Title: Polymer Fabricating, Inc. v. Employers Workers' Compensation Association
Citation: 1998 OK 113, 69OBJ4068, 980 P.2d 109
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: November 24, 1998

Polymer Fabricating, Inc. v. Employers Workers' Compensation Association Annotate this Case Polymer Fabricating, Inc. v. Employers Workers' Compensation Association 1998 OK 113 980 P.2d 109 69 OBJ 4068 Case Number: 89585 Decided: 11/24/1998 Modified: 11/24/1998 Mandate Issued: 07/22/1999 Supreme Court of Oklahoma POLYMER FABRICATING, INC., an Oklahoma corporation, Plaintiff/Appellee, v. THE EMPLOYERS WORKERS' COMPENSATION ASSOCIATION, an Unincorporated Group Self-Insurance Association, Defendant/Appellant. ON APPEAL FROM THE DISTRICT COURT, OKLAHOMA COUNTY; James B. Blevins, Trial Judge. ¶0 A former member of a workers' compensation group self-insurance association pressed for a judicial declaration that its membership agreement was unenforceable as void. The association counterclaimed for damages from breach of contract and for the balance due on "an open account." The trial court gave summary judgment to the plaintiff. The association appealed. The cause stands retained for this court's consideration and disposition. THE TRIAL COURT'S SUMMARY JUDGMENT IS REVERSED AND THE CAUSE REMANDED FOR FURTHER PROCEEDINGS TO BE CONSISTENT WITH TODAY'S PRONOUNCEMENT. Richard A. Shallcross, Brewster, Shallcross & De Angelis, Tulsa, Oklahoma for Appellant Bradley Brickell, Ted Ross, Mahaffey & Gore, Oklahoma City, Oklahoma for Appellee OPALA, J. ¶1 The dispositive issue tendered is whether summary judgment for the plaintiff was erroneously entered. That judgment rests on the trial court's view that the agreement in contest is an unregistered security. We answer in the affirmative. I THE ANATOMY OF LITIGATION ¶2 The appellant, The Employers Workers' Compensation Association [TEWCA], is an unincorporated self-insurance association organized under §§ 61 and 149.1 of the Oklahoma Workers' Compensation Act, Each and every Member jointly and severally agrees to assume, pay and discharge all liabilities under the Act of any and all Members of the Association, except for those liabilities that are specifically excluded by this Agreement, and each Member agrees to pay any assessments as may be required by the Board. ¶3 The totality of premiums collected from TEWCA members was less than the amount of liabilities for the period from 1989 until Polymer's membership ended in 1993. In 1992, 1994 and 1995, TEWCA made deficit assessments for the time running from 1989 through 1994. Polymer's pro rata share of these assessments is alleged to be $35,943.07. ¶4 Polymer, who declined to pay any of the deficit assessments, brought this action for declaratory relief. It urges the Agreement is unenforceable as void. According to Polymer, (a) TEWCA had failed to follow the TEWCA Bylaws and to maintain a "common membership" in accordance with the Rules and (b) the Agreement constitutes an unregistered security. ¶5 TEWCA, which urges the deficit assessments are collectible under paragraph 3 of the Agreement, counterclaimed (a) for damages from the contract's breach by nonpayment, (b) for the balance due on "an open account" and in the alternative (c) for damages arising from breach of a quasi-contractual obligation. Both parties moved for summary judgment. ¶6 The trial court granted Polymer's and overruled TEWCA's quest for summary relief. We retain this appeal for disposition and now reverse the trial court's judgment. II STANDARD OF REVIEW FOR SUMMARY ADJUDICATION PROCESS ¶7 The focus in summary process is not on the facts which might be proven at trial (i.e., the legal sufficiency of evidence that could be adduced), but rather on whether the tendered material in the record reveals only undisputed material facts supporting but a single inference that favors the movant's quest for relief. ¶8 [980 P.2d 113] The issues stand before us for de novo examination. III POLYMER'S ARGUMENTS ¶9 Polymer argues that (a) the terms of 85 O.S.Supp.1996 § 149.1(C)8 were not in effect when this cause of action commenced, (b) legislation is presumed to apply prospectively only9 and (c) the Legislature intended subsection C to apply only to associations