JOSEPH CORDIER AND JO CORDIER, HUSBAND AND WIFE, PLAINTIFF, v. STETSON-ROSS, INC., A WASHINGTON CORPORATION, DEFENDANT, STETSON-ROSS, INC., A WASHINGTON CORPORATION, DEFENDANT AND THIRD-PARTY PLAINTIFF, v. CHAMPION INTERNATIONAL CORPORATION, A CORPORATION, THIRD-PARTY DEFENDANT.
No. 14659.
Supreme Court of Montana
Submitted June 14, 1979. Decided Nov. 28, 1979.
184 Mont. 502 | 604 P.2d 86
Garlington, Lohn & Robinson, Missoula, Larry E. Riley, argued, Missoula, McClelland Law Offices, Goldman Law Firm, Missoula, for respondent.
The Hon. Russell E. Smith, United States District Judge for the District of Montana, has certified to us for decision three questions, the adjudication of which by the Montana Supreme Court would materially advance ultimate termination of federal litigation:
“1. Does a third party, sued by an injured employee, have any right to indemnity or contribution from a negligent employer if the employer and the employee are covered by the Montana workers’ Compensation Act?
“2. If the third party has a right in indemnity or contribution against the employer, may the employer insist that the total verdict, of which he must pay all or part, be reduced by the compensation payments?
“3. If the employer is not liable by way of indemnity or contribution to a third party, may he, even though himself negligent, recover from the third person through the employee under the subrogation rights created by law? In short, is there a conflict between
R.C.M.1947, § 92-204.2 , andR.C.M.1947, § 58-607.2 ?”
The plaintiff in the federal court action, Joseph Cordier, was an employee of Champion International Corporation (hereafter Champion.) He was injured in an industrial accident which was covered under the Montana Workers’ Compensation law and received compensation. Cordier has now brought against Stetson-Ross, Inc. an action under
Stetson-Ross, Inc. answered the complaint of Joseph Cordier and Jo Cordier by way of general denial, by alleging affirmative defenses of contributory negligence and assumption of risk, and by alleging that the negligence of Champion in failing to properly instruct Cordier in the operation of the gang saw, in failing to maintain the saw and equipment properly, and in failing to provide adequate safety procedures, proximately caused the plaintiff‘s accident.
Stetson-Ross, Inc. in the same federal action also filed a third-party complaint against Champion alleging again in essence that
Stetson-Ross, Inc.‘s claim is therefore based on (1) indemnity, or (2) contribution under our comparative negligence statute.
We look first at the contribution issue. In Consolidated Freightways Corporation of Delaware v. June Osier and Margaret Collins (1979), 185 Mont. 439, ___ P.2d ___, 36 St.Rep. 1810, we held that except in those cases covered by our comparative negligence statute, there is no substantive right to contribution between joint tortfeasors under Montana law.
In its answer in the federal court to the complaint of co-plaintiffs Joseph Cordier and Jo Cordier, Stetson-Ross, Inc. alleges that the contributory negligence of Joseph Cordier was the proximate cause of the injuries for which he claims damages. This allegation brings into play the provisions of
“We further hold that even in comparable negligence cases, the right of contribution granted in
section 27-1-703, MCA , applies only to defendants against whom judgment has been recovered bythe plaintiff. The terms of the statute itself appear to command that result. It speaks of contribution in paragraph (1) where ” ‘recovery is allowed against more than one party‘, and in paragraph (2)
“provides what occurs if contribution cannot be obtained ‘from a party liable for contribution.’
“That language is not an invitation to engage in third party practice under Rule 14, Mont.R.Civ.P. One reason is that Rule 14 is a procedural rule, and is not intended to alter, expand or abridge substantive rights. Moore‘s Federal Practice Sec. 14.03[1]. There was no substantive right to contribution in 1975 or 1977, when the comparative negligence statutes were adopted in Montana. Another reason is that there is no indication of legislative intent, unless legislative intent can be found by implication, to change the substantive rule against contribution among joint tortfeasors.” Consolidated Freightways (1979), 185 Mont. 444, ___ P.2d ___, 36 St.Rep. 1810, 1813.
Consolidated Freightways teaches that contribution in Montana between joint tortfeasors is allowed only in comparative negligence cases, and then only as to tortfeasors actually sued by the plaintiff. The reasons are fully set forth in that opinion.
