. Its nucleus is that plaintiff's suit is an improper evasion
of the immunity of the employer because plaintiff is really trying to
employer's duty to provide a safe place to work against defendant, its
officer and stockholder.
Both parties cite as controlling precedent our decision in Steele v.
Eaton, 130 Vt. 1, 285 A.2d 749 (1971). As in this case, the defendant in
Steele was president and principal owner of a corporation that employed the
plaintiff. The plaintiff was injured when he slipped and his shirt, and
eventually his fingers, were pulled into the uncovered gears of a
wood-chipping machine. He alleged that the defendant, who was not at the
site and went to this operation only three times per year, was negligent
because he knew that the chipper was being operated without a safety cover
over the gears and did nothing about it.
Our analysis began with the observation that the defendant could not,
consistent with 21 V.S.A. § 622, be held liable as the master or employer
under a theory of respondeat superior with respect to the manager of the
mill where the plaintiff was injured. Id. at 4, 285 A.2d at 751. We
stated that the defendant could be liable only for "acts constituting
direct negligence toward this plaintiff," that is, "tortious or negligent
acts against the plaintiff in which he participated, cooperated, or
specifically directed others to do." Id.
Noting the importance of maintaining a "distinction between personal
liability and employer liability" to avoid double recovery against the
employer, id. at 5, 285 A.2d at 752, and the defendant's "established close
identity with the corporation itself," id. at 6, 285 A.2d at 752, we held
that the allegations of negligence lacked "the immediacy of participation"
that justified recovery against the defendant as a fellow servant. Id. at
6, 285 A.2d at 753. We quoted from a decision of a New Jersey appellate
court, which held that consequences of neglect of safety precautions by a
corporation cannot be indirectly saddled on it through suits against
officers and directors who failed to take the appropriate affirmative
Plaintiff in this case argues that the evidence shows the active
participation by defendant in the activity, i.e., sanding, which we found
not to exist in Steele. Defendant stresses that in both this case and
Steele, plaintiff relies on a breach of the employer's duty to provide a
safe place to work, and in both, liability is premised on inaction, not
negligent action. We agree
with defendant's position.
Steele is not a holding that officers or managerial personnel cannot
be sued because of the employer's immunity. See Libercent v. Aldrich, 149
Vt. 76, 79, 539 A.2d 981, 983 (1987) (acceptance of worker's compensation
will not bar worker from maintaining subsequent negligence action against
supervisory co-workers). Its purpose, instead, is to define those
instances where suits against officers, directors or shareholders would, in
effect, deprive the corporation of the benefit of its bargain with an
employee to provide workers' compensation benefits as the exclusive
response to a workplace injury. Thus, it sought to align the theory of
liability with the theory used to avoid the workers' compensation
On reflection, particularly in light of the facts of this case, we
find the distinctions drawn in Steele to be unworkable, especially for a
small business like that involved here. If a corporation is so small that
the president is directly involved in making the workplace safe by sanding
the parking lot, Steele's focus on the immediacy of participation of the
officer turns the exclusive remedy provision into an illusion.
Steele is an early decision that precedes most of the evolution of the
law on officer, director and stockholder liability in states that allow
injured workers to sue co-employees.(FN1) Rather than turning on the
"immediacy of participation" of the defendant, the more modern cases have
looked to the nature of the duty that the plaintiff alleges is breached.
Where the duty is that of the employer and is nondelegable, courts have
generally held that the suit cannot be maintained because it is actually
against the employer. See Athas v. Hill, 458 A.2d 859, 864-66
(Md. Ct. Spec. App. 1983) (categorizing decisions).
