Court Opinion

ID: 4345349
Source: CourtListenerOpinion
Date Created: 2018-11-28 21:34:16.402047+00
Date Added: 2024-06-11T14:49:18.981881
License: Public Domain

11/28/2018

               IN THE COURT OF APPEALS OF TENNESSEE
                            AT JACKSON
                            September 11, 2018 Session

   HARTFORD CASUALTY INSURANCE COMPANY v. COMANCHE
    CONSTRUCTION INC. ET AL. v. ANDREA BLACKWELL ET AL.

                 Appeal from the Chancery Court for Dyer County
               No. 14-CV-319     Robert E. Lee Davies, Senior Judge
                      ___________________________________

                          No. W2017-02118-COA-R9-CV
                      ___________________________________

This case involves a dispute between workers’ compensation insurance carriers
concerning liability for benefits paid to an injured employee. The plaintiff filed a
declaratory judgment action seeking indemnity for benefits voluntarily paid to the
employee on the theory that the employee was actually a loaned servant, which shifted
liability to the defendant borrowing employer. The defendant filed a motion for summary
judgment asserting that the undisputed facts could not establish a claim for implied
indemnity. We granted this Rule 9 interlocutory appeal to consider whether the trial
court improperly denied the motion. After our thorough review, we affirm the trial
court’s decision to deny the motion for summary judgment and remand for further
proceedings.

    Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Chancery Court
                                    Affirmed

BRANDON O. GIBSON, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and THOMAS R. FRIERSON, II, J., joined.

John E. Anderson, Sr., and Autumn L. Gentry, Nashville, Tennessee, for the appellants,
Comanche Construction, Inc., Comanche Construction of Georgia, Inc., and Seabright
Insurance Company.

Jason K. Murrie, and Peter C. Robison, Nashville, Tennessee, for the appellee, Hartford
Casualty Insurance Company.
                                              OPINION

                               I. FACTS & PROCEDURAL HISTORY

       In 2009, Comanche Construction, Inc. (“Comanche”) was hired to make repairs to
a bridge in Dyersburg, Tennessee, that crosses over the Mississippi River. A crane was
needed to complete the repairs, so Comanche rented a crane and crane operator from
Ford Construction Company (“Ford”). There was no written agreement between
Comanche and Ford. Instead, there was a verbal agreement to rent the crane and crane
operator at an hourly rate. The crane operator selected by Ford was Robert Blackwell.

       On May 7, 2009, Mr. Blackwell was operating the crane when the crane tipped
and fell over the side of the bridge. He jumped out and onto the bridge, sustaining a
serious head injury that was ultimately fatal. Thereafter, Ford’s workers’ compensation
insurance carrier, Hartford Casualty Insurance Company (“Hartford”), voluntarily paid
workers’ compensation benefits to and/or on behalf of Mr. Blackwell.

       Mr. Blackwell’s conservators (“the Blackwells”) filed a tort action against
Comanche in the Circuit Court for Dyer County, Tennessee, seeking damages for Mr.
Blackwell’s injuries. Because Hartford had voluntarily paid workers’ compensation
benefits, it filed a motion to intervene in the tort action to protect its subrogation lien.
Therein, Hartford asserted that Mr. Blackwell was an employee of Ford.

       Hartford then proceeded to file the present declaratory judgment action in the
Chancery Court for Dyer County, Tennessee, on July 31, 2014, seeking indemnification
from Comanche and its workers’ compensation insurer1 for all workers’ compensation
benefits voluntarily paid to Mr. Blackwell.2 Hartford reasoned that it should recover the
benefits paid because, at the time of the injury, Mr. Blackwell was working as a
“borrowed employee” or loaned servant of Comanche, as he was under Comanche’s
direction and control.

        Thereafter, on August 22, 2014, Comanche settled the Blackwells’ tort claims in

        1
           Hartford named as defendants Comanche Construction, Inc., Comanche Construction Inc. of
Georgia, and Seabright Insurance Company, which is Comanche’s workers’ compensation insurance
carrier. For the sake of clarity, we will continue referring to these defendants as “Comanche,” as did the
trial court.
        2
          Comanche removed the case to federal court on the basis of diversity of citizenship and the
amount in controversy exceeding $75,000. However, the United States District Court for the Western
District of Tennessee declined to exercise the district court’s discretionary jurisdiction and remanded the
case back to the Dyer County Chancery Court.

                                                    2
circuit court for an undisclosed sum, and as a part of the settlement, Hartford
acknowledged the “complete satisfaction of its subrogation lien,” in exchange for a
portion of the settlement funds paid to the Blackwells. The settlement agreement,
however, specifically provided that its terms did not apply to the declaratory judgment
action filed by Hartford in chancery court.3

       On December 19, 2016, Comanche filed a motion for summary judgment in the
declaratory judgment action in chancery court asserting therein that “the undisputed facts
establish that [Hartford’s] evidence is insufficient to establish that it is entitled to
indemnification from [Comanche].”4 Alternatively, Comanche argued that it was entitled
to summary judgment because Hartford’s claim was actually one for subrogation, which
was barred by the passing of the one-year statute of limitations.