The question certified to us by Judge Smith however in effect asks us to assume that there are no other roadblocks to Stetson-Ross, Inc.‘s claim to contribution but the provisions of the Montana Workers’ Compensation Act. In that light, we are brought immediately to consider the effect of
“For all employments covered under the Workers’ Compensation Act . . . the provisions of the act are exclusive . . . [a]n employer is not subject to any liability whatever for the death or personal injury to any employees covered by the . . . Act. The Workers’ Compensation Act binds the employee himself, and in case of death binds his personal representative and all persons having any right or claim to compensation for his injury or death, as well as the
employer and the servants and employees of such employer, . . . The right to compensation, and medical benefits as provided by this act is not affected by the fact that the injury, . . . or death is caused by the negligence of a third party other than the employer, or the servants or employees of the employer. Whenever such event . . . is caused by the act or omission of some persons or corporations other than his employer . . . the employee . . . shall, in addition to the right to receive compensation under this act, have a right to prosecute any cause of action he may have for damages against such persons or corporations. . . .”
The following
We are commanded by the legislature to construe the Workers’ Compensation Act liberally,
Note again that under
One reason given to deny contribution is that an employer under such a statute as
Cases which have adopted the minority rule that contribution from an employer is allowable under compensation acts, do so for reasons not pertinent or applicable to the case at bar. For example, contribution for one-half of the benefits was allowed by the United States Supreme Court in Weyerhaeuser Steamship Company v. United States (1963), 372 U.S. 597, 83 S.Ct. 926, 10 L.Ed.2d 1, even though the Federal Employees Compensation Act, which covered the employer was indicated as the exclusive remedy against the employer. However, the Supreme Court was led to this result by the traditional admiralty rule dividing all damages equally in cases of “mutual fault” between vessels. Yet, in United Air Lines, Inc. v. Wiener (9th Cir. 1964), 335 F.2d 379, the Ninth Circuit Court of Appeals distinguished Weyerhaeuser and refused employer contribution to a third party where the indemnitor (employer) was not liable to the injured employee.
It is our opinion that the broad provisions of
On full consideration, we deem the wise course is to hold that the language of
We also hold that the same reasoning applies to Stetson-Ross, Inc.‘s claim for indemnity against Champion. However, because indemnity is an all-or-nothing proposition, and proceeds from a different legal basis than contribution, we are required to give it some special discussion.
In Consolidated Freightways, supra, we held that in Montana there is no right between multiple tortfeasors who are in pari delicto to indemnity as a matter of substantive law. In so doing we affirmed the holdings in American Home Assur. Co. v. Cessna Aircraft Co. (10th Cir. 1977), 551 F.2d 804, 808, and Panasuk v. Seaton (D.Mont.1968), 277 F.Supp. 979. We did approve in Consolidated Freightways the right of a third party to indemnity when the parties were not in pari delicto, where the injury results from the negligence of one party as primary and where the other party is not negligent, or his negligence is remote, passive and secondary but he is nevertheless exposed to liability by the negligence of the first party. Such situations were exemplified in Great Northern Railway Company v. United States (D.Mont.1960), 187 F.Supp. 690, 693 and Crosby v. Billings Deaconess Hospital (1967), 149 Mont. 314, 426 P.2d 217. As we said in Fletcher v. City of Helena (1973), 163 Mont. 337, 346, 517 P.2d 365, 370:
“Indemnification requires the would be indemnitee be free from any active negligence contributing to the injury causing accident.”
But even if Stetson-Ross, Inc.‘s indemnity claim were otherwise allowable under Montana law, the exclusivity of the Workers’ Compensation Act would still operate to bar that claim of indemnity against the employer Champion. That is the majority rule in these matters, which we choose to follow.
Larson, supra, section 76.44, points out that a leading case for the majority rule is that of Slattery v. Marra Bros. (2d Cir. 1951), 186 F.2d 134, 138, authored by Judge Learned Hand. In that case, Marra Brothers, as defendant, had charged that Spencer Company was liable because of the primary fault and neglect of Spencer Company, and this primary fault entitled Marra Brothers not to contribution but to full indemnity. The District Court dismissed this claim and Judge Hand affirming for the Court of Appeals, said:
“. . . We are therefore to assume that Slattery‘s contract of employment with the Spencer Company was a ‘surrender * * * of * * * any other method, form or amount of compensation’ for any injuries which he might receive ‘in the course of his employment‘; and the Spencer Company was under no liability to him of any kind. Therefore, the right of Marra Bros. Inc., to indemnity from the Spencer Company cannot rest upon any liability of that company to Slattery; and, if it exists at all, it is hard to see how it can arise in the absence of some legal transaction between the two corporations, other than that of joint tortfeasors: . . .
