IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

TIMOTHY LEE, a single man, 

Plaintiff/Appellant/Cross-Appellee,

v. 

 

M AND H ENTERPRISES, INC. dba

MARTIN HARRIS CONSTRUCTION, a Nevada corporation, 

Defendant/Appellee/Cross-Appellant,

 

and 

 

WAL-MART STORES, INC. dba SAM’S 

CLUB, a foreign corporation, 

Defendant/Appellee.

 

No. 1 CA-CV 13-0257

Appeal from the Superior Court in Maricopa County

No. CV2010-001154

The Honorable Mark H. Brain, Judge

The Honorable Joseph B. Heilman, Judge, Retired

The Honorable Donald Daughton, Judge, Retired

AFFIRMED

COUNSEL

Hopkins Law Offices PLC, Phoenix

By Stephen M. Hopkins

Counsel for Plaintiff/Appellant/Cross-Appellee
2

Lewis Brisbois Bisgaard & Smith LLP, Phoenix

By James K. Kloss

Counsel for Defendant/Appellee/Cross-Appellant M and H Enterprises

The Law Office of Don D. Skypeck

By Douglas H. Fitch

Counsel for Defendant/Appellee Wal-Mart Stores, Inc.

OPINION

Judge Michael J. Brown delivered the opinion of the Court, in which 

Presiding Judge Kent E. Cattani and Judge Margaret H. Downie joined.

B R O W N, Judge:

¶1 Timothy Lee suffered serious injuries while performing cleanup duties during the final stages of construction at a Sam’s Club store

located on property owned by Wal-Mart Stores, Inc. (“Wal-Mart”). Lee was 

employed at the time by Able Body Labor (“Able Body”)

1, which supplied 

workers for M&H Enterprises, Inc. (“M&H”), the general contractor on the 

project. After Lee successfully pursued a workers’ compensation claim 

against Able Body, he sued Wal-Mart and M&H for negligence. 

¶2 On appeal, Lee challenges the trial court’s orders granting 

summary judgment in favor of Wal-Mart and granting judgment as a 

matter of law in favor of M&H. The issues we address are: (1) whether Lee, 

as an employee of an independent contractor, could properly assert a 

vicarious liability negligence claim against Wal-Mart; (2) whether Lee 

presented evidence creating a material factual dispute as to whether WalMart retained some control over his work and was therefore directly 

negligent; and (3) whether the lent employee doctrine relieves M&H from 

liability because Lee elected to pursue a workers’ compensation award for 

his injuries. For the following reasons, we affirm.

 

1 The full name of the subcontractor is Professional Staffing, A.B.T.S., 

Inc., d/b/a Able Body Labor. As alleged in the complaint, Able Body is a 

“manpower staffing agency.” 
LEE v. M & H, WAL-MART

Opinion of the Court

3

BACKGROUND

¶3 At the request of M&H, Able Body provided workers to 

perform clean-up work at the Sam’s Club construction site. Lee, who began 

employment with Able Body in 2007, had been regularly assigned such 

work over the course of several months. In January 2009, shortly before the 

planned opening date of the store, Able Body directed Lee to report for 

work at the construction site. An M&H representative instructed Lee to 

clean the tops of various freezers, which were roughly ten feet high. Lee 

used an onsite scissor-lift to access the portion that needed cleaning, and 

proceeded to remove debris. Next to the ten-foot freezers, separated by a 

small section of fiberboard, were taller freezers, roughly sixteen feet high. 

Rather than use the scissor-lift to reach the taller freezers, Lee attempted to 

access them by stepping on the fiberboard. While doing so, the fiberboard 

collapsed and Lee was seriously injured when he fell to the floor. 

¶4 Lee sued Wal-Mart and M&H, alleging they each acted 

negligently by failing to maintain a safe place to work, free of hidden 

dangers. Lee also alleged that both Wal-Mart and M&H were in control of 

the property and therefore owed him a “non-delegable duty to . . . provide 

a safe place to work, free of hidden dangers.” Although he acknowledged 

receipt of an award for workers’ compensation benefits (based on his claim 

against Able Body), Lee asserted the award was inadequate to compensate 

him for his injuries. 

