Court Opinion

ID: 3117562
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:54:13.242555+00
Date Added: 2024-06-11T10:19:58.878475
License: Public Domain

Fourth Court of Appeals
                                      San Antonio, Texas

                                                 OPINION
                                         No. 04-12-00330-CV

                                            Gerardo RICO,
                                              Appellant

                                                   v.

                                       JUDSON LOFTS, LTD.,
                                            Appellee

                      From the 57th Judicial District Court, Bexar County, Texas
                                   Trial Court No. 2012-CI-03141
                          Honorable Cathleen M. Stryker, Judge Presiding

Opinion by:       Patricia O. Alvarez, Justice

Sitting:          Catherine Stone, Chief Justice
                  Sandee Bryan Marion, Justice
                  Patricia O. Alvarez, Justice

Delivered and Filed: May 29, 2013

REVERSED AND REMANDED

           Gerardo Rico appeals the trial court’s summary judgment in favor of Judson Lofts, Ltd.

in Rico’s common law negligence suit against Judson Lofts, Ltd. for injuries he sustained in a

workplace incident. The crux of Rico’s argument on appeal is that Judson Lofts, Ltd. was not

protected by the exclusive remedy provision of the Texas Workers’ Compensation Act. For the

reasons given below, we reverse the trial court’s judgment and remand the cause to the trial

court.
                                                                                    04-12-00330-CV

                                           BACKGROUND

           Appellant Gerardo Rico sustained injuries when he fell out of a backhoe while unloading

construction materials on Appellee Judson Lofts, Ltd.’s premises. At the time of the incident,

Rico was employed by Nationwide Staff Leasing. Judson Lofts, LLC and Nationwide entered

into a written service agreement whereby Judson Lofts, LLC leased employees from Nationwide.

The parties dispute whether “Judson Lofts, LLC” exists and whether Judson Lofts, Ltd. should

be considered the proper party to this contract. Pursuant to the Service Agreement, Nationwide

provided workers’ compensation insurance for Nationwide and Judson Lofts, LLC employees,

including Rico. After Rico was injured, he received workers’ compensation benefits under this

policy.

           Rico brought a common law negligence suit against Judson Lofts, Ltd. to recover for the

injuries he sustained in the workplace incident. Rico asserted that Judson Lofts, Ltd. was not

covered by workers’ compensation insurance because Nationwide’s workers’ compensation

insurance policy (the SUA 1 policy) named Judson Lofts, LLC, not Judson Lofts, Ltd., as the

insured party. Rico alleged that because Judson Lofts, Ltd. was not covered by a workers’

compensation policy, it was subject to Rico’s common law negligence claim. Judson Lofts, Ltd.

moved for traditional summary judgment on its affirmative defense of workers’ compensation

coverage. Judson Lofts, Ltd. contended that as a co-employer, and pursuant to the Staff Leasing

Services Act (SLSA), the exclusive remedy provision of the Texas Workers’ Compensation Act

(TWCA) shielded it from Rico’s common law liability claims. The trial court granted Judson

Lofts, Ltd.’s motion for summary judgment.

           On appeal, Rico asserts that Judson Lofts, Ltd. was not covered by the SUA policy and

was not a party to the Service Agreement. Rico first argues that an entity by the name of Judson

1
    The record does not define “SUA.”

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                                                                                   04-12-00330-CV

Lofts, LLC, not Judson Lofts, Ltd., contracted with Nationwide. He then contends that Judson

Lofts, Ltd. is not protected by the exclusive remedy provision of the TWCA because the Service

Agreement failed to satisfy various requirements of the SLSA. For these reasons, Rico contends

that Judson Lofts, Ltd. failed to establish it was covered by workers’ compensation insurance so

as to receive the protection of the exclusive remedy provision of the TWCA, thus failed to

conclusively establish all the elements of its affirmative defense, and therefore was not entitled

to summary judgment as a matter of law.