“. . . However that may be, we shall assume that, when the indemnitor and indemnitee are both liable to the injured person, it is the law of New Jersey that, regardless of any other relation between them, the difference in gravity of their faults may be great enough to throw the whole loss upon one. We cannot, however, agree that that result is rationally possible except upon the assumption that both parties are liable to the same person for the joint wrong. If so, when one of the two is not so liable, the right of the other to indemnity must be found in rights and liabilities arising out of some other legal transaction between the two. . . .
“. . . So far as we can see therefore there is nobody of sure authority for saying that differences in the degrees of fault between two tortfeasors will without more strip one of them, if he is an employer, of the protection of a compensation act; and we are at a loss to see any tenable principle which can support such a result . . .” 186 F.2d at 138, 139.
Montana has previously ruled on the difference created by “some other legal transaction between the two.” In DeShaw v. Johnson (1970), 155 Mont. 355, 472 P.2d 298, we permitted a claim of indemnity against an employer even though the injury occurred under the Workers’ Compensation Act, because there existed between the indemnitor and indemnitee a written save-harmless agreement. We saw there on the part of the employer an obligation separate and apart from any obligation owed through the injury to the employee.
In Holly Sugar Corp. v. Union Supply Co. (Colo.1977), 572 P.2d 148, employee Pust proceeded against Union on various products liability theories. Union responded by joining employer Holly as a third party defendant, seeking indemnity for any liability which Union might incur. The Colorado Supreme Court, in examining the situation, determined that the Montana compensation statutes and the Colorado statutes were similar with respect to the exclusivity provision, and that since there was no guidance under then existing Montana law, it would assume that Montana would hold as Colorado had, that the Colorado act prohibited a common
Larson, supra, in discussing injuries from the use of products purchased from a manufacturer, poses the question and result logically enough:
“. . . But when a purchaser buys a product, does he make an implied contract with the manufacturer to use the goods in such a way as not to bring liability upon the manufacturer? This would be stretching the concept of contract out of all relation to reality. The court‘s approach to the matter assumed that the employer‘s duty to the manufacturer, if any, would have to be one based on its relative negligence, and on that basis could not survive the exclusive-liability clause. . . .” 2A Larson, Workman‘s Compensation Law, § 76.44, P. 14-402.
Stetson-Ross, Inc. relies on a contrary result reached by the New York Court of Appeals in Dole v. Dow Chemical Company (1972), 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288, and upon Westchester Lighting Co. v. Westchester Co. S. E. Corp. (1938), 278 N.Y. 175, 15 N.E.2d 567, 5 N.Y.S.2d 703. In Westchester, however, as Judge Learned Hand had pointed out in his opinion we have quoted previously (186 F.2d at 138), the liability of the indemnitor was actually founded upon a breach of tort duty by the indemnitor to the indemnitee. The decision in Dole is not logically explainable although Larson states that the result itself may have been a fair compromise. Nevertheless, its logic is described by Larson as “superficial“. Section 76.44, at 14-405.
Once again, the very broad wording of the exclusivity clause in our Workers’ Compensation Act is a factor in our decision. The language “any liability whatever” necessarily includes a noncontractual indemnity claim where the liability of the putative indem-
As to the second question certified by Judge Smith to us, since we hold that in this case there is no right of indemnity or contribution against the employer, we do not need to consider whether the employer may insist that the total verdict against him be reduced by the compensation payments. We reserve our decision on that point to such time as we may be faced with a claim based upon contractual indemnity or on some legal obligation not based on a joint tortfeasor relationship.
The third problem certified to us by the federal court poses the problem of a negligent employer, not liable by way of indemnity or contribution to a third party, nevertheless recovering from the third party through the employee under subrogation rights created by law. The federal judge asks if there is a conflict between
We limit this discussion to the facts of this case, where an employee is suing a third party on tort liability for an incident covered by the Workers’ Compensation Act.
This question was posed and certified to us by the federal court before we entered our opinion in Consolidated Freightways, supra. Therefore the Federal District Court did not have before it at the time the question was certified the discussion set forth in Consolidated Freightways, which is pertinent to the question of conflict between such statutes.
