Court Opinion

ID: 9393158
Source: CourtListenerOpinion
Date Created: 2023-05-09 16:05:47.582984+00
Date Added: 2024-06-11T17:18:51.509808
License: Public Domain

FILED
                                                                      IN THE OFFICE OF THE
                                                                   CLERK OF SUPREME COURT
                                                                           MAY 9, 2023
                                                                    STATE OF NORTH DAKOTA

                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                  2023 ND 91

David Kutcka, individually; The Estate
of Austin D. Dejno, by and through
Tammy Dejno, as its duly-appointed
personal representative; and Tammy
Dejno, individually, as wrongful death
plaintiff,                                          Plaintiffs and Appellants
      v.
Gateway Building Systems, Inc.,             Defendant, Third-Party Plaintiff,
                                                               and Appellee
      v.
Joel Klipping, d/b/a MC Mill Workers,                 Third-Party Defendant

                                No. 20220257

Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Reid A. Brady, Judge.

REVERSED AND REMANDED.

Opinion of the Court by Tufte, Justice.

Thomas J. Conlin (argued), Taylor B. Cunningham (appeared), and Stacy
Deery Stennes (on brief), Minneapolis, Minnesota, for The Estate of Austin D.
Dejno and Tammy Dejno, plaintiffs and appellants.

Jeffrey S. Weikum (appeared), Bismarck, North Dakota, for plaintiff and
appellant David Kutcka.

Cara C. Passaro, Minneapolis, Minnesota, for defendant, third-party plaintiff,
and appellee Gateway Building Systems, Inc.
Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, North
Dakota, for amicus curiae North Dakota Workforce Safety and Insurance.

Duane A. Lillehaug, Fargo, North Dakota, for amicus curiae North Dakota
Association for Justice.

Monte L. Rogneby, Bismarck, North Dakota, for amicus curiae Associated
General Contractors of North Dakota.
                  Kutcka v. Gateway Building Systems
                             No. 20220257

Tufte, Justice.

[¶1] David Kutcka, Tammy Dejno, as personal representative of Austin
Dejno’s estate, and Tammy Dejno, as wrongful death plaintiff (collectively,
“Plaintiffs”) appeal from a judgment dismissing their negligence claims against
Gateway Building Systems (“Gateway”). Plaintiffs argue the district court
erred in concluding Gateway was Kutcka’s and Austin Dejno’s statutory
employer entitling Gateway to immunity from suit under the workers’
compensation act. We reverse, concluding that Gateway, the general
contractor, was not the statutory employer of its subcontractor’s employees,
Kutcka and Dejno, entitling it to immunity under the exclusive remedy
provisions of N.D.C.C. § 65-04-28, and remand for further proceedings.

                                      I

[¶2] In December 2019, David Kutcka and Austin Dejno were performing
millwright work for their employer MC Mill Workers (“MCMW”) at a jobsite in
Eldridge, North Dakota, when a crane jib extension fell on them, injuring
Kutcka and killing Dejno. The crane was operated by an employee of Gateway.
MCMW was acting as a subcontractor for Gateway on a grain elevator repair
project.

[¶3] Gateway and MCMW’s subcontractor agreement required MCMW to
obtain and maintain workers’ compensation insurance. MCMW secured
coverage for its employees and paid premiums to Workforce Safety and
Insurance (“WSI”) for Kutcka and Dejno. Claims for benefits were filed on
behalf of Kutcka and Dejno. WSI accepted the claims and awarded benefits.

[¶4] Dejno’s wrongful death plaintiff, his estate, and Kutcka sued Gateway
for negligence. Gateway moved for summary judgment, arguing it was immune
from suit as the statutory employer of Kutcka and Dejno. The district court
agreed, granting summary judgment and entering judgment dismissing the
Plaintiffs’ claims.