       The trial court heard arguments on the motion, and by order entered September 18,
2017, it denied Comanche’s motion for summary judgment. The court determined that
the action was in fact one for indemnity rather than for subrogation. It found that,
viewing the facts in Hartford’s favor, Hartford had made a prima facie showing that
Comanche borrowed Ford’s employee, Mr. Blackwell, for a particular purpose and
exercised control over him to the extent that he became the de facto employee of
Comanche. Although all agreed that there was no express contract for indemnity
between the parties, the court found that there was a direct contractual relationship
between Ford and Comanche and that implicit within the relationship was the obligation
of Comanche to indemnify Ford under the Workers’ Compensation Act for injuries to
Blackwell if caused by Comanche’s negligence in directing the operation of the crane.

        Comanche filed a timely motion for permission to seek an interlocutory appeal and

        3
            Specifically, this portion of the agreement, which was signed by Hartford’s counsel, provided:

                 Notwithstanding anything herein to the contrary, The Hartford Casualty
        Insurance Company, by the signature of its authorized representative hereinbelow, only
        acknowledges complete satisfaction of its subrogation lien . . . . It is further understood
        and agreed that neither the satisfaction of said lien nor anything in this document shall
        operate to in any way prejudice the Complaint seeking declaratory relief filed by Hartford
        Casualty Insurance Company against Comanche Construction, Inc., . . . on July 31, 2014
        under docket number 14-CV-319 or any of the claims made and asserted therein, whether
        in that forum or in any other.
        4
          The motion for summary judgment was filed against Hartford and alternatively against the
Blackwell estate. On May 3, 2016, Comanche filed a sealed third-party complaint against the Blackwells
seeking indemnification pursuant to the terms of the settlement agreement reached in the tort action. The
chancery court bifurcated the original action by Hartford from the third-party action of Comanche against
the Blackwells. Thus, only the motion for summary judgment against Hartford is at issue.

                                                      3
to stay the proceedings. The trial court granted the motion, and this Court granted
Comanche’s Rule 9 application.

                                II. STANDARD OF REVIEW

        Summary judgment is appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” Tenn. R. Civ. P. 56.04. The party moving for summary
judgment may satisfy its burden of production by (1) affirmatively negating an essential
element of the nonmoving party’s claim or (2) demonstrating that the nonmoving party’s
evidence at the summary judgment stage is insufficient to establish its claim. Rye v.
Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 264 (Tenn. 2015). When a
motion for summary judgment is properly supported, the nonmoving party, in order to
survive summary judgment, may not rest upon the mere allegations or denials of its
pleading but must respond, and by affidavits or one of the other means provided in Rule
56, set forth specific facts showing that there is a genuine issue for trial. Id. at 265. “The
nonmoving party must demonstrate the existence of specific facts in the record which
could lead a rational trier of fact to find in favor of the nonmoving party.” Id.
“[S]ummary judgment should be granted if the nonmoving party’s evidence at the
summary judgment stage is insufficient to establish the existence of a genuine issue of
material fact for trial.” Id. (citing Tenn. R. Civ. P. 56.04, 56.06). Appellate courts
review the grant or denial of a motion for summary judgment de novo with no
presumption of correctness. Id. at 250.

                                       III. ANALYSIS

     The issue before us on appeal is whether the trial court erred in denying
Comanche’s motion for summary judgment.

       “The right to indemnity rests upon the principle that everyone is responsible for
the consequences of his own wrong, and, if another person has been compelled to pay the
damages which the wrongdoer should have paid, the latter becomes liable to the former.”
 S. Coal & Coke Co. v. Beech Grove Min. Co., 381 S.W.2d 299, 302 (Tenn. Ct. App.
1963). This Court discussed express and implied indemnification in Winter v. Smith:

              Indemnity obligations are either express or implied. Express
       indemnity obligations arise from the contracts between the parties, and
       implied indemnity obligations, whether called equitable or contractual, are
       imposed by law without the consent or agreement of the parties. Courts
       will impose an implied obligation to indemnify when the obligation is a