                                     STANDARD OF REVIEW

       We review the trial court’s summary judgment de novo. Vela v. GRC Land Holdings,

Ltd., 383 S.W.3d 248, 250 (Tex. App.—San Antonio 2012, no pet.); Wyckoff v. George C. Fuller

Contracting Co., 357 S.W.3d 157, 162 (Tex. App.—San Antonio 2011, no pet.). In our review,

we “must consider all the evidence in the light most favorable to the nonmovant, indulging every

reasonable inference in favor of the nonmovant and resolving any doubts against the motion.”

Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007); accord Romo v. Tex.

Dep’t of Transp., 48 S.W.3d 265, 269 (Tex. App.—San Antonio 2001, no pet.).

       The movant for traditional summary judgment has the burden to show “there is no

genuine issue as to any material fact and the moving party is entitled to judgment as a matter of

law.” See TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.

1985); Romo, 48 S.W.3d at 269. “The nonmovant has no burden to respond to a summary

judgment motion unless the movant conclusively establishes its cause of action or defense.”

M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000); accord Briggs v.

Toyota Mfg. of Tex., 337 S.W.3d 275, 285 (Tex. App.—San Antonio 2010, no pet.).

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                                                                                  04-12-00330-CV

       “A defendant moving for summary judgment on [an] affirmative defense . . . must prove

conclusively the elements of that defense.” Pustejovsky v. Rapid–Am. Corp., 35 S.W.3d 643,

464 (Tex. 2000); accord Se. Tex. Indus. v. Helmerich & Payne Int’l Drilling Co., 70 S.W.3d 181,

184 (Tex. App.—San Antonio 2001, no pet.). A defendant’s motion for summary judgment

based on an affirmative defense must not be granted if the defendant fails to conclusively

establish each element of its affirmative defense. Garcia v. John Hancock Variable Life Ins. Co.,

859 S.W.2d 427, 429–30 (Tex. App.—San Antonio 1993, writ denied).

                          TWCA & EXCLUSIVE REMEDY PROVISION

       The TWCA was adopted to benefit employers as well as employees, and should be

construed liberally in favor of coverage. Port Elevator-Brownsville, L.L.C. v. Casados, 358
S.W.3d 238, 241 (Tex. 2012). It provides employees with prompt remuneration for injuries

sustained in the course and scope of their employment, without requiring the employee to prove

the employer’s fault. See TEX. LAB. CODE ANN. § 406.031(a)(1)–(2) (West 2006); Briggs, 337
S.W.3d at 282.     For employers, the TWCA limits liability through its exclusive remedy

provision. See TEX. LAB. CODE ANN. § 408.001(a); Briggs, 337 S.W.3d at 282.

       The TWCA states that “[r]ecovery of workers’ compensation benefits is the exclusive

remedy of an employee covered by workers’ compensation insurance coverage.” TEX. LAB.

CODE ANN. § 408.001(a); Briggs, 337 S.W.3d at 282. This provision is an affirmative defense

that, if proven, protects employers from certain common-law claims of their employees. Briggs,
337 S.W.3d at 282. “An employee may have more than one employer within the meaning of the

TWCA, and each employer who subscribes to workers’ compensation insurance may raise the

exclusive-remedy provision as a bar to claims about the injury.” Casados, 358 S.W.3d at 242;

accord Briggs, 337 S.W.3d at 282.

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                                                                                                    04-12-00330-CV

                                                INSURED ENTITY
         Rico argues that Judson is not protected by the exclusivity bar of the workers’

compensation provision of the TWCA because Judson Lofts, Ltd. was not a party to the Service

Agreement and was not covered by a workers’ compensation insurance policy. Rico contends

that an entity by the name of Judson Lofts, LLC, not Judson Lofts, Ltd., contracted with

Nationwide. For these reasons, Rico asserts that there is at least a fact question on whether

Judson Lofts, LLC and Judson Lofts, Ltd. are the same entity.