                                      1
                                       II

[¶5] Our standard for reviewing a grant of summary judgment is well-
established:

           Summary judgment is a procedural device for the prompt
     resolution of a controversy on the merits without a trial if there
     are no genuine issues of material fact or inferences that can
     reasonably be drawn from undisputed facts, or if the only issues to
     be resolved are questions of law. A party moving for summary
     judgment has the burden of showing there are no genuine issues
     of material fact and the moving party is entitled to judgment as a
     matter of law. In determining whether summary judgment was
     appropriately granted, we must view the evidence in the light most
     favorable to the party opposing the motion, and that party will be
     given the benefit of all favorable inferences which can reasonably
     be drawn from the record. On appeal, this Court decides whether
     the information available to the district court precluded the
     existence of a genuine issue of material fact and entitled the
     moving party to judgment as a matter of law. Whether the district
     court properly granted summary judgment is a question of law
     which we review de novo on the entire record.

Markgraf v. Welker, 2015 ND 303, ¶ 10, 873 N.W.2d 26.

                                      III

[¶6] Plaintiffs argue the district court erred in concluding Gateway was
Kutcka’s and Dejno’s statutory employer entitling Gateway to immunity under
the workers’ compensation act.

           Statutory interpretation is a question of law, fully
     reviewable on appeal. The primary objective in interpreting a
     statute is to determine the intent of the legislation. In ascertaining
     the intent of the legislation, we look first to the words in a statute,
     giving them their plain, ordinary, and commonly understood
     meaning, unless defined by statute or unless a contrary intention
     plainly appears. N.D.C.C. § 1-02-02. Statutes are construed as a
     whole and are harmonized to give meaning to related provisions.
     N.D.C.C. § 1-02-07. If the language of a statute is clear and
     unambiguous, “the letter of [the statute] is not to be disregarded

                                       2
     under the pretext of pursuing its spirit.” N.D.C.C. § 1-02-05. The
     language of a statute must be interpreted in context and according
     to the rules of grammar, giving meaning and effect to every word,
     phrase, and sentence. N.D.C.C. §§ 1-02-03 and 1-02-38(2). We
     construe statutes to give effect to all of their provisions, so that no
     part of the statute is rendered inoperative or superfluous. N.D.C.C.
     § 1–02–38(2) and (4).

Ackre v. Chapman & Chapman, P.C., 2010 ND 167, ¶ 10, 788 N.W.2d 344
(citations omitted).

                                       A

[¶7] The district court concluded Gateway was immune from suit under
N.D.C.C. § 65-04-28 as the statutory employer because Kutcka and Dejno were
“deemed” employees of Gateway under N.D.C.C. § 65-04-26.2(1) and Gateway
complied with N.D.C.C. ch. 65-04. Section 65-04-26.2(1), N.D.C.C., states:

     An individual employed by a subcontractor or by an independent
     contractor operating under an agreement with a general
     contractor is deemed to be an employee of the general contractor
     and any subcontractor that supplied work to the subcontractor or
     independent contractor. A general contractor and a subcontractor
     are liable for payment of premium and any applicable penalty for
     an employee of a subcontractor or independent contractor that
     does not secure required coverage or pay the premium owing. The
     general contractor and a subcontractor are liable for payment of
     this premium and penalty until the subcontractor or independent
     contractor pays this premium and penalty. The liability imposed
     on a general contractor and a subcontractor under this section for
     the payment of premium and penalties under this title which are
     not paid by a subcontractor or independent contractor is limited to
     work performed under that general contractor.

(Emphasis added.) Because MCMW and Gateway were operating under a
subcontractor agreement, Kutcka and Dejno were “deemed” to be employees of
Gateway under N.D.C.C. § 65-04-26.2(1). The dispositive issue is whether
Kutcka and Dejno are considered to be Gateway employees for the limited
purposes of N.D.C.C. § 65-04-26.2 or whether they are treated as Gateway

                                       3
employees for purposes of the entire workers’ compensation act, including the
exclusive remedy provisions of N.D.C.C. § 65-04-28.