¶5 M&H moved for summary judgment, asserting that the lent 

employee doctrine barred Lee’s cause of action because he had elected to 

pursue his statutory right to obtain a workers’ compensation award for his 

injuries. The trial court denied the motion. After reassignment of the case 

to a different judge, M&H filed a second motion for summary judgment. 

M&H argued that if it had a duty to control Lee’s actions, then his only 

remedy was workers’ compensation; but if M&H had no duty to control, 

then as a matter of law it could not have breached any duty to Lee. 

¶6 Wal-Mart also filed a motion for summary judgment, arguing 

that as a landowner, it did not owe a non-delegable duty to Lee because his 

injury occurred while he was working as an employee of an independent 

contractor. Wal-Mart also asserted it did not contractually assume 

responsibility or exercise actual control over the work of M&H, Able Body, 

or Lee. Lee countered that, notwithstanding his status as an employee of a 

subcontractor and the terms of Wal-Mart’s contract with M&H, a 

landowner has a non-delegable duty to provide a reasonably safe place for 
LEE v. M & H, WAL-MART

Opinion of the Court

4

business invitees and there was evidence that Wal-Mart and M&H

exercised shared control over the premises at the time of the accident.

¶7 The trial court denied M&H’s motion but granted Wal-Mart’s, 

finding that Wal-Mart had hired M&H to build the Sam’s Club and thereby 

“effectively relinquished control of (and liability for), the project to [M&H]”

through its contract. The court explained that although the project was 

nearing completion and Wal-Mart possibly had “taken possession” of part 

of the site, there was “nothing in the record suggesting that Wal-Mart had

taken possession or control of the area in which Lee was working, nor that 

it controlled Lee’s work.” The court denied Lee’s subsequent motion for 

reconsideration and/or new trial, and entered judgment in favor of WalMart. 

¶8 A jury trial ensued on Lee’s claim against M&H. At the close 

of Lee’s presentation of evidence, M&H moved for judgment as a matter of 

law, reasserting its argument that Lee’s claims were barred based on the 

lent employee doctrine. The court granted the motion, explaining that a 

contract for hire was implied from the circumstances and finding that M&H

exercised control over Lee and no reasonable jury could conclude 

otherwise. Therefore, applying the lent employee doctrine, the court found

that the exclusive remedy of workers’ compensation barred Lee from 

pursuing civil damages.

¶9 The court entered a final judgment in favor of M&H. Lee

timely appealed and M&H cross-appealed the denial of its second motion 

for partial summary judgment.

DISCUSSION

I. Wal-Mart’s Motion for Summary Judgment

¶10 Summary judgment is proper when “there is no genuine 

dispute as to any material fact and the moving party is entitled to judgment 

as a matter of law.” Ariz. R. Civ. P. 56(a). We review de novo the grant of 

summary judgment and view the evidence in the light most favorable to 

the non-moving party. Read v. Keyfauver, 233 Ariz. 32, 35, 308 P.3d 1183, 

1186 (App. 2013).

¶11 Lee argues the trial court erred in granting summary 

judgment because, pursuant to Restatement (Second) of Torts 

(“Restatement”) § 422 (1965), Wal-Mart necessarily retained a nondelegable duty, as the landowner, to keep its premises reasonably safe for 
LEE v. M & H, WAL-MART

Opinion of the Court

5

business invitees. Lee further asserts the court erred because Wal-Mart 

retained control over his work and is therefore directly liable for his injuries. 

A. Premises Liability (Vicarious) under Restatement § 422(a)

¶12 Arizona courts have consistently recognized that a landowner 

is not liable for the negligent conduct of an independent contractor unless 

the landowner has been independently negligent. See Welker v. Kennecott, 1 

Ariz. App. 395, 401-04, 403 P.2d 330, 336-39 (1965) (citing Restatement

(First) of Torts § 409 (1934) (“Except as stated in §§ 410 to 429, the employer 

of an independent contractor is not subject to liability for bodily harm 

caused to another by a tortious act or omission of the contractor or his 

servants.“)); see also E.L. Jones Constr. Co. v. Noland, 105 Ariz. 446, 454, 466 

P.2d 740, 748 (1970) (recognizing the general rule that a property owner is 

not liable for the negligence of an independent contractor); Restatement 

§ 409 cmt. b (explaining that the rule stated in this section, “as to the nonliability of an employer for physical harm caused to another by the act or 

