Opinion
NO. 2018-CA-000984-MR
01-31-2020
DIXIE FUEL COMPANY, LLC, Appellant v. Jacob WYNN and Tristar Risk Management, Appellees
BRIEFS FOR APPELLANT: Billy R. Shelton, Lexington, Kentucky. BRIEF FOR APPELLEE JACOB WYNN: Gregory E. H. Smith, Paducah, Kentucky, Daniel G. Yeast, Somerset, Kentucky.
BRIEFS FOR APPELLANT: Billy R. Shelton, Lexington, Kentucky.
BRIEF FOR APPELLEE JACOB WYNN: Gregory E. H. Smith, Paducah, Kentucky, Daniel G. Yeast, Somerset, Kentucky.
BEFORE: CLAYTON, CHIEF JUDGE; JONES AND LAMBERT, JUDGES.
OPINION
LAMBERT, JUDGE:
Dixie Fuel Company, LLC, has filed an interlocutory appeal pursuant to Breathitt County Board of Education v. Prater , 292 S.W.3d 883 (Ky. 2009), seeking review of the Harlan Circuit Court's order denying its motion for summary judgment. In the motion, Dixie Fuel sought immunity from a personal injury claim filed by Jacob Wynn pursuant to the exclusive remedy provision set out in Kentucky Revised Statutes (KRS) 342.690 of Kentucky's Workers’ Compensation Act. Because we hold that the circuit court erred as a matter of law in its ruling, we reverse the order on appeal.
In February 2013, Dixie Fuel (as the owner) and Robert Clear Coal Corporation (as the contractor) (RCCC) entered into a Contract Mining Agreement (the agreement) whereby RCCC, as an independent contractor, would mine and remove coal in seams owned by Dixie Fuel on the waters of Clover Fork of the Cumberland River in Harlan County. RCCC was in the business of providing mining services. The agreement provided that any personnel RCCC engaged or supplied were its employees or subcontractors and would not be considered employees of Dixie Fuel, and RCCC was required to maintain workers’ compensation coverage. Wynn worked for RCCC, and on January 13, 2014, he sustained an injury to his hand while he was assisting in the repair of a loader owned by RCCC. Hydraulic problems in another loader, one owned by Dixie Fuel, being used to lift the first loader caused it to drop and crush Wynn's hand. The repair was being performed under the supervision of Whayne Supply Company, a heavy equipment dealer.
As a result of his injuries, Wynn filed a complaint in Harlan Circuit Court on September 16, 2014, naming several defendants, including Dixie Fuel and Whayne Supply. Wynn sought damages for the negligent operation of and/or maintenance on the loader that dropped and alleged that Whayne Supply negligently supervised and directed the removal operation related to the loader that was under repair. Wynn sought compensatory damages for bodily injury, pain and suffering, loss of future wages, loss of enjoyment of life, and medical expenses as well as punitive damages. In its answer, Dixie Fuel asserted an immunity defense pursuant to Kentucky's Workers’ Compensation Act, KRS Chapter 342. Tristar Risk Management moved to intervene to protect its subrogation rights. It had issued a workers’ compensation policy to RCCC, and Wynn received workers’ compensation benefits as a result of the injuries he incurred with the loader accident.
Dixie Fuel filed a motion for summary judgment in August 2016, arguing that Wynn was the employee of its subcontractor that had been employed to remove, excavate, or drill soil, rock, or mineral and was therefore protected by the exclusive remedy provisions of KRS 342.610(2)(a) and KRS 342.690(1). Wynn argued that several people had yet to be deposed and that the exclusive remedy provisions did not apply in this case. The motion was denied by order entered September 26, 2016.
