AMS Construction Co. v. K.H.K. Scaffolding Houston, Inc.
357 S.W.3d 30
| Tex. App. | 2011Background
- AMS and KHK entered a staff leasing agreement in May 1999 under which AMS would obtain workers' compensation insurance for leased employees and indemnify KHK for occupational-injury losses.
- The agreement required AMS to obtain and pay for workers' compensation insurance and to furnish certificates of insurance.
- KHK reported employees via turnaround reports to AMS, and AMS charged fees and issued paychecks based on those reports.
- Sosa, a KHK employee, was injured March 31, 2000; AMS did not have a workers' compensation coverage policy identifying KHK as insured for him.
- Sosa sued KHK for negligence; KHK then sued AMS for breach of the leasing agreement, among other claims, leading to a jury verdict for KHK on breach and fraud and a final judgment in AMS's favor on various issues.
- The trial court declined to abate the case to the Texas Workers' Compensation Commission, and the trial court entered judgment in favor of KHK on the contract claims; AMS appeals arguing jurisdiction, sufficiency, waiver, and public-policy defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court lacked subject-matter jurisdiction | KHK's breach claim rests on coverage disputes; AMS contends Commission exclusive jurisdiction | Exclusive jurisdiction lies with the Commission for workers' compensation-related disputes | Trial court had jurisdiction; no exclusive-commissionbar on contract dispute |
| Whether there was legally sufficient evidence of breach of contract | AMS breached by failing to provide workers' compensation coverage for Sosa | No defined leased-employee term; no breach | Evidence legally sufficient; Sosa was a leased employee; AMS breached |
| Whether AMS waived the contract-based waiver defense | Waiver not applicable to contract claim; no jury finding sought on waiver | KHK waived by not obtaining jury findings; can raise on appeal | Waiver defense not preserved; not reviewable on appeal |
| Whether collusive Mary Carter-type agreement tainted trial | Sosa/KHK arrangement could influence trial outcome | No evidence of improper collusion; not a Mary Carter scenario | No evidence of collusion; public-policy defense rejected |
| Whether AMS could avoid contract liability by invoking exclusive remedy defences | Contract required indemnity for loss due to AMS's breach; exclusivity of remedy not applicable | Exclusive remedy defense applies only to benefits claims | Contract-interpretation supports indemnity for AMS's failure to provide coverage; judgment sustained |
Key Cases Cited
- American Motorists Ins. Co. v. Fodge, 63 S.W.3d 801 (Tex. 2001) (exclusive jurisdiction of the Commission over compensation benefits)
- Tex. Mut. Ins. Co. v. Tex. Dept. of Ins., Div. of Workers' Compensation, 214 S.W.3d 613 (Tex.App.-Austin 2006) (lack of procedures indicates division lacks exclusive jurisdiction over non-claim disputes)
- Del Indus. Inc., 35 S.W.3d 591 (Tex. 2000) (staff leasing case; co-employers and coverage implications)
- Wingfoot Enters. v. Alvarado, 111 S.W.3d 134 (Tex.2003) (employment status and exclusive remedy considerations in staff-leasing context)