         This case presents a problem analogous to that addressed in misnomer cases.                              “A

misnomer occurs when a party misnames itself or another party, but the correct parties are

involved.” 2 In re Greater Hous. Orthopaedic Specialists, Inc., 295 S.W.3d 323, 325 (Tex. 2009)

(per curiam). “Typically, misnomer cases involve a plaintiff who has misnamed the defendant,

and a petition involving this type of misnomer is nonetheless effective, for limitations purposes,

when filed, with any subsequent amendment relating back to the date of the original filing.” Id.

at 326. In misnomer cases, courts are flexible “because the party intended to be sued has been

served and put on notice that it is the intended defendant.” Id. When the plaintiff has misnamed

itself, “the rationale for flexibility . . . applies with even greater force.” Id.

         In its motion for summary judgment, Judson Lofts, Ltd. attached evidence to show that

Judson Lofts, LLC and Judson Lofts, Ltd. are the same entity. This evidence includes a letter

from the IRS issuing a federal Employer Identification Number (EIN) to Judson Lofts, Ltd. In

the SUA policy, the insured entity is identified as Judson Lofts, LLC, but the EIN is that of

Judson Lofts, Ltd. The Nationwide Client Addition/Termination Vendor Notification report

identifies Judson Lofts, LLC as a new client and lists the EIN for Judson Lofts, Ltd. Likewise,

2
 Misnomer is different from misidentification in that misidentification “arises when two separate legal entities exist
and a plaintiff mistakenly sues an entity with a name similar to that of the correct entity.” In re Greater Hous.
Orthopaedic Specialists, Inc., 295 S.W.3d 323, 325 (Tex. 2009).

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                                                                                 04-12-00330-CV

the Service Agreement identifies Judson Lofts, LLC as the Customer and lists the EIN issued to

Judson Lofts, Ltd. Judson Lofts, Ltd. also provided the sworn affidavits of Phillip Allen,

manager of Judson Lofts, Ltd., and Thomas Redclift, CEO of RRR Staff Leasing, Inc. d/b/a/

Nationwide. Allen stated that Judson Lofts, LLC has never existed and that the listing of Judson

Lofts, Ltd. as such is merely a typographical error. Redclift stated that Nationwide only leased

employees to a single Judson Lofts entity and the evidence shows that the only EIN in

Nationwide’s documents is that which the IRS issued to Judson Lofts, Ltd.

       Further, Judson Lofts, Ltd. produced two invoices for gross wages and burden rates from

Nationwide to Judson Lofts, LLC.      The invoices, dated July 18, 2008 and July 25, 2008,

reflected total balances due of $10,438.04 and $10,363.38, respectively. The Service Agreement

required that invoices from Nationwide be paid by Judson Lofts, LLC’s corporate check.

However, Judson Lofts, Ltd.’s summary judgment evidence included a statement from a Judson

Lofts, Ltd. account showing payments to Nationwide dated July 18, 2008 and July 25, 2008, in

the amounts of $10,438.04 and $10,363.38, respectively. Finally, Rico does not dispute that he

received workers’ compensation benefits under the SUA policy—the policy issued to

Nationwide, which listed Judson Lofts, LLC as its client company and identified Judson Lofts,

LLC as having the EIN issued to Judson Lofts, Ltd. See Adams v. Consol. Underwriters, 124
S.W.2d 840, 842 (Tex. 1939).

       Having reviewed the summary judgment evidence in the light most favorable to Rico, we

nevertheless determine that Judson Lofts, Ltd. conclusively established that Judson Lofts, Ltd.

and Judson Lofts, LLC are the same entity. See Se. Tex. Indus., 70 S.W.3d at 184. In response

to Judson Lofts, Ltd.’s summary judgment evidence, Rico provided no contrary evidence and

thus failed to raise a genuine issue of material fact. Therefore, for purposes of our review, we

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                                                                                    04-12-00330-CV

consider Judson Lofts, Ltd. and Judson Lofts, LLC to be the same entity and refer to this entity

as Judson.

