Court Opinion

ID: 9407997
Source: CourtListenerOpinion
Date Created: 2023-07-11 06:06:07.801926+00
Date Added: 2024-06-11T17:20:41.023208
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                  revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

JOHN MCPARTLIN II,                                                    UNPUBLISHED
                                                                      July 6, 2023
               Plaintiff-Appellee,

v                                                                     No. 359584
                                                                      Wayne Circuit Court
RK EQUIPMENT REPAIR, INC, and RN                                      LC No. 20-011835-NO
MANAGEMENT COMPANY INC,

               Defendants-Appellants.

Before: HOOD, P.J., and SHAPIRO and YATES, JJ.

PER CURIAM.

        Separate corporations ordinarily prefer to be treated as distinct legal entities, and Michigan
law affords each corporation its independent existence absent some abuse of the corporate form,
Seasword v Hilti, Inc (After Remand), 449 Mich 542, 547; 537 NW2d 221 (1995), but the workers-
compensation system in Michigan muddles that general corporate preference. Here, for example,
after plaintiff, John McPartlin, II, slipped and fell on snow and ice while working as an employee
of Minority Auto Handling Specialists (MAHS), he pursued workers-compensation benefits from
MAHS. He also initiated this action against two defendants—RK Equipment Repair, Inc., (RK
Equipment), a separate entity responsible for snow removal at the facility, and RN Management
Company, Inc., (RN Management), MAHS’s parent company. Although the principals of those
corporations had set up an elaborate corporate structure, they responded to plaintiff’s suit by trying
to avail themselves of the exclusive-remedy provision in the Worker’s Disability Compensation
Act (WDCA), MCL 418.131(1). The trial court rebuffed that effort, denying summary disposition
to those two corporations. Defendants now appeal by leave granted the trial court’s orders denying
their motions for summary disposition and reconsideration.1 We affirm.

1
 McPartlin II v RK Equip Repair, Inc, unpublished order of the Court of Appeals, entered March
30, 2022 (Docket No. 359584).

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                                 I. FACTUAL BACKGROUND

         This case arises from an injury plaintiff sustained to his left shoulder when he fell on snow
and ice while working as a “switcher” at a cross-dock facility, which is owned by defendant RN
Management but associated with a web of corporate entities. Plaintiff was employed by MAHS,
a corporate entity that operated the cross-dock. Defendant RK Equipment, a separate corporate
entity, bore responsibility for repairing equipment and removing snow and ice at the cross-dock
facility. MAHS and RK Equipment are wholly-owned subsidiaries of defendant RN Management,
which is a wholly-owned subsidiary of FCS Industries. Those four entities all share the same three
corporate officers: Norman Klein; Craig Lowry; and Stephen Klein.

        After injuring his shoulder, plaintiff sought worker’s compensation benefits from MAHS,
but MAHS disputed that claim in part because it alleged that the medical treatment was not related
to the injury. Plaintiff subsequently filed this action against defendants RN Management and RK
Equipment, alleging that he slipped and fell on an “unreasonably dangerous accumulation of ice
and snow[.]” Plaintiff alleged that RN Management was the owner of the property, and therefore
being in possession and control of the premises, had a duty to exercise reasonable care to warn and
protect plaintiff from unreasonable dangers on the premises, including effectively unavoidable ice
and snow accumulations. Plaintiff further alleged that RN Management breached its duties by not
addressing and remediating the unreasonably dangerous ice and snow accumulation. Plaintiff also
stated that RN Management failed to exercise due care by inspecting the premises for unreasonably
dangerous and unavoidable conditions. Plaintiff contended that RK Equipment had assumed the
responsibility and duty to maintain the area where he was injured by addressing the snow and ice
accumulation and that RK Equipment failed to perform that responsibility or acted in a negligent
manner that created an unreasonably dangerous condition.

         Defendants sought summary disposition, advancing arguments in support of their motion.
Defendants also submitted several exhibits, including an affidavit from Craig Lowry, who served
as treasurer of FCS Industries, RN Management, MAHS, and RK Equipment and as financial vice
president of FCS Industries, RN Management, and MAHS, and an affidavit from Norman Klein,
chief executive officer and president of FCS Industries, chief executive officer of RN Management
and MAHS, and assistant secretary of RK Equipment. Defendants argued that plaintiff’s exclusive
remedy was to pursue WDCA benefits because RK Equipment and RN Management were both
considered plaintiff’s employers under the WDCA. Plaintiff argued that RN Management and RK
Equipment were not his employers, so the exclusive-remedy provision of the WDCA did not bar
his tort claims against them. Additionally, defendants argued that the hazard that caused plaintiff’s
injury was open and obvious and not effectively unavoidable, a claim that plaintiff disputed.

