Bonebright v. City of Miller

2020 S.D. 16

• Court: South Dakota Supreme Court
• Decided: March 18, 2020
• Docket: 28994, 29001
• Status: Published

Opinion

#28994, #29001-a-MES 2020 S.D. 16

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA

**** STEPHANIE BONEBRIGHT, Claimant and Appellee,

v.

CITY OF MILLER and SDML WORKERS’ COMPENSATION FUND, Employer, Provider and Appellants.

****

APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA

THE HONORABLE PATRICIA J. DEVANEY Judge

LEE SCHOENBECK JOSEPH ERICKSON of Schoenbeck Law, P.C. Watertown, South Dakota Attorneys for claimant and appellee.

LAURA K. HENSLEY of Boyce Law Firm, LLP Sioux Falls, South Dakota Attorneys for employer, provider and appellants.

CONSIDERED ON BRIEFS FEBRUARY 12, 2020 OPINION FILED 03/18/20 #28994, #29001

SALTER, Justice

[¶1.] James Bonebright died from injuries he sustained in a work-related

accident while he was employed with the City of Miller. The City and the South

Dakota Municipal League Workers’ Compensation Fund denied workers’

compensation liability, claiming that Bonebright had engaged in willful misconduct.

The Department of Labor agreed, although it awarded benefits to Bonebright’s

widow after concluding his alleged willful misconduct was not a proximate cause of

his death. The circuit court affirmed the Department’s decision to award benefits,

but did so because it determined that Bonebright had not engaged in willful

misconduct. We affirm.

Background

[¶2.] James Bonebright began his employment with the City of Miller (the

City) in 1987, working for the water department. In 2003, he was promoted to

superintendent of the water department. His predecessor, Bill Lewellen, remained

with the City and became the superintendent of the electrical department.

Bonebright’s position description stated that he “[w]ork[ed] under the general

supervision of the city council utility committee and city council.” The

organizational structure for the City further indicated that Bonebright, as a

department head, reported to the council members, the council vice-president, the

council president, and the mayor.

[¶3.] Bonebright’s position description charged him with the responsibility

to “[o]versee[] the safety of assigned maintenance workers and equipment operators

by instructing individuals in proper safety procedures and monitoring work in

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progress.” As is relevant to this appeal, the City’s safety handbook specifically

addressed safety rules and procedures for working in an excavated trench and

required workers to “always ensure that the proper shoring system is in place

before anyone enters the excavation.” Although Bonebright previously

acknowledged the existence of the safety handbook, there was conflicting testimony

as to whether all employees and city council members were aware of the safety

handbook. 1

[¶4.] In any event, the City’s safety rules require its employees to secure a

trench deeper than 48 inches either by using the City’s trench box 2 or through a

process of sloping 3 the sides of the trench. The City purchased its trench box in the

late 1990s at Bonebright’s request after a previous trench collapse during which he

and another employee narrowly averted injury. However, several employees

testified that they used the trench box only once in the succeeding years. Instead,

their practice had been to slope the trenches or, sometimes, do nothing to secure the

trench. This practice—sloping or doing nothing—occurred during the tenures of

both Lewellen and Bonebright as water department superintendent. The City’s

mayor, Ron Blachford, and Tony Rangel, president of the city council and utilities

1. The City’s safety handbook was adopted in 1997.

2. A trench box is a device with steel sidewalls that can be expanded to the width of a trench and lowered into it to protect workers from cave-ins.

3. Sloping refers to excavating the sides of the trench out using some type of proportionate ratio relative to the depth of the trench. For instance, one of the City’s employees testified that the practice was to slope the trench out one and one-half feet for every foot of depth. The technique is also called benching, shoring, and feathering in the record.