[¶8] Under N.D.C.C. § 65-04-28, “Employers who comply with the provisions
of this chapter shall not be liable to respond in damages at common law or by
statute for injury to or death of any employee, wherever occurring, during the
period covered by the premiums paid into the fund.” The district court
concluded that because Kutcka and Dejno were deemed Gateway’s employees
under N.D.C.C. § 65-04-26.2(1) and Gateway otherwise complied with
N.D.C.C. ch. 65-04 as required under N.D.C.C. § 65-04-28, Gateway is
considered their employer and is immune from suit under N.D.C.C. § 65-04-28.

[¶9] Plaintiffs argue that they are deemed employees of Gateway only for
purposes of N.D.C.C. § 65-04-26.2 and that this use of the term employer does
not extend to the immunity provisions of N.D.C.C. § 65-04-28. Plaintiffs assert
that the “general provisions” chapter’s definition of “employer” applies to
N.D.C.C. § 65-04-28, which states, “In this title: . . . ‘Employer’ means a person
that engages or received the services of another for remuneration . . . .”
N.D.C.C. § 65-01-02(17). Plaintiffs contend that Gateway is considered their
employer only for purposes of N.D.C.C. § 65-04-26.2, holding the general
contractor liable for payment of premiums and any applicable penalties if the
subcontractor does not secure coverage or pay the premiums owing.

[¶10] In State v. E.W. Wylie Co., WSI’s predecessor sued a third-party
employer, E.W. Wylie Co., to recover benefits it paid to an employee injured by
E.W. Wylie’s employee. 58 N.W.2d 76, 78-79 (N.D. 1953). E.W. Wylie asserted it
was entitled to immunity from suit under N.D.C.C. § 65-04-28 because it was
an employer that had complied with the workmen’s compensation law and paid
into the fund and thus N.D.C.C. § 65-04-28 prohibited suit against it to recover
for injury to “any employee.” Id. at 79-80. This Court disagreed, concluding the
legislative intent was that both the prior version of N.D.C.C. § 65-01-08—
precluding an employee from bringing a personal injury claim against its
premium-paying employer—and N.D.C.C. § 65-04-28 “apply only to an
employer and his employee.” Id. at 86-87.

                                        4
[¶11] In Boettner v. Twin City Construction Company, the issue was whether
an employee of one contractor, which may be a subcontractor operating under
an agreement with a general contractor, can sue the employee of another
contractor for negligence on the jobsite. 214 N.W.2d 635, 637 (N.D. 1974). The
Court interpreted an earlier definition of “employee” in the definitions section,
which stated:

      65-01-02. Definitions. Whenever used in this title:
      ....
      5. ‘Employee’ shall mean . . . :
      ....
      c. Persons employed by subcontractor, or by an independent
      contractor operating under an agreement with the general
      contractor, for the purpose of this chapter shall be deemed to be
      employees of the general contractor who shall be liable and
      responsible for the payments of premium for the coverage of these
      employees until the subcontractor or independent contractor has
      secured the necessary coverage and paid the premium therefor.
      This subdivision shall not be construed as imposing any liability
      upon a general contractor other than liability to the bureau for the
      payment of premiums which are not paid by a subcontractor or
      independent contractor; . . .

Id. at 636-37 (quoting N.D.C.C. § 65-01-02(5)(c) (1973)) (cleaned up). In
reconciling this statute with N.D.C.C. § 65-01-08 (1973), which granted
immunity to the “[c]ontributing employer” (as it does today), the Court held
the injured employee was not precluded from bringing suit. Boettner, at 640.
The Court reasoned the purpose of N.D.C.C. § 65-01-02(5)(c) (1973) was to
determine liability for the payment of WSI premiums. Id.