omission of an independent contractor, was the original common law 

rule”). The explanation “most commonly given” for this rule is based on 

the notion that because “the employer has no power of control over the 

manner in which the work is to be done by the contractor, it is to be 

regarded as the contractor’s own enterprise, and he, rather than the 

employer, is the proper party to be charged with the responsibility of 

preventing the risk, and bearing and distributing it.” Restatement § 409 

cmt. b.2

¶13 As our supreme court has noted, however, “many exceptions 

to the rule of nonliability have now been recognized so that even where the 

employer has not been personally negligent, he may be vicariously liable 

for the contractor’s negligence.” Ft. Lowell-NSS Ltd. P’ship v. Kelly, 166 Ariz. 

96, 101, 800 P.2d 962, 967 (1990).3 Most, if not all, of the exceptions fall into 

three broad categories:

 

2 In many reported decisions, as well as the Restatement, the terms 

employer, possessor of land, and landowner are used interchangeably in 

discussing the liability of an entity that hires a general contractor to perform 

construction work. For purposes of our analysis relating to Lee’s claims 

against Wal-Mart, the terms have the same meaning. 

3 As recognized in Ft. Lowell, “[a]lthough no fault of the possessor 

need be shown, the negligence of the independent contractor must be 
LEE v. M & H, WAL-MART

Opinion of the Court

6

1. Negligence of the employer in selecting, instructing, or 

supervising the contractor.

2. Non-delegable duties of the employer, arising out of some 

relation toward the public or the particular plaintiff.

3. Work which is specially, peculiarly, or “inherently” 

dangerous. 

Restatement § 409 cmt. b.

4 

¶14 According to Lee, Wal-Mart had a non-delegable duty to keep 

the premises safe and is therefore vicariously liable under Restatement 

§ 422, which describes an employer’s general scope of liability for injuries 

resulting from work performed on land and structures: 

A possessor of land who entrusts to an independent 

contractor construction, repair, or other work on the land, or 

on a building or other structure upon it, is subject to the same 

liability as though he had retained the work in his own hands 

to others on or outside of the land for physical harm caused 

to them by the unsafe condition of the structure

(a) while the possessor has retained possession of the land 

during the progress of the work, or

(b) after he has resumed possession of the land upon its 

completion.

¶15 Lee argues he was a business invitee when his injury occurred 

on Wal-Mart’s property, and that under Restatement § 422, possessors of 

land have a non-delegable duty to provide such invitees a safe place to 

work. In Welker, however, this court rejected the argument that a 

 

proven before liability may attach to the employer.” 166 Ariz. at 104, 800 

P.2d at 970. For purposes of analyzing Lee’s vicarious liability claim, we 

assume, without deciding, he would be able to satisfy his burden. 

 

4 These exceptions are generally set forth in Restatement §§ 410–415, 

which deal with direct liability of a landowner, and §§ 416–429, which relate 

to vicarious liability of a landowner based on the negligence of an 

independent contractor. See Rause v. Paperchine, Inc., 743 F. Supp. 2d 1114, 

1119 (D. Ariz. 2010). 
LEE v. M & H, WAL-MART

Opinion of the Court

7

landowner owes a non-delegable duty under Restatement § 422 to an 

employee of an independent contractor. 1 Ariz. App. at 404, 403 P.2d at 

339. Thus, under Welker, Wal-Mart did not have a non-delegable duty to 

provide Lee a safe place to work because Lee was working as an employee 

of an independent contractor at the time he was injured. 

¶16 A primary issue in Welker was whether the landowner, a 

mining company, was negligent in causing the death of an employee of its 

general contractor. 1 Ariz. App at 397, 403 P.2d at 332. The victim’s family

alleged that the landowner had a non-delegable duty of care for the 

employees of the general contractor under Restatement § 422.5 Id. at 401, 

403 P.2d at 336. On appeal, we held that the duties outlined in Restatement 

§ 422 “are not owed to employees of an independent contractor” 

performing construction work. Id. at 404, 403 P.2d at 339. In doing so, we 

reasoned in part that because workers’ compensation is essentially paid by 

the landowner through a negotiated contract price with the contractor, the 

landowner should not be held liable for the injuries to the contractor’s 

workers. Id. We further reasoned that the various distinctions developed 

as exceptions to the general rule of non-liability “are nebulous at best” and 

“become so highly confusing as to be undesirable when applied to 

employees of an independent contractor doing construction work.” Id.

