Court Opinion

ID: 9368196
Source: CourtListenerOpinion
Date Created: 2023-02-03 05:04:39.508755+00
Date Added: 2024-06-11T17:16:06.306772
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

ANTHONY TAYLOR,                                                    UNPUBLISHED
                                                                   February 2, 2023
               Plaintiff-Appellant,

v                                                                  No. 358037
                                                                   Oakland Circuit Court
YRC, INC., doing business as FREIGHT, and                          LC No. 2019-175506-NO
KEVEN KING,

               Defendants-Appellees.

Before: HOOD, P.J., and SWARTZLE and REDFORD, JJ.

PER CURIAM.

       In this negligence action, plaintiff, Anthony Taylor (Taylor) appeals as of right an order
granting summary disposition to defendants, YRC, Inc., doing business as Freight (YRC), and
Keven King. We affirm.

                                       I. BACKGROUND

        This case originated with workplace injuries Taylor suffered while working at YRC’s
shipping terminal in Pontiac, Michigan, on December 3, 2018. YRC is a freight shipping and
trucking company. Taylor was employed by a company called FAMCO, Inc. (FAMCO). For
several years, FAMCO had assigned Taylor to perform light maintenance and janitorial work at
YRC’s Pontiac facility. Although the contract between YRC and FAMCO is not part of the record,
Taylor and YRC acknowledge that at a minimum there was an implied contract between YRC and
FAMCO. In early December 2018, while Taylor was walking in YRC’s terminal, a forklift
operated by King, a direct employee of YRC, backed up and struck Taylor, injuring him. Taylor
suffered a significant injury to his left leg.

         Taylor’s employer, FAMCO, did not carry worker’s compensation insurance, and its owner
disappeared shortly after Taylor’s injury. Taylor claims that his medical insurer paid his medical
bills arising from the injury. He has not claimed or received worker’s compensation benefits.

       In late July 2019, Taylor filed a complaint alleging negligence against both YRC and King,
and vicarious liability and agency claims against YRC. Defendants filed a motion for summary

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disposition pursuant to MCR 2.116(C)(10), arguing that YRC was Taylor’s statutory employer
under MCL 418.171, so his claims were barred under MCL 418.131(1), the exclusive-remedy
provision of the Worker’s Disability Compensation Act (the WDCA), MCL 418.101 et seq.
Following a hearing, the trial court granted defendants’ motion for summary disposition, finding
that YRC was Taylor’s statutory employer.1 Taylor filed motions for reconsideration and for relief
from judgment, which the trial court denied. This appeal followed.

                                 II. STANDARD OF REVIEW

      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).

               A motion under MCR 2.116(C)(10) . . . tests the factual sufficiency of a
       claim. When considering such a motion, a trial court must consider all evidence
       submitted by the parties in the light most favorable to the party opposing the
       motion. A motion under MCR 2.116(C)(10) may only be granted when there is no
       genuine issue of material fact. A genuine issue of material fact exists when the
       record leaves open an issue upon which reasonable minds might differ. [El-Khalil,
       504 Mich at 160 (quotation marks and citations omitted).]

                                  III. LAW AND ANALYSIS

        Taylor argues that the trial court erred by concluding that YRC was his statutory employer,
therefore, it erred in applying the exclusive-remedy provision to bar his claim. We disagree.

                                           A. WDCA

        The WDCA is Michigan’s worker’s compensation statute. Ideally, the dual purpose of the
WDCA is to streamline the payment and receipt of benefits for workers who are injured on the job
and to limit employers’ exposure to individual lawsuits by injured workers. See Reed v Yackell,
473 Mich 520, 529-530; 703 NW2d 1 (2005) (opinion by TAYLOR, C.J.). An employee, who
falls within the WDCA’s framework, is subject to the exclusive-remedy provision of the act, MCL
418.131(1). See id. This means, with the exception of certain intentional torts, an employee
subject to the exclusive-remedy provision cannot sue their employer for a workplace injury except
to recover WDCA benefits. See id.; MCL 418.131(1). The protection of the exclusive-remedy
provision extends not only to the employer but also to a coworker who allegedly injured the
plaintiff on the job. Harris v Vernier, 242 Mich App 306, 310, 312; 617 NW2d 764 (2000); Whaley
v McClain, 158 Mich App 533, 535-536, 538; 405 NW2d 187 (1987). As with many worker’s
compensation cases, the threshold question is whether Taylor was an “employee” under the
definitions in the WDCA, and in this case whether YRC was an employer.

