DOUGLAS RIES v. JM CUSTOM HOMES, LLC
#29718-a-SPM
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
OPINION FILED 08/24/22
2022 S.D. 52
THE HONORABLE ROBERT GUSINSKY Judge
CONSIDERED ON BRIEFS JANUARY 10, 2022
DOUGLAS RIES, Plaintiff and Appellant,
v.
JM CUSTOM HOMES, LLC, Defendant and Appellee.
APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA
HEATHER M. LAMMERS BOGARD of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, LLP Rapid City, South Dakota Attorneys for plaintiff and appellant.
GARY D. JENSEN BRETT A. POPPEN of Beardsly, Jensen & Lee, Prof. LLC Rapid City, South Dakota Attorneys for defendant and appellee.
[¶1.] Douglas Ries received workers’ compensation benefits from his employer following an employment-related injury at a construction site where his employer was a subcontractor. After receiving those workers’ compensation benefits from his employer, Ries filed a negligence claim against the general contractor responsible for the construction project. After extensive discovery, the general contractor sought leave from the circuit court to amend its answer to assert statutory immunity under
Facts and Procedural History
[¶2.] JM Custom Homes, LLC (JM) was the general contractor constructing a home in Rapid City, South Dakota. JM subcontracted with Pine Tree Plumbing (Pine Tree) to complete the plumbing work on the home. Pine Tree employed Ries.
[¶3.] On June 6, 2017, Ries was injured in the home when he fell through an unanchored, plywood stair leading from the main level to the basement. The stair caused him to fall and hang upside down on the staircase. Ries sustained injuries to his right knee, left hip, and forearms. He later underwent several surgeries, including a right knee replacement. Following the incident, Ries filed a workers’ compensation claim under Pine Tree‘s policy because the injury occurred during the course and scope of his employment with Pine Tree. Pine Tree‘s insurer, Acuity Insurance, paid Ries‘s workers’ compensation benefits. Ries then filed a negligence suit in circuit court against JM, the general contractor, alleging JM was negligent because it used unanchored, half-inch plywood on each step and failed to install handrails.
[¶4.] After the parties had engaged in extensive discovery, JM filed a motion to amend its answer to include statutory immunity as a defense. Ries opposed the motion to amend, arguing that JM waived its ability to assert statutory immunity because it failed to plead the defense in its initial answer. Both parties submitted affidavits regarding the motion to amend answer, provided briefs, and presented oral arguments to the circuit court. The circuit court signed an order granting JM‘s motion to amend answer on March 3, 2021. That order does not explain the circuit court‘s ruling, and there is no written decision in the record.1 JM filed its amended answer on March 9, 2021, asserting statutory immunity under
[¶6.] In response, Ries argued that JM was not entitled to statutory immunity under
[¶7.] The circuit court granted JM‘s motion for summary judgment and entered judgment on July 6, 2021. The circuit court determined that JM was potentially liable to Ries for workers’ compensation under
Whether Ries‘s notice of appeal included JM‘s motion to amend answer.
[¶8.] As an initial matter, we address JM‘s claim that Ries cannot challenge the circuit court‘s decision to grant JM‘s motion to amend because Ries‘s notice of appeal did not specifically indicate an intention to appeal the circuit court‘s decision to allow JM to amend its answer.
[¶9.] “On an appeal from a judgment this court may review intermediate orders. However, they must involve the merits and necessarily affect the judgment appealed from.” Lang v. Burns, 77 S.D. 626, 631, 97 N.W.2d 863, 866 (1959). Moreover, notices of appeal should “be liberally construed in favor of their sufficiency.” People ex rel. S.D. Dep‘t of Soc. Servs., 2011 S.D. 26, ¶ 8, 799 N.W.2d 408, 409 (quoting Int‘l Union of Operating Eng’rs Loc. No. 49 v. Aberdeen Sch. Dist. No. 6-1, 463 N.W.2d 843, 844 (S.D. 1990)) (internal quotation marks omitted).
[¶10.] The amendment to JM‘s answer asserted the exclusivity provisions of
Whether the circuit court abused its discretion by granting JM‘s motion to amend its answer.
[¶11.] We review the circuit court‘s decision to grant or deny a motion to amend pleadings using the abuse of discretion standard of review. McDowell v. Citicorp Inc., 2008 S.D. 50, ¶ 7, 752 N.W.2d 209, 212. “An abuse of discretion occurs when ‘discretion [is] exercised to an end or purpose not justified by, and clearly against, reason and evidence.’” Id. (alteration in original) (quoting In re Name Change of L.M.G., 2007 S.D. 83, ¶ 6, 738 N.W.2d 71, 73–74).
