Court Opinion

ID: 9743398
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:32:37.242199+00
Date Added: 2024-06-11T07:24:41.102535
License: Public Domain

DISSENT
GILBERT, Justice
(dissenting).
I respectfully dissent from the majority’s opinion. This case arises from the district court’s granting of a motion for summary judgment. The court ruled that a co-employee’s intentional tort claims against a sole shareholder of a corporation who undisputedly committed the tort were precluded by the exclusive remedy provision of the WCA, and that the assaults were not intentional torts subject to the intentional torts exception of the exclusive remedy provision. The court of appeals held that an “employer” does not lose the protection of the exclusive liability provision of the WCA by choosing to incorporate.
By affirming decisions of the district court and court of appeals, the majority permits a co-employee/sole shareholder of a closely held corporation to use the WCA to shield himself from liability for intentional assaults on another employee. It is hard to fathom that the legislature intended such a result. Doing business in the corporate form does establish some limits of liability for shareholders, even sole shareholders, and this is often a reason for incorporation. Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d 509, 512 (Minn.1979). A corporation is generally considered a legal entity separate from the shareholders. Milwaukee Motor Transp. Co. v. Comm’r of Taxation, 193 N.W.2d 605, 608, 292 Minn. 66, 71 (1971). The corporation owns its own property, and it must answer for its own contractual obligation and tort liabilities. Id. As Gunder-son points out, the corporate entity Harrington Orthodontics generally shields Dr. Mark Harrington, D.D.S. from personal liability for actions by creditors and others. Harrington Orthodontics issued Gunder-*705son’s paychecks, and if Gunderson were to be owed wages or benefits, she would not be able to maintain an action against Harrington personally. The corporate entity would be considered the employer liable for the wages owed. The court of appeals’ holding is boldly asserted without authority. The definition of employer should not change for the purpose of applying the WCA.
However, the corporate shield is not without bounds. In certain circumstances, it is possible to “pierce the corporate veil” and hold a shareholder personally hable where there is fraud or where the shareholder is the “alter ego” of the corporation. Victoria Elevator Co., 283 N.W.2d at 512. When the courts use the alter ego theory to impose liability, they are “concerned with reality and not form, with how the corporation operated and the individual defendant’s relationship to that operation.” Id. In Victoria Elevator, we held that where the formalities of corporate existence are disregarded, the corporate existence cannot be allowed to shield the individual from liability for damages incurred by those dealing with the corporation. Id. But, in this case, Gunderson is not seeking to.pierce the corporate veil; rather, she is simply asking that a co-employee be held personally accountable for his intentional torts.
The majority reasons that Harrington is not personally responsible for his own intentional tort because of his status as the “sole principal and shareholder” and that the corporation is “completely dominated by and identified with Harrington.” The majority argues Harrington should be transformed into being the employer when applying the WCA even though Harrington Orthodontics, a duly authorized Minnesota corporation, is the employer under the law. The reasoning that the majority uses in making its argument is the type of reasoning usually used by the courts when applying an equitable remedy, such as an alter ego theory, in order to pierce the corporate veil to attach liability to the individual shareholder. See id. Instead, the majority uses this same equitable reasoning hére to shield Harrington from the consequences of his own active wrongful conduct. It concludes that Harrington is the employer for the purposes of the WCA. Therefore, he is personally immune from liability for his intentional assault on an employee. Even though the majority might not label it as such, this is an inappropriate application of the alter ego theory. The alter ego theory was never meant to shield either sole proprietors or co-employees from liability for intentional torts.
The majority’s decision also violates one of the maxims of equity: “he who seeks equity must do equity, and he who comes into equity must come with clean hands.” Gully v. Gully, 599 N.W.2d 814, 825 (Minn.1999) (quoting Hruska v. Chandler Assocs., Inc., 372 N.W.2d 709, 715 (Minn.1985)). Although Harrington is seeking equity, he is not coming to this court with clean hands and has not done equity to his long-time loyal receptionist. However, in granting Harrington equity, the majority holds that an individual employee of a corporation can escape liability for a variety of tortious conduct toward a fellow corporate employee, as long as that individual dominates the corporate entity.