                                   THE SERVICE AGREEMENT

       Rico contends that Judson is not protected by the exclusive remedy provision of the

TWCA because it has not conclusively established that it is covered by workers’ compensation

insurance in accordance with the SLSA. Specifically, Rico argues that the Service Agreement

does not satisfy the requirements of the SLSA because, inter alia, the parties did not “actually or

contractually share meaningful employment responsibilities” as required by Texas Labor Code

section 91.032.    Rico further argues that under the Service Agreement, Judson was solely

responsible for the direction and control over the adoption of employment and safety policies.

       We must determine whether, as a matter of law, the Service Agreement shares the

responsibilities set forth in section 91.032. We first consider whether the Service Agreement is

ambiguous. See Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex. 1996)

A. Ambiguity

       “Whether a contract is ambiguous is a question of law for the court to decide by looking

at the contract as a whole in light of the circumstances present when the contract was entered.”

Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983); accord Lenape Res. Corp., 925 S.W.2d at

574. “An ambiguity does not arise simply because the parties advance conflicting interpretations

of the contract.” Columbia Gas Transmission Corp. v. New ULM Gas, Ltd., 940 S.W.2d 587,

589 (Tex. 1996).     However, when a contract’s “meaning is uncertain and doubtful or is

reasonably susceptible to more than one interpretation,” the contract is ambiguous and its

meaning must be resolved by the fact-finder. Heritage Res., Inc. v. NationsBank, 939 S.W.2d
118, 121 (Tex. 1996); accord Lenape Res. Corp., 925 S.W.2d at 574.

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                                                                                    04-12-00330-CV

B. Staff Leasing Services Act Requirements

       The SLSA applies to all persons offering staff leasing services. TEX. LAB. CODE ANN.

§ 91.002(b). The staff leasing services provider must obtain a license to “engage in or offer staff

leasing services in [Texas].” Id. § 91.011. This person or entity—the “license holder”—assigns

its employees to a “client company” pursuant to a written contract. See id. §§ 91.001(3), (11);

91.031(a). Critical to this appeal, “[t]he [SLSA] contemplates that one workers’ compensation

policy procured by the staff leasing service company will cover employees leased to a client

company, and that both the leasing company and the client may rely on the exclusive remedy

provision of the [TWCA].” Wingfoot Enters. v. Alvarado, 111 S.W.3d 134, 140 (Tex. 2003); see

Calvasina v. Wal-Mart Real Estate Bus. Trust, No. SA-09-CA-1024-XR, 2012 WL 4506001, at

*24 (W.D. Tex. Sept. 28, 2012).

       To qualify under the SLSA, the contract between the license holder and the client

company must include certain provisions. Garza v. Exel Logistics, Inc., 161 S.W.3d 473, 478

(Tex. 2005). “[The] contract between a staff leasing license holder and its client must provide

that the leasing company ‘shares, as provided by Subsection (b), with the client company the

right of direction and control over employees assigned to a client’s worksites.’” Id. (quoting

TEX. LAB. CODE ANN. § 91.032(a)(1)). The contract must also provide that the license holder

and client company share “the right to hire, fire, discipline, and reassign the assigned

employees.” TEX. LAB. CODE ANN. § 91.032(a)(4); see DeLeon v. Thos. S. Byrne, Ltd., No. 02-

10-00438-CV, 2012 WL 42942, at *8 (Tex. App.—Fort Worth Jan. 5, 2012, no pet.) (mem. op.).

Finally, the contract must provide for the sharing of the “right of direction and control over the

adoption of employment and safety policies.”         TEX. LAB. CODE ANN. § 91.032(a)(5); see

DeLeon, 2012 WL 42942, at *8. Notwithstanding other provisions of the SLSA, “a client

company retains responsibility for . . . the direction and control of assigned employees as
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                                                                                     04-12-00330-CV

necessary to conduct the client company’s business.” TEX. LAB. CODE ANN. § 91.032(b)(1);

accord Wingfoot Enters., 111 S.W.3d at 141.

