Welch v. Home Two, Inc.

Welch v. Home Two, Inc. (2000-236); 172 Vt. 632, 783 A.2d 419

[Filed 19-Sept-2000]


                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2000-236

                               MAY TERM, 2001


Norman and Bobbie Jo Welch	       }	APPEALED FROM:
                                       }
                                       }
     v.	                               }	Chittenden Superior Court
                                       }	
Home Two, Inc. 	                       }
                                       }	DOCKET NO. S204-00 CnC

                                                Trial Judge: Matthew I. Katz

             In the above-entitled cause, the Clerk will enter:


       Norman and Bobbie Jo Welch appeal from an order of the Chittenden
  Superior Court  dismissing their negligence claim against defendant, Home
  Two, Inc.  Plaintiffs contend that the  court erred in finding that Home
  Two, Inc. was Norman Welch's statutory employer within the  meaning of the
  Workers' Compensation Act, 21 V.S.A. §§ 622, 624 (The Act), and that
  plaintiffs'  common law claims are therefore barred under the
  employer-immunity of the Act.  We affirm.

       In January 1998, Norman Welch worked as a project supervisor for
  Leclair Brothers Inc., an  electrical subcontractor, at a construction
  project at the Charlotte Library.  Home Two, Inc. was the  general
  contractor of the Charlotte Library construction project.  On January 21,
  while working at the  construction site, Welch injured his shoulder,
  attempting to ascend a staircase which he claims was  negligently selected
  and installed by Home Two.  Due to the accident, Welch was disabled from 
  work for one year, underwent surgery on his shoulder and sustained a
  permanent partial impairment.  As a result of his injury, Welch received
  workers' compensation benefits through Leclair Brothers'  coverage.

       No written employment contracts were executed between Home Two and
  either Leclair  Brothers, or Welch.  However, Home Two regularly contracted
  with independent electrical  subcontractors, such as Leclair Brothers, to
  perform work on its construction projects.

       After his injury, Welch (FN1) brought a negligence action against Home
  Two, claiming that  it negligently installed a staircase at the
  construction site, and knowingly created "an unreasonable  risk of danger."
  Home Two filed a motion to dismiss pursuant to V.R.C.P. 12(b)(6), arguing
  that as  Welch's statutory employer under the Act, 21 V.S.A. §§ 622, 624,
  it was entitled to immunity from  suit by an injured employee of an
  independent subcontractor. Welch opposed the motion, filing a 

 

  statement of material facts and an affidavit. (FN2)   The superior court
  granted Home Two's motion  to dismiss in a one sentence opinion which
  states, "General contractor having control of premises is  statutory
  employer." 

       On appeal, Welch claims the court erred in concluding that Home Two
  was Welch's  employer.  We disagree.  The rights and remedies of Vermont's
  Workers' Compensation Act granted  to an employee on account of a personal
  injury for which the employee is entitled to compensation  under the
  provisions of the Act are intended to be exclusive, "[e]xcept as provided
  in subsection  618(b) and section 624 of [title 21]."  21 V.S.A. § 622. 
  Here, Welch having elected to claim  workers' compensation, (see § 618(b))
  asserts that his acceptance of compensation benefits should  not be deemed
  to be an election of remedies because Home Two is not Welch's employer
  within the  meaning of 21 V.S.A. § 624(a).   Welch asserts that Home Two
  cannot be considered an employer 

 

  within the ambit of § 624(a) because (1) Home Two did not control the
  worksite premises, and (2)  because Welch received workers' compensation
  benefits from subcontractor, LeClair Brothers, and  not Home Two, the
  general contractor. 

       In essence, Welch attempts to preserve the option of collecting
  workers' compensation  benefits from the subcontractor and suing the
  general contractor for negligence by application of a  statutory employer
  "test" that would insulate a general contractor from the definition of
  "employer."   We have long held that in determining whether an
  employer-employee relationship is covered by the  Workers' Compensation
  Act, the language of the law "is all-embracing."  Morrisseau v. Legac, 123 
  Vt. 70, 76, 181 A.2d 53, 57 (1962).  The Workers' Compensation Act defines
  "employer" to include:

    the owner or lessee of premises or other person who is virtually
    the  proprietor or operator of the business there carried on, but
    who, by  reason of there being an independent contractor or for
    any other  reason, is not the direct employer of the workers there
    employed.

