Opinion ID: 1436216
Heading Depth: 1
Heading Rank: 1

Heading: exclusivity of worker's compensation [1]

Text: The effect of the Worker's Compensation provisions on a third-party complaint for indemnification is a matter of first impression in this court. We have previously considered the propriety of a negligence suit on behalf of a deceased worker against a fellow employee, Markle v. Williamson, Wyo., 518 P.2d 621 (1974), and we have considered the force and effect of certain indemnification agreements under statutes not here in question, Mountain Fuel Supply Company v. Emerson, Wyo., 578 P.2d 1351 (1978). The question now before us has been extensively discussed by the courts of other jurisdictions and by certain authorities in the field of worker's compensation. In order to fully answer the contentions of the parties, we find it necessary to discuss the language of the pertinent constitutional and statutory provisions, as well as the public policies which lie at their foundations. Maddux and the trial court emphasize the constitutional and statutory language which states that the right of an employee to compensation shall be in lieu of  all rights of action against any employer ... in favor of any person or persons by reason of such injuries or death. [Emphasis supplied] Both conclude that the words are unambiguous, and by their all-inclusive nature clearly bar all third-party actions against contributing employers. We have reviewed the statutes of other jurisdictions that have been held to bar third-party claims for indemnification, but find that they generally contain broader language than that found in the Wyoming provisions. For example, the statutes of Wisconsin, Colorado and New Mexico provide that employers complying with the worker's compensation provisions shall not be subject to any liability whatsoever. Even in these states, it is apparent that not all third-party claims for indemnification are barred. See, e.g., Royal Indemnity Company v. Southern California Petroleum Corporation, 67 N.M. 137, 353 P.2d 358, 362 (1960) (holding only that the common-law right of indemnity was destroyed, and leaving open for decision the effect of a specific contract for indemnity); and Hilzer v. MacDonald, 169 Colo. 230, 454 P.2d 928 (1969) (again, holding only that the common-law right of indemnity was destroyed). See, also, Holly Sugar Corporation v. Union Supply Company, Colo., 572 P.2d 149 (1977) (applying Colorado and Montana law). The effect of the Wyoming Worker's Compensation Act on third-party claims for indemnity has been considered by the United States District Court for the District of Wyoming and by the 10th Circuit Court of Appeals. In Pittsburgh-Des Moines Steel Company v. American Surety Company of New York, 10 Cir., 365 F.2d 412 (1966), affirming 238 F. Supp. 850 (D.Wyo. 1965), the court held that the Wyoming Worker's Compensation provisions did not bar a third-party action against an employer when there is an express contract of indemnity against the employer. The case that gave rise to this holding involved a third-party action by the subrogee of a prime contractor against a sub-contractor. An employee of the sub-contractor had been injured in a fall from a defective scaffold constructed by the contractor. Indemnity was found to arise out of the independent legal relationship under which the sub-contractor owed a duty to the contractor regardless of the contractor's negligence toward the subcontractor's employee. Based on this decision and the decision in Royal Indemnity Company v. Southern California Petroleum Corporation, supra, the federal district court recently observed: It appears to this Court that the only justifiable way to abrogate the Wyoming Workmen's Compensation provision, and its exclusive remedy thereunder is by the existence of a written contract of indemnity against the employer. Shields v. Bechtel Power Corporation, 439 F. Supp. 192, 194 (D.Wyo. 1977). The only third-party claim before the court in Shields was a claim for contribution. It may be persuasive on that theory of recovery  we are not asked to consider that question here  but the dicta with regard to indemnity may be overly narrow. With these initial thoughts in mind, we return to a construction of the Wyoming Worker's Compensation provisions. As Larson puts it in his treatise: The initial question is whether the exclusive-remedy clause is broad enough to grant immunity to the employer for all causes of action growing out of the accident, regardless of the question of independent breach of duty. This issue requires careful examination of the language used in the particular exclusive-liability provision. 2A Larson, Workmen's Compensation Law, § 76.30, at page 14-322. (1976). In considering the language in question, we are confronted with the apparent fact that the exclusivity provisions of the statutes seem to be more restrictive in scope than the constitutional provisions. Article 10, Section 4, of the Wyoming Constitution, provides that the employee's right to compensation takes the place of any action against an employer in favor of any person or persons. [Emphasis supplied] On the other hand, § 27-50, W.S. 1957, provided in relevant part that [c]ompensation ... shall be payable to persons injured ... or the dependent families of such, as die, as the result of such injuries, ... The right of each employee to compensation ... shall take the place of any and all rights of action ... in favor of any such person or persons... . [Emphasis supplied] Section 27-51, W.S. 1957, provided that the rights provided by the workmen's compensation law shall be exclusive of all other rights of such employee, his personal or legal representatives or dependent family. Thus, while the Constitution speaks of any person when it designates those who are barred from suing an employer, the statutes speak only of a certain class of persons. Third parties, seeking indemnification from an employer, do not, therefore, seem to be precluded from bringing suit under the statute but, arguably, they are precluded under the language of the Constitution. This apparent anomaly tends to disappear, however, when the remaining language of the Constitution is considered. The rights of action in favor of any person, that are precluded by the Constitution, are those which arise by reason of any such injuries or death. Section 27-50, supra, uses the same terminology. Section 27-51, supra, uses the phrase, on account of any injury. Certainly, a claim for indemnification from an employer would not arise but for the occurrence of an injury or death to an employee. A third-party claim for indemnity, however, is not based on the employee's injury. It is based on  by reason of  on account of  the alleged breach of an independent duty owed by the employer to the third party. 2A Larson, supra, § 76.30, at page 14-324. A third-party claim for indemnity does not, therefore, fit within the language used in the Wyoming Constitution. This conclusion is buttressed by the realization that the enactment of the Worker's Compensation statutes resulted in a trade-off of rights and liabilities between the employer and the employee. Zancanelli v. Central Coal & Coke Co., 25 Wyo. 511, 173 P. 981 (1918). See, Markle v. Williamson, supra, at 624-625, citing Pittsburgh-Des Moines Steel Company v. American Surety Company of New York, supra. Third parties, seeking indemnity, received no benefits and, therefore, should not be held to have impliedly given up any rights. 2A Larson, supra, § 76.52, at page 14-407. We hold that the Worker's Compensation provisions do not bar third-party claims for indemnity. The trial court, therefore, erred with respect to the general legal principles to be applied to Maddux's motion for summary judgment. As noted previously, the courts of some jurisdictions have based their decisions on the exclusivity issue on the type of indemnity sought. In this case, the parties appear to concede that if Worker's Compensation is not a bar to indemnity based on an express contract, then it is not a bar to claims based on an implied indemnity or on common-law indemnity. As is the case with the issue of contribution, we have, therefore, no occasion in this opinion to decide whether or not causes of action had on implied indemnity or common-law indemnity would be precluded by the Worker's Compensation Act. That inquiry must await a case that squarely presents these last-mentioned issues.