Court Opinion

ID: 9592481
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:14:38.947435+00
Date Added: 2024-06-11T12:06:03.821131
License: Public Domain

BOSSON, Judge (dissenting). Over thirty years ago George DeArman, an oil field roughneck working for an independent contractor, was seriously injured when heavy equipment supplied by the well owner collapsed unexpectedly, falling thirty feet to the rig floor below and striking DeArman. DeArman v. Popps, 75 N.M. 39, 400 P.2d 215 (1965). DeArman received workers’ compensation from his employer. He then filed suit against the well owner, Sunset International Petroleum Corporation, alleging negligent supervision of the various contractors working on the site. Our Supreme Court rejected Sunset’s argument that its control over the project and the work of the various contractors made DeArman an implicit employee of Sunset which would have limited his remedies to the benefits available under the Workers’ Compensation Act. Instead the Court permitted DeArman to sue in tort under a theory of retained control, as set forth in Restatement (Second) of Torts § 414 (1965). The Court held that Sunset: owed a duty of reasonable care to employees of independent contractors to the extent it retained control over the project. Therefore, DeArman was not limited to statutory remedies under workers’ compensation, and Sun- • set was not immune from suit. The opinion in DeArman has evolved over the past thirty years into a substantial body of law in New Mexico. Founded on principles articulated in the Restatement, an em- ■ ployer of a contractor, whether called an owner, operator, general contractor, or the like, has a duty to provide a reasonably safe • work place, not only for its own employees, but for the workers of its subcontractors as well, at least to the extent it retains some contractual control over the project and the work product of the subcontractor. See, e.g., Requarth v. Brophy, 111 N.M. 51, 801 P.2d 121 (Ct.App.1990); Tipton v. Texaco, Inc., 103 N.M. 689, 712 P.2d 1351 (1985); Valdez v. Cillessen & Son, Inc., 105 N.M. 575, 734 P.2d 1258 (1987); New Mexico Elec. Serv. Co. v. Montanez, 89 N.M. 278, 551 P.2d 634 (1976); Fresquez v. Southwestern Indus. Contractors & Riggers, Inc., 89 N.M. 525, 554 P.2d 986 (Ct.App.), cert. denied, 90 N.M. 8, 558 P.2d 620 (1976). The principle has been applied to the oil field, where the owner/operator customarily hires specialty contractors with their own employees instead of performing the work in-house. See Tipton; DeArman. The same principle has been applied to construction projects, both large and small, where the project is led by a general contractor and implemented by a host of specialty subcontractors each with their own employees. See Requarth, 111 N.M. at 51, 801 P.2d at 121; Valdez, 105 N.M. at 575, 734 P.2d at 1258; Fresquez, 89 N.M. at 525, 554 P.2d at 986. Our courts continue to apply these principles. In one of the two cases before us, plaintiff Harger, an employee of a subcontractor, seeks to apply this same proven theory against the general contractor, Jaynes Corporation. Harger sues on a theory of unsafe work place. According to clearly established precedent, if Harger can prove that Jaynes retained certain control over the project, then under the Restatement, Harger is entitled to an opportunity to prove his case at trial. The majority opinion denies Harger this opportunity because he supposedly has become a “statutory employee” of the general contractor as well as an actual employee of his own subcontractor. Ironically, the holding is premised in part upon Jaynes’ retained control over the subcontractor, which, of course, is the very element under the Restatement § 414 which creates liability in tort. Harger is thereby placed in an impossible position: he must disclaim control by Jaynes over its contractors to avoid the statutory employee statute, while he must prove the very opposite to prevail at trial. We are left, then, to wonder, and to shudder, at the prospects of future workers and the degree to which their claims in tort have now been foreclosed. I believe the George DeArmans of New Mexico are now seriously at risk. How did we get into such a paradox? What could possibly justify such a result? I suppose the majority would first postulate that its holding makes no change in the law; it merely interprets a statute which has been in existence for some time, and theoretically has always meant the same thing. George DeArman would be the first one surprised by such