¶17 After Welker, this court continued to recognize that 

landowners are not liable under Restatement § 422 for injuries suffered by 

employees of independent contractors engaged in construction activities. 

See Allison Steel Mfg. Co. v. Superior Court for the County of Pima, 22 Ariz. App. 

76, 81, 523 P.2d 803, 808 (1974) (citing Welker and noting that if landowner 

had no control or active role in bringing about the dangerous condition that 

caused the plaintiff’s injury, it could not be held liable under a theory of 

non-delegable duty); Parks v. Atkinson, 19 Ariz. App. 111, 114-15, 505 P.2d 

279, 282-83 (1973) (upholding summary judgment in favor of the landowner 

by relying on Welker for the proposition that Restatement § 422 did not 

apply to an employee of an independent contractor who fell from a scaffold 

at the site); see also Mason v. Arizona Pub. Serv. Co., 127 Ariz. 546, 551, 622 

P.2d 493, 498 (App. 1980) (citing Welker and recognizing that “in the absence 

of retained control, the duties owed by a landowner to third persons are not 

 

5 The court in Welker analyzed Restatement (First) of Torts § 422 

(1934), which for purposes of this case is not materially different from the 

current version of Restatement § 422. See Restatement § 422 Reporter’s 

Notes.
LEE v. M & H, WAL-MART

Opinion of the Court

8

owed to the employees of an independent contractor”). Lee has not cited, 

nor has our research revealed, any Arizona reported decision that has 

overruled or otherwise questioned the validity of Welker as it pertains to 

Restatement § 422.

6 

¶18 Lee argues that our supreme court’s decision in Ft. Lowell

impliedly overruled Welker. In Ft. Lowell, the supreme court explained that 

if an exception applies, a landowner may be vicariously liable for a 

contractor’s negligence in failing to maintain a safe workplace. 166 Ariz. at 

101, 800 P.2d at 967. But, unlike this case, Ft. Lowell did not involve a claim 

brought by an employee of an independent contractor. 166 Ariz. at 98, 800 

P.2d at 964. Thus, Ft. Lowell cannot be said to have overruled Welker. 

Moreover, referencing this court’s decision in Koepke v. Carter Hawley Hale 

Stores, Inc., 140 Ariz. 420, 423, 682 P.2d 425, 428 (App. 1984), the supreme 

court in Ft. Lowell noted: 

Prior to Koepke, Arizona courts considered section 422 only in 

the context of finding it was not applicable to suits by 

employees of independent contractors. As the Koepke court 

noted, the policy underlying this refusal to apply Restatement 

§ 422 to such employees is unrelated to the question of 

liability for injuries to other invitees.

Ft. Lowell, 166 Ariz. at 102 n.6, 800 P. 2d at 968 n.6 (emphasis added.)

¶19 In Rause, the federal district court analyzed Welker and Ft. 

Lowell in concluding that a paper mill owner was not vicariously liable for 

damages resulting from the death of an employee of a subcontractor at the 

mill. 743 F. Supp. 2d at 1119. The surviving members of the deceased 

worker’s family sued the mill owner, alleging premises liability under 

Restatement § 422(a), and claiming that the owner and possessor of the 

 

6 In Lewis v. N.J. Riebe Enterprises, Inc., 170 Ariz. 384, 825 P.2d 5 (1992), 

our supreme court rejected the presumption stated in Welker and other 

cases that “without retained control, a general contractor owes absolutely 

no duty of care to employees of subcontractors.” Lewis, 170 Ariz. at 389, 825 

P.2d at 10. The court instead found that a “general contractor has a general 

duty to provide employees of subcontractors with a reasonably safe place 

to work.” Id. at 388, 825 P.2d at 9. The supreme court’s rejection of Welker, 

however, was related only to Welker’s analysis of Restatement § 414. See id.; 

Rause, 743 F. Supp. 2d at 1124 (“Welker has not been overruled, and the 

criticism of Welker, as articulated in Lewis, does not affect Welker’s holding 

as it relates to Restatement § 422.”). 
LEE v. M & H, WAL-MART

Opinion of the Court

9

paper mill had a duty to maintain the premises in a safe condition for 

invitees and to ensure that all construction work was completed in 

accordance with applicable safety regulations. Id. The court relied on 

Welker and noted that Ft. Lowell had “distinguished cases where the injured 

party is a business invitee from those where the injured party is the 

employee of an independent contractor.” Rause, 743 F. Supp. 2d at 1124. 