        Without conducting oral argument, the trial court denied defendants’ motion for summary
disposition in a form order that did not provide any explanation for the ruling. Defendants moved
for reconsideration, arguing that the factual issues in dispute were such that it would be beneficial
to hold oral argument. Defendants also argued that the trial court erred when it denied their request
for summary disposition on the ground that defendants qualified as plaintiff’s employers and when
it did not decide that the hazard was open and obvious and not effectively unavoidable. The trial
court issued a written order denying defendants’ motion for reconsideration without explaining its
reasoning. This appeal followed.

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                                      II. LEGAL ANALYSIS

        On appeal, defendants present several challenges to the trial court’s denial of their motion
for summary disposition under MCR 2.116(C)(4) and (10). First, defendants contend that the trial
court erred in denying their motion for summary disposition because they, as corporations related
to MAHS, should be considered plaintiff’s employers under MCL 418.131(1), so both of them are
covered by the exclusive-remedy provision of the WDCA. Second, defendants insist that the trial
court should have granted summary disposition to them because the hazard that caused plaintiff to
fall and injure himself was open and obvious and not effectively unavoidable. Finally, defendants
argue that the trial court erred by denying their motion for summary disposition without conducting
oral argument.2 We will address each of these three contentions in turn.3

              A. THE EXCLUSIVE REMEDY PROVIDED BY MCL 418.131(1)

        The trial court denied summary disposition to defendants on their theory that the exclusive-
remedy provision set forth in the WDCA, MCL 418.131(1), precludes plaintiff from asserting legal
claims. “We review de novo a trial court’s decision on a motion for summary disposition.” El-
Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159; 934 NW2d 665 (2019). Because “a party’s
assertion of the exclusive remedy provision of the WDCA is a direct challenge to the trial court’s
subject-matter jurisdiction,” Harris v Vernier, 242 Mich App 306, 312; 617 NW2d 764 (2000), a
defendant seeking summary disposition on that basis must file a motion under MCR 2.116(C)(4).
Id. at 313. Summary disposition is appropriate under MCR 2.116(C)(4) if the trial court does not
have jurisdiction over the subject matter. Petersen Fin LLC v Kentwood, 326 Mich App 433, 441;
928 NW2d 245 (2018). This Court “review[s] decisions on motions for summary disposition under
MCR 2.116(C)(4) de novo to determine if the moving party was entitled to judgment as a matter
of law, or whether the affidavits and other proofs show that there was no genuine issue of material
fact.” Herbolsheimer v SMS Holding Co, Inc, 239 Mich App 236, 240; 608 NW2d 487 (2000).

2
  Defendants also argue on appeal that plaintiff failed to demonstrate that defendants breached any
duty they owed to plaintiff to remove any snow and ice. Defendants are required to include each
question involved in their statement of questions, MCR 7.212(C)(5), and failure to do so ordinarily
results in this Court deeming all unstated issues waived. Caldwell v Chapman, 240 Mich App 124,
132; 610 NW2d 264 (2000). Defendants did not assert the breach-of-duty issue in their statement
of questions, and therefore we decline to take up that issue in this appeal.
3
  Defendants contend that their attorney did not receive the trial court’s order denying their motion
for summary disposition until three days after it was signed and entered on the register of actions,
and they did not receive the trial court’s order denying reconsideration until eight days after it was
entered. Defendants concede that these alleged discrepancies had no impact on this case and did
not hinder their ability to meet any applicable filing deadlines. Our Supreme Court has described
a moot issue as one in which a judgment “ ‘cannot have any practical legal effect upon a then
existing controversy.’ ” League of Women Voters of Mich v Secretary of State, 506 Mich 561, 580;
957 NW2d 731 (2020) quoting Anway v Grand Rapids Ry Co, 211 Mich 592, 610; 179 NW2d 350
(1920). Because a ruling in defendants’ favor on this procedural issue cannot have any practical
legal effect on the controversy in this matter, we decline to take up this issue.

