Case Name: Lewis F. KRAHWINKEL, Jr., Appellant/Cross-Appellee, v. COMMONWEALTH ALUMINUM CORPORATION, Appellee/Cross-Appellant
Court: Supreme Court of Kentucky
Jurisdiction: Kentucky
Decision Date: 2005-08-25
Citations: 183 S.W.3d 154
Docket Number: No. 2003-SC-0708-DG, 2004-SC-0219-DG
Parties: Lewis F. KRAHWINKEL, Jr., Appellant/Cross-Appellee, v. COMMONWEALTH ALUMINUM CORPORATION, Appellee/Cross-Appellant.
Judges: GRAVES, J., concurs.
Reporter: South Western Reporter Third Series
Volume: 183
Pages: 154–166

Head Matter:
Lewis F. KRAHWINKEL, Jr., Appellant/Cross-Appellee, v. COMMONWEALTH ALUMINUM CORPORATION, Appellee/Cross-Appellant.
No. 2003-SC-0708-DG, 2004-SC-0219-DG.
Supreme Court of Kentucky.
Aug. 25, 2005.
As Modified on Denial of Rehearing Feb. 23, 2006.
Jeanie Owen Miller, Owensboro, Counsel for Appellant/Cross-Appellee.
Marvin P. Nunley, McCarroll, Nunley & Hartz, Owensboro, Counsel for Appel-lee/Cross-Appellant.

Opinion:
COOPER, Justice.
Appellee, Commonwealth Aluminum Corporation ("Commonwealth") contracted with Intech-Industrial Technology, - Inc. ("Intech") for the purchase and installation of a new fluid capture system in its industrial plant. The contract required Intech to install a large tank in the basement of the plant into which groundwater containing PCBs would be pumped for containment and disposal. On January 24, 1996, the tank was unloaded from an Intech truck and moved by a permanently installed overhead crane across the motor room of Commonwealth's plant to a room containing a large hole in the floor through which the tank was lowered to the basement. The grate that normally covered the hole was removed for this purpose. Appellant, Lewis F. Krahwinkel, Jr., an employee of Intech, was assigned the task of guiding the tank through the motor room using a lead line. He testified that a large amount of oil and grease, as much as an inch thick, was on the portion of the motor room floor on which he was required to walk in order to guide the tank, and that the oil and grease adhered to his boots. After the tank was lowered into the hole, Appellant remained on the ground floor passing tools to other Intech employees in the basement. While so engaged, he slipped and fell through the hole approximately sixteen feet to the basement floor, seriously injuring his right knee and ankle. He later opined that the oil and grease that adhered to his boots while he was guiding the tank through the motor room caused his feet to slip out from under him. Gene Holtzman, Commonwealth's safety administrator, admitted at trial that there was oil and grease on the floor in the area around the hole.
Appellant filed a workers' compensation claim against Intech. He also brought this civil action in the Hancock Circuit Court against Commonwealth, alleging that his fall was caused by negligent acts or omissions of Commonwealth. Intech intervened in the civil action to assert its statutory subrogation claim, KRS 342.700(1), but voluntarily dismissed its intervening complaint prior to trial.
