Case Name: Adele S. PALERMO, Individually and on behalf of her dependent child, Amy Cherie Palermo, Plaintiff-Appellant, v. RELIANCE INSURANCE COMPANY, et al., Defendants-Appellees
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1987-01-15
Citations: 501 So. 2d 333
Docket Number: No. 86-29
Parties: Adele S. PALERMO, Individually and on behalf of her dependent child, Amy Cherie Palermo, Plaintiff-Appellant, v. RELIANCE INSURANCE COMPANY, et al., Defendants-Appellees.
Judges: Before DOMENGEAUX, FORET and STOKER, JJ.
Reporter: Southern Reporter, Second Series
Volume: 501
Pages: 333–344

Head Matter:
Adele S. PALERMO, Individually and on behalf of her dependent child, Amy Cherie Palermo, Plaintiff-Appellant, v. RELIANCE INSURANCE COMPANY, et al., Defendants-Appellees.
No. 86-29.
Court of Appeal of Louisiana, Third Circuit.
Jan. 15, 1987.
Writ Denied March 13, 1987.
Raggio, Cappel, Stephen A. Berniard, Jr., Lake Charles, for plaintiff-appellant.
Plauche, Smith & Nieset, Allen L. Smith, Jr., Lake Charles, Alan K. Braud of Mouton & Assoc. Lafayette, for defendants-ap-pellees.
Before DOMENGEAUX, FORET and STOKER, JJ.

Opinion:
STOKER, Judge.
Ronald Palermo drowned while surf bathing at a resort on the Pacific coast of Mexico while on a recreational-social trip sponsored by and largely paid for by his employer. Adele S. Palermo, widow of Ronald, seeks worker's compensation on behalf of herself and her dependent child, Amy Cherie Palermo. The issue in this case is whether or not Ronald Palermo's drowning death arose out of and in the course o/his employment within the contemplation of the compensation law. The trial court concluded that it did not and rejected plaintiffs demands by granting a directed verdict in favor of the defendants. Plaintiff appeals. We affirm.
While we approach the case by considering whether the trial court was clearly wrong (manifestly erroneous) under the peculiar and unusual circumstances or whether it misapplied the law, we in fact must determine whether the ambit of the worker's compensation law should, as a matter of policy, be extended to cover the unusual factual circumstances of the case. W. Malone and H. Johnson, Louisiana Civil Law Treatise Section 149 (2d Ed.1980), and Jackson v. American Ins. Co. 404 So.2d 218 (La.1981).
FACTS
As we must decide this case on the basis of its own facts, we must recite them in some detail.
Ronald Palermo was an accountant, a professional employee. Originally, he worked as assistant to the comptroller directly for a corporation entitled Dunham-Price, Inc. The principal owners of that corporation were Robert W. Price, Robert W. Price, Jr., Ted W. Price and Ted W. Price, Jr. This corporation was in the concrete business. For various reasons a separate corporation was formed for the purpose of engaging in construction contracting. Among other objectives this would permit construction activities without putting Dunham-Price, Inc. in competition with its customers. Robert W. Price, Jr. was made the sole stockholder of the new corporation, and it was given the name of Robert W. Price, Jr. Contractors, Inc. (Contractors).
The first project undertaken by Contractors was the construction of a Hilton Hotel in Lake Charles, Louisiana, which was owned by a partnership consisting of the four stockholders of Dunham-Price, Inc. Robert W. Price, Jr. appears to have been the manager or chief executive officer of Contractors. Through arrangement with Dunham-Price, Inc. certain employees, including Ronald Palermo, were transferred to work for Contractors. It was apparently intended that this arrangement would last for an indefinite time, as the partners contemplated construction of other projects as investments. For convenience and various advantages, such as savings in bookkeeping, four transferred employees, including Palermo, remained on the payroll of Dunham-Price, Inc. and under its group insurance program. This arrangement gave rise to an issue as to whether Palermo was a borrowed employee. Contractors reimbursed Dunham-Price, Inc. for the salaries paid the four employees. (Actually two of the employees, Dick Bahr and Harvey Moore, had not previously been employees of Dunham-Price, Inc., but came to work for Contractors.)
