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Berry Contracting, L.P. v. Mann

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

April 26, 2018

BERRY CONTRACTING, L.P., D/B/A BAY LTD. AND JUAN TOMAS HERNANDEZ ALVAREZ, Appellants,
v.
GERNAL RANDOLPH MANN AND JENNIFER MANN, Appellees.

          On appeal from the County Court at Law No. 3 of Nueces County, Texas.

          Before Justices Rodriguez, Benavides, and Longoria

          OPINION

          NELDA V. RODRIGUEZ Justice

         Appellant Berry Contracting, L.P., d/b/a Bay Ltd. employed appellee Gernal Randolph Mann as its foreman for a project at a Valero refinery. Mann was injured crossing a road near the refinery, and he and his wife Jennifer ("the Manns") filed suit against Bay and Juan Tomas Hernandez Alvarez (collectively, "Bay"). Bay asserted that the Manns' suit was barred by the exclusive-remedy defense or "comp bar." The trial court granted partial summary judgment in favor of the Manns, disposing of Bay's exclusive-remedy defense.

         We granted this permissive appeal to address four questions posed by the trial court concerning the exclusive-remedy defense. See Tex. R. App. P. 28.3. Because we resolve each of these questions in favor of Bay, we reverse the summary judgment and remand to the trial court for further proceedings.

         I. Background

         On October 8, 2015, Mann clocked in to work at 6:44 a.m. at a terminal on the side of Up River Road in Corpus Christi, Texas. Around 6:47 a.m., as Mann walked across the road, he was struck by a vehicle driven by Alvarez, also an employee of Bay. There are four different versions of what Mann was intending to do as he crossed the road: (1) gathering water for his workers, (2) preparing for a safety meeting, (3) going to look at an excavation site to determine what paperwork he would need to obtain from Valero before his men could commence work, or (4) walking to his truck to get out of the rain.

         Bay submitted proof that at the time of the accident, Mann was employed as Bay's foreman for a project at the Bill Greehey Refinery owned by Valero ("the refinery"). The refinery is located on Up River Road and is relatively close to the site of the accident.

         Bay alleges that Mann was covered by two separate, complementary workers' compensation policies. One policy was a "rolling owner controlled insurance program" that was procured by Valero (the "ROCIP policy").[1] The ROCIP policy covered the refinery and was designed to provide blanket workers' compensation coverage to contractors who worked on Valero projects (such as Bay), as well as their employees (such as Mann).

         The other policy was procured by Bay for the general protection of its employees (the "standard policy"). When Bay signed the ROCIP policy, it also executed a document which excluded any work at the refinery from the scope of its standard policy. Thus, according to Bay, any work-related injury to a Bay employee was to be covered under either Valero's ROCIP policy or Bay's standard policy, but not both.

         Following Mann's injury, Bay submitted notice to the carriers for both policies. Both denied coverage. The agent for the standard-policy carrier asserted that Mann was injured at the refinery, and therefore his injuries were covered by Valero's ROCIP policy and excluded from Bay's standard policy. The agent for the ROCIP carrier took the position that Mann was not in the course and scope of his employment when he was injured, and therefore his injuries were not compensable under the Texas Workers' Compensation Act ("the Act").

         The Manns filed this personal injury suit against Bay and Alvarez. Bay sent multiple inquiries to both workers' compensation carriers, asking them to provide benefits to Mann, but both carriers continued to deny coverage. To further pursue coverage and reimbursement from the carriers, Bay filed a claim before the Division of Worker's Compensation at the Texas Department of Insurance ("the Division").[2]

         Meanwhile, proceedings continued in the trial court. Bay filed a motion for summary judgment, arguing that it was entitled to judgment as a matter of law on the Manns' claims. Bay maintained that because Mann sustained a work-related injury and was covered by a workers' compensation policy, the exclusive-remedy defense prevented the Manns from filing a personal injury suit against Bay. The trial court denied Bay's motion.

         The Manns filed a cross-motion for partial summary judgment, attempting to defeat Bay's exclusive-remedy defense. The trial court granted the Manns' motion and struck Bay's exclusive-remedy defense. The trial court then gave Bay leave to seek a permissive appeal in this Court concerning four questions, which Bay raises as its issues on appeal:

1. Under Valero's Rolling Owner Controlled Insurance Program ("ROCIP") and section 406.123 of the Labor Code, was Bay an employer of Randy Mann for purposes of the exclusive remedy defense?
2. Under the law of agency and quasi-estoppel, is Bay precluded from asserting the exclusive remedy defense because of the ROCIP carrier's denial of coverage to date?
3. Because of the ROCIP carrier's denial of coverage to date, does section 408.001(d) of the Labor Code preclude Bay from asserting the exclusive remedy defense?
4. Was Randy Mann in the course and scope of his employment at the time of his accident?