[¶12.] “Under South Dakota law, a defendant is required to plead any and all affirmative defenses in the answer to plaintiff‘s complaint.” Jurgensen v. Smith, 2000 S.D. 73, ¶ 21, 611 N.W.2d 439, 442. However, “[a] trial court may permit the amendment of pleadings before, during, and after trial without the adverse party‘s consent.” Klutman v. Sioux Falls Storm, 2009 S.D. 55, ¶ 14, 769 N.W.2d 440, 446 (quoting Burhenn v. Dennis Supply Co., 2004 S.D. 91, ¶ 20, 685 N.W.2d 778, 783); see
[¶13.] JM filed a motion to amend its answer approximately eight months after its initial answer and after the parties had engaged in extensive discovery. Although Ries had informally requested pretrial deadlines, none had been agreed to by the parties or ordered by the circuit court. The circuit court had not set a trial date. Ries‘s ability to prepare to challenge JM‘s assertion of this defense was not restricted. Further, the circuit court found that allowing the amended answer would not prejudice Ries. Accordingly, we conclude that the circuit court did not abuse its discretion in granting JM‘s motion to amend.
Whether the circuit court erred in granting summary judgment.
[¶14.] “We review a circuit court‘s entry of summary judgment under the de novo standard of review.” Wyman v. Bruckner, 2018 S.D. 17, ¶ 9, 908 N.W.2d 170, 174 (quoting Heitmann v. Am. Fam. Mut. Ins. Co., 2016 S.D. 51, ¶ 8, 883 N.W.2d 506, 508). “We will affirm a circuit court‘s ‘grant of a motion for summary judgment when no genuine issues of material fact exist, and the legal questions have been correctly decided.’” Harvieux v. Progressive N. Ins. Co., 2018 S.D. 52, ¶ 9, 915 N.W.2d 697, 700 (quoting Wyman, 2018 S.D. 17, ¶ 9, 908 N.W.2d at 174). We do not give deference to the circuit court‘s decision to grant summary judgment under de novo review. Oxton v. Rudland, 2017 S.D. 35, ¶ 12, 897 N.W.2d 356, 360. “Statutory interpretation is a question of law for the court to determine, and when the trial court resolves the question in a litigant‘s favor, summary judgment is appropriate.” Sioux Valley Hosp. Ass’n v. State, 519 N.W.2d 334, 335 (S.D. 1994).
[¶15.] “The purpose of the South Dakota Worker‘s Compensation Act is to provide an injured employee with an expeditious remedy independent of fault and to limit the liability of employers and fellow employees.” Thompson v. Mehlhaff, 2005 S.D. 69, ¶ 11, 698 N.W.2d 512, 516. “There is an inherent trade-off” as the “employee is guaranteed compensation if injured on the job[,] but the employer‘s liability is limited in exchange for this certainty.” Id. ¶ 11, 698 N.W.2d at 516–17. This “quid pro quo” under which the employer‘s assumption of liability is traded for immunity is codified in
The rights and remedies granted to an employee subject to this title, on account of personal injury or death arising out of and in the course of employment, shall exclude all other rights and remedies of the employee . . . against the employer
or any employee, partner, officer, or director of such employer, except rights and remedies arising from intentional tort.
(Emphasis added.) Thus, the Legislature designed workers’ compensation to be “the exclusive method for compensating workers injured on the job in all but extraordinary circumstances.” Harn v. Cont‘l Lumber Co., 506 N.W.2d 91, 95 (S.D. 1993).
[¶16.] The Legislature did not limit the provisions on compensation exclusivity and employer immunity to apply only to the employee‘s immediate employer. Rather, the Legislature extended the provisions to any “principal, intermediate, or subcontractor,” as each is potentially liable for workers’ compensation.
A principal, intermediate, or subcontractor is liable for compensation to any employee injured while in the employ of any subcontractor and engaged upon the subject matter of the contract, to the same extent as the immediate employer. Any principal, intermediate, or subcontractor who pays compensation under the provisions of this section may recover the amount paid from any person, who, independently of this section, would have been liable to pay compensation to the injured employee. Each claim for compensation under this section shall in the first instance be presented to and instituted against the immediate employer, but such proceeding does not constitute a waiver of the employee‘s rights to recover compensation under this title from the principal or intermediate contractor. However, the collection of full compensation from one employer bars recovery by the employee against any others. The employee may not collect from all a total compensation in excess of the amount for which any contractor is liable. This section applies only in cases where the injury occurred on, in, or about the premises on which the principal contractor has undertaken to execute work or which are otherwise under the contractor‘s control or management.