According to an Agreement as to Compensation dated February 5, 2001, Appellant successfully prosecuted his workers' compensation claim against Intech to an "opinion and award dated February 27, 1998." He received $18,240.57 in temporary total disability benefits (TTD) (57 weeks x $320.01 per week) and additional weekly benefits for a 50% permanent partial disability (PPD). Pursuant to KRS 342.020, Intech's insurer, Underwriters Safety & Claims, also paid medical bills of $15,292.15 incurred by Appellant up to the date of the agreement. The remainder of Appellant's workers' compensation claim was settled for a lump sum of $39,956.68, itemized as follows:
$30,456.68 — lump sum payment of 50% PPD award
4,500.00 — buyout of future medical expenses
4,000.00 — waiver of right to reopen
1,000.00 — waiver of vocational rehabilitation
$39,956.68
At the trial of Appellant's civil action against Commonwealth, Appellant introduced evidence that there were no protective guardrails ("fall prevention") around the hole and no place to tie off a safety harness ("fall restraint") normally worn while working in the vicinity of an open floor hole. Appellant asserted that Commonwealth's violation of occupational safety and health regulations requiring these protections constituted negligence per se and that the jury should be instructed only to determine the degree of Appellant's fault, if any, and render an apportioned verdict pursuant to KRS 411.182. Instead, the trial court instructed the jury that Commonwealth had a duty to exercise ordinary care to maintain its business premises in a reasonably safe condition. The jury returned a verdict finding both parties at fault and fixing Appellant's damages at $44,971.02, itemized as follows:
$10,000.00 —• permanent impairment of power to earn money
7,300.00 — past and future pain and suffering
17,671.02 — medical expenses incurred •
10,000.00 — lost wages
$44,971.02
Because the jury also apportioned fault at 75% against Commonwealth and 25% against Appellant, the trial court reduced the judgment to a lump sum of $33,728.27 ($44,971.02 x 0.75). Applying the apportionment to each separate item of damages yields the following itemization:
$ 7,500.00 — permanent impairment
5,475.00 — pain and suffering
13,253.27 — medical expenses
7,500.00 — lost wages
$33,728.27
On appeal to the Court of Appeals, Commonwealth asserted that (1) the trial court should have sustained its motion for a directed verdict because (a) the presence of the hole was open and obvious, and (b) pursuant to its contract with Intech, the latter assumed responsibility for the safety of its own employees; or, in the alternative, (2) the trial court should have vacated those portions of the judgment that duplicated amounts paid to Appellant or his medical providers pursuant to his workers' compensation claim so as to prevent double recovery. The Court of Appeals held that (1) Appellant's testimony that his fall was caused by the oil and grease that adhered to his boots while he was guiding the tank through the motor room created a jury issue with respect to Commonwealth's negligence and causation, rendering it unnecessary to address whether Intech had contractually assumed responsibility to provide guardrails or safety harnesses for its employees; but (2) an owner is not liable for injuries to third parties arising out of work performed by an independent contractor unless the work constitutes a nuisance or is inherently dangerous, and that the work performed by Intech fell into neither of those categories; and (3) even if the work was inherently dangerous, the liability of an owner to employees of an independent contractor is limited to payment of workers' compensation benefits. See KRS 342.700(2). Since Appellant had already recovered workers' compensation benefits from Intech, he had no claim against Commonwealth. Having thus disposed of the case, the Court of Appeals did not reach the issue of double recovery.
Appellant moved for discretionary review and Commonwealth filed a cross motion for review solely to preserve the issue of double recovery. Commonwealth, Transp. Cabinet v. Taub, 766 S.W.2d 49, 51-52 (Ky.1988). Since issues pertaining to Commonwealth's negligence and causation were not preserved for further review, Appellant's argument that Commonwealth's alleged violation of administrative regulations adopted pursuant to the Kentucky Occupational Safety and Health Act, KRS 338, constituted negligence per se are moot. We now reverse the Court of Appeals insofar as it vacated Appellant's judgment in its entirety, and remand this case to the Hancock Circuit Court with directions to determine an appropriate computation of the total credit due to Commonwealth in light of the employer's/insurer's failure to assert its right of subrogation and enter an amended judgment in accordance with that computation.
I. LIABILITY OF OWNER FOR INJURIES TO EMPLOYEES OF INDEPENDENT CONTRACTOR.
The Court of Appeals' reliance on Simmons v. Clark Constr. Co., 426 S.W.2d 930 (Ky.1968), Jennings v. Vincent's Adm'x, 284 Ky. 614, 145 S.W.2d 537 (1940), and Clemons v. Browning, 715 S.W.2d 245 (Ky.App.1986), for its holding that Commonwealth is not liable for Appellant's damages because the work performed by In-tech was neither a nuisance nor inherently dangerous was misplaced. Those cases apply only when it is sought to hold an owner vicariously liable for the negligence of an independent contractor. Jennings, 145 S.W.2d at 541. In both Simmons and Clemons, employees of subcontractors were injured because of defective scaffolding erected not by the owner but by the independent general contractor. Simmons, 426 S.W.2d at 931; Clemons, 715 S.W.2d at 246. The fatal explosion in Jennings was caused by the negligence of employees of the independent contractor, not the owner. Jennings, 145 S.W.2d at 539. Here, Commonwealth was not held vicariously liable because of the negligence of Intech's employees. It was held directly liable because of its own negligence.