an argument. Make no mistake about it — whatever the boundary lines — the majority opinion, if left standing, is a substantial change in the law. The fact of the matter is that the majority has taken an obscure section of the workers’ compensation law and breathed an aggressiveness into it never before known in its 65 years of viability. See 1929 N.M.Laws, ch. 113, § 12(0). It requires no great imagination to realize that the present opinion grants general contractors a dimension of tort immunity which exceeds their wildest dreams — one which, I wager, they could never reasonably expect to enact into law by the democratic process of legislation. This watershed event substantially alters the delicate balance between statutory, no-fault workers’ compensation insurance and the assignation of fault and financial responsibility by way of common law suit in tort. An event of such proportion is usually accompanied by resounding principles of law and equity, and I discern in the majority’s reasoning no less noble an effort. Candidly, the majority does not try to base this result on the force of New Mexico precedent; it recognizes that its opinion is premised largely upon considerations of policy, with which one can honestly disagree. Citing to Professor Larson, the majority heralds the public good from encouraging workers’ compensation coverage and even backup coverage. The majority relies upon the factual premise of: (1) a contractual requirement imposed upon subcontractors to provide workers’ compensation insurance, and (2) some kind of fiscal scheme whereby the general contractor “pays for” or “reimburses” for the subcontractor’s cost of providing insurance. See Quintana v. University of California, 111 N.M. 679, 682, 808 P.2d 964, 967 (Ct.App.), cert. denied, 111 N.M. 678, 808 P.2d 963 (1991). But see Matkins v. Zero Refrigerated Lines, Inc., 93 N.M. 511, 513, 602 P.2d 195, 197 (Ct.App.1979). These two factual elements arguably inject the general contractor into the workers’ compensation equation, and thereby, it is argued, the general contractor becomes as much a provider of insurance as the subcontractor. Because this is a good thing, we are told, the general contractor deserves the reward of tort immunity. This is certainly one acceptable view of public policy which favors no-fault workers’ compensation over the rising cost involved in attributing fault through the laborious process of litigation. Professor Larson undoubtedly subscribes to this policy, and there is authority in other states as well. It may also be supposed that these factors distinguish prior tort cases, such as DeAr-man, because no such contractual provision is noted in them. However, no one knows if George DeArman’s contractor had such a provision in its contract with the oil field owner/operator. We may assume not, since the point was not discussed. But it is speculative at best to try to read too much into old cases, where the issue is not even raised. It is, at best, a debatable point. I question the significance of a contractor including such a requirement in its contracts. To be sure, from now on there will be one in every contract between an employer and a contractor. It costs the employer little to assure contractually a provision which the law already requires, and which many times, as in the case of Harger, may already be in place and paid for! In exchange for such “assurance” the employer is given absolute tort immunity. This is some bargain! The majority opinion’s omission of any reference to DeArman, its progeny, and the important principles for which they stand is also troublesome. This omission is all the more glaring since the Supreme Court in DeArman discussed the leading workers’ compensation employee/independent contractor cases of the time, distinguished them, and concluded, unlike the majority in this opinion, that there was nothing in the Act inconsistent with imposing tort liability and a duty of reasonable care to contractor’s employees by proof of retained control over the work site. See DeArman, 75 N.M. at 48-49, 400 P.2d at 221. Further, there is substantial authority which does not subscribe to Larson’s view, including cases holding the general contractor liable in tort even if it actually paid workers’ compensation benefits, see, e.g., Miller v. Northside Danzi Constr. Co., 629 P.2d 1389 (Alaska 1981); Laffoon v. Bell & Zoller Coal Co., 65 Ill.2d 437, 3 Ill.Dec. 715, 359 N.E.2d 125 (1976), and other cases granting tort immunity only where the general contractor actually paid