Citing other Arizona cases that have recognized Welker’s viability, 

including Parks, Allison, and Koepke, the district court found that under 

Welker the mill owner did not owe a non-delegable duty to the decedent. 

Id.

¶20 In sum, this court’s holding in Welker—that Restatement 

§ 422 does not constitute an exception to the general rule that a landowner 

is not liable for injuries suffered by an employee of an independent 

contractor performing work on the property, 1 Ariz. App. at 404, 403 P.2d 

at 339—remains the law in Arizona. For that reason, Wal-Mart, as the 

landowner, did not owe Lee a non-delegable duty of care under 

Restatement § 422 because he was working as an employee of an 

independent contractor at the time he sustained injuries.

7

B. Retained Control - Restatement § 414

¶21 Lee argues that Wal-Mart “retained some control” over his 

work and is therefore directly liable for his injuries under Restatement § 

414. Specifically, Lee notes that during a final walk-through inspection of 

the construction site, a Wal-Mart representative requested that the tops of 

the freezers be cleaned, and thus contends his fall while cleaning those 

freezers was a result of Wal-Mart’s direct orders.

¶22 Restatement § 414 addresses the direct liability of a 

landowner based on a theory of retained control: 

One who entrusts work to an independent contractor, but 

who retains the control of any part of the work, is subject to 

 

7 Although Lee states Wal-Mart violated a duty to warn of hidden 

dangers, the only exception to the general rule of nonliability that Lee cites 

in his opening brief is Restatement § 422. Because Lee has failed to develop 

this argument by tethering it to a recognized exception that extends to 

employees of independent contractors, we do not address it. See In re U.S. 

Currency in the Amount of $26,980.00, 199 Ariz. 291, 299, ¶ 28, 18 P.3d 85, 93 

(App. 2000) (refusing to consider arguments offered without development 

or citation to supporting legal authority).
LEE v. M & H, WAL-MART

Opinion of the Court

10

liability for physical harm to others for whose safety the 

employer owes a duty to exercise reasonable care, which is 

caused by his failure to exercise his control with reasonable 

care.

Thus, to trigger liability under Restatement § 414, a landowner “must have 

retained some measure of control not over the premises of the work site, 

but over the actual work performed.” See Lewis, 170 Ariz. at 390, 825 P.2d 

at 11. The scope of the landowner’s duty, if any, “is determined by the 

amount of control” the landowner retained over the construction work

performed by a contractor. Id. at 389, 825 P.2d at 10 (determining the 

parameters of a general contractor’s duty based on the control it retained 

over the subcontractor’s work). Both the governing contractual provisions 

and the actual exercise of control over work are “relevant considerations” 

in determining whether a landowner retained control. Id. at 390, 825 P.2d 

at 11. 

¶23 Generally, the existence of a duty is a question of law for the 

court. See Lewis, 170 Ariz. at 387, 825 P.2d at 8. Because the issue of a breach 

of duty is inextricably linked with the scope of retained control, however, 

“the issue of retained control is also a question of fact which ordinarily 

should be left to the fact finder.” Id. at 389, 825 P.2d at 10 (emphasis 

omitted). Nonetheless, a trial court may properly grant summary judgment 

in favor of a landowner if no reasonable jury could conclude the landowner 

retained control over the work at issue. Id. (citing Orme School v. Reeves, 166 

Ariz. 301, 802 P.2d 1000 (1990)).

¶24 Applying these principles here, the contract between WalMart and M&H provided that M&H had control of the construction site and 

that Wal-Mart disclaimed all responsibility for the construction personnel 

of the contractor (M&H) and its subcontractors (Able Body):

Neither Owner [Wal-Mart] nor Contractor [M&H] has the 

right and shall not seek, to exercise any control over the other 

party, its employees, or its agents. Contractor shall control 

the methodology for performing the Work to meet Owner’s 

specifications. Each party shall be solely responsible for 

hiring, firing, promoting, demoting, rates of pay, benefits, and 

other terms and conditions in regard to its own employees. 