                                                 -3-
         Defendants’ motion for summary disposition rests on the assertion that both of them should
have been treated as plaintiff’s employers, so the exclusive-remedy provision in the WDCA, MCL
418.131(1), precludes plaintiff from filing suit against them. Under MCL 418.131(1), “[t]he right
to the recovery of benefits as provided in this act shall be the employee’s exclusive remedy against
the employer for a personal injury or occupational disease.” The WDCA does not define the word
“employer,” Clark v United Technologies Auto, Inc, 459 Mich 681, 687; 594 NW2d 447 (1999),
so courts “appl[y] the ‘economic realities test’ to determine whether an employment relationship
exists for purposes of the exclusive remedy provision, and thus whether an individual or entity is
the ‘employer’ of a given employee.” Id. The economic-realities test assesses the totality of the
circumstances, but focuses on four factors: “ ‘(1) the control of a worker’s duties, (2) the payment
of wages, (3) the right to hire and fire and the right to discipline, and (4) the performance of the
duties as an integral part of the employer’s business towards the accomplishment of a common
goal.’ ” Id. at 688, quoting Askew v Macomber, 398 Mich 212, 217-218; 247 NW2d 288 (1976).
“No one factor is controlling.” Clark, 459 Mich at 689.

        In addition to the four factors considered in the economic-realities test, courts at times have
relied on additional factors in their analysis. In determining that a parent company and its wholly-
owned subsidiaries were all considered to be the plaintiff’s employer for purposes of the exclusive-
remedy provision, this Court observed that “[a] salient factor . . . is the use of a combined worker’s
compensation insurance policy by both parent and subsidiary.” James v Commercial Carriers,
Inc, 230 Mich App 533, 537; 583 NW2d 913 (1998). Beyond that, “[c]ombined bookkeeping and
accounting, together with income tax treatment that regards the corporations as a single entity, has
also been a persuasive factor in supporting the conclusion that two corporations should be treated
as one for the purposes of the exclusive remedy provision.” Id. at 539.

        Our Supreme Court distinguishes “dual employer” cases from “parent-subsidiary” cases.
Clark, 459 Mich at 690. Dual employer cases involve entities that share a horizontal relationship,
such as sister corporations. Id. In dual employer cases, when warranted by the application of the
economic-realities test, both corporations can “claim employer status for purposes of the exclusive
remedy provision.” Id. Parent-subsidiary cases, in contrast, involve corporate entities that share
“an essentially vertical relationship[.]” Id. at 691. In parent-subsidiary cases, when justified under
the economic-realities test, two corporations “will be treated as essentially one entity for purposes
of the exclusive remedy provision[,]” so the “separate existence of the two entities is disregarded.”
Id. Despite this distinction, the economic-realities test is used in both situations. See id. at 689.

        Here, we must decide whether defendants RK Equipment and RN Management should be
considered plaintiff’s “employers,” as contemplated by MCL 418.131(1). Without explaining its
reasoning, the trial court rejected defendants’ argument that they were plaintiff’s employers and,
therefore, protected by the exclusive-remedy provision of the WDCA. Although RK Equipment
and RN Management have different relationships with MAHS, the analysis for each defendant is
essentially the same. MAHS is a wholly-owned subsidiary of RN Management, so the two entities
share a vertical relationship. Id. at 691. RK Equipment and MAHS are wholly-owned subsidiaries
of RN Management which have a horizontal relationship. Id. at 690. In the dual employer context,
“courts have recognized that an employee can work for two employers at the same time,” while
“the separate existence of each entity is respected.” Id. Nevertheless, the economic-realities test
applies to both vertical and horizontal corporate relationships. Id. at 689.

                                                 -4-
         Because the evidence presented to the trial court was not “reasonably susceptible of but a
single inference,” but rather was disputed and “conflicting inferences may reasonably be drawn[,]”
the issue of defendants’ status as plaintiff’s employers is a question “for the trier of fact to decide.”
Id. at 694. Under the economic-realities factors, defendants have not identified evidence showing
that either defendant controlled plaintiff’s duties or had the right to hire, fire, or discipline plaintiff.
Defendants cite portions of the affidavits from Norman Klein and Lowry and the deposition of an
employee of RK Equipment that purportedly establish that defendants controlled plaintiff’s duties
and had the right to hire, fire, or discipline him. But a review of the identified portions of those
exhibits offers no such support. The evidence reveals that Nancy O’Connell, the general manager
of MAHS, oversaw management of personnel at MAHS and that Travis Collins, the dock manager
of MAHS, was plaintiff’s direct supervisor. The evidence also suggests that Collins and, to a lesser
extent, O’Connell controlled plaintiff’s duties. Defendants emphasize that O’Connell would often
confer with Norman Klein about the operation of the MAHS facility, but that does not support an
inference that Norman Klein, rather than O’Connell or Collins, controlled plaintiff’s duties on the
job. Additionally, plaintiff claimed that no one at RK Equipment or RN Management had the right
to discipline or fire him, and that no such person was involved in his hiring.

