Title: Franks v. Olson

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Franks v. Olson1999 WY 25975 P.2d 588Case Number: 97-147Decided: 03/05/1999Supreme Court of Wyoming
 
James FRANKS, Appellant (Plaintiff),

v.

Linne OLSON; and GESCO 
Management Corp., a Wyoming corporation, Appellees 
(Defendants).

Appeal from the District 
Court, Carbon County, Kenneth Stebner, J.

Vance Countryman 
of Hooper Law Offices, P.C., Riverton, Wyoming, Representing 
Appellant.

Michael 
Rosenthal and Dominique D.Y. Cone of Hathaway, Speight & Kunz, Cheyenne, 
Wyoming, Representing Appellees.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and TAYLOR,* 
JJ.

* Chief Justice at time of 
expedited conference; retired November 2, 1998.

THOMAS, 
Justice.

[¶1]      The primary issue 
in this case is whether James Franks (Franks) is foreclosed from recovering 
damages for personal injuries from Linne Olson, a retired President and General 
Manager of L.M. Olson, Inc., because of the provisions of the Wyoming Worker's 
Compensation Act, Wyo. Stat. Ann. §§ 27-14-101 through 27-14-805 (Michie Repl. 
1991). Franks sought recovery for injuries he sustained when concrete blocks in 
a retaining wall that was being rebuilt fell on him, alleging that Linne Olson 
was negligent in designing the project. Franks was employed by L.M. Olson, Inc. 
(Olson), and Linne Olson had been retained as a casual employee by Olson for the 
project of rebuilding the retaining wall. The major question depends on whether 
Linne Olson was an employee of Olson. The trial court ruled that Linne Olson was 
an employee of Olson, and it entered summary judgment in favor of Linne Olson. 
The record discloses no genuine issues of material fact relating to Linne 
Olson's employment status, and liability on his part is foreclosed by the 
provisions of the Wyoming Worker's Compensation Act. The Order Granting Motion 
for Summary Judgment of Defendant Linne Olson is affirmed.

[¶2]      A second issue is 
raised with respect to whether Linne Olson and two other individuals, who were 
employees of Olson, also were employed by GESCO Management Corp. (GESCO) so that 
it could be sued under a theory of vicarious liability. Consistent with its 
ruling about the status of Linne Olson, the trial court determined that all 
three were employees of Olson, not GESCO. Based on that ruling, a summary 
judgment also was entered in favor of GESCO. On this question, the record 
discloses no genuine issues of material fact, and the law correctly was applied 
to those facts. GESCO has no vicarious liability as an employer of any of the 
individuals named in the complaint. The Order Granting Motion for Summary 
Judgment of Defendant GESCO Management Corp. is affirmed.

[¶3]      In the Brief of 
Appellant, filed on behalf of Franks, these issues are 
raised:

Whether Linne 
Olson, hereafter referred to as Linne, was a co-employee of the Appellant as 
defined by and therefore entitled to Summary Judgment as a matter of 
law.

Whether there 
was an issue of fact precluding the entry of Summary Judgment in favor of 
GESCO.

[¶4]      In the Brief of 
Appellees, filed on behalf of Linne Olson and GESCO, the issues that are raised 
are stated in this way:

A. Did the trial 
court properly grant summary judgment to defendant/appellee Linne 
Olson?

B. Did the trial 
court properly grant summary judgment in favor of defendant/appellee GESCO 
Management Corporation ("GESCO")?

The Reply Brief 
of Appellant does not set forth any additional issues.

[¶5]      In 1989, Linne 
Olson was the President and General Manager of Olson. When he retired in 
December of 1990, his son, Gregg Olson, assumed his duties, and continues in the 
positions of President and General Manager. Counting stock owned by his wife, 
Linne Olson remained a majority shareholder in Olson. He serves as a member of 
the board of directors, and receives a fee for attending meetings. During the 
year of 1989, Olson commenced the construction of a building in Rawlins on a 
tract of land that was owned by the corporation. Linne Olson was active when the 
project was started, but he retired before it was 
completed.