Ronald Palermo was a salaried employee and did not receive overtime pay. He and the other three Dunham-Price, Inc. employees were directly involved with Robert W. Price, Jr. in the management of the construction of the Lake Charles Hilton Hotel. They were administrative personnel. Contractors had a contract deadline to meet. The hotel owners had announced an opening date of the hotel at a time subsequent to the date on which completion was required by the contract. As it turned out, completing the hotel by opening time placed the four administrative employees and Price under exceptional pressure. It was necessary for them to work beyond normal working hours in order to meet the projected opening date. Apparently, most, if not all, of the actual work was done through subcontractors.
As a relief from the pressure the employees were under, Price conceived the idea of the group taking a trip when the project was completed. Price left it to the employees to select the place to which they would like to go. He testified that he did not broach the idea of the trip as an incentive to induce the employees to work harder to meet the completion date. It was not intended as a bonus. He intended it as a reward for a job well done, and to permit the employees to "get away and relieve some of the pressure that had been on them." Price also testified that he did not give the trip with the expectation of recovering some kind of improvement in employee relations. He did expect it to improve morale, including his own.
The three male employees decided on a fishing trip to the coast of Mexico on the Pacific Ocean. Spouses were not invited. One of the four employees was Mrs. Pat El Khansa, who declined Price's offer of the trip. Price transported the parties from Lake Charles to Houston in his private plane where they were joined by two friends of Price. From there the group (now including non-employees) took a commercial flight to a Mexican resort town on the Pacific coast. Price paid for all transportation, lodging, most meals, and the cost of the deep-sea fishing trip. The individuals paid for individual sideline activities, such as meals and motor bike rentals.
The group went on the deep-sea fishing trip on Friday, September 24,1982. On the following afternoon Palermo drowned while swimming in the surf with one of the other administrative employees.
PARTIES TO SUIT
Adele S. Palermo, widow of Ronald Palermo, brought this suit on behalf of herself and her child, Amy Cherie Palermo, against the following defendants: Robert W. Price, Jr. Contractors, Inc. and its worker's compensation insurer, Reliance Insurance Company; and Dunham-Price, Inc. and its worker's compensation insurance carrier, Northwest Insurance Company. On separate motions made by plaintiff the trial court dismissed Contractors and Northwest Insurance Company. Following presentation of plaintiffs evidence, the trial court directed a verdict in favor of defendants. (See footnote 1) Plaintiff appealed from this adverse judgment.
ISSUES AND APPLICABLE LAW
In granting defendants' motion for a directed verdict the trial court stated: "[Ujnfortunately I do not think that worker's comp extends to the facts of this particular case." Also: "I . cannot find that the facts as presented fit within the law." Presumably this expresses the opinion that Ronald Palermo's death did not arise out of or in the course of his employment.
It is basic to our compensation law that injury or death must arise out of and in the course of employment before compensation benefits shall be due. LSA-R.S. 23:1031. For a time in the Louisiana jurisprudence the two concepts of "arising out of" and "in the course of" were muddled. Since then the two concepts have been clarified and harmonized. In Lisonbee v. Chicago Mill and Lumber Company, 278 So.2d 5 (La.1973) the Louisiana Supreme Court stated:
"The terms arising out of, and in the course of are not synonymous. The former suggests an inquiry into the character or origin of the risk, while the latter brings into focus the time and place relationship between the risk and the employment. The two requirements cannot, however, be considered in isolation from each other. A strong showing by the claimant with reference to the arise-out-of requirement may compensate for a relatively weak showing on the during-course-of requirement, or vice versa. As a corollary it follows that whenever the showing with respect to both requirements is relatively weak a denial of compensation is indicated. Malone, Louisiana Workmen's Compensation, § 162, 192.