We said in Consolidated Freightways that the right of contribution granted in
Even though there is no conflict between
Subrogation provisions in Workers’ Compensation Acts vary from state to state and with each quirk and special provision to be found therein, it may safely be said that there are almost 50 different approaches to the right of subrogation among the various states. We must look at the subrogation rights provided by the Montana Act from the viewpoint that the employer has accepted liability without fault to the employee; that the employee‘s recovery against the employer is limited to the benefits under the Act; that the employer has given up its common law defenses if it does not come under the Act; and that the special provisions of the Act with respect to subrogation are designed to provide an incentive to the employee to seek reimbursement for his damages from a responsible party so that the employer may be reimbursed in whole or in part out of any recovery made by the employee.
It is the intent and purpose of the Workers’ Compensation Act that the right of action against a responsible third party belongs to the employee. Consequently, it is uniformly held that the employer‘s contributory negligence may not be used as a defense in an action by the injured employee against the responsible party. See Froysland v. Leef Bros., Inc. (1972), 293 Minn. 201, 197 N.W.2d 656.
Therefore, under the Montana scheme, the negligence, if any, of the employer (but not of the employee himself) never becomes an issue in the injured employee‘s action against a responsible third party. His right to recover damages is determined without reference to his employer‘s negligence. If contributory negligence is involved, it is only the contributory negligence of the injured employee himself which serves to reduce his right of recovery under comparative negligence. Under the statutory scheme in Montana, the negligence of the employer or of the employee‘s fellow servants does not serve to reduce the recovery to which the injured employee is entitled.
Under
While this may result in a “negligent” employer profiting through subrogation, the employee‘s cause of action cannot be split. In choosing between two possible injustices, allowing a negligent employer to profit, or reducing the recovery allowed to an injured employee, the Montana legislative has opted in favor of the employee by providing him full recovery.
Any reduction of the employer‘s right to subrogation by virtue of the employer‘s negligence would have to be found within the four corners of the Workers’ Compensation Act. There is no such provision, and we cannot provide one.
We agree with Larson‘s comment on the matter:
“. . . On the other hand, it is admittedly rather an odd spectacle to see a negligent employer reimbursing himself at the expense of a third party; and several courts have barred the employer‘s recovery on these facts. There is, however, one oversight in most of the latter cases: They have a tendency to speak of the ‘employer‘s’ negligence when what they really mean is the negligence of some co-employee of the injured employee. Once this is held firmly in mind, the picture changes in two ways. First, one‘s moral indignation evaporates, since one no longer has the prospect of a personally guilty plaintiff claiming damages. Second, it becomes even legally inaccurate to speak of the ‘employer‘s’ negligence in such circumstances, since the employer who assumes compensation coverage is in law not liable for the negligent harms wrought by one employee upon another. It is incorrect to say that the negligence of a co-employee is that employer‘s negligence, when the injured person is also an employee; the principle of vicarious liability simply does not apply. . . .” 2A Larson, Workman‘s Compensation law, § 75.23, p. 14-269 to 14-272.
Stetson-Ross, Inc. points to the California case of Associated Const. v. Workers’ Compensation (1978), 22 Cal.3d 829, 150 Cal.Rptr. 888, 587 P.2d 684, as a case supporting their position that we should reduce the subrogation recovery rights of an employer
First of all, California has no comparative negligence statute. The contributory negligence of a plaintiff in the slightest degree operated to defeat a plaintiff‘s claim in California until Li v. Yellow Cab Co. (1975), 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226. In Li, the California Supreme Court abolished the rule of contributory negligence, and adopted a rule of “pure” comparative negligence, thereby abolishing the doctrines of last clear chance, and assumption of risk (as a variant of contributory negligence) which were subsumed under the general process of assessing liability in proportion to the negligence between the parties.
By “pure” comparative negligence, the California Supreme Court meant that the negligence, if any, of a plaintiff would be assessed by the trier of fact, and any reward recoverable by the plaintiff would be proportionally reduced by the amount of his negligence. Thus, in theory, a plaintiff, guilty of negligence in any percentage as a causative factor in bringing about his injuries could nevertheless recover an amount diminished by the percentage that his negligence bore to the total amount of the damages he sustained.
Before Li, a statutory development existed with respect to joint tortfeasors. The California legislature had adopted in 1957 provisions whereby joint tortfeasors were given a right of contribution, prorata as against other joint tortfeasors against whom a judgment had been rendered. The joint and several liability of each tortfeasor to the plaintiff was kept in force.