[¶12] The district court distinguished Boettner from this case, noting the
different language between N.D.C.C. § 65-01-02(5)(c) (1973) and N.D.C.C. § 65-
04-26.2(1) and that the Boettner Court did not analyze N.D.C.C. § 65-04-28. We
agree with these distinctions. Section 65-01-02(5)(c) (1973), N.D.C.C., more
clearly stated the purpose for which a subcontractor’s employee is deemed an
employee of the general contractor, which is to collect premiums against a
general contractor with a delinquent subcontractor. Second, the Boettner Court
was tasked with reconciling the premium collection statute, N.D.C.C. § 65-01-

                                       5
02(5)(c) (1973), with N.D.C.C. § 65-01-08 (1973), which granted immunity to a
“contributing employer.” Here, the court concluded Gateway had immunity
under N.D.C.C. § 65-04-28, which grants immunity to “[e]mployers who comply
with the provisions of this chapter.” This Court has since made clear that a
“contributing employer” under N.D.C.C. § 65-01-08 is “the entity who pays the
WSI premium.” Trinity Hosps. v. Mattson, 2006 ND 231, ¶ 12, 723 N.W.2d 684.
However, such clarity has not been provided as to employers “who comply”
under N.D.C.C. § 65-04-28.

[¶13] Gateway cites Trinity Hospitals for the proposition that it does not need
to be the “contributing employer” to be entitled to immunity. In Trinity
Hospitals, an employee of Trinity Health—which paid WSI premiums into the
fund on behalf of the employee—died as a result of slipping and falling in a
service tunnel owned and maintained by Trinity Hospitals. 2006 ND 231, ¶¶ 2-
3. The employee’s estate brought a third-party wrongful death action against
Trinity Hospitals, which was the subsidiary of Trinity Health. Id. We concluded
that “Trinity Hospitals is the same entity as Trinity Health for WSI purposes
and is entitled to the benefits of the exclusive remedy provisions as a
‘contributing employer’ under the plain and unambiguous language of
N.D.C.C. § 65-01-08.” Id. at ¶ 21. In determining they were the same entities
for WSI purposes, we reasoned that “WSI’s determination about the structure
of Trinity Health’s WSI premiums, coupled with the organizational structure
and relationship of Trinity Health and Trinity Hospitals” compelled the
determination. Id. at ¶ 20.

[¶14] Both the facts and law in Trinity Hospitals are different from this case.
Here, the relationship between the premium-paying employer and the party
claiming immunity is that of a subcontractor and general contractor. In Trinity
Hospitals, the relationship was between a parent company and its subsidiary.
We specifically recognized that the parent and subsidiary in Trinity Hospitals
were the same entities for WSI purposes. No argument has been made that
Gateway and MCMW are the same entities for WSI purposes. Further, the
immunity statute, N.D.C.C. § 65-01-08, analyzed in Trinity Hospitals provides
immunity to the “contributing employer” as opposed to “[e]mployers who

                                      6
comply,” who are immune under N.D.C.C. § 65-04-28. Accordingly, Trinity
Hospitals provides little guidance in our analysis of this case.

[¶15] Ultimately, our precedents are not dispositive on the issue. However, we
conclude the case law better supports the Plaintiffs’ construction. The Court in
E.W. Wylie concluded immunity under N.D.C.C. § 65-04-28, like the prior
version of N.D.C.C. § 65-01-08, applies only to an employer and its employee.
58 N.W.2d at 87. In Boettner, the Court recognized the different purposes
served by an immunity statute and a premium collection statute and construed
the two statutes to avoid their conflicting with each other. 214 N.W.2d at 640.
Absent one notable exception for a parent-subsidiary relationship, our case law
has consistently shown that only the premium-paying employer is entitled to
immunity.1 We conclude the case law supports the proposition that N.D.C.C.
§ 65-04-26.2 is a premium collection statute and N.D.C.C. § 65-04-28 grants
immunity to “Employers.” An “Employer” under title 65 “means a person that
engages or received the services of another for remuneration.” N.D.C.C. § 65-
01-02(17). Because Gateway did not “engage[ ] or receive[ ] the services” of
Kutcka and Dejno “for remuneration,” Gateway was not their employer and is
not entitled to immunity under N.D.C.C. § 65-04-28.