On March 27, 2018, Dixie Fuel filed a renewed motion for summary judgment after additional discovery had been taken. Dixie Fuel included an affidavit from Robert Clear, the president of RCCC, in which he stated:
RCCC is a foreign corporation authorized to conduct business within the Commonwealth of Kentucky. On or about February 15, 2013, RCCC entered into the Contract Mining Agreement (the "Agreement") with Dixie Fuel Company, LLC ("Dixie") attached hereto and made a part hereof as Exhibit A. Pursuant to the Agreement, RCCC agreed, as an independent contractor, to mine and remove by usual and accepted surface mining methods coal contained within certain seams on Dixie's surface mining permit. RCCC further agreed to provide at its own expense, all labor, machinery, equipment and supplies necessary to perform its obligations under the Agreement and agreed to maintain its equipment in good, serviceable condition.
Subsequent to the execution of the Agreement, RCCC began conducting operations on Dixie's mining permit consisting of the drilling and blasting of rock and overburden, removal of the overburden to expose the coal seam(s) and removal of the coal for loading into coal trucks retained by Dixie. After removal of the coal from the active pit, RCCC would then backfill the pit with spoil material to reclaim the area to prepare it for seed and vegetation.
Prior to the accident involving the Plaintiff, Jacob Wynn, RCCC had equipment issues with its Cat 992 End Loader, which required repair. The 992 End Loader is the main rock loading tool on
the surface mine site and is an integral part of the overburden and spoil removal process to expose the coal seam(s) for mining and loading into coal trucks. Without the repairs to the 992 End Loader, RCCC would not have been able to mine any coal on the job and would not have been able to perform its contractual obligations pursuant to the Agreement. The Plaintiff was injured while he was assisting in the repairs to RCCC's End Loader.
Dixie Fuel therefore claimed it was entitled to the exclusive remedy immunity set forth in KRS 342.690(1) based upon its status as a contractor pursuant to KRS 342.610(2)(a).
In his response, Wynn argued that RCCC had been contracted to mine coal, not make major repairs to heavy machinery, and that he had not been injured while he was doing any of the activities he had been hired to do, which included fueling, greasing, and oiling the machinery. Because he was assisting in a job regularly done by Whayne Supply, Wynn could not be deemed a contractor for purposes of KRS 342.610(2)(a) or (b). He went on to argue that a genuine dispute existed as to whether the repair work was regular or recurrent work he performed. In reply, Dixie Fuel argued whether the work was regular or recurrent was not an issue because another section of the statute applied. In a later response, Wynn made an equal protection argument related to the application of KRS 342.610(2). The circuit court again denied Dixie Fuel's motion in an order entered June 19, 2018, and this interlocutory appeal by Dixie Fuel now follows. We note that Wynn provided a notice of his constitutional challenge to the Attorney General of Dixie Fuel's argument regarding the interplay of KRS 342.610(2) and KRS 342.690(1) in his supplemental prehearing statement and that he served the Attorney General with his brief filed in this appeal.
Our standard of review is set forth in Scifres v. Kraft , 916 S.W.2d 779 (Ky. App. 1996) :
The standard of review on appeal of a summary judgment is whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law. Kentucky Rules of Civil Procedure (CR) 56.03. There is no requirement that the appellate court defer to the trial court since factual findings are not at issue. Goldsmith v. Allied Building Components, Inc. , Ky., 833 S.W.2d 378, 381 (1992). "The record must be viewed in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc. , Ky., 807 S.W.2d 476, 480 (1991). Summary "judgment is only proper where the movant shows that the adverse party could not prevail under any circumstances." Steelvest , 807 S.W.2d at 480, citing Paintsville Hospital Co. v. Rose , Ky., 683 S.W.2d 255 (1985). Consequently, summary judgment must be granted "[o]nly when it appears impossible for the nonmoving party to produce evidence at trial warranting a judgment in his favor ..." Huddleston v. Hughes , Ky.App., 843 S.W.2d 901, 903 (1992), citing Steelvest , supra (citations omitted).