In holding that the liability of the owner to the employees of an independent contractor is limited to payment of workers' compensation benefits, the Court of Appeals relied on language in King v. Shelby Rural Elec. Coop. Corp., 502 S.W.2d 659 (Ky.1973), which, if taken out of context, would seem to support that position, viz:
We can see no reason why appellant, simply because he was an employee of an independent contractor, should be placed in a better position than if he had been an employee of Shelby [owner], in which case his recovery would be limited without question to the benefits provided by the Workmen's Compensation Act. Conversely, we see no valid reason why Shelby should be subjected to more liability simply because it engaged the services of a qualified independent contractor.
Id. at 663. However, King, like Simmons, Jennings, and Clemons, was a case in which an employee of an independent contractor sought to hold the owner vicariously liable for injuries caused by the contractor's negligence:
The evidence in the case on behalf of Shelby indicated that it did not exercise any control whatever over the work involved and did not consider itself to have the right of [sic] the duty to do so.
[T]he liability of Shelby for the negligence of the independent contractor does not extend to the employees of the independent contractor.
King, 502 S.W.2d at 664. As subsequently explained in Caskey v. Hammonds Construction, Inc., 536 S.W.2d 449 (Ky.1976), "[t]he opinion [in King ] does not hold that an employee of an independent contractor may not recover from the owner in those instances where the negligence of the owner causes the injury or death of the employee of the independent contractor." Id. at 451. Caskey held that an owner is liable for injuries sustained by an employee of its independent contractor that were caused by the owner's own negligence. Id.
Workers' compensation coverage is a voluntary contract between employer and employee, the terms of which are defined by the provisions of the Act. McNeese Const. Co. v. Harris, 273 S.W.2d 355, 357 (Ky.1954). The employer gives up the right to claim certain defenses, KRS 842.610(1), in exchange for the employee's agreement to accept limited benefits in lieu of damages at law, KRS 342.690(1). It is the voluntary nature of this statutory contract that renders the Act constitutional. See generally Greene v. Caldwell, 170 Ky. 571, 186 S.W. 648 (1916) (upholding constitutionality of 1916 Kentucky Workmen's Compensation Act and distinguishing State Journal Co. v. Workmen's Comp. Bd., 161 Ky. 562, 170 S.W. 1166 (1914), which had held the mandatory 1914 Act unconstitutional). The Court of Appeals' interpretation of the quoted language in King would give an independently negligent nonparty to this statutory contract the same advantages otherwise afforded only to the injured party's employer. The trial court properly held Commonwealth liable for damages incurred by Appellant because of Commonwealth's own negligence.
II. DOUBLE RECOVERY.
KRS 342.700(1) provides:
Whenever an injury for which compensation is payable under this chapter has been sustained under circumstances creating in some other person than the employer a legal liability to pay damages, the injured employee may either claim compensation or proceed at law by civil action against the other person to-recover damages, or proceed both against the employer for compensation and the other person to recover damages, but he shall not collect from both. If the injured employee elects to proceed at law by civil action against the other person to recover damages, he shall give due and timely notice to the employer and the special fund of the filing of the action. If compensation is awarded under this chapter, the employer, his insurance carrier, the special fund, and the uninsured employer's fund, or any of them, having paid the compensation or having become liable therefor, may recover in his or its own name or that of . the injured employee from the other person in whom legal liability for damages exists, not to exceed the indemnity paid and payable to the injured employee, less the employee's legal fees and expense. The notice of civil action shall conform in all respects to the requirements of KRS 411.188(2).
(Emphasis added.) The statute separately defines the respective rights of the injured employee and the employer/insurer when the employee's injuries were caused by the negligence of a third party. The employer/insurer "owns" a subrogation right to the amount of compensation it paid to the injured employee, and the employee "owns" the right to any other damages for which the third-party tortfeasor is legally liable. The emphasized language in the statute clearly precludes double recovery by the employee and does not condition that preclusion upon whether the employer actually pursues its subrogation right.