This rule is often called the "Wisconsin rule" and was first developed
in the leading case of Kruse v. Schieve, 213 N.W.2d 64 (Wis. 1973), which
involves facts similar to those in Steele. The Wisconsin Supreme Court
reasoned that the duty to provide a safe place to work is that of the
employer and cannot be delegated to others. Id. at 67. The court held
that something more than a breach of this duty must be alleged to impose
liability on an officer or supervisory employee.(FN2) Id. Most cases after
Kruse have adopted its rule that a worker who receives workers'
compensation benefits is barred from suing individual officers, directors
and stockholders for conduct that amounts to a breach of the corporate
employer's duty to provide a safe place to work. See 2A A. Larson, Law of
Workmen's Compensation § 72.13, at 14-105 to -111 (1995).
As discussed in our criticism of Steele, there is a strong policy
reason to adopt the Wisconsin rule. A corporation must act through people.
See McGann v. Capital Bank & Trust Co., 117 Vt. 179, 183, 89 A.2d 123, 126
(1952) (corporations can do business "only through officers or agents");
Rounds v. Standex Int'l, 550 A.2d 98, 102 (N.H. 1988); Greco v. Farago, 477 A.2d 98, 99 (R.I. 1984). In all cases, an injured worker can identify a
person who is responsible to the corporation for discharging the particular
responsibility the worker claims was breached and sue that person rather
than the corporation. The effect is to make officers, directors and
stockholders targets of suits that would otherwise be filed against the
corporation, an undesirable result. See Rounds, 550 A.2d at 102. To the
extent such a suit is maintained against an officer, director or
stockholder for an accident arising out of unsafe conditions at the place
of employment, the corporation is often required to indemnify, imposing
double liability on the employer in most cases. See State ex rel. Badami
v. Gaertner, 630 S.W.2d 175, 180 (Mo. Ct. App. 1982). This effect is
particularly pronounced for a small, closely held corporation where the
stockholders serve as officers and directors and routinely discharge
corporate functions directly.
The Wisconsin rule is also consistent with our policy on
responsibility for workplace safety. We have recognized the common-law
duty on the employer to provide the employee a safe place to work. See
Landing v. Town of Fairlee, 112 Vt. 127, 129, 22 A.2d 179, 180 (1941). The
duty is now covered by statute, which requires employers to furnish
employees "a place of employment . . . free from recognized hazards . . .
likely to cause death or significant physical harm to . . . employees." 21
V.S.A. § 223(a).
We adopt the Wisconsin rule as consistent with the result in Steele,
but with a rationale that is more workable for future cases. Thus, we
agree with the analysis that:
[I]t is clear that the negligence of the employer or supervisor
which increases the risk to another employee is not the touchstone
of common law liability. The key question is whether that
negligence occurred in the pursuance of the obligation owed the
employer or whether that negligence occurred in a different
context, that of a co-employee. . . . [I]t is only when an officer
or supervisor breaches a personal duty, as contrasted to a breach
of duty owed primarily to the employer, that the policy of the
workers' compensation act permits a recovery from the officer or
supervisor as a third-party defendant.
Gerger v. Campbell, 297 N.W.2d 183, 186 (Wis. 1980). Rather than looking
to the "immediacy of participation" of the officer, director or
stockholder, we must look to the nature of the obligation the plaintiff
alleges has been breached. As long as a corporate duty is in issue,
immunity exists whether the officer fails to discharge it or actually does
so in a negligent manner. See Rounds, 550 A.2d at 102.
This is not a per se rule against third-party recovery from corporate
officers for workplace injuries. If a corporate officer acts as a
co-employee and is negligent in discharging a duty, apart from a
nondelegable duty of the corporation, the employer's immunity does not
insulate the officer from liability.(FN3) Numerous cases from Missouri, one
of the three other states that still allow co-employee liability,
demonstrate how the rule works in practice. For example, in Craft v.