Scifres , 916 S.W.2d at 781. "Because summary judgment involves only legal questions and the existence of any disputed material issues of fact, an appellate court need not defer to the trial court's decision and will review the issue de novo. " Lewis v. B & R Corp. , 56 S.W.3d 432, 436 (Ky. App. 2001) (footnote omitted). For its first argument, Dixie Fuel contends that the circuit court erred in denying its motion for summary judgment because Wynn failed to establish that any disputed issues of material fact remained as to whether Dixie Fuel was his statutory employer and because it was entitled to immunity as a matter of law. In Pearce v. University of Louisville, by and through its Board of Trustees , 448 S.W.3d 746 (Ky. 2014), the Supreme Court of Kentucky addressed the standard of review of statutory construction:
Statutory construction is an issue of law that we review de novo. Therefore, "[t]he trial court's and Court of Appeals's construction of statutes is also entitled to no deference on appeal...." Cumberland Valley Contractors, Inc. v. Bell County Coal Corp. , 238 S.W.3d 644, 647 (Ky. 2007) (citing Bob Hook Chevrolet Isuzu, Inc. v. Kentucky Transportation Cabinet , 983 S.W.2d 488, 490 (Ky. 1998) ).
In construing a statute, it is fundamental that our foremost objective is to determine the legislature's intent in enacting the legislation. "To determine legislative intent, we look first to the language of the statute, giving the words their plain and ordinary meaning." Richardson v. Louisville/Jefferson County Metro Government , 260 S.W.3d 777, 779 (Ky. 2008). Further, we construe a "statute only as written, and the intent of the Legislature must be deduced from the language it used, when it is plain and unambiguous...." Western Kentucky Coal Co. v. Nall & Bailey , 228 Ky. 76, 14 S.W.2d 400, 401-02 (1929). Therefore, when a statute is unambiguous, we need not consider extrinsic evidence of legislative intent and public policy. County Bd. of Educ. Jefferson County v. Southern Pac. Co. , 225 Ky. 621, 9 S.W.2d 984, 986 (1928). However, if the statutory language is ambiguous, we will look to other sources to ascertain the legislature's meaning, such as legislative history and public policy considerations. MPM Financial Group Inc. v. Morton , 289 S.W.3d 193, 198 (Ky. 2009). Further, we "read the statute as a whole, and with other parts of the law of the Commonwealth, to ensure that our interpretation is logical in context." Lichtenstein v. Barbanel , 322 S.W.3d 27, 35 (Ky. 2010).
Pearce , 448 S.W.3d at 749.
In KRS 342.690(1), the General Assembly set forth the exclusive remedy of the Workers’ Compensation Act, which extends to both the employer and a statutorily-defined contractor:
If an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death. For purposes of this section, the term "employer" shall include a "contractor" covered by subsection (2) of KRS 342.610, whether or not the subcontractor has in fact, secured the payment of compensation....
In KRS 342.610(2), the General Assembly defined the term contractor:
A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to the employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter. Any contractor or his or her carrier who shall become liable for such
compensation may recover the amount of such compensation paid and necessary expenses from the subcontractor primarily liable therefor. A person who contracts with another:
(a) To have work performed consisting of the removal, excavation, or drilling of soil, rock, or mineral, or the cutting or removal of timber from land; or
(b) To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person
shall for the purposes of this section be deemed a contractor, and such other person a subcontractor. This subsection shall not apply to the owner or lessee of land principally used for agriculture.
Dixie Fuel argues that it met the statutory definition of contractor through the application of KRS 342.610(2)(a) because it had contracted with RCCC to mine and remove the coal on its property. It provided evidence through Clear's affidavit and the attached agreement that Dixie Fuel had entered into a contract with RCCC to mine its coal and that RCCC would not have been able to perform its contractual obligations pursuant to the agreement if the loader had not been repaired. On the other hand, Wynn contends that, because he was not performing regular and recurrent work pursuant to KRS 342.610(2) at the time he was injured, the exclusivity provision of KRS 342.690(1) does not apply.