The statute has been a part of our Workers' Compensation Act since its initial enactment in 1916. See AIK v. Bush, 74 S.W.3d at 254, for a brief statutory history. Shortly after its enactment, our predecessor Court held that the statute allowed the employee to assert claims against both the employer and the third-party tortfeasor, albeit in different forums, but "to the extent he collects from one he may not collect from the other." Book v. City of Henderson, 176 Ky. 785, 197 S.W. 449, 451 (1917) (emphasis added). See also S. Quarries & Contracting Co. v. Hensley, 813 Ky. 640, 232 S.W.2d 999, 1002 (1950) ("[I]f the employer, having paid compensation, makes no claim against the negligent third party, the latter is entitled to be credited on the judgment rendered against him in favor of an injured employee for such compensation as may have been paid to such employee by the employer."); Dillman v. John Diebold & Sons Stone Co., 241 Ky. 631, 44 S.W.2d 581, 583 (1931) ("Dillman, the employee of the principal contractor, may maintain his action for damages against appellee, the subcontractor, notwithstanding the fact that he had been paid compensation by the insurer of his immediate employer, subject, however, to appellee's right in the event of a recovery to have the judgment credited by the compensation so paid."); Napier v. John P. Gorman Coal Co., 242 Ky. 127, 45 S.W.2d 1064, 1065 (1931) ("The amount of compensation received by the injured employee, or, in the event of fatal injury, by the dependents, must be credited upon the amount recovered from the wrongdoer, and only the excess of the damages over the compensation collected is recoverable."); Berry v. Irwin, 224 Ky. 565, 6 S.W.2d 705, 706 (1928) (same quote as Southern Quarries); Williams v. Brown, 205 Ky. 74, 265 S.W. 480, 481 (1924) ("The one thing certain from a reading of the section of the statute above quoted is that the injured employee cannot have full compensation and collect money on a judgment for full damages for the same injury. That would be double compensation.").
In Davis v. Buley, 634 S.W.2d 161 (Ky.App.1982), the Court of Appeals held that "KRS 342.700(1) expresses a clear legislative intent that an injured employee should not be allowed to recover from both the compensation carrier and a third-party tortfeasor." Id. at 163. See also Old Republic Ins. Co. v. Ashley, 722 S.W.2d 55, 59 (Ky.App.1986) ("The policy behind KRS 342.700(1) that an injured employee should not recover from both the workers' compensation carrier and a third-party tortfea-sor has long been recognized by Kentucky courts."); 6 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 110.02, at 110-3 (Matthew Bender 2004) ("It is equally elementary that the claimant should not be allowed to keep the entire amount both of his or her compensation award and of the common law damage recovery."). That is not to say that the employer/insurer could not assign its subrogation rights to the worker, as was done in Weinberg v. Crenshaw, 896 S.W.2d 22 (Ky.App.1995). However, there was no assignment in this case — only a decision by Intech, for whatever reason, to forego its subrogation rights.
In his separate opinion, the Chief Justice would hold that when the employer or carrier entitled to subrogation under KRS 342.700(1) decides not to pursue its subro-gation rights, the common law collateral source rule and/or KRS 411.188(2) assigns those rights to the worker as a matter of law. Post, at 162-68. However, neither KRS 342.700(1) nor KRS 411.188(2) so provides. Both statutes provide only that the failure of the subrogee to assert its rights results in the loss of those rights. Neither provides that those rights are thereby transferred to the subrogor in order to permit double recovery. In Zurich Am. Ins. Co. v. Haile, 882 S.W.2d 681 (Ky.1994), we specifically rejected such an interpretation of KRS 411.188:
Had this case not been settled forthwith under terms excluding the amounts paid by Zurich, dismissing Zurich's subrogation claim would have resulted, quite possibly, in a windfall verdict for the plaintiff, the very same double recovery which KRS 342.700(1) was written to prevent. We are not inclined or required to interpret the statute [KRS 411.188] to permit such an absurdity.
Id. at 686.
Nor is the common law collateral source rule relevant to this issue.
But it is suggested that, under the common law, appellee would have been entitled to recover for the combined results of the disease and the accident, and that many compensation acts have been construed as having the same effect. The act supersedes the common law and creates a different standard of rights and obligations covering the entire field of personal injury as defined in the act. It provides for compensation and not for damages, and common-law principles fixing the measure of damages for injuries caused by negligence are no longer applicable or controlling.