compensation benefits as opposed to a mere contingent liability in a contract, see Webb v. Montana Masonry Constr. Co., 233 Mont. 198, 761 P.2d 343 (1988); Prive v. M.W. Goodell Constr. Co., 119 N.H. 914, 409 A.2d 1149 (1979); Lewis v. Lockard, 498 N.E.2d 1024 (Ind.Ct.App.1986); Baldwin Co. v. Maner, 224 Ark. 348, 273 S.W.2d 28 (1954); Fonseca v. Pacific Constr. Co., 54 Haw. 578, 513 P.2d 156 (1973); Nash v. Damson Oil Corp., 480 So.2d 1095 (Miss. 1985); Pate v. Marathon Steel Co., 777 P.2d 428 (Utah 1989); see generally Benjamin Marcus, Advocating the Rights of the Injured, 61 Mich.L.Rev. 921 (1963); Allan H. McCoid, The Third Person in the Compensation Picture: A Study of the Liabilities and Rights of Now-Employers, 37 Tex.L.Rev. 389 (1959). But the weight of out-of-state authority is not the point, at least not in my view. What is “enough” or “too much” workers’ compensation coverage, and at what cost to the worker and to society as a whole in terms of tort immunity, are truly imponderable issues. There is no right or wrong side; there is only point and counterpoint. That is why these issues belong in the legislative arena. The majority opinion wrongly usurps the legislative prerogative. Anyone alive and breathing over the past decade knows of the battles that have raged in New Mexico legislative halls over workers’ compensation. Love it or hate it, the Act is the essence of the legislative process. The present statute, amended time and again, is a classic example of legislative compromise. In the course of easting and recasting this statute, the legislature has left alone the statutory employee section; it has remained the same, existing in silence and. relative obscurity through all- the legislative wars, exactly as it was created back in 1929. See Laws, supra. Surely the most that can be attributed to legislative intent in keeping this statute intact is an effort to maintain the ■equilibrium of the status quo, whatever that has been. This statute has been almost totally ignored by New Mexico’s litigants and •by our courts, and as we have seen, tort litigation in comparable circumstances has flourished. Clearly, this statute is scant authority for the position advanced by the majority. We are reminded by our Supreme Court that workers’ compensation is no nirvana; it is merely a “legislative scheme ... to keep the claimant off the welfare rolls, not to provide a complete tort recovery for compensation of all damages suffered.” See Continental Ins. Co. v. Fahey, 106 N.M. 603, 606, 747 P.2d 249, 252 (1987). Therefore, the very goal of the majority — expanding and insuring back-up workers’ compensation coverage — is a questionable bargain at best considering the terrible cost to the victim. It will be little solace to these workers that this has been accomplished supposedly in the name of helping them. And one wonders what of the clear, express legislative intent that third parties, “any person other than his employer,” who are at fault shall be held accountable, and indeed shall reimburse the workers’ compensation carrier for negligence proximately causing employee injury. See NMSA 1978, § 52-1-6(E) (Repl.Pamp.1991): Nothing in the Workers’ Compensation Act, however, shall affect or be construed to affect, in any way, the existence of or the mode of trial of any claim or cause of action that the worker has against any person other than his employer— Oil field roughneck George DeArman was joined by his employer’s workers’ compensation carrier in the lawsuit seeking contribution from the owner whose negligence may have contributed to the worker’s injury. How indeed is Mr. Harger’s situation any different with respect to Jaynes Corporation?. In other words, , if Mr. Harger had brought this ease in 1965, he would have prevailed under the law established by our Supreme Court in DeArman, just as he. should now. The majority acknowledges that most of the existing New Mexico cases on employee/independent contractor are framed in the context of trying to obtain workers’ compensation coverage in the first instance, as opposed to no coverage at all, by a presumption in favor of the status of employee over independent contractor. See Shipman v. Macco Corp., 74 N.M. 174, 392 P.2d 9 (1964) (distinguished in DeArman); Bailey v. Farr, 66 N.M. 162, 344 P.2d 173 (1959); Burruss v. B.M.C. Logging Co., 38 N.M. 254, 31 P.2d 263 (1934); see, e.g., Tafoya v. Casa Vieja, Inc., 104 N.M. 775, 727 P.2d 83 (Ct.App.1986); Dibble v. Garcia, 98 N.M. 21, 644 P.2d 535 (Ct.App.), cert. denied, 98 