  21 V.S.A. § 601(3).  As we have previously stated, "[t]his language
  specifically and unambiguously  covers multiple-employer business
  situations."  Candido v. Polymers, Inc., 166 Vt. 15, 17, 687 A.2d 476, 478
  (1996).  

       Welch notes that in Candido, we held that in the absence of a written
  employment contract,  "[t]he most important consideration in finding
  implied consent [by the employee to the employment  relationship] is
  whether the employee submitted to the employer's direction and control."
  Id. at 21,  687 A.2d  at 480.  The employment relationship in Candido
  differs markedly, however, from the one  at issue in the present case.  In
  Candido, the defendant, Polymers, Inc., had a contract with an  employment
  agency which provided temporary workers.  The plaintiff, one such temporary 
  employee, was injured on the job while working at the defendant's plant,
  and received workers'  compensation benefits from the employment agency.  

       As in the instant case, the plaintiff in Candido argued that the
  defendant was not plaintiff's  employer within the meaning of the Workers'
  Compensation Act and thus was subject to common  law liability.  Id. at 20,
  687 A.2d  at 480.   In determining whether the plaintiff consented to the 
  employment relationship with the defendant, we found that the plaintiff
  clearly accepted the  defendant's direction and control.  But the inquiry
  that was necessary in Candido, i.e., to ensure that  in a "lent-employee"
  situation, the employee's common law rights were not being affected by the 
  private arrangement between two employers without the employee's consent is
  different from the 

 
 
  relevant inquiry where a statutory employment relationship exists.  See A.
  Larson & L. Larson,  Larson's Workers' Compensation Law § 111.04(1)(c) at
  111-30 (2001) (where "state has, for various  policy reasons, decreed by
  statute that certain legal liabilities and relations shall follow if
  parties fit  into a particular employment pattern," different branches of
  law, that of statutory employees and that  of lent employees, should not be
  confused).

       Within the general contractor construction context, the facts of the
  instant case fall within an  employment pattern well known to, and
  recognized by the Legislature.  General contractors typically  "outsource"
  specific responsibilities within the overall construction project to
  subcontractors.  To  require general contractors to demonstrate direct
  control and supervision of workers hired directly by  subcontractors would
  contravene the nearly universal approach of Workers' Compensation Acts 
  intended to make the general contractor the employer for purposes of
  extending coverage.  See id. at  § 111.04(1)(a) at 111-21 ("Since the
  general contractor is . . . in effect, made the employer for the  purposes
  of the compensation statute, it is obvious that it should enjoy the regular
  immunity of an  employer from third-party suit when the facts are such that
  it could be made liable for compensation;  and the great majority of cases
  have so held.")

       Similarly, Welch's assertion that the general contractor cannot be
  said, as a matter of law, to  be "virtually the proprietor or operator of
  the business there carried on [the premises]" would  effectively remove
  general contractors from the statutory definition of employer unless they
  were the  owners or lessees of the premises.  See 21 V.S.A. § 601(3).  It
  would be difficult, to say the least, to  give effect to the clear
  legislative intent to make general contractors "employers" for purposes of 
  broadening workers' compensation coverage, if general contractors cannot be
  said to be operators of  the general contracting business on the premises
  where the construction project takes place.  Welch's  injury occurred at
  the construction site at the Charlotte Library, where, as general
  contractor, Home  Two was "virtually the proprietor or operator of the
  business [the construction project] there carried  on."  Id. 

       Finally, Welch contends that Home Two does not qualify for immunity
  from suit because it  did not in fact pay workers' compensation to him. 
  Citing Ryan v. New Bedford Cordage Co., 421 F. Supp. 794 (D. Vt. 1976),
  Welch asserts that a general contractor that could be held liable for
  workers'  compensation benefits in the event that a subcontractor fails to
  secure workers' compensation  coverage is not entitled to immunity when it
  does not in fact provide such benefits to the injured  worker.  However,
  our decision in Candido effectively rejects the holding in Ryan by
  determining  that an employee is not entitled to both workers' compensation
  benefits and recovery under a  common law negligence action.  See Candido,
  166 Vt. at 20, 687 A.2d  at 480.  This reading  comports with our previous
  decisions that hold both employers "primarily liable." Morrisseau, 123  Vt.
  at 78, 181 A.2d  at 59; King v. Snide, 144 Vt. 395, 401, 479 A.2d 752, 754
  (1984).  "[I]t is the  fact of liability that renders [an employer] immune
  from suit . . . not the fact that its carrier did not  actually pay [an
  injured employee's] worker's compensation benefits."  Walker v. United
  Steel  Works, Inc., 606 So. 2d 1243, 1244 (Fla. Dist. Ct. App. 1992). 