Neither Contractor nor any of its employees or agents may be 

considered Owner’s agents or employees for any purpose and 

have no authority to act or purport to act on Owner’s behalf. 
LEE v. M & H, WAL-MART

Opinion of the Court

11

 . . . .

Notwithstanding the foregoing provisions of this Article 12,

the Owner, through the establishment of minimum standards 

for Project site access procedures, does not assume responsibility 

for the control of the construction personnel of the Contractor or its 

Subcontractors . . . with safety or security measures, or for 

implementation and enforcement of site access, security and 

safety measures, all of which shall remain solely and 

exclusively the responsibility of the Contractor. 

(Emphasis added). Under the contract’s plain language, M&H controlled 

both the construction personnel and the implementation of onsite safety 

measures. 

¶25 Moreover, even assuming Wal-Mart instructed M&H to clean 

the tops of the freezer units where Lee’s accident occurred, that conduct 

would be insufficient to constitute the exercise of actual control as 

contemplated by Restatement § 414. Wal-Mart’s exercise of its right to 

inspect the area in connection with final walkthroughs to ensure 

compliance with its contract with M&H did not amount to taking direct 

control of M&H such that it retained “a right of supervision that [M&H 

was] not entirely free to do the work in [its] own way.” Restatement § 414 

cmt. c. Wal-Mart had reserved and exercised “only the right to inspect the 

construction work to see that the contract specifications are met while 

[M&H] control[ed] how and when the work [was] to be done[.]” Lewis, 170 

Ariz. at 391, 825 P.2d at 12 (emphasis added); see also Koepke, 140 Ariz. at 

426, 682 P.2d at 431 (finding lack of actual control because “there [was] no 

evidence indicating that [the landowner] had any authority to direct the 

manner in which the contractors worked”). 

¶26 We conclude no genuine dispute of material fact exists 

regarding Wal-Mart’s lack of control over Lee’s work for purposes of 

Restatement § 414, either by the terms of its contract with M&H or by its 

actions. As such, summary judgment in favor of Wal-Mart was

appropriate.

II. M&H’s Motion for Judgment as a Matter of Law

¶27 We review a trial court’s decision on a motion granting 

judgment as a matter of law de novo. Sec. Title Agency, Inc. v. Pope, 219 Ariz.

480, 492, ¶ 51, 200 P.3d 977, 989 (App. 2008). The trial court properly grants 

judgment as a matter of law if “a party has been fully heard on an issue and 
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Opinion of the Court

12

there is no legally sufficient evidentiary basis for a reasonable jury to find 

for that party on that issue[.]” Ariz. R. Civ. P. 50(a)(1). 

¶28 As a threshold issue, Lee contends that M&H has waived its 

argument that Lee was its employee by making several binding admissions 

to the court that Lee was an employee of Able Body. An employee may 

have two employers, however, both of which are immune to tort liability. 

See Lindsey v. Bucyrus-Erie, 161 Ariz. 457, 458, 778 P.2d 1353, 1354 (App. 

1989); Nation v. Weiner, 145 Ariz. 414, 417-18, 701 P.2d 1222, 1225-26 (App. 

1985) (explaining the admission that one party is the employee’s employer 

does not “prevent” another party from being the employee’s employer). 

Lee has not cited, and our review of the record has not revealed, any 

admission by M&H that it was not Lee’s employer. We therefore find no 

waiver. 

¶29 The Arizona Constitution directs the legislature to enact 

workers’ compensation laws protecting workers injured or killed “from any 

accident arising out of and in the course of” employment. Ariz. Const. art. 

18, § 8. This requirement arose from the view that work-related injuries

inevitably accompany industrialization, the costs of which should be borne 

by the responsible industry and its consumers. See Ford v. Revlon, Inc., 153 

Ariz. 38, 46, 734 P.2d 580, 588 (1987) (Feldman, V.C.J., concurring).

¶30 Under Arizona’s workers’ compensation system, an 

employee seeking compensation for an injury must choose between 

pursuing a statutory claim with the Industrial Commission and filing a 

common law tort action. Anderson v. Indus. Comm’n, 147 Ariz. 456, 457, 711 

P.2d 595, 596 (1985). The choice to sue in tort is made by a written rejection 

of the compensation system filed with the employer before injury. Ariz. 