(Emphasis added.)
[¶17.] This Court held in Metzger that a general contractor is subject to the same non-fault liability for workers’ compensation as an immediate employer and therefore has statutory immunity from negligence actions. Metzger, 84 S.D. at 172, 169 N.W.2d at 263. Metzger involved similar facts to this case; the defendant, a general contractor, contracted with a subcontractor who employed Metzger. Id. at 169, 169 N.W.2d at 262. Metzger died while completing work for the subcontractor, and his administrator filed a workers’ compensation claim against the subcontractor. Id. Metzger‘s estate received workers’ compensation benefits from the subcontractor and then sued the general contractor, who sought statutory immunity under
[¶18.] Our holding in Thompson v. Mehlhaff reaffirmed these principles; there, we stated, “[t]he general contractor receives immunity because the general
contractor is the back-up provider of workers’ compensation coverage.” 2005 S.D. 69, ¶ 16, 698 N.W.2d at 518. In Thompson, two men, each employed by separate employers, were killed in a trucking collision while in the scope of their separate employment. Id. ¶ 3, 698 N.W.2d at 515. The estates of both men collected workers’ compensation from their respective employers. Id. ¶ 4, 698 N.W.2d at 515. One worker‘s estate then sought to recover from the other worker‘s employer, asserting that the employer was vicariously liable for its employee‘s negligence. Id. The employer denied liability and asserted statutory immunity. Id.
[¶19.] This Court determined that statutory immunity did not apply to this “type of down-the-ladder” claim because although general contractors receive immunity because they remain potentially liable for workers’ compensation benefits, “the opposite is not true.” Id. ¶ 16, 698 N.W.2d at 518. “The reason for the difference in result is forthright: the general contractor has a statutory liability to the subcontractor‘s employee, actual or potential, while the subcontractor has no comparable statutory liability to the general contractor‘s employee.” Id. (quoting Arthur Larson, Worker‘s Compensation Law § 111.04[2] (2002)).
[¶20.] Ries argues that JM‘s insurance policy precludes the application of
“The Workers Compensation Law may make you responsible to the employees of a contractor (or subcontractor) doing work for you, unless such contractor (or subcontractor) is operating under the Workers Compensation Act.”
Ries contends that JM would ordinarily be liable for subcontractors but for this language. He argues that because Pine Tree was operating under the Act, the insurance policy‘s language eliminates JM‘s liability for workers’ compensation benefits owed to a subcontractor‘s employee. Citing Metzger, Ries asserts that because JM is not liable to the same extent as a subcontractor due to the policy‘s language, it cannot claim statutory immunity under
[¶21.] In response, JM argues that the language of the insurance policy between JM and its insurer is irrelevant to the application of the statutory immunity provided by the Legislature. Alternatively, JM asserts that interpretation of the policy language and its effect on statutory immunity is a question of law. Along that vein, JM argues that the policy language does not exclude benefits to employees of a subcontractor; instead, they argued the “provision advises the insured that a state‘s workers’ compensation law may make the insured liable to employees of a subcontractor unless the subcontractor is operating under a workers’ compensation act.” JM also argues that the policy provided coverage when it stated, “[w]e will pay promptly when due the benefits required of you by workers compensation law.”
[¶22.] Ultimately, however, we think the question before us has less to do
contractor‘s claim for immunity exists solely because of its ancillary liability to pay workers’ compensation benefits to injured subcontractors’ employees under
[¶23.] A private-sector employer is “deemed to have accepted” if it has secured its obligation to pay benefits by purchasing insurance, entering into a reciprocal or interinsurance contract, or complying with self-insurance rules. See
[¶24.] Thus, JM is incorrect when it argues that “worker‘s compensation coverage is irrelevant to whether worker‘s compensation is Ries‘s exclusive remedy and that JM is immune from this negligence lawsuit.” To avail itself of statutory immunity, JM must show that it has “accepted” the workers’ compensation statutes by securing benefits for the employees of its subcontractors. JM‘s insurance policy secures such coverage.
[¶25.] The language found in
benefits under
[¶26.] KERN, SALTER, and DEVANEY, Justices, concur.
[¶27.] JENSEN, Chief Justice, dissents.
JENSEN, Chief Justice (dissenting).