"These concepts are developed from cases interpreting the spare phrases arising out of the employment, and in the course of the employment. But the question of which risk shall be included within the act and which shall be excluded cannot be decided by phrases. Each case must be determined from its own facts. Kern v. Southport Mill, 174 La. 432, 141 So. 19 (1932); Myers v. Louisiana Ry. & Nav. Co., 140 La. 937, 74 So. 256 (1917)."
Malone and Johnson in the text of their treatment of the subject of workers' compensation in the Louisiana Civil Law Treatise cited above discuss the dual requirements in Chapter 7. In Section 149 after discussing certain cases in the jurisprudence decided since Lisonbee the authors state the following conclusions:
"These decisions and others seem to indicate that the Louisiana courts have begun to recognize the interplay between the two features of the dual requirement concept, and are rather frankly viewing the question of compensability in its proper perspective. It should be recalled, however, that, like the practice of analyzing tort problems with a so-called duty-risk concept, the use of the dual requirement is merely an approach to the process of judicial decision making. It is an honest effort by the court to do justice in the case within the guidelines provided legislatively. It is not intended to be, nor should it be frozen into, a formal rule or a doctrine. There is no substitute for an analysis of each situation upon its own facts, with a decision to be reached by weighing the relative merits of the showing of whether the injury was in the course of employment and arose out of the employment." (Footnotes omitted)
Recently a panel of this court had occasion to consider and apply the dual requirement concept. In Sanders v. Chesson, 467 So.2d 1388 (La.App.3d Cir.1985) the following discussion is set forth at page 1390:
"[1] In order to be entitled to worker's compensation benefits, an employee must show that the injuries received were due to an accident 'arising out of' and 'in the course of' his employment. La.R.S. 23:1031; King v. Wilson Bros. Drilling Co., Inc., 441 So.2d 68 (La.App. 3rd Cir.1983), writ denied, 443 So.2d 598 (La.1983). The terms 'arising out of and 'in the course of are not synonymous, but must be considered together. Lisonbee v. Chicago Mill & Lumber Co., 278 So.2d 5 (La.1973).
"[2] Our courts have had little difficulty in formulating a test for determining whether an employee was within the course of employment when injured. An accident occurs in the course of employment when it happens during the time of employment and at a place contemplated by the employment. Guidry v. Sline Industrial Painters, Inc., 418 So.2d 626 (La.1982).
"However, the test to decide whether an accident arose out of the employment has occasioned our courts some difficulty. In Myers v. Louisiana Ry. and Navigation Co., 140 La. 937, 74 So. 256 (1917), the Louisiana Supreme Court observed that in order to meet the requirement of 'arising out of, "[i]t ought to be sufficient that the nature of the employment was such that the risk from which the injury resulted was greater for the workman than for a person not engaged in the employment_". Later in Kern v. Southport Mill, 174 La. 432, 141 So. 19 (1932), our Supreme Court set forth a different test to be employed in determining whether the accident arose out of the employment. In Kern, the court stated:
" 'In determining . whether an accident "arose out of" the employment, it is necessary to consider only this: (1) Was the employee then engaged about his employer's business and not merely pursuing his own business or pleasure; and (2) did the necessities of that employer's business reasonably require that the employee be at the place of the accident at the time the accident occurred?'
"It has been suggested that where an employee's actions fall squarely within the course of his employment, any risk that he may encounter will be considered as arising out of the employment. However, in situations where there is doubt concerning whether the employee is within the course of his employment, compensation will be allowed only when the employment has exposed the claimant to a greater risk than that to which the general population might have been exposed. W. Malone and A. Johnson, 'Workers' Compensation Law and Practice', 13 Louisiana Civil Law Treatise (2d ed. 1980), § 193 at pages 392-393; see also, Whitney v. U.S. Fid. & Guar. Ins. Co., 373 So.2d 728 (La.App. 2nd Cir.1979), writ denied, 376 So.2d 320 (La.1979)."
