Title: Wilson v. Rebsamen Insurance, Inc.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

O'Neal WILSON v. REBSAMEN INSURANCE, INC.
d/b/a Insurisk Insurance Services, Jim
Moorhead, and John Doe

97-14                                              ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered December 4, 1997


1.   Judgment -- summary judgment -- when appropriate -- factors on
     review. -- Summary judgment is appropriate only when there is
     no genuine issue of material fact, and the moving party is
     entitled to a judgment as a matter of law; in making this
     determination the supreme court reviews the evidence in the
     light most favorable to the party resisting the motion, and
     resolve all doubts and inferences in his favor. 

2.   Workers' compensation -- appellee's argument without merit --
     injury occurred well before effective date of act. --
     Appellees' argument that they were immune from appellant's
     tort action under Act 796 of 1993, codified at Ark. Code Ann.
      11-9-409(e) (Repl. 1996), was without merit where the
     emergency clause of Act 796 specifically stated that it was
     applicable only to injuries which occurred after July 1, 1993;
     here, appellant was injured on September 16, 1988, which was
     well before the applicable date of Act 796. 

3.   Appeal & error -- argument not raised at trial -- issue may
     not be raised for first time on appeal. -- Where appellees did
     not argue before the trial court that they were immune under
     Ark. Code Ann.  11-9-409(e), they were precluded from raising
     the issue for the first time on appeal.

4.   Workers' compensation -- Ark. Code Ann.  11-9-410 -- third
     party defined. -- A "third party" as used in Ark. Code Ann. 
     11-9-410 is some person or entity other than the first and
     second parties involved, and the first and second parties can
     only mean the injured employee and the employer or one liable
     under the compensation act.

5.   Workers' compensation -- workers' compensation carrier not
     third party under Ark. Code Ann.  11-9-410 -- workers'
     compensation carrier has same immunity from suit as provided
     to employer. -- A workers' compensation carrier is not a
     "third party" under  section 410 because it is the only other
     entity, besides the employer, that can be held "liable under
     the workers' compensation act"; hence, a workers' compensation
     carrier has the same immunity from suit as provided to the
     employer under Ark. Code Ann.  11-9-105. 

6.   Workers' compensation -- when co-employees immune from suit
     under Ark. Code Ann.  11-9-105. -- Co-employees are immune
     from suit under section 105 if at the time of the injury they
     were performing the employer's duty to provide a safe work
     place. 

7.   Workers' compensation -- Ark. Code Ann.  11-9-105 immunity
     strictly construed -- trial court erred in ruling appellee
     immune from tort action under exclusive remedy provision of
     Workers' Compensation Act. -- Although Ark. Code Ann.  11-9-
     105(a) provides that workers' compensation is the employee's
     exclusive remedy against the employer, the employee may sue a
     "third-party" who negligently causes his injuries under Ark.
     Code Ann.  11-9-410(a)(1)(A) (Repl. 1996); where the supreme
     court had strictly construed section 105 to extend immunity
     beyond the employer only to the workers' compensation carrier
     or to co-employees, the trial court erred when it ruled that
     appellees were immune from appellant's tort action under the
     exclusive remedy provision of the Worker's Compensation Act;
     appellees were not immune under section 105 because, as
     independent contractors hired by the business to perform
     safety inspections, they were "third parties" as defined by
     section 410.   

8.   Negligence -- negligent performance or undertaking -- duty of
     care owed to third parties. -- By undertaking a duty to the
     owner of a construction site, an independent consulting firm
     that agrees to perform safety inspections of an employer's
     premises and to maintain a safe premises, owes a duty of care
     to a third party who is injured due to the firm's negligent
     performance of its undertaking. 
9.   Torts -- safety inspectors owe duty of care to third-party
     employees under Restatement of Torts -- reasoning applied. -- 
     Pursuant to section (b) of the Restatement of Torts (Second)
     324A, an independent consulting firm that agrees to perform
     safety inspections of an employer's work place owes a duty of
     care to a third-party employee to perform those inspections
     with reasonable care; the safety consultant owes a duty of
     care under Restatement  324A(b) because it is reasonably
     foreseeable that if the inspections are done improperly a
     third-party employee will be injured.  

10.  Negligence -- authority to implement safety changes not
     relevant in determining whether consultant owes duty of care
     to injured employee -- issue of proximate causation and not
     duty. -- The authority to implement safety changes is not
     relevant in determining whether a consultant owes a duty of
     care to injured employee because the authority to implement
     safety changes is an issue of proximate causation and not
     duty.  