[¶6]      In order to 
create a level surface for parking at the new building, Olson built a barrier on 
the east side of the property. The barrier consisted of two foot by two foot by 
four foot concrete blocks placed end to end on top of the ground surface at the 
property boundary. Each of those blocks weighed approximately 2,500 pounds. Fill 
dirt then was packed against the blocks to create the level parking surface. 
After it was completed, the building was leased to the Bureau of Land Management 
(BLM), and Olson later sold the property to another party who continued to lease 
it to the BLM.

[¶7]      The lot adjacent 
to the parking area was utilized for a trailer court, which is owned by Jewell 
Withrow. In 1991, the Withrows recognized that the vegetation on the property 
bordering the BLM building was dying. Investigation disclosed that, at the time 
the parking lot was constructed, a layer of the defoliant was spread upon the 
ground beneath the asphalt to retard weed growth. It appeared that the defoliant 
had migrated under the retaining wall and onto the Withrow property. Ron 
Withrow, the ex-husband of Jewell Withrow, contacted Linne Olson about the 
problem.

[¶8]      Linne Olson had 
enjoyed a long friendship and business relationship with Ron Withrow, and Linne 
Olson and Gregg Olson agreed that Linne would work on the problem with Withrow, 
on behalf of Olson. A series of meetings occurred between Linne Olson, Gregg 
Olson, and Ron Withrow, and Olson agreed to treat the contaminated soil to 
neutralize the defoliant and to build a new retaining wall. Linne Olson designed 
the plans for the new retaining wall between the properties. Ron Withrow, who 
had extensive excavating experience, contracted to perform all the excavating 
work, with the remaining work on the project to be accomplished by 
Olson.

[¶9]      Linne Olson 
delivered his sketch of the retaining wall to the Olson supervisor, and Olson's 
employees worked at the job site for several days prior to the accident that is 
the subject matter of this case. They had been tearing down the old fence, 
removing fence posts, and clearing away bushes and other debris. Franks joined 
the Olson crew, consisting of two other Olson employees, for the first time on 
May 13, 1992, and the accident occurred on the same day.

[¶10]   At the time the crew arrived, 
Withrow already had started using a backhoe to dig a trench adjacent to the 
concrete blocks forming the old retaining wall. Franks and another member of the 
crew were working in the trench some distance away from Withrow when they heard 
the bucket of the backhoe strike against the blocks. One of the concrete blocks 
near the backhoe fell into the trench, and a domino effect resulted in which all 
of the concrete blocks began to topple over, one after the other. The other 
employee stepped out of the trench unharmed, but Franks was pinned by one of the 
falling blocks. He alleges injuries to his hamstring muscles, thigh, buttock and 
back.

[¶11]   In his original complaint, filed on 
March 14, 1995, Franks named ten defendants, including Linne Olson. Linne Olson 
filed a motion for summary judgment, asserting that he was employed by Olson; 
was a co-employee of Franks; and the Wyoming Worker's Compensation Act barred 
Franks' complaint for ordinary negligence. The trial court agreed with Linne 
Olson's position, and it granted his motion for summary 
judgment.

[¶12]   On May 13, 1996, Franks filed a 
First Amended Complaint in which he asserted additional claims against 
additional defendants, including GESCO. Franks' theory as to GESCO was that 
GESCO had been employed by Olson to provide management services for Olson's 
general contractor business. He contended that, in its management capacity, 
GESCO engaged the services of Linne Olson to design the retaining wall in 
question. Franks alleged that Linne Olson negligently designed the retaining 
wall project, and that his negligence was the direct and proximate cause of 
Franks' injuries. Franks contended that GESCO, as the employer of Linne Olson, 
was vicariously liable for his negligent acts.