The majority’s rhetoric about changing the form and not the substance of Harrington’s business upon incorporation is added without citing to any authority. This statement is in fact contrary to Minn. Stat. § 302A.161 (2000), which lists the powers held by a corporation independent of its shareholders, and case law where we have stated that “a closely held corporation is still a corporation with all of the *706rights and limitations proscribed by the legislature.” Wessin v. Archives Corp., 592 N.W.2d 460, 466 (Minn.1999). Importantly, the notion that because a corporation “is so completely dominated by and identified with Harrington, he must be considered Gunderson’s employer for the purposes of the WCA” is a totally new judicial principle added for effect, but again, without any authority. In the past, the corporate form has only been disregarded when corporate formalities have been disregarded or where there has been fraud to justify piercing the corporate veil. In this case, those elements are not present. Accordingly, Harrington Orthodontics must be considered the employer for the purposes of the WCA, just as it is for all other purposes.
If Harrington Orthodontics is the employer, Harrington should be considered Gunderson’s co-employee under the WCA. Importantly, the WCA does not shield co-employees from liability for intentional torts. A co-employee is not liable for personal injury of another employee unless the injury was a result of gross negligence or was intentionally inflicted by the co-employee. Minn.Stat. § 176.061, subd. 5(c) (2000). Gunderson’s injuries did not happen by accident. Harrington intentionally inflicted them when he hit Gunderson on the back of the head.
In addition to Minn.Stat. § 176.061, subd. 5(c), our case law indicates that the WCA does not shield individuals from liability for intentional torts. The majority concludes that the intentional tort exception to the WCA does not apply. It should be noted that the majority labels this exception the “intentional injury exception” because the “well-settled standard [is] ‘conscious and deliberate intent to inflict injury.’ ” This court has in fact repeatedly referred to this exception as the “intentional tort” exception even in those cases cited by the majority. See Kaess, 403 N.W.2d at 644; Hildebrandt, 364 N.W.2d at 394. The majority cites Breimhorst for the premise that there must be an intent to inflict injury for the intentional tort exception to apply. The very language cited by the majority demonstrates that Breimhorst is not analogous to the case at hand. Breimhorst involved a spring gun that injured an employee of a restaurant. The court concluded that “intent may not be inferred from mere negligence, though it be gross.” Breimhorst, 227 Minn. at 426, 35 N.W.2d at 730. Here, Harrington’s intent to hit Gunderson on the head is clear and an inference is not required. No matter how the facts are viewed, Harrington’s conduct cannot be viewed as negligence. There is no question that the case at hand involves an intentional tort.
The majority also cites Hildebrandt and Kaess for the proposition that in order for the intentional tort exception to apply, there must be a “conscious and deliberate intent to inflict injury.” Both eases involved injuries arising from exposure to toxic materials. The plaintiffs alleged that the course of conduct was intentional and injury was foreseeable. Neither case involved an intentional tort — assault—like we have here. Boek v. Wong Hing did involve an intentional assault. 180 Minn. 470, 231 N.W. 233 (1930). There, we held that just as an employee can maintain a claim against a third party for an intentional assault, so should an employee be able to maintain such an action against an employer for an intentional assault. 180 Minn. at 471-72, 231 N.W. at 234. “An employer who intentionally and maliciously inflicts bodily injuries on his servant should occupy no better position than would a third party not under a Compensation Act * * Id.
Summary judgment is only appropriate where a review of the evidence shows that there is no genuine issue as to material fact and that either party is entitled to *707judgment as a matter of law. Minn. R. Civ. P. 56.03. On review of summary-judgment, the court reviews the evidence in the light most favorable to the party against whom the summary judgment was rendered. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). Even if the majority is correct and intent to injure is required for the intentional tort exception to apply, whether Harrington intended to cause injury when he assaulted Gunderson at least presents a question of fact that cannot be dismissed on summary judgment. The parties do not dispute that Harrington intended to strike Gunderson on numerous occasions. On the most recent occasion, he hit her hard enough to cause bruising and pain for several days. A jury might infer from the bruising that Harrington intended to hit Gunderson quite hard and that he intended to injure her. Just because Gunderson said in a deposition that she did not know whether Harrington intended to injure her, does not mean that it is conclusive that the intent to injure did not exist. Regarding the last assault, Gunderson was asked whether she thought Harrington meant to hurt her, and she answered, “I think with the force of the hit, I think it was intentional.” This testimony is evidence that Harrington did intend to injure Gunderson. While not the strongest of evidence, it at least presents a question of fact.
I would therefore reverse and remand for trial on the merits.