N.M. 50, 644 P.2d 1039 (1982); Yerbich v. Heald, 89 N.M. 67, 547 P.2d 72 (Ct.App.1976); Burton v. Crawford & Co., 89 N.M. 436, 553 P.2d 716 (Ct.App.), cert. denied, 90 N.M. 7, 558 P.2d 619 (1976). These are not so-called “statutory employee” cases, and by and large, they completely ignore that section of the Act. With the policy bias of trying to secure coverage for injured workers, it is no surprise that most opinions lean discemibly in their analysis towards finding a worker to be an employee and not an independent contractor. See Yerbich, 89 N.M. at 68-69, 547 P.2d at 73-74. It follows that if these same cases are applied literally to the statutory employee context, where the worker already has coverage, then the result will be similarly skewed by a presumption that a contractor is “a contractor other than an independent contractor.” See NMSA 1978, § 52-1-22 (Repl. Pamp.1991). The majority has chosen to make this extension, resulting in presumptions and a burden of persuasion in favor of finding non-independence of the contractor. The majority states: “If a broad interpretation of ‘employment’ is appropriate in the context of workers’ compensation, we believe that a broad interpretation of ‘statutory employment’ is at least as appropriate.” It is here that I part company, not with the underlying case law, but with its application to the statutory employee context, which, I maintain, is unprecedented and unauthorized in New Mexico law. I read the statute to apply only where subcontractor insurance proves unavailing or deficient. Then the general contractor is truly “liable to pay all compensation under the ... Act to the same extent as if the work were done without the intervention of such contractor.” Section 52-1-22. Unless the general contractor truly “pays all compensation” — more than just backup assurances — then its liability is merely contingent. Unless liability to that worker is actually “to pay all compensation,” then I fail to see the quid pro quo for the worker’s loss of tort action. See Matkins, 93 N.M. at 513, 602 P.2d at 197 (when someone else pays actual benefits to the injured employee, employer surrenders exclusivity of workers’ compensation statute). Other jurisdictions have a similar view. See Fonseca; Nash; Pate. In Nash the Supreme Court of Mississippi said the following about tort immunity in exchange for contingent liability: “Where the ‘contractor’ invoking the protections of the exclusiveness of liability statute is not itself liable for compensation to the injured worker, illogic, if not absurdity, would attend our sustaining that contractor’s exclusivity defense.” Nash, 480 So.2d at 1099. Whether this position falters from “illogic” or “absurdity,” I fail to see where we get the authority to make such a judgment, in light of the clear choice of the legislature to leave things as they have been for well over half a century. Two recent New Mexico cases touch on this subject but, in my opinion, do not compel the result reached today. The first is Quintana, 111 N.M. 679, 808 P.2d 964, the only New Mexico case in 65 years to deal substantively with the statutory employee statute. In that case the defendant, Los Alamos National Laboratory (“LANL”), entered into a contract with Pan Am Services, Inc. to provide essential administrative services such as management, administration, equipment installation, building construction, and custodial maintenance. These were services which normally would be provided by the defendant’s own employees and services over which the defendant exercised detailed control. By contract, Pan Am was required to provide workers’ compensation coverage for its employees, for which LANL was then responsible to reimburse Pan Am as part of its costs. Plaintiff, a Pan Am employee, filed suit against LANL for negligent operation of a vehicle by a LANL employee. Plaintiff also received workers’ compensation benefits from Pan Am. The trial court dismissed plaintiff’s negligence claim on the grounds that LANL was a statutory employer under Section 52-1-22 and therefore, entitled to immunity under the exclusivity provisions of the Act. On appeal, this Court affirmed and held, based upon the facts of the case, that defendant satisfied the classic tests under New Mexico law of “power of control” and “relative nature of the work” to prove that Pan Am was a “contractor other than an independent contractor” under Section 52-1-22. Quintana, 111 N.M. at 682-88, 808 P.2d at 967-68. The opinion applied the usual precedents establishing