Nichols v. Jacobsen Construction Co.
2016 UT 19
| Utah | 2016Background
- Rick J. Nichols, an employee of subcontractor Safway, was seriously injured while unloading scaffolding at Jacobsen’s City Creek construction site in 2011.
- Jacobsen ran a contractor-controlled insurance program (CCIP) that provided primary workers’ compensation coverage for enrolled subcontractors; Safway enrolled in June 2009 and received a certificate of insurance in August 2010.
- After the accident Nichols filed a workers’ compensation claim and separately sued Jacobsen for negligence; there was dispute over who initially paid benefits, though Jacobsen has paid substantial benefits since.
- Jacobsen moved for summary judgment asserting immunity under Utah’s Workers’ Compensation Act as an "eligible employer" (Utah Code § 34A-2-103(7)(f)(iii)(B)), claiming it: (1) procured the work, (2) secured payment of workers’ compensation benefits, and (3) maintained a written safety program meeting statutory requirements.
- The district court granted summary judgment for Jacobsen on all three requirements; the Utah Court of Appeals affirmed procurement but reversed on the securing-payment requirement, finding a factual dispute about timing of payments.
- The Utah Supreme Court granted certiorari and held Jacobsen satisfied all statutory requirements and is immune from the negligence suit.
Issues
| Issue | Plaintiff's Argument (Nichols) | Defendant's Argument (Jacobsen) | Held |
|---|---|---|---|
| 1. Whether Jacobsen "procured work" that is part or process of its trade or business | Safway was a mere supplier; unloading materials is not "work" procured as part of Jacobsen’s construction business | Safway contracted to "erect and dismantle" scaffolding; supplying/erecting/dismantling are work controlled by Jacobsen | Court: "Work" includes supplying, erecting, dismantling scaffolding; procurement requirement met (Jacobsen is an eligible employer) |
| 2. Whether "securing the payment" requires actual payment (timing) of benefits | Statute requires the contractor actually pay benefits (or at least timely payment); delay/initial payment by Safway defeats "secured" status | "Securing the payment" means obtaining and maintaining qualifying workers’ compensation insurance under § 34A-2-201; actual timing of insurer payments is immaterial | Court: Securing payment is satisfied by providing/maintaining qualifying insurance; Jacobsen secured payment by enrolling Safway in CCIP and maintaining coverage |
| 3. Whether Jacobsen’s CCIP enrollment and certificate evidences that Safway was covered | Nichols: dispute over who paid first shows Jacobsen did not effectively secure coverage for Safway at relevant time | Jacobsen: enrollment, CCIP manual, and certificate show valid insurance in place before the accident | Court: Uncontested record shows Safway was enrolled and insured under CCIP before the accident; securing-payment requirement satisfied |
| 4. Whether Jacobsen maintained the required written workplace accident and injury reduction program | Nichols: challenges sufficiency — disputed notice, signature, right-to-control elements, and posting on site | Jacobsen: CCIP, CCIP Manual, and Safety & Health Manual (incorporated by reference) satisfy the 12 statutory program elements and rights (control, removal, inspection) | Court: Jacobsen met statutory safety-program requirements (minor lacuna re: posting not fatal); requirement satisfied |
Key Cases Cited
- Bennett v. Indus. Comm’n, 726 P.2d 427 (Utah 1986) (defines "trade or business" and explains when subcontractor operations are part/process of contractor’s business)
- Pinter Const. Co. v. Frisby, 678 P.2d 305 (Utah 1984) (phrase "part or process" includes operations directly related to contractor’s commercial function)
- Thomas A. Paulsen Co. v. Indus. Comm’n, 770 P.2d 125 (Utah 1989) (Section imposing unconditional obligation to be properly insured)
- Smith v. Am. Express Travel-Related Servs., 765 F. Supp. 1061 (D. Utah 1991) (securing payment satisfied by providing qualifying insurance; employer not guarantor of insurer’s actual payments)
- Dep’t of Homeland Sec. v. MacLean, 135 S. Ct. 913 (U.S. 2015) (statutory interpretation canon: differences in language across nearby subsections are intentional)
- Energy Claims Ltd. v. Catalyst Inv. Grp. Ltd., 325 P.3d 70 (Utah 2014) (standard of review on certiorari to Utah Supreme Court — no deference to Court of Appeals)
- Pinnacle Homes, Inc. v. Labor Comm’n, 173 P.3d 208 (Utah Ct. App. 2007) (context on right-to-control and workers’ compensation eligibility)