[¶28.] I agree with the majority opinion that “[t]o avail itself of statutory immunity, JM must show that it has ‘accepted’ the workers’ compensation statutes by securing benefits for the employees of its subcontractors.” However, I dissent from the opinion affirming summary judgment because JM failed to make the necessary showing that it is an “employer” entitled to immunity under the exclusive remedy provisions of the workers’ compensation statutes.
[¶29.] To prevail on its motion for summary judgment, JM had the burden to prove its affirmative defense that it was an employer entitled to claim the benefit of the exclusive remedy provision in
defense . . . [before] the burden then shifts to the plaintiff to establish the existence of material facts in avoidance of the [defense].’”) (citation omitted).
[¶30.] JM failed to present any facts in support of its statement of material facts showing that it paid Ries for any services he performed or that it is an employer entitled to claim immunity as provided in the exclusive remedy statute in
[¶31.] Ries‘s response to the motion for summary judgment included a policy declarations page showing that Pine Tree had workers’ compensation coverage in force for its employees at the time Ries was injured. JM did not dispute this fact, and its statement of material facts included a recitation that Ries made a workers’ compensation claim to Pine Tree and received benefits from Pine Tree‘s workers’ compensation carrier. Ries‘s submission also included the workers’ compensation policy for JM in effect at the time of the injury. The declarations page shows that the JM policy provided workers’ compensation coverage for seven of its employees. JM made no showing that Ries was one of those employees or that it had purchased workers’ compensation coverage for Ries under its policy.3
[¶32.]
workers’ compensation coverage for an employee under
[¶33.] If an employer secures the payment of compensation,
[¶34.] In addition to JM failing to meet its burden on summary judgment, a substantial question exists whether this Court should continue to rely on Metzger to support
statute in
The rights and remedies herein granted to an employee subject to this title, on account of personal injury or death by accident arising out of and in the course of employment, shall exclude all other rights and remedies of such employee, his personal representatives, dependents, or next of kin, on account of such injury or death.
Applying this language, Metzger tied the broad immunity provided in
[¶35.] The current language of
whether the person is using the services of another for pay.” JM does not meet either definition of an employer.
[¶36.] This Court has recognized that “proceedings under the Work[ers‘] Compensation Law . . . are purely statutory, and the rights of the parties and the manner of procedure under the law must be determined by its provisions.” Martin v. Am. Colloid Co., 2011 S.D. 57, ¶ 12, 804 N.W.2d 65, 68 (alteration in original) (citation omitted). When called upon to interpret workers’ compensation statutes we apply two rules of construction to determine the legislative intent:
The first rule is that the language expressed in the statute is the paramount consideration. The second rule is that if the words and phrases in the statute have plain meaning and effect, we should simply declare their meaning and not resort to statutory construction. When we must, however, resort to statutory construction, the intent of the legislature is derived from the plain, ordinary and popular meaning of statutory language.
Progressive Halcyon Ins. Co. v. Philippi, 2008 S.D. 69, ¶ 5, 754 N.W.2d 646, 649 (citation omitted). The language of
[¶37.] This reading of
statute] . . . .” because it did not qualify as an employer); see also Meiggs v. Associated Builders, Inc., 545 A.2d 631, 632 (D.C. 1988) (concluding that a general contractor was not an employer of a subcontractor‘s employee under the District of Columbia workers’ compensation statutes, and therefore, did not enjoy immunity under the exclusive remedy provision). In Munoz, the Supreme Court of Illinois recently applied the plain language of its workers’ compensation exclusive remedy statute to hold that “while the [workers’ compensation act] bars an employee from bringing a civil suit directly against his or her employer, it does not limit the employee‘s recovery from a third-party general contractor.” Id. at *7.
[¶38.] Metzger‘s analysis extending immunity to a general contractor is no longer sustainable in view of the plain language of
itself to the language used.” Martinmaas v. Engelmann, 2000 S.D. 85, 49, 612 N.W.2d 600, 611 (citations omitted).
[¶39.] Thompson is no more persuasive. The issue in Thompson was whether a subcontractor was entitled to immunity under the workers’ compensation statutes from an action by a general contractor‘s employee. 2005 S.D. 69, ¶ 16, 698 N.W.2d at 518. In concluding that the subcontractor could not claim the benefit of the exclusive remedy statute in
[¶40.] For these reasons, I would reverse the entry of summary judgment because Ries‘s complaint for negligence against JM is not prohibited by the exclusive remedy statute in