      B. YRC WAS TAYLOR’S STATUTORY EMPLOYER UNDER MCL 418.171(1)

1
 The trial court appeared to conclude that Taylor also met the statutory definition of an employee
under MCL 418.161(1)(n).

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         The trial court correctly concluded that YRC was Taylor’s statutory employer, bringing
Taylor within the exclusive-remedy provision of the WDCA. Although Taylor’s direct employer
was FAMCO rather than YRC, the exclusive-remedy provision is nonetheless applicable in this
case if YRC qualifies as Taylor’s statutory employer under MCL 418.171(1). See Burger v
Midland Cogeneration Venture, 202 Mich App 310, 314; 507 NW2d 827 (1993) (“If an employer
is a statutory employer under [MCL 418.171], the exclusive remedy provision of [MCL 418.131]
applies.”) (Citations omitted).

       A “statutory employer” or “shoot-through employer” is an employer that becomes, through
function of the statute, responsible for paying the WDCA benefits of workers that are not its direct
employees. See MCL 418.171.2 This happens when the employer hires a contractor that is either
not subject to the WDCA or uninsured, and the contractor’s employee is injured. See id.; see also
McQueer v Perfect Fence Co, 502 Mich 276, 286-290; 917 NW2d 584 (2018). Effectively, MCL
418.171 is a safety net for employees of a contractor who does not have adequate WDCA coverage.
McQueer, 502 Mich at 289-290.

         Our Supreme Court has explained:

                 [MCL 418.171(1)] sets forth a statutorily imposed employment
         relationship, under which an employer assumes the role of a “principal” by
         contracting with an independent contractor, referred to as the “contractor,” for the
         performance of any work. The principal becomes liable for the payment of
         workers’ compensation benefits to “any person employed” by the contractor for
         injuries sustained while performing any work on behalf of the principal, provided

2
    MCL 418.171(1) provides:

         If any employer subject to the provisions of this act, in this section referred to as
         the principal, contracts with any other person, in this section referred to as the
         contractor, who is not subject to this act or who has not complied with the
         provisions of section 611, and who does not become subject to this act or comply
         with the provisions of section 611 prior to the date of the injury or death for which
         claim is made for the execution by or under the contractor of the whole or any part
         of any work undertaken by the principal, the principal shall be liable to pay to any
         person employed in the execution of the work any compensation under this act
         which he or she would have been liable to pay if that person had been immediately
         employed by the principal. If compensation is claimed from or proceedings are
         taken against the principal, then, in the application of this act, reference to the
         principal shall be substituted for reference to the employer, except that the amount
         of compensation shall be calculated with reference to the earnings of the person
         under the employer by whom he or she is immediately employed. A contractor
         shall be deemed to include subcontractors in all cases where the principal gives
         permission that the work or any part thereof be performed under subcontract.

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       that the contractor is either not subject to the WDCA or has failed to obtain adequate
       insurance as required by the WDCA. Subsection (1) thus creates a tripartite
       employment relationship among the principal, the contractor, and the contractor’s
       employees. [McQueer, 502 Mich at 288.]

“For an employee to recover from a principal under [MCL 418.171(1)], there must be, among
other things, a contract between the principal who is covered by the WDCA and a contractor
employer who is not covered.” McQueer, 502 Mich at 288 n 20 (quotation marks, brackets, and
citation omitted). In short, MCL 418.171(1) “statutorily imposes an employment relationship
between the principal and the contractor’s uninsured employees for purposes of providing
workers’ compensation benefits.” McQueer, 502 Mich at 289.