For other cases applying the dual requirement test see those cited in the Pocket Part at 13 Louisiana Civil Law Treatise Section 149, n. 61. The two requirements are discussed at length by Malone and Johnson in Chapters 8 and 9 of that treatise. In Section 193, contained in Chapter 9, the authors make these pertinent observations:
"Thus the Lisonbee decision, while discussing 'increased risk', seems clearly to be an additional example of the validity of the theory of the interdependence of the two concepts and the continuing usefulness of the hybrid test evolved by the Louisiana judiciary from the Myers and Kern cases. That test, simply stated, is that where — as in Kern — the employee is actively at work or standing by for an immediate return to his task and thus is squarely within the course of his employment, virtually any risk will be considered as arising out of the employment, whether it is an 'increased risk' or not. But where there is some doubt about whether the employee is within the course of his employment, compensation will be allowed only when the employment seems to have exposed the claimant to a greater risk than those to which the general population might have been exposed. To express this notion, Myers might be used. But the procedure reflected by the use of these two cases remains the only genuinely useful and predictable tool to resolve these mat ters — a consideration of the dual requirement and the interdependence of the two concepts which compose it." (Footnotes omitted)
APPLICATION OF DUAL REQUIREMENT TO THIS CASE
Tested against the legal principles outlined above, we now consider whether the trial court in this case was clearly wrong or whether it misapplied the law, as urged by Mrs. Palermo as appellant, in granting a directed verdict in favor of defendants.
Louisiana appears to have considered only one case involving compensability resulting from accidents which occur on purely recreational or social trips taken by employees which are employer-sponsored and paid for. This is the case on which plaintiff relies. It is Jackson v. American Ins. Co., supra, a 1981 case which deals with a drowning at a swimming party. Appellant's counsel cites cases from other jurisdictions, but we must apply the specific jurisprudential rules of the cases discussed above.
Other than the fact that an employee drowned in each instance, we find little similarity between the Jackson facts and the facts of this case. In Jackson a sixteen-year-old CETA employee drowned in a pond at an "employer" sponsored swimming party. The trial court found that Jackson's death was covered by the compensation law. The Court of Appeal for the Second Circuit reversed (with Judge Marvin dissenting from a refusal to grant a rehearing), at 391 So.2d 1339 (La.App.2d Cir.1980). With two dissents the Supreme Court reversed the Court of Appeal and reinstated the trial court judgment.
The Supreme Court stated its approach in these terms: "The chief question presented is whether the trial court was clearly wrong in its factual finding . and/or erroneous in its application of the law." 404 So.2d at 220. As there appears to have been no dispute concerning the facts of the case, the correctness of the application of law would seem to be the essential question of the Jackson case. The Supreme Court stated the facts in the following language:
"The facts giving rise to this litigation are as follows. In the summer of 1978, the Coordinating and Development Council of Northwest Louisiana adopted a program funded under the federal government's Comprehensive Employment and Training Act (CETA) which program was designed to provide summer' employment for a nine week period to economically disadvantaged youths. Joe Dennis Jackson was one of several youths so employed by the program.
"The youngsters were supervised by one Carolyn Huseth. Their duties included cutting grass, picking up litter, and doing general maintenance labor in and around the small community of Rodessa, Louisiana, in Caddo Parish. It was conceded at trial that the boys rarely worked a full eight hour day even though they usually received credit for four eight hour days per week.
"On Thursday, August 10th, the last day of the summer program, Mrs. Hu-seth took the youngsters to do some work near the home of a Mr. Buehler, a municipal employee. At approximately 10:00 a.m. that morning, Mrs. Huseth informed the boys that, as she had promised earlier in the week, she would take them to a pond several miles out of Rodessa for a swimming party to celebrate the end of the program. There was testimony that the boys were informed that their attendance at the party was not mandatory, although this matter was in dispute at trial. Time sheets had already been turned in by Mrs. Huseth, giving all the boys credit for the concluding week's work, including Thursday, August 10th. With the exception of two boys who found their own way to the party, the group was transported to the pond by Mrs. Huseth in her truck. While wading at the pond, Joe Dennis Jackson accidentally drowned.