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committee member, testified that they were aware of the practice. However, the

evidence before the Department established that the City never reprimanded its

employees for not following proper trench excavation safety procedures. 4

[¶5.] During the week of July 4-8, 2016, Bonebright was working with city

employees, including Terry Manning and Lewellen, to install a new underground

water main and tap. The project had been contemplated since the late 1990s, but it

became necessary in 2016 because the existing system did not allow the City to shut

water service off to a non-paying customer without affecting other customers. To

accomplish the work, the city employees were replacing sections of pipe that were

13 and 20 feet long in an excavated trench that was approximately seven feet deep.

[¶6.] On the fateful afternoon of July 8, 2016, Bonebright and his crew were

close to completing the project and needed to install one final section of pipe.

Bonebright had decided not to use either the trench box or sloping to shore the sides

of the trench. 5 Manning expressed concern about the safety of the trench, as did

Rangel, who was on hand at the project site. To avoid going into the unsecured

trench, Bonebright and Manning decided to use straps to lower the pipe into

position. Before they could rig the straps, however, some dirt fell on the pipe, and

Bonebright went into the trench to shovel the dirt away. The trench partially

4. The City’s employee manual provides that “employee misconduct . . . may result in . . . disciplinary action up to and including immediate discharge.”

5. Several witnesses testified that the trench box had rusted shut, and Bonebright was reluctant to slope the sides of the trench because of nearby underground electrical wires and damage to a wider area of the right of way, which also served as a road. The City’s expert later testified that sloping the trench, while more difficult, was still possible.

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collapsed, burying Bonebright’s legs and knocking him over. Manning jumped in to

assist, and the trench collapsed further on top of the two men. After rescue efforts

to recover the men from the trench, they were taken by ambulance to a local

hospital. Bonebright was then airlifted to a Sioux Falls hospital where he died from

his injuries on July 10, 2016.

[¶7.] Bonebright’s widow, Stephanie, requested workers’ compensation

benefits from the City and its workers’ compensation provider, the South Dakota

Municipal League Workers’ Compensation Fund (the Fund). In response, the City

employed Mike Willetts as its expert to investigate the trench collapse. Willetts

opined that the trench collapse could have been prevented if “proper excavation

guidelines” had been followed, “including but not limited to using protective

shoring, sloping or benching methods.” Willetts also thought the City’s trench box

could have been adapted to provide some protection to workers in the trench. Citing

Willetts’ findings, the City and the Fund denied workers’ compensation benefits to

Stephanie, asserting that Bonebright had engaged in willful misconduct. See SDCL

62-4-37 (providing that “[n]o compensation may be allowed for any injury or death

due to the employee’s willful misconduct . . .”).

[¶8.] Acting individually and as the personal representative of her

husband’s estate, Stephanie petitioned the Department of Labor (the Department),

for medical and funeral expenses along with indemnity benefits as a surviving

spouse. After conducting a hearing, the Department denied the City’s willful

misconduct defense and awarded Stephanie benefits. Although it concluded that

Bonebright had engaged in willful misconduct, the Department determined that the

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City had not established that Bonebright’s failure to follow safety precautions was a

proximate cause of his injury and death.

[¶9.] As it related to the willful misconduct determination, the Department

found that “Bonebright’s behavior on the day of the trench collapse indicates he

understood the potential danger of the unsloped trench.” The Department

acknowledged evidence that the City had not enforced its safety rule for securing

trenches, but it concluded that Bonebright was responsible for enforcing the safety

rules. Because Bonebright had decided to leave the trench unsecured in violation of

the City’s safety rules, the Department reasoned that his later decision to get into

the trench constituted willful misconduct.

[¶10.] Despite believing the Department had correctly decided the willful

misconduct issue, the City and the Fund appealed to the circuit court, challenging

the Department’s additional determination that Bonebright’s willful misconduct

was not a proximate cause of his death. By notice of review, Stephanie contended

that the Department erred when it determined that Bonebright had engaged in

willful misconduct. The circuit court affirmed the Department’s determination that

Stephanie was not barred from recovering workers’ compensation benefits, but it

held that the Department clearly erred when it found that Bonebright engaged in

willful misconduct because the City had “habitually disregard[ed] violations of the

safety rule.” Anticipating the possibility of further review, the court also considered

the proximate cause issue and concluded that the City and the Fund had satisfied

their burden to prove causation in the event we reversed the determination that

Bonebright did not engage in willful misconduct.