[¶13]   GESCO was a party to a written 
agreement with Olson pursuant to which GESCO provided management services and 
personnel. Of particular interest in this case, GESCO provided the services of 
Gregg Olson, the President and General Manager of Olson, and Fred Hansen, the 
Controller and Corporate Secretary. The agreement provided that the services 
"shall be performed pursuant to the direction and control of the Board of 
Directors of [Olson] * * *." As consideration for these management services, 
Olson reimbursed GESCO for the salaries of Gregg Olson and Fred Hansen on a 
monthly basis. Gregg Olson explained on the record that GESCO did not exercise 
any direct or indirect control over Olson business operations. He also stated 
that GESCO provided no safety training for Olson or any of its employees. Safety 
training and safety information were provided by Olson supervisors at each 
respective job site. Whenever necessary, Fred Hansen compiled safety information 
to distribute to Olson supervisors. Finally, GESCO contended that Linne Olson 
was not employed by GESCO, and, for that reason, Franks' claim of vicarious 
liability was fallacious.

[¶14]   GESCO relied upon this information 
in filing its motion for summary judgment. The trial court agreed with GESCO's 
position, and granted the motion for summary judgment. The trial court found 
that Franks had failed to present any genuine issue of material fact and that 
GESCO was entitled to judgment as a matter of law. Franks' appeal is taken from 
the respective orders granting Linne Olson's and GESCO's motions for summary 
judgment.

[¶15]   Our review of an order of the trial 
court granting a summary judgment is a de novo review. Krier v. Safeway Stores 
46, Inc., 943 P.2d 405, 408 (Wyo. 1997); Knudson v. Hilzer, 551 P.2d 680, 685 
(Wyo. 1976). We examine the record from the perspective most favorable to the 
party who opposed the motion to determine whether a genuine issue exists as to 
any material fact that prevents disposition of the case as a matter of law. 
Nowotny v. L & B Contract Industries, Inc., 933 P.2d 452, 455 (Wyo. 1997) 
(quoting Thomas by Thomas v. South Cheyenne Water and Sewer Dist., 702 P.2d 1303, 1304 (Wyo. 1985)); Bluejacket v. Carney, 550 P.2d 494, 497 (Wyo. 
1976).

[¶16]   A number of years ago, we 
articulated the process for addressing motions for summary 
judgment:

The object of a 
motion for summary judgment is to separate what is formal or pretended in denial 
or averment from what is genuine and substantial so that only the latter may 
subject a suitor to the burden of a trial, the purpose being to eliminate formal 
trials where only questions of law are involved. Vipont Mining Co. v. Uranium 
Research and Development Co., Wyo., 376 P.2d 868 (1962); and Carter v. Davison, 
Wyo., 359 P.2d 990 (1961). The formal judgment should be granted only where it 
is clear that no issue of material fact is involved, and where inquiry into the 
facts is not desirable to clarify the application of the law. Forbes Co., Inc. 
v. MacNeel, Wyo., 382 P.2d 56 (1963). Where there are genuine issues of material 
fact the summary judgment should not be granted. Gilliland v. Steinhoefel, Wyo. 
521 P.2d 1350 (1974); Kover v. Hufsmith, Wyo., 496 P.2d 908 (1972); McClure v. 
Watson, Wyo., 490 P.2d 1059 (1971), Low v. Sanger, Wyo., 478 P.2d 60 (1970); 
Godard v. Ridgway, Wyo. 445 P.2d 757 (1968). On the other hand, the whole 
purpose of the procedural technique of a summary judgment would be defeated if 
cases could be forced to trial by the mere assertion that a genuine issue of 
material fact exists. Maxted v. Pacific Car & Foundry Company, Wyo., 527 P.2d 832 (1974); LeGrande v. Misner, Wyo. 490 P.2d 1252 (1971); McCamon v. 
Darnall Realty, Wyo., 444 P.2d 623 (1968); In Re Wilson's Estate, Wyo., 399 P.2d 1008 (1965). It is the duty of the trial judge to ascertain what material facts 
exist without substantial controversy. Clouser v. Spaniol Ford, Inc., Wyo., 522 P.2d 1360 (1974). The propriety of granting a summary judgment depends then upon 
the correctness of the court's dual findings that there was no genuine issue as 
to any material fact and that the prevailing party was entitled to judgment as a 
matter of law. Dixon v. Credit Bureau of Douglas, Wyo., 419 P.2d 707 
(1966).

