Garrity v. Manning

GARRITY_V_MANNING.94-222; 164 Vt 507; 671 A.2d 808

[Filed 05-Jan-1996]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 94-222


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
  plaintiff-appellant

       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
  enforce the

 



  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
  action.  Id.

       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
  exclusivity bar.

       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
  machine).

       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.

       Affirmed.


                              FOR THE COURT:



                              _______________________________________
                              Associate Justice


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                                  Footnotes


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.