that were formed (and to members of existing associations who joined) after the amendment's effective date. The amendment is unconstitutional, Polymer argues, if it may be applied retroactively to agreements like that entered between Polymer and TEWCA. ¶10 Polymer also claims the Agreement is void because TEWCA failed to notify it of annual membership meetings and of Board elections. Because TEWCA breached the Agreement, Polymer urges that it should be able to sue for its losses ex contractu. ¶11 Polymer suggests that TEWCA members impermissibly engaged in dissimilar business activities which range from healthcare management to car dealerships. The divergent enterprises did not represent insurance risks similar to those of Polymer's business of manufacturing cooling tower components. It is argued that (a) the statutory phrase "common purpose" requires that employers in a self-insured association all be engaged in business activities with similar coverage risks and (b) the TEWCA-formed unit of diverse enterprises does not qualify as a statutorily-sanctioned risk grouping. IV TEWCA'S ARGUMENTS ¶12 TEWCA urges that the 1996 amendment10 did not substantively change pre-existing law but rather clarified it. According to TEWCA, subsectionC explains that a membership in self-insurance associations is not and never has been deemed a "security" subject to registration under Oklahoma Securities Act.11 ¶13 TEWCA admits that during Polymer's membership period the Board did not regularly conduct formal meetings. Its failure to have membership meetings, TEWCA maintains, is merely a technical departure but not a material breach of its contract with Polymer. ¶14 According to TEWCA, its membership grouping, although diverse, did indeed have a "recognizable common purpose" for associating - one to lower the individual member's workers' compensation coverage expense through a group self-insurance association. V THE PROVISIONS OF THE 1996 AMENDMENT ARE RETROACTIVE IN FORCE ¶15 [980 P.2d 114] Subsection C, ¶16 Following, as we must, the teachings of Self Insurers'VI BY FAILING TO FOLLOW ITS BY-LAWS, TEWCA DID NOT MATERIALLY BREACH THE AGREEMENT ¶17 TEWCA By-laws stipulate that TEWCA will hold annual membership meetings at which, on any matter presented, each member is entitled to one vote. ¶18 The authorities invoked by Polymer to escape liability are factually distinguishable. ¶19 There is no showing in this case that (a) TEWCA's failure either to notify Polymer of annual meetings or to hold annual elections detrimentally affected Polymer and (b) Polymer ever inquired about the annual meetings or demonstrated any concern about elections to the supervisory board. Oklahoma Employers ¶20 We hence hold there is here no legal support for summary judgment to Polymer on the ground that TEWCA materially breached its Agreement. VII THE TRIAL COURT ERRED IN HOLDING THAT THE RULES OF THE ADMINISTRATOR OF THE WORKERS' COMPENSATION COURT PROHIBIT DISSIMILAR BUSINESSES FROM JOINING A GROUP SELF-INSURANCE ASSOCIATION ¶21 Rule 3 § 3(b) (of the WCC administrator rules) requires that members of group self-insurance associations have a common interest or purpose for associating. ¶22 We hence hold that TEWCA's membership was not inappropriately configured either under the statutes or under the WCC administrator rules. VIII SUMMARY ¶23 The 1996 amendment to § 149.1 constitutes but a clarification of the legislative will that the provisions of the Oklahoma Securities Act ¶24 Subsection C, which must be given retroactive sweep, was in force when this cause was under consideration at nisi prius. Because the trial court refused to apply the critical subsection to the Agreement in contest here, we direct that in post-remand proceedings the after-enacted legislation be given retroactive force. No less is required by our teachings in Self Insurers' Management Group v. YWCA of Oklahoma City ¶25 The trial court's summary judgment rests on flawed legal conclusions. It is accordingly reversed and the cause remanded for further proceedings to be consistent with today's pronouncement. ¶26 KAUGER, C.J., SUMMERS, V.C.J., and HODGES, LAVENDER, SIMMS, HARGRAVE, OPALA, and WATT, JJ., concur; ¶27 WILSON, J., concurs in part and dissents in part. FOOT