Several cases have explored the purpose of these statutes and the relationship between them. In McCarty v. Covol Fuels No. 2, LLC , 978 F.Supp.2d 799 (W.D. Ky. 2013), a federal district court explained:
"The purpose of the provision of KRS 342.610 that a contractor is liable for compensation benefits to an employee [of] a subcontractor who does not secure compensation benefits is to prevent subcontracting to irresponsible people." Fireman's Fund Ins. Co. v. Sherman & Fletcher , 705 S.W.2d 459, 461 (Ky. 1986). By the same token, "if a defendant qualifies as a contractor, ‘it has no liability in tort to an injured employee of a subcontractor’ once worker's compensation benefits are secured." Giles v. Ford Motor Co. , 126 Fed.Appx. 293, 295 (6th Cir. 2005) (quoting Fireman's Fund , 705 S.W.2d at 461 ). Essentially, "the Act treats the employees of a subcontractor as de jure employees of the contractor for the purposes of guaranteeing worker's compensation benefits." Giles , 126 Fed.Appx. at 295.
McCarty , 978 F.Supp.2d at 805. We note that in this case the district court was applying the regular or recurrent work prong of KRS 342.610(2) and that the worker was injured while installing a garage door as a subcontractor for a company that performed construction.
In Cabrera v. JBS USA, LLC , 568 S.W.3d 865 (Ky. App. 2019), this Court recently addressed the application of these statutes in determining whether up-the-ladder immunity applied.
To explain, the term "employer," for purposes of coverage under the Act and corresponding workers’ compensation immunity, includes "contractors" which are defined by the Act in relevant part as follows: "A person who contracts with another ... (b) [t]o have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person shall for the purposes of this section be deemed a contractor, and such other person a subcontractor." KRS 342.610(2) ; see also KRS 342.690(1). If a defendant qualifies as a contractor, "it has no liability in tort to an injured employee of a subcontractor."
Fireman's Fund Ins. Co. v. Sherman & Fletcher , 705 S.W.2d 459, 461 (Ky. 1986).
In other words, tort immunity under the Act extends "up the ladder" from the subcontractor that employs an injured person to the entities that contracted with the subcontractor, so long as the injured person's employer has workers’ compensation coverage, and the up the ladder entities contracted "to have work performed of a kind which is a regular or recurrent part of the work" of their business. See [ Goldsmith v. Allied Bldg. Components, Inc. , 833 S.W.2d 378, 379 (Ky. 1992) ].
Cabrera , 568 S.W.3d at 869. We note that the work in Cabrera was in a pork processing plant.
In the present case, Wynn relies on several cases to support his position, including the definition of regular or recurrent work set forth in General Electric Co. v. Cain , 236 S.W.3d 579 (Ky. 2007) :
Work of a kind that is a "regular or recurrent part of the work of the trade, business, occupation, or profession" of an owner does not mean work that is beneficial or incidental to the owner's business or that is necessary to enable the owner to continue in business, improve or expand its business, or remain or become more competitive in the market. [Arthur Larson and Lex K. Larson, Larson's Workers’ Compensation Law , § 70.06[10] (2006)]. It is work that is customary, usual, or normal to the particular business (including work assumed by contract or required by law) or work that the business repeats with some degree of regularity, and it is of a kind that the business or similar businesses would normally perform or be expected to perform with employees.
Cain , 236 S.W.3d at 588. Dixie Fuel contends that KRS 342.610(2)(b) is irrelevant because it met the statutory definition of contractor set forth in KRS 342.610(2)(a). We agree with Dixie Fuel.
In KRS 342.610(2), the General Assembly set forth two ways a person could be deemed a contractor:
A person who contracts with another:
(a) To have work performed consisting of the removal, excavation, or drilling of soil, rock, or mineral, or the cutting or removal of timber from land; or
(b) To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person
shall for the purposes of this section be deemed a contractor, and such other person a subcontractor.