       The Court's interpretation of the Act is consistent with its
  legislative purpose: to provide  "expeditious and certain payments" to
  injured employees without requiring them to prove fault.  St.  Paul Fire &
  Marine Ins. Co. v. Surdam, 156 Vt. 585, 589, 595 A.2d 264, 266 (1991). 
  "Allowing an 

 

  employee with more than one employer to collect workers' compensation
  benefits from the first  employer and then turn around and sue the second
  in negligence frustrates this policy."  Candido,  166 Vt. at 18, 687 A.2d 
  at 478.

       We find that as a general contractor, Home Two was Welch's statutory
  employer, entitling it  to immunity under the Workers' Compensation Act. 


       Affirmed.


------------------------------------------------------------------------------
                                 Concurring


       SKOGLUND, J., concurring.   I concur in all aspects of the decision
  but disagree with this  Court's suggestion that only a defendant/movant
  could convert a Rule 12(b) motion to dismiss into a  motion for summary
  judgment. See ante at 2, n. 2.  Under Rule 12 of the Federal Rules of Civil 
  Procedure, either the pleader, the moving party, or both, may bring the
  conversion provision into  operation by submitting matters extraneous to
  the complaint.  See  Santiago v. Canon U.S.A., Inc.,  138 F.3d 1, 4 (1st
  Cir. 1998); Bapat v. Connecticticut Dep't of Health Servs., 815 F. Supp
  525, 529  (D. Conn. 1992); C. Wright & A. Miller, Federal Practice and
  Procedure § 1366 (2d ed. 1990).    

       We have not had occasion to specifically address this issue under our
  state rules of civil  procedure.  It may not be typical that the pleader
  would initiate such conversion to summary  judgment, as that may result in
  a binding final determination against him rather than a test of the law  of
  the case, but I believe it remains a possibility under V.R.C.P. 12 (b).  In
  the case at bar, the trial  court obviously did not convert the motion to
  dismiss to one of summary judgment as evidenced by  that court's entry
  order.  Further support for this conclusion is found in the fact that the
  court did not  notify the parties that he was considering conversion from a
  motion to dismiss to one of summary  judgment and, thus, provide them the
  opportunity to supplement their submissions as required by the  Rule. See
  V.R.C.P. 12(b).    I am authorized to say that Justice Johnson joins in
  this concurrence.


                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice



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                                  Footnotes


FN1.  Bobby Jo Welch claimed loss of spousal consortium as a result of her
  husband's  injuries.  Reference to "Welch" is to plaintiff Norman Welch.

FN2.  In its response to defendant's Rule 12(b)(6) motion, plaintiffs
  requested that it be  treated as one for summary judgment.  The Rule
  provides:

  If, on a motion asserting the defense . . . to dismiss for failure of the 
  pleading to state a claim upon which relief can be granted, matters 
  outside the pleading are presented to and not excluded by the court,  the
  motion shall be treated as one for summary judgment and  disposed of as
  provided in Rule 56, and all parties shall be given  reasonable opportunity
  to present all material made pertinent to such  a motion by Rule 56.

  V.R.C.P. 12(b) (emphasis added).

       The court was under no obligation to convert the motion to dismiss to
  a motion for summary  judgment since it was plaintiffs not defendant who
  filed an affidavit and statement of facts in  opposition to the motion to
  dismiss.  

       In any event, for the purposes of this case, we have considered
  plaintiffs' supplemental  affidavit and statement of material facts to be
  within the ambit of the pleadings.  In reviewing a  motion to dismiss, we
  assume that all factual allegations in the complaint are true, accept as
  true all  reasonable inferences that may be derived from plaintiffs'
  pleadings and assume that all contravening  assertions in defendant's
  pleadings are false.  Richards v. Town of Norwich, 169 Vt. 44, 726 A.2d 81 
  (1999).

FN3.  Section 624(a) of the Workers' Compensation Act states in pertinent
  part: 

    [w]here 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 a third party for
    damages in accordance with the  provisions of this section.

  21 V.S.A. § 624(a) (emphasis added).