                                               B

[¶16] The district court concluded, and Gateway argues, the 2019 amendment
to N.D.C.C. § 65-04-26.2(1) expanded the scope of immunity to general
contractors such as Gateway. The 2019 amendment to N.D.C.C. § 65-04-26.2(1)
made the following additions (shown in bold) and deletions (struck through
language):

       An individual employed by a subcontractor or by an independent
       contractor operating under an agreement with a general
       contractor is deemed to be an employee of the general contractor if
       and any subcontractor that supplied work to the

1 The 1999 Legislature amended N.D.C.C. § 65-01-08 following our decision in Cervantes v. Drayton
Foods, L.L.C., 1998 ND 138, 582 N.W.2d 2, to expressly provide immunity to client companies and
staffing services. See 1999 N.D. Sess. Laws ch. 552, § 1; Trinity Hospitals, 2006 ND 231, ¶ 12.

                                               7
      subcontractor or independent contractor does not secure coverage
      as required under this title. A general contractor is and a
      subcontractor are liable for payment of premium and any
      applicable penalty for an employee of a subcontractor or
      independent contractor that does not secure required coverage or
      pay the premium owing. The general contractor is and a
      subcontractor are liable for payment of this premium and
      penalty until the subcontractor or independent contractor pays
      this premium and penalty. The liability imposed on a general
      contractor and a subcontractor under this section for the
      payment of premium and penalties under this title which are not
      paid by a subcontractor or independent contractor is limited to
      work performed under that general contractor.

2019 N.D. Sess. Laws ch. 524, § 9.

[¶17] The 2019 amendment to N.D.C.C. § 65-04-26.2(1) made three changes to
the statute. First, the amendment allowed for premium and penalty collection
beyond the general contractor, expanding to “any subcontractor that supplied
work to the subcontractor.” Thus, a subcontractor to the subcontractor is now
potentially liable for the premium and penalties owing. The three subsequent
additions of “subcontractor” by the amendment to N.D.C.C. § 65-04-26.2(1)
refer to the subcontractor that supplied work to the subcontractor. Second, the
2019 amendment added “or pay the premium owing.” Gateway does not argue
that this addition extends immunity to the general contractor. Third, the
amendment removed the contingency language from the first sentence. The
district court concluded, and Gateway argues, the removal of the contingency
language granted general contractors immunity from suit from its
subcontractor’s employees. Specifically, the court held “the deeming of the
employment relationship between the subcontractor’s employee and the
general contractor is no longer contingent upon ‘if the subcontractor or
independent contractor does not secure coverage as required under this title.’”

[¶18] We disagree that removal of the contingency language granted Gateway
immunity from suit under N.D.C.C. § 65-04-28. First, N.D.C.C. § 65-04-26.2(1)
is clear that an employee of a subcontractor, which is operating under an
agreement with a general contractor, is “deemed to be an employee of the

                                      8
general contractor.” “‘Deem’ means ‘[t]o treat (something) as if (1) it were really
something else, or (2) it has qualities that it does not have.’” Snider v.
Brinkman, 2017 ND 31, ¶ 16, 889 N.W.2d 867 (quoting Black’s Law Dictionary
504 (10th ed. 2014)). “Deem” is a “useful word when it is necessary to establish
a legal fiction either positively by ‘deeming’ something to be what it is not or
negatively by ‘deeming’ something not to be what it is.” Id. By its plain
language, N.D.C.C. § 65-04-26.2(1) does not state the general contractor is the
employer of its subcontractor’s employees. Rather, N.D.C.C. § 65-04-26.2(1)
creates a legal fiction—deeming a non-employee an employee. Thus, a
subcontractor’s employee is treated as the general contractor’s employee for
premium collection when the subcontractor fails to pay the premium, even
though the employee is not actually an employee of the general contractor. But,
at no time is the general contractor actually the employer of the subcontractor’s
employee. Recall, immunity under N.D.C.C. § 65-04-28 applies to “Employers,”
not to a general contractor whose subcontractor’s employee is “deemed to be
[its] employee” under the premium collection statute. Section 65-04-26.2(1),
N.D.C.C., provides no indication that it is defining “Employers” as that term
appears in N.D.C.C. § 65-04-28. Section 65-01-02(17), N.D.C.C., on the other
hand, provides the definition of “Employer” as that term is used in title 65,
which includes N.D.C.C. § 65-04-28.