        Here, the trial court correctly concluded that YRC qualifies as Taylor’s statutory employer
under MCR 418.171(1) as a matter of law. Using the language of that statutory provision, YRC
was the principal, and FAMCO was the contractor. YRC and FAMCO had a contractual
arrangement whereby FAMCO provided maintenance and janitorial services for YRC’s Pontiac
terminal. Taylor, who worked for FAMCO, had been performing maintenance and janitorial
services at YRC’s Pontiac terminal for many years. He was injured while working at YRC’s
Pontiac terminal. It is undisputed that FAMCO did not have workers’ compensation insurance.
In light of these facts, YRC was Taylor’s statutory employer under MCL 418.171(1). Therefore,
the exclusive-remedy provision applies to bar Taylor’s tort claim against YRC. Burger, 202 Mich
App at 314. And Taylor’s tort claim against his coworker, King, is also barred by the exclusive-
remedy provision. Harris, 242 Mich App at 310, 312; Whaley, 158 Mich App at 535-536, 538.

       Taylor argues in his principal brief on appeal that YRC was not his statutory employer
because there was no contract for hire between YRC and FAMCO. We disagree.

        The language of MCL 418.171(1) does not require a contract for hire; it merely requires a
contract. See MCL 418.171(1) (“If any employer subject to the provisions of this act, in this
section referred to as the principal, contracts with any other person, in this section referred to as
the contractor . . . .”) (emphasis added). Taylor suggests that there was no contract between YRC
and FAMCO. He relies on deposition testimony indicating that no written contract between YRC
and FAMCO has been found or produced. But there is no language in MCL 418.171(1) requiring
a written contract. It is recognized elsewhere in the WDCA that contracts may be “express or
implied, oral or written . . . .” MCL 418.151(b). An implied-in-fact contract “arises when services
are performed by one who at the time expects compensation from another who expects at the time
to pay therefor.” Drob v SEK 15, Inc, 334 Mich App 607, 619; 965 NW2d 683 (2020) (quotation
marks and citation omitted). It is beyond reasonable dispute that, at minimum, an implied contract
existed between YRC and FAMCO, a point which Taylor’s counsel appeared to concede at oral
argument. YRC engaged FAMCO to provide maintenance and janitorial services at YRC’s
Pontiac terminal. Taylor worked for FAMCO at YRC’s Pontiac terminal for about 11 years before
he was injured. There is no evidence disputing the existence of this implied contract.

       The trial court did not err in concluding that YRC was Taylor’s statutory employer under
MCL 418.171. It, therefore, correctly granted summary disposition because Taylor’s negligence
claims were barred by the exclusive-remedy provision. Because we affirm on this ground, we

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decline to address the alternative argument regarding Taylor’s status as an employee under MCL
418.161(n).

C. LIABILITY UNDER THE WDCA IS NOT CONTINGENT ON PAYMENT OR RECEIPT
                 OF WORKER’S COMPENSATION BENEFITS

        Finally, Taylor argues for the first time in his reply brief that he cannot be subject to the
exclusive-remedy provision of the WDCA because he has not sought or received worker’s
compensation payment or benefits. We disagree for two reasons. First, because YRC is Taylor’s
statutory employer under MCL 418.171, both YRC and Taylor are bound by the exclusive-remedy
provision. See Dagenhardt v Special Machine & Engineering, Inc, 418 Mich 520, 531-532; 345
NW2d 164 (1984). Second, seeking or receiving payment of WDCA benefits does not, on its own,
determine whether a worker falls within the WDCA’s exclusive remedy provision. See MCL
418.831.

        At the outset, Taylor failed to preserve this issue by raising it before the trial court;
therefore, we review this issue for plain error. See Mr Sunshine v Delta College Bd of Trustees,
___ Mich App ___; ___ NW2d ___ (2022) (Docket No 358042); slip op at 2; see also Kern v
Blethen-Coluni, 240 Mich App 333, 336; 612 NW2d 838 (2000); Wischmeyer v Schanz, 449 Mich
469, 483 & n 26; 536 NW2d 760 (1995).3 To demonstrate plain error, a party must show: (1) that
an error occurred, (2) that the error was plain, and (3) that the plain error affected the outcome of
the proceedings. Mr Sunshine, ___ Mich App at ___; slip op at 2. He also failed to raise this issue
in his principal brief. See Kinder Morgan Mich, LLC v Jackson, 277 Mich App 159, 174; 744
NW2d 184 (2007) (“Reply briefs must be confined to rebuttal, and a party may not raise new or
additional arguments in its reply brief.”).