Johnson v. 
Soulis, 542 P.2d 867, 871 (Wyo. 1975). We went on to define a material fact in 
Johnson, 542 P.2d at 872:

A fair summary * 
* * is that for purposes of ruling upon a motion for summary judgment a fact is 
material if proof of that fact would have the effect of establishing or refuting 
one of the essential elements of a cause of action or defense asserted by the 
parties. Such a fact would necessarily affect the application of the appropriate 
principle of law to the rights and obligations of the parties. In considering a 
motion for summary judgment it is appropriate for a court to identify the 
essential elements of the plaintiff's cause or of the defense asserted, and to 
then determine the materiality of any fact in the light of whether it will 
establish or refute one of those essential elements. If it does not have that 
effect, it would not be a material fact in the controversy, and a genuine issue 
with respect to that fact, no matter how sharp, would not foreclose the granting 
of a motion for summary judgment.

 

We continue to 
apply this definition. Mize v. North Big Horn Hosp. Dist., 931 P.2d 229, 232 
(Wyo. 1997).

[¶17]   It is appropriate for a court to 
enter a summary judgment when no genuine issue exists as to any material fact 
and the prevailing party is entitled to have a judgment as a matter of law. 
Estate of Noell v. Norwest Bank Wyoming, N.A., 960 P.2d 499, 500 (Wyo. 1998). 
The burden is assigned to the moving party to demonstrate initially that no 
genuine issue of material fact exists. Weber v. McCoy, 950 P.2d 548, 551 (Wyo. 
1997); Gilliland v. Steinhoefel, 521 P.2d 1350, 1352 (Wyo. 1974). If the moving 
party successfully carries that burden, the party who opposes the summary 
judgment must produce evidence to demonstrate that a genuine issue of material 
fact exists. Weber, 950 P.2d  at 551. We also follow the rule that we are 
entitled to affirm the grant of a summary judgment upon any correct legal ground 
appearing in the record. Newberry v. Board of County Com'rs of Fremont County, 
919 P.2d 141, 144 (Wyo. 1996).

[¶18]   In order to prevail in his action 
against Linne Olson, Franks needed to establish that Linne Olson was not an 
employee of Olson and, therefore, not a co-employee of Franks. Similarly, the 
right to recover against GESCO depends upon Linne Olson and others, who were 
accused of negligent acts, being identified as employees of GESCO. Our 
examination of the record satisfies this Court that Franks offered no evidence 
to demonstrate a genuine issue as to any material facts with respect to 
employment status, and summary judgment properly was granted to Linne Olson and 
GESCO.

[¶19]   An employee who is covered by 
worker's compensation with an employer who is current in its contributions must 
rely upon the Wyoming Worker's Compensation Act as his exclusive remedy as to 
his employer or co-employees acting within the scope of their employment. Wyo. 
Stat. Ann. § 27-14-104(a) (Michie 1997). For those claims that accrue between 
July 1, 1987, and February 18, 1993, a co-employee is liable for injuries only 
if guilty of culpable negligence. Copp v. Redmond, 858 P.2d 1125, 1126-27 (Wyo. 
1993).1 The culpable negligence standard 
would apply in this case because Franks was injured in 1992. Franks does not 
allege culpable negligence on the part of Linne Olson, and his claim for 
recovery depends upon Linne Olson not being an employee of 
Olson.

[¶20]   The Wyoming Worker's Compensation 
Act, in effect in 1992, defined an employee in this way:

"Employee" means 
any individual entering into the service of or working under contract of 
services or apprenticeship with an employer engaged in an extrahazardous 
occupation for which compensation is paid except as provided under this 
paragraph. * * * "Employee" does not include any individual whose employment is 
purely casual and not for the purpose of the usual trade or business of the 
employer * * *.