                                              4
      necessary element of the parties’ relationship, Lusk v. Jim Walter Homes,
      Inc., 648 S.W.2d 935, 939 (Tenn.1983); Houseboating Corp. v. Marshall,
      553 S.W.2d [588, 589 (Tenn. 1977)], or when justice and fairness demand
      that the burden of paying for the loss be shifted to the party whose fault or
      responsibility is qualitatively different from the other parties. Velsicol
      Chem. Corp. v. Rowe, 543 S.W.2d 337, 339 (Tenn.1976); see also Hydro–
      Air Equip., Inc. v. Hyatt Corp., 852 F.2d 403, 406 (9th Cir.1988); Facilities
      Dev. Corp. v. Miletta, 180 A.D.2d 97, 584 N.Y.S.2d 491, 495 (1992). In
      the absence of an express contract, an obligation to indemnify will be
      implied only if the party from who indemnification is sought breached a
      contract or engaged in some other related tortious conduct. Burkert v.
      Petrol Plus of Naugatuck, Inc., 216 Conn. 65, 579 A.2d 26, 31 (1990); First
      Am. Bank v. Woods, 734 S.W.2d 622, 632 (Tenn.Ct.App.1987) (implied
      contractual indemnity based on negligence); Stiver Mktg., Inc. v.
      Performance Business Forms, Inc., App. No. 01–A–01–9108–CH–00276,
      slip op. at 7, 16 T.A.M. 52–7, 1991 WL 254564 (Tenn. Ct. App. Dec. 4,
      1991) (No Tenn. R. App. P. 11 appl. filed).

914 S.W.2d 527, 541-42 (Tenn. Ct. App. 1995).

        Although the Winter case discussed the concept of indemnification in the context
of construction litigation, the Tennessee Supreme Court has considered the issue in a
case—not unlike the subject claim—involving the payment of workers’ compensation
benefits. In Travelers Ins. Co. v. Fidelity & Cas. Co. of New York, the supreme court
considered an indemnity claim brought by Travelers, the workers’ compensation
insurance carrier of a contractor, against Fidelity, the insurer of a subcontractor. 409
S.W.2d 175, 176 (Tenn. 1966). Travelers had paid workers’ compensation benefits to an
injured employee of the general contractor but alleged that the employee was a loaned
servant of the subcontractor at the time of the injury. Id. at 177. According to Travelers,
the work being done at the time of the injury was that of the subcontractor, and the
subcontractor had the right to control the details of the employee’s work. Id. Fidelity
sought to have the case dismissed based on the undisputed fact that the case had been
filed after the one-year statute of limitations for subrogation claims had run. Id.

       The supreme court reversed the trial court’s dismissal of the case. Id. at 179. It
concluded that the claim was one for indemnity, not for subrogation, and that the one-
year statute of limitations did not apply. Id. at 179. The court noted that Tennessee’s
workers’ compensation laws “do[] not determine, as between contractors and
subcontractors, who is primarily liable as that determination must be made on equitable
principles.” Id. at 178. It further concluded that “[w]hether Travelers or Fidelity was
primarily liable to [the employee] . . . is a question of fact,” depending “upon in whose

                                            5
work he was engaged at the time of his injury.” Id.

       Likewise, in the case before us, Hartford has claimed that although Mr. Blackwell
was employed by Ford at the time of his accident, he was a loaned servant under the
direction and control of Comanche. Hartford cites Winchester v. Seay, in which our
supreme court held that a “special employer” becomes liable for workers’ compensation
to an employee loaned from a “general employer” if:

      (a) The employee has made a contract of hire, express or implied, with the
      special employer;

      (b) The work being done is essentially that of the special employer; and

      (c) The special employer has the right to control the details of the work.

Winchester v. Seay, 409 S.W.2d 378, 381 (Tenn. 1966); see also Catlett v. Indem. Ins.
Co. of N. Am., 813 S.W.2d 411, 414-16 (Tenn. 1991).

       Comanche argues on appeal, as it did before the trial court, that we need not
consider the loaned servant issue because, pursuant to Winter v. Smith, Hartford’s proof is
insufficient as a matter of law to establish its claim for indemnification. For this point,
Comanche relies almost exclusively on the last sentence of the above-quoted portion of
the Winter opinion that“an obligation to indemnify will be implied only if the party from
who indemnification is sought breached a contract or engaged in some other related
tortious conduct.” Winter, 914 S.W.2d at 542 (emphasis added). Comanche asserts that
based on this, implied indemnity cannot be imposed because Hartford has not alleged that
Comanche breached a contract or engaged in tortious conduct.

        In denying Comanche’s motion for summary judgment, the trial court emphasized
that the same court, in Winter, stated that “[c]ourts will impose an implied obligation to
indemnify when the obligation is a necessary element of the parties’ relationship.”
Winter, 914 S.W.2d at 542. The trial court found that Hartford produced sufficient
evidence, when viewed in the light most favorable to Hartford at the summary judgment
stage, to show that “Comanche borrowed Ford’s employee, Blackwell,” and that “implicit
within this relationship was the obligation of Comanche to indemnify Ford under the
Workers’ Compensation Act for injuries to Blackwell if they were caused by the
negligence of Comanche while it directed the operation of the crane in question.” The
trial court, citing Travelers, explained:

      While the policy behind our Workers’ Compensation Act is to ensure
      compensation for an injured worker regardless of his or her negligence, the

                                            6
        statute does contemplate indemnification among principal and intermediate
        contractors, subcontractors and the immediate employer, and our Supreme
        Court has indicated that any immediate employer may file an action for
        indemnification against the party who was controlling the details of the
        work being performed by the employee at the time of his injuries.