       Taylor’s unpreserved argument fails because he cannot demonstrate that the trial court
erred. The lead opinion in Dagenhardt concluded that the exclusive-remedy provision of MCL
418.131(1) applies when a principal is a statutory employer under MCL 418.171(1). Dagenhardt,

3
  Our court has applied two different standards to unpreserved issues in the civil context: plain-
error, see, e.g., Wischmeyer, 449 Mich at 483 & n 26; Kern, 240 Mich App at 336, and the so-
called “raise-or-waive” rule, see, e.g., In re Conservatorship of Murray, 336 Mich App 234, 240-
242; 970 NW2d 372 (2021); Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich
App 182, 192-194, 194 n 5; 920 NW2d 148 (2018) (acknowledging that the Michigan Supreme
Court has applied the plain-error standard in the civil context; noting that the Michigan Supreme
Court has yet to hold that plain-error is the correct standard to apply). Our Supreme Court has yet
to state definitively which standard is the appropriate standard for the civil context. In practice,
both standards are unforgiving. Here, we apply the plain-error standard because it provides a
workable standard, as opposed to “raise-or-waive,” which treats an issue as waived unless a panel
decides there is a reason to address an otherwise waived issue. See Walters v Nadell, 481 Mich
377, 387-388; 751 NW2d 431 (2008); see also Shah, 324 Mich App at 194-195 (declining to
exercise jurisdiction to review a waived issue for want of a compelling reason to do so).

                                                -5-
418 Mich at 528-530 (opinion by CAVANAGH, J.).4 Justice Cavanagh’s lead opinion explained
that, under MCL 418.171(1), “the principal incurs liability for an injured worker’s disability
compensation benefits merely because that worker was employed by an uninsured employer and
was injured while performing work which the principal contracted for the employer to perform.”
Dagenhardt, 418 Mich at 528 (opinion by CAVANAGH, J.). Here, those conditions are satisfied:
Taylor was employed by an uninsured employer, FAMCO, and was injured while performing work
that the principal, YRC, contracted for FAMCO to perform. YRC incurred liability for Taylor’s
workers’ compensation benefits. Id.

        The lead opinion went on to explain that, “when construed together and in conjunction with
the legislative intent, [MCL 418.131] and [MCL 418.171] require that a principal liable for a
worker’s disability compensation benefits is entitled to invoke the exclusive remedy provision
against that worker, i.e., principals are employers within the meaning of [MCL 418.131].”
Dagenhardt, 418 Mich at 530 (opinion by CAVANAGH, J.). Therefore, because, as explained, YRC
is liable for Taylor’s workers’ compensation benefits, YRC is entitled to invoke the exclusive-
remedy provision against Taylor, i.e., YRC is an employer within the meaning of MCL 418.131.

       Taylor argues that Dagenhardt is distinguishable because the defendant in Dagenhardt
voluntarily paid workers’ compensation benefits and the worker actively sought benefits.5
Dagenhardt, 418 Mich at 530 (opinion by CAVANAGH, J.). This, however, did not alter Justice
Cavanagh’s conclusion. Id.

       As previously noted, liability for a worker’s disability compensation benefits is
       imposed upon the principal merely because that worker was employed by an

4
  Justice Cavanagh’s lead opinion in Dagenhardt was joined by Justices Brickley and Ryan.
Dagenhardt, 418 Mich at 535 (opinion by CAVANAGH, J.). Justice Boyle concurred in the result.
Id. (BOYLE, J., concurring).
5
  Taylor further argues in his reply brief on appeal that the plaintiff in Dagenhardt “undisputedly
sought WDCA benefits from the statutory employer, who paid them. Therefore, any mention in
Dagenhardt of situation [sic] in which benefits were not sought and paid is dicta.” However,
although the plaintiff in Dagenhardt did not dispute the defendant’s representation that the plaintiff
had made a claim for workers’ compensation benefits, Justice Cavanagh’s lead opinion stated that
“the record before us is unclear as to whether plaintiff made any claim of defendant.” Dagenhardt,
418 Mich at 530 n 4 (opinion by CAVANAGH, J.). Justice Cavanagh’s lead opinion went on to state
that “whether plaintiff made a claim, whether defendant voluntarily paid benefits, or whether the
compensation proceedings were instituted on defendant’s petition is unimportant to our analysis
and holding.” Id. Moreover, Taylor fails to discuss or grapple with this Court’s caselaw that has
followed Dagenhardt. In particular, Taylor does not address the fact that this Court has cited
Justice Cavanagh’s lead opinion in Dagenhardt for the proposition that, “[i]f an employer is a
statutory employer under [MCL 418.171], the exclusive remedy provision of [MCL 418.131]
applies.” Burger, 202 Mich App at 314, citing Dagenhardt, 418 Mich at 529-530 (opinion by
CAVANAGH, J.), and Smith, 154 Mich App at 185. Taylor’s attempt to circumvent the analysis in
Dagenhardt is unconvincing.