Wyo. Stat. Ann. 
§ 27-14-102(a)(vii) (Michie Repl. 1991). Franks contends that Linne Olson was 
not an employee of Olson, and his argument is centered on the statutory 
requirement that an individual must receive compensation to come within the 
definition of "employee." Linne Olson argues that the compensation he received 
as a director of Olson was sufficient to bring him under the statute, but Franks 
asserts that the director's pay does not satisfy the requirement of compensation 
under the Wyoming Worker's Compensation Act.

[¶21]   The statutory definition does not 
require any minimum level of compensation. Franks relies upon the Wyoming 
Business Corporation Act, which provides: " '[e]mployee' includes an officer but 
not a director. A director may accept duties that make him also an employee[.]" 
Wyo. Stat. Ann. § 17-16-140(a)(viii) (Michie Repl. 1989). The trial court ruled 
that when Linne Olson agreed to talk to the Withrows on behalf of Olson and 
later was engaged in designing a new retaining wall, he was "accept[ing] duties 
that make him also an employee[.]" Wyo. Stat. Ann. § 17-16-140(a)(viii).The 
additional duties did not require additional wages in order to bring Linne Olson 
within the statutory definition of an employee. Whether the undisputed facts " ' 
"constitute an employment relationship is strictly a question of law." ' " 
Stratman v. Admiral Beverage Corp., 760 P.2d 974, 980 (Wyo. 1988) (quoting Joyce 
v. Super Fresh Food Markets, Inc., 815 F.2d 943, 947 (3rd Cir. 1987) and English 
v. Lehigh County Authority, 286 Pa. Super. 312, 322, 428 A.2d 1343, 1348 
(1981)). In the absence of culpable negligence, Linne Olson, as a co-employee of 
Franks, was not liable for his injuries. The Order Granting Motion for Summary 
Judgment of Defendant Linne Olson is affirmed.

[¶22]   Franks' theory of recovery against 
GESCO was incorporated in his amended complaint in which he asserted negligence 
on the part of GESCO and acts of negligence on the part of various individuals, 
for which he alleged GESCO was vicariously liable. The negligence claim was 
based upon allegations that GESCO assumed responsibility for safety at Olson 
work sites. The claim of vicarious liability also asserted that GESCO should be 
liable for the acts of Linne Olson when he designed the retaining wall. The 
trial court granted summary judgment in favor of GESCO on both of these claims. 
The entry of a summary judgment is proper "against a party who fails to make a 
showing sufficient to establish the existence of an element essential to that 
party's case, and on which that party will bear the burden of proof at trial." 
Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 
(1986).

[¶23]   Franks contends that GESCO employed 
Gregg Olson and Fred Hansen, and is liable for any negligence on their part. 
That contention could support liability unless Gregg Olson and Fred Hansen were 
borrowed servants of Olson. According to the "borrowed servant" doctrine, when 
one employer provides an employee to another employer, the employee becomes the 
"borrowed servant" of the second employer for that particular transaction. If 
the second employer exercises control over the "borrowed servant," the second 
employer assumes liability for the activities of that borrowed employee, and the 
original employer is not liable for any of that employee's conduct. Blessing v. 
Pittman, 70 Wyo. 416, 251 P.2d 243, 246-47 (1952); 27 Am.Jur.2d Employment 
Relationship § 462 (1996). In determining which employer must assume liability, 
the court looks to the dual factors of who controls the employee and whose 
business the employee is furthering at the time of the accident. Blessing, 251 P.2d  at 247. Under our law, however, the primary test to establish the existence 
of employment is the right of control of the alleged employer. Claims of Naylor, 
723 P.2d 1237, 1240 (Wyo. 1986) (quoting Fox Park Timber Co. v. Baker, 53 Wyo. 
467, 84 P.2d 736, 743 (Wyo. 1938)).

[¶24]   The factor of whose business the 
employee was furthering is not helpful in this case. GESCO's business consisted 
of providing management personnel to perform work for Olson. When Gregg Olson 
and Fred Hansen were engaged in the performance of their duties at Olson, they 
necessarily were furthering and doing the business of both employers. Blessing, 
251 P.2d  at 247. Under these circumstances, the primary test to apply is the 
right of control test. GESCO and Franks both contend that the "right of control" 
test supports their respective positions.