         II. Exclusive Jurisdiction

         In granting this permissive appeal, we asked the parties to brief a jurisdictional question: whether the Division has exclusive jurisdiction over this suit pursuant to American Motorists Insurance Co. v. Fodge. 63 S.W.3d 801, 805 (Tex. 2001). The Act vests the Division with exclusive jurisdiction to determine the ultimate question of whether the claimant is entitled to workers' compensation benefits. Id. at 803. In Fodge, the court held that because a claim for bad-faith denial of benefits depends upon the ultimate question of whether the claimant was entitled to benefits in the first place, the bad-faith issue was also subject to the Division's exclusive jurisdiction over compensability determinations. Id. at 804.[3]

         In our initial estimation, it seemed reasonable that under Fodge, the Division's exclusive jurisdiction over compensability determinations would include the parties' dispute here. The parties have debated the issue of whether Mann was injured in the course and scope of his employment, and it is said that "[w]hether the injury occurred in the course and scope of employment is an issue that regards compensability." See Morales v. Liberty Mut. Ins. Co., 241 S.W.3d 514, 518 (Tex. 2007). The parties also dispute whether a valid workers' compensation policy applies to Mann and protects Bay, which is also part of the Division's ultimate compensability determination. See In re Tex. Mut. Ins. Co., 157 S.W.3d 75, 81 (Tex. App.-Austin 2004, orig. proceeding).[4]

         However, two reasons compel us to conclude that the Division does not have exclusive jurisdiction. First, "[t]he determination of whether any type of claim is within the exclusive jurisdiction of the [Division] depends on whether the claim is based on a claimant's entitlement to benefits." Bestor v. Serv. Lloyds Ins. Co., 276 S.W.3d 549, 553 (Tex. App.-Waco 2008, no pet.) (quoting Pickett v. Tex. Mut. Ins. Co., 239 S.W.3d 826, 835 (Tex. App.-Austin 2007, no pet.)). The Manns' personal injury suit touches on many of the same subsidiary inquiries that would be posed in a Division proceeding to determine whether a claimant was ultimately entitled to compensation (e.g., course and scope), but the Manns' personal injury suit is not "based on" the ultimate question of whether Mann was eligible for workers' compensation benefits. See id.; Tex. Mut. Ins. Co. v. Sonic Sys. Intern., Inc., 214 S.W.3d 469, 481 (Tex. App.-Houston [14th Dist.] 2006, pet. denied) (combined appeal & orig. proceeding) (concluding that contract claims were not subject to the Division's exclusive jurisdiction because while the contract claims involved similar issues as a proceeding before the Division, the contract claims "do not depend on the final determination" of compensability itself). There is no aspect of the personal injury suit that requires Mann to ultimately be eligible for workers' compensation benefits, unlike the claim for bad-faith denial of benefits in Fodge; just the opposite, if Mann's injury is compensable, this would likely bar the Manns' suit pursuant to the exclusive-remedy defense. See Walls Reg'l Hosp. v. Bomar, 9 S.W.3d 805, 806 (Tex. 1999) (per curiam). Accordingly, the Manns' claim is not "based on" Mann's entitlement to benefits, and their suit is not subject to the Division's exclusive jurisdiction to determine the ultimate question of whether the claimant is entitled to workers' compensation benefits. See Bestor, 276 S.W.3d at 553.

         Second, the main subject of this appeal is the exclusive-remedy defense; both parties' motions for summary judgment concerned the exclusive-remedy defense, and the trial court granted leave to appeal issues related to the exclusive-remedy defense. This favors the conclusion that the Division does not have exclusive jurisdiction: the Division's exclusive jurisdiction "does not extend to all cases that touch on workers' compensation issues. The district courts decide disputes about whether the Act's exclusive remedy provision applies as a defense to an injured worker's personal injury suit." AMS Const. Co., Inc. v. K.H.K. Scaffolding Houston, Inc., 357 S.W.3d 30, 38 (Tex. App.-Houston [1st Dist.] 2011, pet. dism'd) (emphasis added) (citing two cases in which the Texas Supreme Court decided substantive issues concerning the exclusive-remedy defense). That is, the main subject of this appeal is an issue which falls within the jurisdiction of the district court, not the Division. See id.

         Because this suit is not based on Mann's entitlement to worker's compensation benefits, and because this appeal concerns the exclusive-remedy defense, it is not subject to the Division's exclusive jurisdiction.

         III. Exclusive-Remedy Defense

         The main subject of this appeal is Bay's exclusive-remedy defense. In the Manns' motion for summary judgment, they asserted that Bay did not qualify for two elements of the defense: Bay was not Mann's "employer, " as that term is used in the Act, and Mann was not injured while in the "course and scope" of his employment. The trial court summarily dispensed with Bay's exclusive-remedy defense, ruling in favor of the Manns.

         The recovery of workers' compensation benefits is the exclusive remedy of (1) an employee covered by workers' compensation insurance coverage (2) against the employer, or another employee of the employer (3) for a work-related injury sustained by the employee (i.e., injury in the course and scope of employment). Tex. Lab. Code Ann. § 408.001(a) (West, Westlaw through 2017 1st C.S.); see Payne v. Galen Hosp. Corp., 28 S.W.3d 15, 18 (Tex. 2000) (interpreting "work-related injury" to mean injury in the course and scope of employment). Exclusive remedy is an affirmative defense. Vega v. Silva, 223 S.W.3d 746, 748 (Tex. App.-Dallas 2007, no pet.); Pierce v. Holiday, 155 S.W.3d 676, 678 (Tex. App.-Texarkana 2005, no pet.).

         By its first and fourth issues, Bay asserts that it satisfied both elements of the exclusive-remedy defense which were challenged in the trial court: that Bay was Mann's "employer or an agent or employee of the employer" and that Mann's injury occurred in the "course and scope" of his employment. See Tex. Lab. Code Ann. § 408.001(a). Bay asserts that it has conclusively proved these elements or, in the alternative, that there is at least a fact issue which prevents the summary disposal of this defense.

         A.Standard of ...


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