        The evidence about the payment of plaintiff’s wages similarly presents an unclear picture.
Defendants submitted an affidavit from Lowry in which he stated that wages for MAHS employees
were “paid through” RN Management. Other evidence revealed that the wages were paid directly
by MAHS and that MAHS’s name appeared on plaintiff’s paychecks. This resembles the situation
in Clark, where the plaintiff’s paychecks came from the actual employer, despite the fact defendant
alleged that the wages were paid from a common fund. Clark, 459 Mich at 695. Accordingly, this
factor does not support defendants’ argument.

        The fourth component of the economic-realities test—the common objective of the
separate entities—lends support to defendants’ assertion that they should be deemed plaintiff’s
employers. But that fourth factor does not outweigh the countervailing results under the other
three factors. Moreover, turning to additional factors courts have considered, the record reflects
that the parent company of defendant RN Management, i.e., FCS Industries, was a self-insured
entity that carried workers-compensation benefits for defendant RK Equipment and MAHS.
Although a combined workers-compensation policy covering multiple entities has been described
as one “salient factor” in this analysis, it is not dispositive. James, 230 Mich App at 537. In Clark,
our Supreme Court ruled that the issue of whether defendant was plaintiff’s employer for the
purpose of the exclusive-remedy provision was an issue that should be decided by the trier of fact
because of the numerous conflicting inferences that may be reasonably drawn from known facts,
even though both entities were covered by a single workers-compensation policy. Clark, 459 Mich
at 694, 696.

        We also deem it noteworthy that defendants submitted a notice of nonparty at fault, which
sought to place blame for plaintiff’s fall on MAHS and MAHS’s employees. That filing militates
against defendants’ assertion that MAHS and RN Management should be treated as a single entity.
That filing also diminishes the risk of an injustice in defendants’ assumption of responsibility for
plaintiff’s workers-compensation benefits without the protection of the WDCA exclusive-remedy
provision. See James, 230 Mich App at 541, quoting Wodogaza v H & R Terminals, Inc, 161 Mich
App 746, 756; 411 NW2d 848 (1987) (deeming it significant that “the subsidiaries in this case are
seeking to shield themselves from tort liability without having assumed any concomitant liability

                                                    -5-
for the payment of workers’ compensation benefits.”). While there is some evidence that suggests
that defendants RN Management and RK Equipment could be regarded as plaintiff’s employers,
defendants have not presented sufficient evidence to establish that, as a matter of law, those entities
should be treated as plaintiff’s employers. Accordingly, the trial court did not err when it denied
summary disposition to defendants under MCR 2.116(C)(4).

                          B. THE OPEN-AND-OBVIOUS DOCTRINE

        Next, defendants insist that the trial court should have awarded them summary disposition
pursuant to MCR 2.116(C)(10) by applying the open-and-obvious doctrine, which provides that a
“possessor of land ‘owes no duty to protect or warn’ of dangers that are open and obvious” unless
“the danger is unreasonable dangerous or when the danger is effectively unavoidable.” Hoffner v
Lanctoe, 492 Mich 450, 460, 463; 821 NW2d 88 (2012). In deciding whether an open and obvious
danger is effectively unavoidable, the key question is “whether any alternatives were available that
a reasonable individual in the plaintiff’s circumstances would have used to avoid the condition.”
Estate of Livings v Sage’s Investment Group LLC, 507 Mich 328, 333, 347; 968 NW2d 397 (2021).
Under MCR 2.116(C)(10), summary disposition is justified if “there is no genuine issue as to any
material fact, and the moving party is entitled to judgment or partial judgment as a matter of law.”
“A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to
the opposing party, leaves open an issue upon which reasonable minds might differ.” West v Gen
Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). In analyzing defendants’ request for
summary disposition under MCR 2.116(C)(10) in this case, we must draw all reasonable inferences
in favor of plaintiff. Dextrom v Wexford Co, 287 Mich App 406, 415-416; 789 NW2d 211 (2010).