[¶25]   GESCO relies upon the management 
agreement which provides explicitly that services performed under the agreement 
"shall be performed pursuant to the direction and control of the Board of 
Directors of [Olson] * * *." GESCO further argues that Olson had the sole right 
to terminate Gregg Olson and Fred Hansen. Franks relies upon different language 
from the management agreement which states that management services are to be 
"mutually determined by both parties." In addition, Franks contends that many of 
the same individuals (including Gregg Olson) are directors of both GESCO and 
Olson. He argues that since GESCO and Olson have similar boards or directors and 
ownership, genuine issues of material fact exist as to who was exercising the 
right of control when decisions were made with respect to the job on which he 
was injured. Franks also asserts that the business affiliation between Olson and 
GESCO was not an arm's length relationship.

[¶26]   We have considered a similar 
relationship in the past, and we then decided:

"[A] business 
enterprise has a range of choice in controlling its own corporate structure. But 
reciprocal obligations arise as a result of the choice it makes. The owners may 
take advantage of the benefits of dividing a business into separate corporate 
parts, but principles of reciprocity require that courts also recognize the 
separate identities of the enterprises when sued by an injured 
employee."

Fiscus v. 
Atlantic Richfield Co., 742 P.2d 198, 201 (Wyo. 1987) (quoting Boggs v. Blue 
Diamond Coal Co., 590 F.2d 655, 662 (6th Cir.), cert. denied, 444 U.S. 836, 100 S. Ct. 71, 62 L. Ed. 2d 47 (1979)). Franks theorizes that two companies with such 
similar ownership and similar boards of directors could not isolate the actions 
of their dual employees for the sake of liability.

[¶27]   While Franks questions the GESCO 
structure, he did not present any evidence that GESCO had the right to control 
the manner and method in which Gregg Olson and Fred Hansen performed their 
day-to-day duties for Olson. Unsupported hypotheses do not permit us to 
disregard separate corporate entities. The evidence in the record demonstrates 
that GESCO did nothing more than provide management employees to Olson. In 
addition, the record establishes that the directors of Olson asserted 
employer-type control over Fred Hansen and Gregg Olson.

[¶28]   Under the process that we described 
earlier, GESCO made the requisite initial showing that no genuine issue of 
material fact existed as to Olson's right of control over Gregg Olson and Fred 
Hansen. The burden was then upon Franks to produce specific facts that would 
suffice to demonstrate the existence of a genuine issue of material fact. Franks 
did not produce evidence that would create any genuine issue of material fact as 
to the right of control over Gregg Olson and Fred Hansen. The record 
demonstrates that Olson controlled the actions of all members of its management 
team. The result is that Gregg Olson and Fred Hansen are borrowed servants, and 
GESCO cannot be held liable for their actions in this case. Summary judgment for 
GESCO, based upon that theory of vicarious liability for the acts of Gregg Olson 
and Fred Hansen, was appropriate.

[¶29]   Franks also argues that GESCO is 
vicariously liable for the actions of Linne Olson. He argues that Linne Olson 
became an agent of GESCO when he designed the retaining wall because Gregg 
Olson, a GESCO employee, directed him to design the project. The rationale set 
forth above demonstrates that Gregg Olson was subject to the right of control of 
Olson and that Linne Olson was an employee of Olson. Franks does not even allege 
that Linne Olson was also an employee of GESCO. Under the circumstances, there 
is a failure to produce evidence that would support any genuine issue of 
material fact that could possibly lead to liability on the part of GESCO for 
Linne Olson's actions. The Order Granting Motion for Summary Judgment of 
Defendant GESCO Management Corp. is affirmed.

[¶30]   We are satisfied that there is no 
reversible error in the record, and the rulings of the trial court in this case 
and the summary judgments granted to both Linne Olson and GESCO are 
affirmed.

Footnotes

1 Since 1993, 
the statute immunizes co-employees from suit for all but intentional acts. Wyo. 
Stat. Ann. § 27-14-104(a) (Michie 1997).