C. Service Agreement Terms

       Under the Service Agreement, Nationwide agreed to provide “assigned Workers and

worker-related services,” including human resources, to Judson by “assuming certain

responsibilities for certain Workers.” Judson, in the business of building renovation, agreed to

obtain workers from Nationwide. Nationwide’s responsibilities are set forth in Article I of the

Service Agreement. They principally comprise human resources responsibilities, but include

responsibilities for safety and site inspection services and for strict compliance with “all laws,

regulations, rules and guidelines established by governmental or quasi-governmental agencies in

all aspects of [Nationwide’s] industry, including without limitation, labor relations and safety

conditions.”

       Judson’s responsibilities are set forth in Article II of the Service Agreement. Like

Nationwide, Judson has safety responsibilities. In fact, Article II specifically requires Judson to

acknowledge that Nationwide will provide safety consultation and that Judson is to “cooperate in

the efforts to make the workplace a safer environment.” In Article II, Judson acknowledges that

Nationwide is entitled to remove the employees from any unsafe worksite. Article II (1)(c) of

the Service Agreement provides that Judson shall be solely responsible “in conjunction with

Article III(a) hereof, [for the] direction and supervision of all Workers” participating in Judson’s

activities. The Service Agreement does not contain an Article III(a). However, pursuant to

Article III(1), Nationwide “expressly reserves the right” to discipline or reassign employees

provided to Judson. Judson’s responsibilities under Article II also include “adherence to all

safety laws, regulations, rules and guidelines existing specifically in Customer’s business and in

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                                                                                             04-12-00330-CV

Customer’s industry generally, and as required by any governmental agencies or interested

insurance carriers” and “to provide safe work conditions and premises for all workers.”

        1. Right of Direction and Control over the Adoption of Employment and Safety Policies

        Both Article I and Article II of the Service Agreement require the parties to adhere to

safety laws, regulations, rules, and guidelines in Nationwide’s business and industry. Likewise,

both articles address responsibilities for safety policies. Article I, for example, clearly states that

Nationwide “will provide certain safety related services and site inspections.” Article II requires

Judson to provide safe work conditions and safe premises. Although the word “share” 3 is not

used in either article, the language in both articles has only one clear meaning: both Nationwide

and Judson have safety responsibilities in accordance with the laws, regulations, rules, and

guidelines in Nationwide’s business and industry in matters of safety and employment. Thus, the

Service Agreement requires that Judson and Nationwide share in the responsibilities for

employment and safety policies. Accordingly, we conclude that, as a matter of law, the Service

Agreement is not ambiguous in this respect and that, as such, it meets the SLSA requirements

regarding sharing of employment and safety policies. See TEX. LAB. CODE ANN. § 91.032(a)(5);

Columbia Gas Transmission Corp., 940 S.W.2d at 589; Coker, 650 S.W.2d at 393.

        2. Right of Direction and Control and Right to Hire, Fire, Discipline, and Reassign

        Article I of the Service Agreement is silent as to Nationwide’s responsibilities for

directing and controlling the employees; it is also silent as to Nationwide’s right to hire, fire, and

discipline employees. Therefore, our analysis of this part of the Service Agreement begins with

Articles II(1) and III. The pertinent portions of these articles provide:

3
 The word “share” is defined as “[d]ivide and distribute in portions amongst a number of recipients; divide up
between oneself and another or others.” SHORTER OXFORD ENGLISH DICTIONARY 2789 (6th ed. 2007).

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                                                                                  04-12-00330-CV

                                        ARTICLE II
                                   Customer Responsibilities

       (1)    Customer shall be solely responsible for the following matters:
                  ....
              (c) in conjunction with Article III(a) hereof, direction and supervision of
                  all Workers in the course of their participation in Customer’s business
                  activities, including establishment of performance standards for such
                  Workers and provision of all customary tools and/or other equipment
                  necessary for performance of required tasks.
                  ....
              (g) to evaluate the performance of each Worker periodically and to
                  discharge those Workers whose performance is unsatisfactory to
                  Customer in terms of the standards established in subparagraph (c)
                  above.
                  ....
                                          ARTICLE III
                                      Reservation of Rights

              The Corporation expressly reserves the following rights:

       (1)    the Corporation expressly reserves the right to discipline or reassign
              Workers provided to Customer . . . .