(Emphasis added.) The General Assembly used the term "or" between subsections (a) and (b), which means that only one of the two options needs to be met to be deemed a contractor under the statute. As Dixie Fuel established that it was a contractor under subsection (a) because it contracted with RCCC to mine the coal on its property, it did not need to establish that the work performed by RCCC through Wynn was a regular or recurrent part of RCCC's work under subsection (b). And because it was a contractor, Dixie Fuel was entitled to up-the-ladder immunity as set forth in KRS 342.690(1) for the injuries Wynn sustained while he was working in the course and scope of his employment for RCCC.
We also agree with Dixie Fuel that this reading of the statutes does not violate public policy. "The purpose of the provision of K.R.S. 342.610 that a contractor is liable for compensation benefits to an employee if a subcontractor who [sic] does not secure compensation benefits is to prevent subcontracting to irresponsible people." Fireman's Fund Ins. Co. , 705 S.W.2d at 461 (citing Elkhorn-Hazard Coal Land Corp. v. Taylor , 539 S.W.2d 101, 103 (Ky. 1976) ). Wynn contends that "it was not the legislative intent of the statutes to allow Dixie to not be accountable for blatant negligence at the expense of Wynn." However, we must disagree with this argument based upon the clear statutory language the General Assembly elected to use. Certainly the statutes were designed to protect injured workers of a subcontractor. But along with that protection comes the exclusive remedy immunity for the statutory employer.
Finally, we shall address Wynn's equal protection argument. He argues that if we were to hold that Dixie Fuel is a contractor and entitled to immunity without performing an analysis under KRS 342.610(2)(b), then he would be treated arbitrarily when compared to a similarly situated worker who was not involved in the removal of soil, rock, or mineral under KRS 342.610(2)(a). He cites to the Supreme Court of Kentucky's opinion in Vision Mining, Inc. v. Gardner , 364 S.W.3d 455 (Ky. 2011), to support his position. Vision Mining provides that such challenges are subject to rational basis review:
Workers’ compensation statutes concern matters of social and economic policy. Cain v. Lodestar Energy, Inc. , 302 S.W.3d 39, 42 (Ky. 2009). As a result, such a statute is not subject to strict or immediate scrutiny and therefore must be upheld if a "rational basis" or "substantial and justifiable reason" supports the classifications that it creates:
Statutes ... concerning social or economic matters generally comply with federal equal protection requirements if the classifications that they create are rationally related to a legitimate state interest.... A statute complies with Kentucky equal protection requirements if a "reasonable basis" or "substantial and justifiable reason" supports the classifications that it creates.
Id. at 42-43 (footnotes omitted).
Vision Mining , 364 S.W.3d at 466. In Vision Mining , the Supreme Court addressed different evidentiary standards set out in the Act for pneumoconiosis claims, depending on whether it was contracted through exposure to coal dust or some other source. It held that
Because we consider the classification of coal workers’ pneumoconiosis claimants to be arbitrary in regard to the more stringent proof or procedures required and believe that the disparate treatment afforded such workers lacks a rational basis or substantial justification, we hold that the consensus procedure and the clear and convincing evidentiary standard are unconstitutional.
Id. at 473.
Wynn argues that as in Vision Mining , there is no rational basis to distinguish between those who are contracted to work in the coal removal business and those who are not when determining if the requirements of KRS 342.610(2) are met to be deemed a contractor for workers’ compensation purposes. However, Dixie Fuel counters with the argument that these statutes differentiate between employers, not different classes of workers, because the burden is on the employer to assert and provide an affirmative defense before being permitted to assert the exclusive remedy immunity set forth in KRS 342.690(1). This has nothing to do with the differing burdens of proof for the injured worker that were addressed in Vision Mining . Therefore, we cannot hold that Wynn's equal protection rights have been violated in this case by our interpretation of the statutes.
For the reasons set forth above, we hold that the Harlan Circuit Court erred as a matter of law when it denied Dixie Fuel's motion for summary judgment, thereby deciding that it was not entitled to the exclusive remedy set forth in KRS 342.690(1). Therefore, we must reverse the June 19, 2018, order and remand this matter for further proceedings in accordance with this opinion.
ALL CONCUR.