         According to plaintiff’s first amended complaint, “[o]n February 6, 2020, at approximately
9:10 am, Plaintiff was walking, as required by his employer MAHS, between two trailers, in order
to perform his job when he slipped and fell on an unreasonably dangerous accumulation of ice and
snow[.]” Defendants contend that the ice and snow that caused plaintiff’s fall and injury were not
effectively unavoidable because plaintiff had a reasonable alternative to take instead of confronting
the hazard. But defendants have failed to establish that, as a matter of law, there was a reasonable
alternative available to plaintiff. Plaintiff testified at his deposition that he had climbed out of the
switcher and was walking across snow toward the rear tandems of a trailer and reaching for a wheel
chock when he slipped and fell on a layer of ice underneath the snow. Plaintiff was injured when
he landed on his left arm and shoulder. Plaintiff faulted defendants for failing to apply salt between
the trailers and for failing to remediate the flow of water that resulted in ice under the snow. With
regard to alternatives to walking on the snow-covered ice to the rear of the trailer on the day of his
fall, plaintiff testified that there was no other way for him to complete the tasks required of his job
as a switcher. Specifically, plaintiff testified as follows:

       Q: Isn’t it true that if you thought it was dangerous to walk between the trailers
       you did not have to do that?

       A: My job out there is dangerous. So I was trying to perform my job as instructed.

       Q: Mr. McPartlin, if it was unreasonably danger[ous] you could have refused to do
       that work, correct?

                                                  -6-
       A: Absolutely not. It’s part of my job function and it’s unavoidable for me to walk
       that area.

Plaintiff’s deposition testimony creates a genuine issue of material fact as to whether the dangerous
condition was effectively unavoidable. See Livings, 507 Mich at 333 (“We hold that an open and
obvious condition can be deemed effectively unavoidable when a plaintiff must confront it to enter
his or her place of employment for work purposes.”). Consequently, the trial court properly denied
defendants’ summary disposition motion under MCR 2.116(C)(10) on the premises-liability claim.

                      C. DENIAL OF ORAL ARGUMENT ON MOTIONS

         Finally, defendants insist that the complicated issues in their summary disposition motion
necessitated oral argument, so the trial court erred by resolving that motion and the reconsideration
motion without oral argument. Defendants also claim the trial court committed reversible error by
not providing an explanation for its denial of their motions. Under MCR 2.119(E)(3), “[a] court
may, in its discretion, dispense with or limit oral arguments on motions, and may require the parties
to file briefs in support of and in opposition to a motion.” “ ‘An abuse of discretion occurs when
the trial court chooses an outcome falling outside the range of principled outcomes.’ ” Nowacki v
Dep’t of Corrections, 319 Mich App 144, 148; 900 NW2d 154 (2017).

        We reject defendants’ contention that their motions presented issues so complex that oral
argument was imperative. Defendants have provided no authority that suggests that oral argument
is mandatory for motions containing legal issues of a certain complexity. Additionally, defendants
have not identified any argument that they could not present to the trial court because oral argument
was not held. Thus, defendants have not established that the trial court abused its discretion when
it resolved defendants’ motions without the benefit of oral argument. Defendants’ claim of error
in the denial of oral argument is especially unpersuasive as to their motion for reconsideration. As
MCR 2.119(F)(2) states, oral argument on motions for reconsideration shall not take place “unless
the court otherwise directs.” Therefore, defendants’ complaint about the denial of oral argument
on their motion for reconsideration turns MCR 2.119(F)(2) on its head.

         Although we find no reversible error in the trial court’s handling of defendants’ motions,
we sympathize with defendants in two respects. First, the trial court unilaterally cancelled an oral
argument at the last moment even though it had been set on the court calendar. Such last-minute
cancellations are highly inadvisable because they often inconvenience attorneys and parties alike.
Second, the trial court offered no explanation whatsoever for its decisions on the motions. When
no explanation is provided, the parties have no idea why the trial court ruled as it did, the attorneys
are hamstrung in trying to present issues for appellate review, and this Court is forced to analyze
the rulings of the trial court without the benefit of any reasoning to support the decisions before
us. Surely there is a better way, and we trust that the trial court will provide much more support
for its decisions in the future.

       Affirmed.

                                                               /s/ Noah P. Hood
                                                               /s/ Douglas B. Shapiro
                                                               /s/ Christopher P. Yates

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