Scaman, 715 S.W.2d 531 (Mo. Ct. App. 1986), a machine in a factory became
disabled because a flange on a spool separated from its cylinder. In order
to allow the machine to operate with the plaintiff at the controls, the
defendant, who was also the corporation president, propped up the spool
with a board while it was spinning. The resulting friction caused a flash
fire that engulfed the plaintiff in flames. The court found that the
employer's immunity did not apply to the officer because he breached his
common-law duty to exercise reasonable care in handling a dangerous
instrumentality, a duty different from the corporation's duty to provide a
safe place to work. Id. at 537-38; see also Workman v. Vader, 854 S.W.2d 560, 564 (Mo. Ct. App. 1993) (no immunity where defendant co-employee was
negligent in handling packing materials on which plaintiff slipped);
Tauchert v. Boatmen's Nat'l Bank, 849 S.W.2d 573, 574 (Mo. 1993) (no
immunity where defendant foreman unsuccessfully rigged elevator hoist and
elevator fell on plaintiff); Biller v. Big John Tree Transplanter Mfg. &
Tuck Sales, Inc., 795 S.W.2d 630, 634 (Mo. Ct. App. 1990) (no immunity
where corporation president ran over plaintiff with tree-transplanting
On the other hand, the Missouri courts have found immunity in cases
similar to this where only the duty to provide a safe place to work is
involved. In State ex rel. Feldman v. Lasky, 879 S.W.2d 783 (Mo. Ct. App.
1994), the plaintiff alleged that the defendant failed to properly salt,
shovel or de-ice an exterior walkway on which the plaintiff slipped. The
court found that the allegations failed to show a personal duty apart from
the employer's duty to provide a safe workplace. Id. at 785-86.
Plaintiff's action here is based on a breach of the duty to provide a
safe place to work.
He attempts to distinguish Steele based on defendant's personal
participation in sanding the parking lot in the past. As we have now
explained, this is a distinction without a difference because it is the
nature of the duty, not the extent of the officer's involvement in it, that
is determinative. Even if defendant had actually plowed the parking lot on
the day in question, but left unplowed the spot on which plaintiff fell,
the workers' compensation immunity would attach. Nothing in plaintiff's
complaint, or the factual showing made in response to the motion for
summary judgment, demonstrates a personal duty on defendant apart from the
duty of the employer, Hartford Oil Company, to provide plaintiff a safe
place in which to work.
Summary judgment is appropriate where no genuine issue of material
fact exists, and the moving party is entitled to judgment as a matter of
law. See Nationwide Mut. Fire Ins. Co. v. Lajoie, ___Vt.___, ___, 661 A.2d 85, 85 (1995). Although there are factual differences in this case, no
genuine issue of material fact exists. Defendant is entitled to judgment
as a matter of law.
FOR THE COURT:
FN1. Only three other states, Arkansas, Missouri and Maryland, now
limit immunity to employers only. See 2A A. Larson, Law of Workmen's
Compensation § 72.11, at 14-85 (1995). Each of these states has adopted
the Wisconsin rule, as described in the text. See Barnes v. Wilkiewicz,
783 S.W.2d 36, 38 (Ark. 1990); Athas v. Hill, 458 A.2d 859, 866 (Md. Ct.
Spec. App. 1983), aff'd, 476 A.2d 710, 718 (Md. 1984); Tauchert v.
Boatmen's Nat'l Bank of St. Louis, 849 S.W.2d 573, 574 (Mo. 1993) (en banc)
(per curiam). Much of the law in this area has been made in states, like
Wisconsin, which no longer allow a co-employee suit by a worker who has
received workers' compensation.
FN2. Kruse applies to any supervisory employee who is discharging a
responsibility of the employer. See Zurich Ins. Co. v. Scofi, 366 So. 2d 1193, 1195 (Fla. Ct. App. 1979) (although most cases deal with liability of
officer, director or stockholder, rationale extends to any supervisor who
"has committed no affirmative act of negligence going beyond the scope of
his employer's nondelegable duty"). We do not decide whether we would
similarly extend the rationale to all supervisory employees.
FN3. We need not decide today how we would define precisely when an
officer, director, or stockholder acts as a co-employee and breaches a
personal duty. It must be "sorted out on a case-by-case basis." Badami v.
Gaertner, 630 S.W.2d at 181.