(emphases added).

       In determining whether the meaning of this portion of the agreement is ambiguous

regarding the sharing requirements of the SLSA, of importance are the definitions of the words

“solely,” “conjunction,” and “reserves.” Because none are expressly defined within the Service

Agreement, we look at their plain and ordinary meaning. See Fiess v. State Farm Lloyds, 202
S.W.3d 744, 751 & n.30 (Tex. 2006) (consulting Webster’s New Collegiate Dictionary for

meaning of “otherwise”).

       The word “solely” in Article II means “[a]s a single person or thing; without any other as

an associate, partner, etc.; alone” or “[o]nly, merely, exclusively.” SHORTER OXFORD ENGLISH

DICTIONARY 2911 (6th ed. 2007). The word “conjunction” used in part (c) of that same article

means “[t]he action or an act of conjoining; the fact or condition of being conjoined; (a) union;

(a) connection.” Id. at 492. In the context of Article II, the plain meanings of these words lead

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                                                                                     04-12-00330-CV

us to conclude that Judson’s sole responsibility for the direction and supervision of the

employees is modified pursuant to Article III(a). The problem is that Article III(a) does not

exist. Accordingly, the Service Agreement potentially provides that Judson is solely responsible

for the direction and supervision of the employees.

       However, we must look at the contract as a whole. See Coker, 650 S.W.2d at 394.

Article III(1) allows Nationwide to reserve its right to discipline or reassign employees. The

word “reserve” means “[k]eep back or set aside for future use or for a later occasion.” SHORTER

OXFORD ENGLISH DICTIONARY 2544. A reasonable interpretation is that by reserving the right to

discipline or reassign workers, by implication Nationwide reserved some right of employee

control. What is not clear from the document, however, is whether the right of control includes

firing and hiring responsibilities. It is likewise unclear whether Nationwide’s reservation of the

right to discipline or reassign workers was intended as merely a postponement of the

responsibilities for a future date or was intended to be a shared responsibility at all times. Thus,

the meaning of these provisions is uncertain and “reasonably susceptible to more than one

interpretation.” See Heritage Res., Inc., 939 S.W.2d at 121; Lenape Res. Corp., 925 S.W.2d at

574.

D. Service Agreement is Ambiguous as to Sharing of Certain Responsibilities

       For these reasons, we conclude that the meaning of Articles II and III is ambiguous as to

whether Nationwide shares with Judson the “right of direction and control over [the] employees”

and “the right to hire, fire, discipline, and reassign [them].”       See TEX. LAB. CODE ANN.

§ 91.032(a)(1), (4); see also Garza, 161 S.W.3d at 478; Heritage Res., Inc., 939 S.W.2d at 121;

Lenape Res. Corp., 925 S.W.2d at 574. Because this portion of the Service Agreement is

ambiguous, it raises a genuine issue of material fact and we must reverse the trial court’s

summary judgment. See Coker, 650 S.W.2d at 393–94.
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                                                                                                   04-12-00330-CV

                                                  CONCLUSION

         After reviewing the evidence de novo and in the light most favorable to Rico, we

determine that Judson conclusively established that Judson Lofts, Ltd. and Judson Lofts, LLC are

the same entity, and that Rico failed to raise a genuine issue of material fact to the contrary.

Because the Service Agreement is ambiguous as to whether the parties shared responsibilities as

required by the SLSA, we conclude that Judson failed to meet its burden to conclusively

establish all of the elements of its SLSA affirmative defense of workers’ compensation

insurance. Therefore, the trial court erred in granting Judson’s motion for traditional summary

judgment. Accordingly, we reverse the trial court’s judgment and remand the cause to the trial

court for further proceedings consistent with this opinion. 4

                                                          Patricia O. Alvarez, Justice

4
 Any further proceedings in this matter must be consistent with our determination that Judson Lofts, Ltd. is the true
entity referenced in the Service Agreement.

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