       After reviewing the controlling law, we are inclined agree with the trial court’s
interpretation of the Winter case. Although Comanche makes much of the statement in
Winter that “an obligation to indemnify will be implied only if the party from who
indemnification is sought breached a contract or engaged in some other related tortious
conduct,” we cannot ignore the preceding statement that “[c]ourts will impose an implied
obligation to indemnify when the obligation is a necessary element of the parties’
relationship.” Winter, 914 S.W.2d at 542 (emphasis added). As explained above, Winter
involved construction litigation. It is evident that the court of appeals was not
contemplating a dispute involving no-fault workers’ compensation benefits, nor was it
considering a dispute settled by agreement without a determination of liability, as is the
case here. Moreover, our supreme court indicated in Travelers that such indemnification
claims by a general employer against another employer borrowing an employee are
permissible in the context of workers’ compensation. See Travelers, 409 S.W.2d at 179.

       Having clarified that an implied obligation to indemnify may indeed be imposed
“when the obligation is a necessary element of the parties’ relationship,” we turn to the
specifics of the case at hand. A review of the existing law leads us to conclude that, here,
the question of implied indemnity is inextricably linked to the loaned servant issue. The
issue of whether Mr. Blackwell was a loaned servant is a question of fact, see id., and a
review of the record indicates that there is at least a genuine factual dispute concerning
this point.5 If we do not know for certain whether Mr. Blackwell was a loaned servant,
we cannot determine if an indemnity obligation was a necessary element of the
relationship between Ford and Comanche. We emphasize that at this stage of the
proceedings, the issue is not whether Hartford is ultimately entitled to indemnification
from Comanche. The limited issue before us in this interlocutory appeal is whether
Comanche was entitled to summary judgment. Viewing the evidence in the light most
favorable to Hartford, as we are required to do at this stage, we conclude that Hartford’s
evidence was sufficient to withstand the motion for summary judgment.

        Alternatively, Comanche argues, as did the defendant insurer in Travelers, that

        5
           It should be noted that although the trial court found that Hartford “made out a prima facie case”
as to this point, the court did not make a factual finding that Mr. Blackwell was a loaned servant. Rather,
it found that Hartford presented enough evidence of such to survive Comanche’s motion for summary
judgment.

                                                     7
Hartford’s claim is actually one for subrogation, for which the statute of limitations has
run. Comanche points to evidence in the record in the form of emails suggesting that the
Blackwells agreed to cooperate with Hartford in pursuing the declaratory judgment
action. In exchange, Hartford purportedly agreed to return to the Blackwells any excess
in recovery over Hartford’s payment of benefits and expenses. Even so, the trial court
dismissed Comanche’s argument, again citing Travelers, and concluded that Hartford’s
claim was one for indemnity, not subrogation. We agree. The supreme court in
Travelers made clear that when one employer brings a claim against another employer
for reimbursement of benefits paid to an injured employee on the basis that an employee
was a loaned employee that the cause of action is one for indemnity. See id. at 178-79.
Evidence of a contemporaneous agreement between Hartford and the Blackwells does not
change the nature of this cause of action as it relates to the applicable statute of
limitations.

       We note that Comanche also suggested in its motion for summary judgment that if
Hartford is ultimately permitted to recover an amount that exceeds its subrogation interest
and remits that sum to the Blackwells, this would “fl[y] in the face of the exclusivity
provision of Tenn. Code Ann. § 50-6-108.” Likewise, on appeal, Comanche briefly
suggests that allowing Hartford to recover in this lawsuit “would effectively require that
Comanche be deemed both the employer and the tortfeasor in direct contravention of the
exclusivity provisions of the Tennessee Workers’ Compensation Act.” However, in
denying the motion for summary judgment, the trial court made no ruling with respect to
the exclusivity rule, and consequently, we express no opinion on appeal as to this issue.

      We, therefore, conclude that the trial court did not err in denying Comanche’s
motion for summary judgment.

                                    IV. CONCLUSION

      For the aforementioned reasons, we affirm the decision of the chancery court and
remand for further proceedings consistent with this opinion. Costs of this appeal are
taxed to the appellants, Comanche Construction, Inc., Comanche Construction of
Georgia, Inc., and Seabright Insurance Company, for which execution may issue if
necessary.

                                                _________________________________
                                                BRANDON O. GIBSON, JUDGE

                                            8