11.  Torts -- when duty of care owed by inspectors to third-party
     employees not imposed -- situations inapplicable -- appellees
     owed duty of care to third-party employees to perform safety
     inspections with reasonable care. -- Although some courts have
     refused to impose a duty of care when a safety inspection is
     performed by the employer's insurance carrier or when the
     inspections are performed by a government agency, neither
     exception was applicable here; thus, appellees' owed a duty of
     care to the employees of the business they inspected to
     perform safety inspections with reasonable care; the degree of
     the undertaking defines the scope of the duty of care owed to
     the third party; the trial court's order of summary judgment
     was reversed and the case remanded.

12.  Torts -- appellees agreed to inspect work site and warn of
     safety hazards -- appellees liable to third-party employee if
     they breached duty to inspect and that breach proximately
     caused third-parties injuries. -- Where appellees agreed to
     inspect the work site and warn the business about any detected
     safety hazards, appellees will be liable to the appellant only
     if it is determined that they breached those duties, and that
     such breach proximately caused appellant's injuries.

     Appeal from Jefferson Circuit Court; Fred D. Davis, Judge;
reversed and remanded.
     Trafford Law firm, by:  G. Ray Howard amd Duncan & Rainwater,
P.A., by:  Michael R. Rainwater, for appellant.
     Anderson & Kilpatrick, by:  Mariam T. Hopkins, for appellee.