Robinson-Pettet Co. v. Workmen's Comp. Bd., 201 Ky. 719, 258 S.W. 318, 319-20 (1924). See also Evansville Printing Corp. v. Sugg, 817 S.W.2d 455, 457 (Ky.App.1991) (Workers' Compensation Act evidences legislative policy and supersedes common law).
In denying double recovery to the worker, KRS 342.700(1) operates similarly as KRS 304.39-060(2)(a), which abolishes tort recovery by a person injured in an automobile accident who has not rejected the provisions of the Motor Vehicle Reparations Act for amounts paid or payable in reparations benefits.
The effect of this statute is to abolish the claims for lost wages and medical expenses of a person injured in an automobile accident against the person who caused the injury to the extent that basic reparations are payable therefor. The injured person can assert a claim only for those damages which exceeded the amounts payable as basic reparation benefits. If it elects to do so, the basic reparations obligor may intervene as the real party in interest to recover the sums payable by it as reparation benefits.
Carta v. Dale, 718 S.W.2d 126, 128 (Ky.1986) (emphasis added) (internal citations omitted). See also Ohio Cas. Ins. Co. v. Ruschell, 834 S.W.2d 166, 168 (Ky.1992) (claimant has no tort claim whatsoever for those elements of damages paid or payable under the no-fault statute).
Any windfall obtained by Commonwealth from Intech's decision to forego its subrogation rights is no different than if Intech had never filed its intervening complaint in this action. Either way, KRS 342.700(1) precludes Appellant from recovering from Commonwealth those elements of damages that he had already recovered from Intech by way of workers' compensation benefits.
Accordingly, we reverse the Court of Appeals insofar as it vacates the entire judgment against Commonwealth, but we remand this cause to the circuit court for an appropriate computation of the total credit due to Commonwealth in light of the employer's/insurer's failure to assert its right of subrogation and to enter an amended judgment in accordance with that computation. Upon remand, the parties may be heard and evidence taken, if necessary, as to the proper determination of the aforementioned credit.
GRAVES, J., concurs.
LAMBERT, C.J., concurs in part and dissents in part by separate opinion, with SCOTT, and WINTERSHEIMER, JJ., joining that dissenting opinion.
COOPER, J., concurs in part and dissents in part by separate opinion, with JOHNSTONE, and ROACH, JJ., joining that opinion.
SCOTT, J., concurs in part and dissents in part by separate opinion, with LAMBERT, C.J., and WINTERSHEIMER, J., joining that opinion.
. KRS 342.730(1)(a).
. January 25—March 21, 1996 (8 weeks); January 3 — August 31, 1997 (342Aths weeks); July 20 — October 31, 2000 (14 s/7ths weeks).
.KRS 342.730(1)(b).
. Commonwealth, did not file a third-party complaint against Intech for contribution. Compare AIK Selective Self Ins. Fund v. Bush, 74 S.W.3d 251, 252 (Ky.2002); Dix & Assocs. Pipeline Contractors, Inc. v. Key, 799 S.W.2d 24, 29 (Ky.1990).
. Commonwealth does not claim that it is an "up-the-ladder'' employer of Appellant. KRS 342.690(1); KRS 342.610(2)(b). The installation of the fluid capture system was not a "regular or recurrent" part of Commonwealth's business, trade or occupation. KRS 342.610(2)(b); Fireman's Fund Ins. Co. v. Sherman & Fletcher, 705 S.W.2d 459, 462 (Ky.1986). Compare Gesler v. Ford Motor Co., 185 F.Supp.2d 724, 728 (W.D.Ky.2001) (demolition and removal of automobile body anti-corrosion system so that new system could be installed in its place was not a regular or recurrent part of automobile manufacturer's business), with Sharp v. Ford Motor Co., 66 F.Supp.2d 867, 869-70 (W.D.Ky.1998) (loading and unloading manufactured vehicles was a regular or recurrent part of automobile manufacturer's business).
. The employer/insurer might conclude that its subrogation right is not worth pursuing in view of the fact that the statute requires that the employee's legal fees and expenses be deducted from the amount recovered by the employer/insurer. See AIK v. Bush, 74 S.W.3d at 258.