Rev. Stat. (“A.R.S.”) § 23-906(B), (C). If an employee fails to file a rejection, 

the compensation system is the employee’s “exclusive remedy against the 

employer or any co-employee acting in the scope of his employment[.]” 

A.R.S. § 23-1022(A). Thus, an injured employee who has failed, before 

injury, to reject the workers’ compensation system may not maintain a tort 

action against his or her employer. Anderson, 147 Ariz. at 457, 711 P.2d at 

596. Because Lee never opted out of the workers’ compensation system 

prior to his injury, his sole remedy against any of his employers for injuries 

he sustained is under that system.

¶31 Lee argues nonetheless that the trial court erred in granting 

judgment as a matter of law in favor of M&H because he was not an 

employee of M&H, thereby placing him outside the law that prohibits 

employees from pursuing a tort claim when they have received
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Opinion of the Court

13

compensation through the workers’ compensation system. “When a labor 

contractor . . . supplies or ‘lends’ its employee to another employer, the 

result may be an arrangement in which one employee has two employers.” 

Araiza v. U.S. W. Bus. Res., Inc., 183 Ariz. 448, 452, 904 P.2d 1272, 1276 (App. 

1995). In this kind of situation the lending employer, Able Body, is known 

as the “general employer” and the borrowing employer, M&H, is the 

“special employer.” 5 Arthur Larson and Lex K. Larson, Larson’s Workers’ 

Compensation Law § 67.01 (2014). “The significance of this arrangement is 

that both employers are liable for workers’ compensation and both are 

immune from tort liability for injuries received by the employee on the job 

pursuant to A.R.S. § 23–1022(A).” Araiza, 183 Ariz. at 452, 904 P.2d at 1276; 

see also Wiseman v. DynAir Tech of Ariz., Inc., 192 Ariz. 413, 416, ¶ 10, 966 

P.2d 1017, 1020 (App. 1998).

¶32 Three elements must be proven to establish that a “lent 

employee” has become the employee of the “special employer”:

(a) the employee has made a contract of hire, express or 

implied, with the special employer;

(b) the work being done is essentially that of the special 

employer; and

(c) the special employer has the right to control the details of 

the work.

Word v. Motorola, Inc., 135 Ariz. 517, 520, 662 P.2d 1024, 1027 (1983). “When 

all three of [these] conditions are satisfied in relation to both employers, 

both employers are liable for work[ers’] compensation.” Id. In cases 

involving labor contractors, “employers obtaining workers from [a labor 

service provider] have usually, but not invariably, been held to assume the 

status of special employer.” Id. at 520 n.5, 662 P.2d at 1027 n.5 (internal

quotation omitted). 

¶33 Lee asserts there is no evidence that M&H exercised sufficient 

control over Lee to render him an M&H employee under the lent employee 

doctrine. Because Lee does not dispute the existence of the first two 

elements, only the third factor—whether M&H had the right to control the 

details of Lee’s work—is relevant here. In deciding whether an employer 

has the right to supervise and control, we consider the totality of the 

circumstances, including, but not limited to:

[T]he duration of the employment; the method of payment; 

who furnishes necessary equipment; the right to hire and fire; 
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Opinion of the Court

14

who bears responsibility for workmen’s compensation 

insurance; the extent to which the employer may exercise 

control over the details of the work, and whether the work 

was performed in the usual and regular course of the 

employer’s business. 

Avila v. Northrup King Co., 179 Ariz. 497, 501, 880 P.2d 717, 721 (App. 1994). 

The key for this analysis is whether the special employer has “the right to 

supervise and control [the work], not the exercise of that right.” Nation, 145 

Ariz. at 418, 701 P.2d at 1226 (emphasis added). 

¶34 On this record, we conclude that M&H had the right to 

supervise and control the work Lee was performing at the Sam’s Club

construction site. Of the 100-150 subcontractor employees actively 

involved in the construction project, Able Body was the only subcontractor 

that did not have an onsite foreman supervising its workers. As the trial 

court noted, “[u]nlike every other subcontractor out there, there were no [] 

foremen or anyone else supervising [Lee] and his [co-worker]. They were 

on their own. It wasn’t like the electricians who’d have people telling them 

how to do their job.” Indeed, by Lee’s own testimony, M&H was his “boss” 

and he was required to follow its instructions each day. Furthermore, Lee’s 

construction safety expert admitted that M&H had control of the work site 

and Lee’s work. 