An understanding of the rationale of the Jackson decision can no doubt be aided by a reading of Judge Marvin's dissent from the Court of Appeal's refusal to grant a rehearing in Jackson. Judge Marvin argued that the appellate court majority had not approached the question of compensa-bility in the proper prospective dictated by the jurisprudence represented by Lisonbee.
The Supreme Court took such an approach. It began with a preamble:
"Our assessment of the question of coverage under the Louisiana compensation statute must be accomplished in light of the jurisprudence of this state. Furthermore, an analysis of the 'in the course of' requirement if oversimplified by its relegation to several boilerplate questions. The determination of coverage is a subjective one in that each case must be decided from all of its particular facts. Lisonbee v. Chicago Mill and Lumber Company, 278 So.2d 5 (La.1973)." 404 So.2d at 220.
With respect to the applicable law the Supreme Court in Jackson, speaking through Justice Calogero, found that the "arising out of" requirement was satisfied by two factors: (1) attendance at the swimming party was mandatory, and (2) "the degree to which the employer's purpose was served by the activity which gave rise to the injury."
The Supreme Court found attendance was mandatory because there was a "compulsion" growing out of the fact that the CETA employees were adolescents dealing with an adult. The court found that adolescents take suggestions as direct orders; therefore, the suggestion of the supervisor that all employees go on a swimming party amounted to compulsion.
The court found that the "arising out of" requirement was also supported by the fact that the outing served the purposes of the federally funded CETA program, which included among its goals "the advantages to be derived from community goodwill, the instillment of discipline, and improved relations between the underadvantaged youth and the institution of government."
The Supreme Court found the "in the course of" requirement to be filled because it generally refers to time and place of the accident as it related to that of employment. Justice Calogero wrote that the CETA program was a sort of "floating" operation, and the work place was wherever the employees were sent during working hours. The opinion quotes Larson, Worker's Compensation Section 22:23 (Desk Ed. 1977), to the effect that when the employer gives a company party "both the time and space limits of the employment are expanded to picnic day at the picnic grounds."
In summary we conclude that the Supreme Court found coverage in Jackson because the CETA employees really had no choice but to attend the outing. The program was a rather loose summer program, the purpose of which was to keep students busy and to permit them to earn some income; the work place was not fixed but was mobile at the direction of the supervisor, and the accident took place during customary working hours.
Reverting to the Palermo case before us and comparing it with Jackson, and deciding this case on its own facts, we see no compelling precedent in Jackson which requires us to reverse the trial court. We find the facts of this case quite dissimilar to the Jackson facts, and a different result should be reached.
At the outset we note that the employee group consisted of adult professional administrative persons. While there was an employer-employee relationship, it is obvious that the group was closely knit and we find no suggestion or reason to believe that the three employees who took the trip were compelled to accept, or were intimidated into accepting, the employer's largess. Despite the employer-employee relationship, there apparently was no great difference in social standing between them, and the nature of the trip demanded rapport and compatibility between the parties. Mrs. El Khansa declined to go on the trip with impunity. The employer left the decision as to what to do or where to go up to Palermo and the other employees. We cannot conclude that taking the trip was mandatory. The trip served no business purpose. No business was transacted on the trip, and Price testified none was discussed. (In Jackson it is fair to say that the very act of playing and swimming was the employer-assigned work.)