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       uninsured employer and was injured while performing work which the principal
       contracted for the employer to perform. [MCL 418.171] then states that
       substitution of the term “principal” for the term “employer” shall occur “if
       compensation is claimed from or proceedings are taken against the principal.”
       However, when examining the entire workers’ disability compensation scheme, it
       becomes clear that the imposition of liability itself is sufficient to allow a principal
       to invoke the protection of [MCL 418.131]. [Dagenhardt, 418 Mich at 530
       (opinion by CAVANAGH, J.).]

It was unimportant to the lead opinion’s analysis whether the plaintiff made a claim, whether the
defendant voluntarily paid benefits, or whether compensation proceedings were instituted on a
petition that the defendant had filed. Id. at 530 n 4. “The mandatory obligation to pay disability
compensation benefits arises regardless whether ‘compensation is claimed from or proceedings
are taken against’ the employer or principal.” Id. at 531.

       [T]he same limitations preventing an injured worker from suing his or her employer
       in tort apply when that same worker wishes to sue a [principal as defined in MCL
       418.171]. [MCL 418.171] merely emphasizes that an injured worker cannot secure
       a tort recovery from a principal who is liable to pay that worker disability
       compensation benefits. [Dagenhardt, 418 Mich at 532 (opinion by CAVANAGH,
       J.).]

        In short, Justice Cavanagh’s opinion in Dagenhardt makes clear that the exclusive-remedy
provision applies when a principal is liable for workers’ compensation benefits under MCL
418.171(1). It is the principal’s liability, and not a claim for or payment of benefits, that makes
the exclusive-remedy provision applicable. And as already explained, YRC is liable for workers’
compensation benefits as a statutory employer under MCL 418.171(1). The crux of Dagenhardt
was liability, not payment. The exclusive-remedy provision bars Taylor’s tort claims.

        Finally, Taylor’s argument fails for a more fundamental reason: payment or receipt of
workers’ compensation benefits does not, in and of itself, bring a worker within the exclusive-
remedy provision of the WDCA. See MCL 418.831. The WDCA unambiguously provides:
“Neither the payment of compensation or the accepting of the same by the employee or his
dependents shall be considered as a determination of the rights of the parties under this act.” MCL
418.831. Not only the text, but the purpose of the statute support this idea. See id.; Dagenhardt,
418 Mich at 531-532 (opinion by CAVANAGH, J.). The WDCA’s purpose is to compensate a
disabled worker, and prompt payment of benefits by an employer advances that purpose. See
Dagenhardt, 418 Mich at 532; id. at 532 n 7, quoting McAvoy v H B Sherman Co, 401 Mich 419,
437; 258 NW2d 414 (1977) (“Any worker’s compensation schem[e] has, therefore, as its primary
goal the delivery of sustaining benefits to a disabled employee as soon as possible after an injury
occurs, regardless of any traditional tort concepts of liability.”) (Quotation marks omitted). Just
as an employee may not opt out of the WDCA by refusing benefits, they are not brought into the
WDCA by receiving such benefits. See MCL 418.831.

        Taylor has not established that the trial court made an error. Whether Taylor received
workers’ compensation benefits has no bearing on his status as an employee, or YRC’s status as a
statutory employer. See MCL 418.831. Under MCL 418.831, the fact that YRC or its insurer has

                                                 -7-
not paid, and that Taylor has not accepted, workers’ compensation benefits does not affect either
of their statuses. The trial court, therefore, correctly did not rely on this at all.

                                      IV. CONCLUSION

       For the reasons stated above, we affirm.

                                                           /s/ Noah P. Hood
                                                           /s/ Brock A. Swartzle
                                                           /s/ James Robert Redford

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