¶35 Finally, the record shows that M&H exercised actual control 

over Lee when he was at the construction site. For example, when he 

arrived each morning, Lee would locate the M&H superintendents and 

receive his instructions for the day. On the morning of the accident, Lee 

followed this same procedure and was directed by a superintendent for 

M&H to clean the tops of the freezers. Therefore, Lee was an employee of 

M&H under the lent employee doctrine. 

¶36 Lee argues that M&H did not exercise control over him 

because Able Body’s safety rules controlled his conduct at the worksite. 

Under these rules, Able Body was responsible for compensating its 

workers, maintaining workers’ compensation insurance, and providing

safety equipment and tools. However, as noted above, Able Body’s status 

as Lee’s general employer does not exclude the possibility that M&H also 

had control over Lee, and therefore was his special employer. See Araiza, 

183 Ariz. at 452, 904 P.2d at 1276. Whether Able Body maintained some 

element of control over Lee through its safety work rules does not affect 

whether M&H exercised control over Lee under the lent employee doctrine. 

See Word, 135 Ariz. at 520, 662 P.2d at 1027. 
LEE v. M & H, WAL-MART

Opinion of the Court

15

¶37 Lee also argues that public policy does not support granting 

tort immunity unless the employer is liable for workers’ compensation 

benefits. Lee relies on Tarron v. Bowmen Machine & Fabricating, Inc., 225 Ariz. 

147, 235 P.3d 1030 (2010), and Inmon v. Crane Rental Servs., Inc., 205 Ariz. 

130, 67 P.3d 726 (App. 2003), to support this contention. However, neither 

Tarron nor Inmon support Lee’s position because those cases did not involve 

a temporary worker seeking to hold the special employer liable for the 

employee’s work-related injuries. See Tarron, 225 Ariz. at 150, ¶ 14, 352 P.3d 

at 1033 (noting that the plaintiff employee sustained injuries due to the 

negligence of borrowed employees loaned to the special employer by the 

defendant general employer), Inmon, 205 Ariz. at 131-32, ¶ 2, 67 P.3d at 727-

28 (explaining that plaintiffs, who were steel company employees, 

sustained injuries due to the negligence of borrowed employees provided 

by the defendant general employer, a crane rental service company). 

¶38 Finally, no case in Arizona applying the lent employee 

doctrine mandates that a special employer must have had workers’

compensation coverage in place to receive tort immunity. Instead, the

special employer is liable to an injured employee for workers’ 

compensation regardless of whether the special employer had coverage in 

place at the time of the employee’s injury. See Nation, 145 Ariz. at 420, 701 

P.2d at 1228 (concluding that the plaintiff had the right to recover workers’

compensation benefits from the defendant special employer if she applied 

for such benefits); see also Porteadores Del Noroeste S.A. De C.V. v. Indus. 

Comm’n, 234 Ariz. 53, 59-60, ¶ 21, 316 P.3d 1241, 1247-48 (App. 2014) 

(recognizing that a foreign company, as a special employer under the lent 

employee doctrine, was subject to Arizona’s workers’ compensation 

statutes for injuries sustained by an employee). Furthermore, even if an 

employer does not carry workers’ compensation insurance, the employee 

can still receive compensation through the Special Fund/No Insurance 

Section of the Industrial Commission of Arizona. See A.R.S. § 23-907(C). In 

such a scenario, the non-insured employer is then liable to the Commission

for any payments made to the injured employee. See A.R.S. § 23-961(G). A

special employer is not immune from liability when its employees are

injured within the course and scope of their work duties.

¶39 In sum, we agree with the trial court’s determination that as a 

matter of law, M&H was Lee’s special employer under the lent employee 

doctrine. Thus, we need not address M&H’s cross-appeal on vicarious 

liability.
LEE v. M & H, WAL-MART

Opinion of the Court

16

CONCLUSION

¶40 Based on the foregoing, we hold that the trial court properly 

determined Lee could not prevail, as a matter of law, on his liability theories 

against Wal-Mart under Restatement §§ 422 and 414. We also hold that the 

court correctly decided Lee was a lent employee of M&H, which limited his

ability to recover against M&H to workers’ compensation benefits. We 

therefore affirm the court’s judgment.