     Annabelle Clinton Imber, Justice.
     This is a tort case in which the appellant, O'Neal Wilson,
sued the appellees, Rebsamen Insurance, d/b/a Insurisk Insurance
Services, and Jim Moorhead, for injuries he sustained while
working for his employer.  The trial court granted the appellees
summary judgment because it ruled that they were immune from suit
under the exclusive remedy provision of the workers' compensation
statute, and because they did not owe a duty of care to Wilson. 
We disagree with both of these rulings, and accordingly we
reverse and remand.
     Insurisk Insurance Services, a company owned and operated by
Rebsamen Insurance, conducts loss-control surveys and recommends
safety improvements for its customers.  In the late 1970's,
Arkansas Oak Flooring hired Insurisk to conduct loss-control
surveys of its facilities in an effort to contain the rising
costs of workers' compensation insurance coverage.  Specifically,
Insurisk contractually agreed to make inspections and provide
recommendations regarding safety.  Insurisk did not have the
authority to implement the program or to make the suggested
safety improvements.  Jim Moorhead, Insurisk's vice-president of
management services, was in charge of the project.  
     On September 16, 1988, O'Neal Wilson was injured while he
was working for his employer, Arkansas Oak Flooring, when he fell
from a catwalk that did not have safety rails.  Sometime after
the accident, Arkansas Oak's workers' compensation carrier, Home
Insurance Company, paid Wilson permanent and total disability
benefits.  
     On April 23, 1993, Wilson filed a complaint against
Insurisk and Jim Moorhead alleging that they were negligent in
failing to discover, warn about, and correct the safety hazard
posed by the unguarded catwalk.  Wilson also claimed that
Moorhead and Insurisk affirmatively hid the existence of the
defect from Arkansas Oak by giving the company a clearance on
overall safety when it knew or should have known of the unsafe
condition of the catwalk.  Finally, Wilson asserted that Moorhead
and Insurisk had a "silent agreement" with Arkansas Oak to ignore
safety violations so that Arkansas Oak could obtain "favorable
insurance treatment."
     On May 30, 1995, Insurisk and Moorhead filed a motion for
summary judgment contending that they did not owe a duty of care
to Wilson, and that Wilson's lawsuit was barred by the exclusive
remedy provision of the workers' compensation statute.  Insurisk
and Moorhead attached to their motion the affidavits of John Fox,
Jr., the President of Arkansas Oak, Glenn Richards, Arkansas
Oak's plant supervisor from 1978 to 1980, and Jim Moorhead.  In
all three affidavits, the affiants declared that prior to
Wilson's accident Jim Moorhead recommended both orally and in
writing that Arkansas Oak install guardrails on the catwalk to
remedy the potentially dangerous condition.  In addition, the
affiants declared that Moorhead and Insurisk had no authority to
implement their suggested changes.  Finally, John Fox explained
in his affidavit that Arkansas Oak decided against making the
changes recommend by Moorhead and Insurisk "due to cost and
feasibility considerations."
     In his response, Wilson produced the affidavits of William
Fish, Larry Borecky, and Boulter Kelsey.  William Fish witnessed
Wilson's fall, and testified that there were no guardrails on the
catwalk at the time of the accident.  Larry Borecky, Arkansas
Oak's safety manager who was hired one month before the accident,
declared in his affidavit that Insurisk and Moorhead failed to
notify him about the safety problem created by the unguarded
catwalk.  Finally, H. Boulter Kelsey, Jr., a professional
engineer, declared in his affidavit that the unguarded catwalk
created an unreasonably dangerous condition that should have been
detected by Moorhead and Insurisk.     
     On September 20, 1996, the trial court ruled that Insurisk
and Moorhead were immune from suit under the exclusive remedy
provision of the workers' compensation statute, and that they did
not owe a duty of care to Wilson.  Accordingly, the court granted
summary judgment to Insurisk and Moorhead.  From the order of
summary judgment, Wilson filed a timely notice of appeal.
     As we have stated on numerous occasions, summary judgment is
appropriate only when there is no genuine issue of material fact,
and the moving party is entitled to a judgment as a matter of
law.   Wheeler v. Phillips Dev. Corp., 329 Ark. 354, 947 S.W.2d 380 (1997); Porter v. Harshfield, 329 Ark. 130, 948 S.W.2d 83
(1997).  In making this determination, we review the evidence in
the light most favorable to Wilson, as the party resisting the
motion, and resolve all doubts and inferences in his favor. 
Wheeler, supra; Porter, supra. 
        I.  Immunity under the Workers' Compensation Act
     For his first argument on appeal, Wilson contends that the
trial court erred when it ruled that Insurisk and Moorhead were
immune from liability under the Workers' Compensation Act. 
Whether a safety consultant, which does not provide workers'
compensation coverage to the employer, is immune from tort
liability under the Workers' Compensation Act is an issue of
first impression in Arkansas.
                  A.  Ark. Code Ann.  11-9-409
     Insurisk and Moorhead contend that they are immune from
Wilson's tort action under Act 796 of 1993, codified at Ark. Code
Ann.  11-9-409(e) (Repl. 1996), which states that:
     the insurance company, the agent, servant, or employee
     of the insurance company or self-insured employer, or a
     safety consultant who performs a safety consultation
     under this section shall have no liability with respect
     to any accident based on the allegation that such
     accident was caused or could have been prevented by a
     program, inspection, or other activity or service
     undertaken by the insurance company or self-insured
     employer for the prevention of accidents in connection
     with operations of the employer.
The emergency clause of Act 796, however, specifically states
that it "shall apply only to injuries which occur after July 1,
1993."  1993 Ark. Acts 796,  41.  In this case, Wilson was
injured on September 16, 1988, which is well before the
applicable date of Act 796.  In addition, Insurisk and Moorhead
did not argue before the trial court that they were immune under
Ark. Code Ann.  11-9-409(e), and thus they are precluded from
raising this issue for the first time on appeal.  See, McGhee v.
State, 330 Ark. 38,    S.W.2d    (1997); Ouachita Wilderness
Inst., Inc. v. Mergen, 329 Ark. 405, 947 S.W.2d 780 (1997).  
             B.  Ark. Code Ann.  11-9-105 and 410
     Instead of arguing that they were immune under Ark. Code
Ann.  11-9-409(e), Insurisk and Moorhead argued before the trial
court that they were immune from Wilson's tort action under Ark.
Code Ann.  11-9-105(a) (Repl. 1996), which states that:
          The rights and remedies granted to an employee
     subject to the provisions of this chapter, on account
     of injury or death, shall be exclusive of all other
     rights and remedies of the employee, his legal
     representative, dependents, next of kin, or anyone
     otherwise entitled to recover damages from the employer
     . . . on account of the injury or death, and the
     negligent acts of a coemployee shall not be imputed to
     the employer.
Although Ark. Code Ann.  11-9-105(a) provides that workers'
compensation is the employee's exclusive remedy against the
employer, the employee may sue a "third-party" who negligently
causes his injuries under Ark. Code Ann.  11-9-410(a)(1)(A)
(Repl. 1996), which provides that:
         The making of a claim for compensation against any
    employer or carrier for the injury or death of an employee
    shall not affect the right of the employee, or his
    dependents, to make a claim or maintain an action in court
    against any third party for the injury, but the employer or
    his carrier shall be entitled to reasonable notice and
    opportunity to join in the action.
(Emphasis added.)  On appeal, Wilson argues that Insurisk and
Moorhead are not immune under the exclusive remedy provision of
section 105 because they are "third parties" as defined by
section 410.  We agree. 
     In Neal v. Oliver, 246 Ark. 377,