Li involved one plaintiff and one defendant. The problem of multiple tortfeasors was not handled until the case of American Motorcycle Ass‘n v. Superior Court (1978), 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899. There the California court, again in the absence of legislative action, made several departures from its established law. First it held that the adoption of comparative negligence in Li did not abolish the rule of joint and several liability as between joint tortfeasors. Therefore, each tortfeasor whose negligence was a proximate cause of an indivisible injury received by a plaintiff was liable for the full amount of the plaintiff‘s recovery, irrespective of the comparative or proportional negligence of that individual tortfeasor as to the other tortfeasors or as to the plaintiff.
Next, it abolished the “equitable indemnity” rule of recovery (to be compared with our rule under Crosby v. Billings Deaconess Hospital (1967), 149 Mont. 314, 426 P.2d 217) and held that partial indemnity, as a species of contribution, was to be considered in assessing the overall comparative negligence as between the joint tortfeasors. This development the court called an evolving common law right of comparative indemnity. 146 Cal.Rptr. at 185, 578 P.2d at 902. Finally, it determined that a named defendant was authorized to file a cross-complaint against any other person whether sued or unsued, as to whom the named defendant sought to obtain total or partial indemnity. This latter development was, of course an abrupt departure from the provisions of
Even while the California Supreme Court was taking this course in American Motorcycle Ass‘n, with respect to bringing in un-
Notwithstanding the statement in the footnote in American Motorcycle Ass‘n, supra, nevertheless, when the California Code came to consider the case of Associated Const., supra, 150 Cal.Rptr. at 896, 587 P.2d at 693, it then decided that comparative fault among joint tortfeasors was applicable as to an employer in spite of the exclusivity clause of the Workers’ Compensation Act. In that case, the Court takes a further broad step: not only could a court decide the comparative fault of the employer and any concurrently negligent tortfeasor, but if the matter were before the administrative board, handling Workers’ Compensation cases, the problem of such comparative fault could be determined by that Board.
From the foregoing, it should be apparent that this is not the time for Montana to follow the lead of California or indeed of New York (see Dole v. Dow Chemical Company (1972), 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288) to adopt the broad judicial jumps that have occurred there without the springboard of legislation.
Several distinctions that apply to Montana come to mind. First, our comparative negligence statute is a “fifty percent statute” in that the plaintiff recovers if his negligence is not greater than the negligence of the person against whom recovery is sought.
As an example, in California, if a plaintiff is thirty percent
California justifies its departures from established rules and statutes as a part of the evolution of the common law (Li, supra, 119 Cal.Rptr. at 870, 532 P.2d at 1238), a euphemism for the adoption of uncommon law. In any event, the result in Workers Compensation cases has been to inject the concept of fault of the employer into its decisions, regardless of the exclusivity clause.
What California has really done through these decisions, is to open the door for liability insurers to scurry around for propective cross defendants with whom to divide the risk. Third party practice now is one of the factors clogging the progress of litigation in the courts, even in Montana with our limited indemnity doctrine. The resulting burden on a plaintiff is enormous. Perhaps in California, where a plaintiff with as much as ninety percent of the blame for his injuries may yet in theory recover something, the cause is worthwhile; but in Montana, under our “fifty percent” statute, the cost could be disastrous. While our trial courts have power to bifurcate issues and causes, and thus confine the proceedings, still trial courts are nearly powerless to control the paper blizzard that ensues when the professional discoverers go to work under our liberal discovery procedures. When unnamed defendants are brought into the action by other tortfeasors, the plaintiff is on his mettle to attend all the depositions and other discovery, or else face a possible summary judgment against him. We think the “time-worn” rules are also time-proved. For now, the wiser course for us is to follow
Accordingly, we reject the idea that an employer can be called to account for his negligence in determining his subrogation rights in Workers’ Compensation cases.
We therefore answer the questions certified to us as follows:
1. Does a third party, sued by an injured employee have any right to indemnity or contribution from a negligent employer if the employer and the employee are covered by the Montana Workers’ Compensation Act? Answer: No, unless it arises out of some other legal transaction between employer and third party.
2. If the third party has a right in indemnity or contribution against the employer, may the employer insist that the total verdict, of which he must pay all or part, be reduced by the compensation payments? Answer: Not applicable.
3. If the employer is not liable by way of indemnity or contribution to a third party, may he, even though himself negligent recover from the third person through the employee under the subrogation rights created by law? Answer: Yes: In short, is there a conflict between
MR. JUSTICES DALY and HARRISON concur.
MR. CHIEF JUSTICE HASWELL specially concurring:
I concur in the answers of the majority to the certified questions, but not in all the dicsussion, reasoning and statements in the foregoing opinion.
MR. JUSTICE SHEA concurs.