The trip lost some of the "company" character when Price brought two of his non-employee friends into the venture at Houston. While at the Mexican resort only the deep-sea fishing trip was participated in by the entire party. Otherwise, the individuals chose their own activities and amusement. The swim in the surf which led to Palermo's drowning was not company directed. In fact, only Palermo and one other co-employee were engaged in swimming at that time. The purpose of the trip was purely recreational, intended for rest and relief from excessive work under pressurized conditions. The employer derived no benefit from the enterprise, and the purpose could have been accomplished as easily by giving the employees a few days off to spend with their families. We find no company purpose was served, and the trip was offered simply as a gesture of gratitude.
Under the circumstances discussed above we find that the death of Ronald Palermo did not arise out of his employment.
We now move to a consideration of whether the so-called "greater risk" notion should bring this case under compensation coverage. The notion comes from a meshing and interdependence of the holdings of the Myers and Kern cases, as noted in the excerpt from the Malone and Johnson treatise cited above. In Sanders v. Chesson, supra, the opinion writer observed:
"It has been suggested that where an employee's actions fall squarely within the course of his employment, any risk that he may encounter will be considered as arising out of the employment. However, in situations where .there is doubt concerning whether the employee is within the course of his employment, compensation will be allowed only when the employment has exposed the claimant to a greater risk than that to which the general population might have been exposed."
(Emphasis supplied)
In this case presence at the Mexican resort for deep-sea fishing and other recreation does not manifestly "fall squarely within" the course of Palermo's employment. Because we have concluded definitively that Palermo's death did not arise out of his employment, we need go no further. However, to put the matter to rest we state our opinion that the trip in question, even bathing in the surf, exposed Palermo to no greater risk than that to which the general population might have been exposed. Who besides the general public goes bathing in the ocean surf? Confining ourselves to the resort where Palermo met his unfortunate death, we would say that anyone who went swimming in the surf there would be a member of the general public. Although the distance and cost factors might reduce the numbers of members of the general public who might go surf bathing at that particular resort, they still would be members of the general public. The risk to which Palermo was exposed, therefore, was no greater than that to which the general public was exposed.
CONCLUSION
In summary, we find there was no essential or substantial connexity between Palermo's employment and the recreational trip in question such that the trip became a part of his employment. The trip was offered solely as an expression of gratitude to the affected employees. No business of Contractors was conducted or discussed. Contractors reaped no advantage from the trip. It served no company purpose. We do not believe that an adult professional employee, who is rewarded as Palermo was, is going to be more loyal or conscientious in the future merely because his employer gives him a free recreational trip. If in fact the trip was offered prior to completion of construction of the Hilton Hotel, we doubt that it caused Mr. Palermo or his co-employees to work harder or more diligently. We cannot believe there was any compulsion for the employees to accept the offer of the trip. One employee did decline to accept the offer. In view of the professional status of the employees, there is nothing to suggest that they were in any way intimidated into accepting the trip. In short, the facts of this case fit none of the criteria or tests followed in Jackson v. American Ins. Co., supra. In that case the Supreme Court quoted the following passage from Larson's treatise cited above:
"Recreational or social activities are within the course of employment when
(1) They occur on the premises during a lunch or recreation period as a regular incident of the employment; or
(2) The employer, by expressly or impliedly requiring participation, or by making the activity part of the services of an employee, brings the activity within the orbit of the employment; or
(3) The employer derives substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life." (Emphasis supplied)
In the words of item (3) listed by Larson, the only benefit reaped by the employer was an "intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life."
Our decision makes it unnecessary to consider the "borrowed employee" issue.
For the foregoing reasons we affirm the judgment of the trial court. The costs of this appeal are assessed to plaintiff-appel-lee.
AFFIRMED.
FORET, J., dissents and assigns written reasons.
. Technically this action should be regarded as a dismissal under LSA-C.C.P. art. 1672 rather than the granting of a directed verdict under LSA-C.C.P. art. 1810 for the reason that the trial was before the judge and was not a jury trial.
" The Coordinating and Development Council of Northwest Louisiana is comprised of ten parishes in that area of the state and was formed to administer various state and federally funded projects."