these tests. LANL then became a “statutory employer” under the Act and entitled to immunity from tort litigation. Taken this far, the opinion breaks little new ground. It is premised upon the special relationship between the parties which demonstrated detailed control in LANL and a status in Pan Am which can be interpreted as almost an alter ego of LANL with respect to providing LANL’s essential services. However, in dictum the opinion also pays deference to the so-called “modern trend” of Professor Larson which would secure tort immunity merely by contractually assuring insurance coverage and providing some mechanism for financial reimbursement. It is this portion of the opinion which is seized upon by the majority in our case and with which I disagree. I have already emphasized my reservations at joining a so-called “modem trend” based upon a statute which is anything but modem and which prior to Quinta.na had never in its history been interpreted in this fashion. Second, Quintana’s reference to Larson was made without much analysis of the important policy considerations behind such a sweeping concept, probably because it was not essential to the holding of the case. Third, even the Quintana opinion refers to the insurance coverage and reimbursement evidence as “a matter not germane to our discussion,” because the opinion was grounded upon other principles. Id. at 682, 808 P.2d at 967. Even the majority opinion candidly acknowledges that Quintana went only “part of the way.” In my judgment the majority opinion should be confined to this special set of facts, and we should not journey “the rest of the way,” nor are we obliged under Quintana to place undue emphasis on a mere contingent liability. In Garcia v. Smith Pipe & Steel Co., 107 N.M. 808, 765 P.2d 1176 (Ct.App.), cert. denied, 107 N.M. 673, 763 P.2d 689 (1988), a borrowed employee-employment agency case, the employer expressly paid for the workers’ compensation coverage, but the actual insurance was procured by the employment agency. This Court followed the money so to speak and held that within the context of that case, the employer had done enough to fall within the protection of the exclusive remedy section of the Act. In the case before us the parties make much of this fact. However, this Court, in Quintana, went to great pains to limit the holding in Garcia. We emphasized that the parties in Garcia had stipulated to the existence of an actual employer/employee relationship, which, of course, leads directly to workers’ compensation coverage and tort immunity. Quintana, 111 N.M. at 683, 808 P.2d at 968. We expressly disagreed that Garcia could be construed to mean that merely the purchase of workers’ compensation coverage, subject to reimbursement by the employer, would bar plaintiff’s personal injury suit under the exclusivity provision. Id. In fact, Garcia says nothing about the statutory employee statute. Accordingly, in my view, Garcia does not stand for any far-reaching interpretation that would afford statutory employee status to anyone who reimburses or otherwise pays for compensation insurance. The employer merely used the indirect means of agency to satisfy the duty it owed under law of providing workers’ compensation coverage to its own employees, including Mr. Garcia. As we made clear, it was intended to be confined to the special circumstances of that case and to those class of cases knowh as borrowed or special employees. See Rivera v. Sagebrush Sales, Inc., 118 N.M. 676, 884 P.2d 832 (Ct.App.1994). The final question pertains to the companion case, Romero v. Shumate Constructors, Inc. In one sense this case might be viewed as the very situation Section 52-1-22 was designed to prevent, where a subcontractor has no insurance and abandons its worker. It would appear that there is a certain fairness in enabling the worker to look to the general • contractor. Similarly, the general contractor would have earned tort immunity by becoming “liable to pay all compensation.” To my eye, however, this is not how the statute reads. Under Quintana, Section 52-1-22 should be limited to the exceptional circumstance. The facts in the Romero case do not indicate that the subcontractor, Fay’s Painting Co., was anything other than an independent contractor. The worker must look to Fay’s for his workers’ compensation coverage. He must look to tort for anything else. Therefore, I would affirm the Romero case and reverse the entire Harger case. Having stated my opinion and being in the minority, I respectfully dissent.