[¶19] Second, the exclusive remedy provisions, including N.D.C.C. § 65-04-28,
were not amended to reflect an extension of immunity to general contractors
as Gateway suggests. See also N.D.C.C. § 65-01-08 (precluding an employee
from suing a “contributing employer”); N.D.C.C. § 65-05-06 (precluding claims
against the “employer of the injured or deceased employee”). As noted in
Trinity Hospitals, 2006 ND 231, ¶ 12, the Legislature amended N.D.C.C. § 65-
01-08 to provide immunity to client companies and staffing services when one
entity pays the premium, superseding Cervantes v. Drayton Foods, L.L.C.,
1998 ND 138, 582 N.W.2d 2. Thus, the Legislature has shown at least in one
instance that it would amend the exclusive remedy provisions if it intended
upon granting immunity to specific entities. Additionally, the Legislature did
not expand the definition of “Employer” in N.D.C.C. § 65-01-02(17) to include
the general contractor in this context.

                                        9
[¶20] The district court concluded, and Gateway argues, under the Plaintiffs’
interpretation, the first sentence of N.D.C.C. § 65-04-26.2(1) is superfluous. We
disagree. The first sentence identifies the relevant actors and their
relationships to one another and states an agreement between the
subcontractor (or independent contractor) and the general contractor is a
necessary condition for an employee of the subcontractor to be deemed an
employee of the general contractor. N.D.C.C. § 65-04-26.2(1). The second
sentence states the general contractor (and any subcontractor that supplied
work) is liable for premium payments of the subcontractor’s employee and
penalties if the subcontractor does not secure coverage or pay the premiums
owing. Id.

[¶21] Gateway cites several cases from other jurisdictions illustrating the
“modern trend” of providing immunity to general contractors regardless of
whether they secured the coverage and paid the premium. These cases,
however, do not apply a substantially similar statutory scheme to North
Dakota’s workers’ compensation statutes. They provide little assistance in
interpreting our statutes. For the reasons stated above, this so-called “modern
trend” is not the law in North Dakota.

[¶22] In Brendel Construction, Inc. v. North Dakota Workforce Safety &
Insurance, 2021 ND 3, ¶ 21, 953 N.W.2d 612, we stated, “The plain language
of N.D.C.C. § 65-04-26.2(1) allows an agency to seek payment of premiums and
penalties from both general contractors and subcontractors. Additionally, the
statute holds general contractors liable for payment of premiums and penalties
until the subcontractor pays.” While Brendel did not concern the exclusive
remedy provisions, we have consistently interpreted N.D.C.C. § 65-04-26.2(1)
and previous versions of the statute as a premium collection statute. Brendel,
which was decided after the 2019 amendment to N.D.C.C. § 65-04-26.2(1),
likewise interpreted the statute consistent with our past decisions.

[¶23] We conclude the Legislature did not intend to extend immunity to the
general contractor when the subcontractor secures coverage for its employees
and pays WSI premiums under N.D.C.C. § 65-04-26.2(1). The 2019 amendment
to N.D.C.C. § 65-04-26.2(1) is an extension of the 2017 statute, applying

                                       10
liability for premium payments and penalties to other subcontractors in
addition to the general contractor, who was already subject to the premium
collection provisions. Accordingly, the district court erred in concluding
Gateway was Kutcka’s and Dejno’s statutory employer entitling it to immunity
from suit under N.D.C.C. § 65-04-28.

                                    IV

[¶24] The district court improperly granted summary judgment. We reverse
and remand for further proceedings consistent with this decision.

[¶25] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte
      Douglas A. Bahr

                                    11