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[¶11.] The City and the Fund have appealed the circuit court’s decision

regarding willful misconduct, and Stephanie has, by notice of review, challenged the

court’s alternative determination of causation. We restate the issues as follows:

1. Whether the circuit court erred when it determined the Department committed clear error by deciding that Bonebright had engaged in willful misconduct.

2. Whether the circuit court erred when it determined the Department committed clear error by deciding that the City had failed to establish that the safety violations were the proximate cause of Bonebright’s injury and death.

Analysis

[¶12.] Our review of administrative agency decisions “is well settled and

governed by SDCL 1-26-37, which provides in relevant part that on review we ‘shall

give the same deference to the findings of fact, conclusions of law, and final

judgment of the circuit court as given to other appeals from the circuit court.’”

Holscher v. Valley Queen Cheese Factory, 2006 S.D. 35, ¶ 28, 713 N.W.2d 555, 564

(quoting SDCL 1-26-37). “However, if the issue is a question of law, the

Department’s actions are fully reviewable by this Court under the de novo

standard.” Id.

[¶13.] “When reviewing findings of fact we apply the clearly erroneous

standard of review, giving great weight to the agency’s findings and inferences

drawn on questions of fact.” Id. ¶ 29. “However, . . . findings based on deposition

testimony and documentary evidence” are reviewed de novo. Id. (quoting Mudlin v.

Hills Materials Co., 2005 S.D. 64, ¶ 5, 698 N.W.2d 67, 71).

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Willful Misconduct

[¶14.] We begin our discussion with the settled principle that South Dakota’s

statutory workers’ compensation system reflects a conscious legislative policy

decision to displace traditional negligence concepts for work-related injuries,

whether offered as theories of recovery or as defenses. We explained the general

rule and its justification over forty years ago:

Work[ers’] compensation legislation is based upon the idea that the common law rule of liability for personal injuries incident to the operation of industrial enterprises, based as it is upon the negligence of the employer, with its defenses of contributory negligence, fellow servants’ negligence, and assumption of risk, is inapplicable to modern conditions of employment . . . .

The general purposes of work[ers’] compensation legislation, therefore, is the substitution in place of the doubtful contest for a recovery based on proof of the employer’s negligence and the absence of the common law defenses of a right for the employees to relief based on the fact of employment, practically automatic and certain, expeditious and independent of proof of fault and for the employers a liability which is limited and determinate.

Scissons v. City of Rapid City, 251 N.W.2d 681, 686 (S.D. 1977).

[¶15.] Consequently, employees may recover statutory benefits for work-

related injuries except in limited instances where intentional conduct by an

employer or an employee removes the case from the realm of workers’

compensation. For instance, in exceptional cases where an employee is injured by

an employer’s intentional conduct, the employee is not obligated to accept the

exclusive remedy of workers’ compensation benefits and may instead pursue a tort

claim against the employer. See Fryer v. Kranz, 2000 S.D. 125, ¶ 11, 616 N.W.2d

102, 105-06 (citation omitted) (“Only injuries ‘intentionally inflicted by the

employer’ take the matter outside the exclusivity of workers’ compensation

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coverage.”). More relevant to this case is the somewhat symmetrical idea that

intentional misconduct by an employee can preclude the employee’s right to recover

workers’ compensation benefits. See Holscher, 2006 S.D. 35, ¶ 44 n.2, 713 N.W.2d

at 567-68 n.2 (quoting Phillips v. John Morrell & Co., 484 N.W.2d 527, 532 (S.D.

1992) (Explaining that an employee is barred from recovering workers’

compensation benefits when his actions “constitute serious, deliberate, and

intentional misconduct.”)).

[¶16.] Aptly designated as the willful misconduct defense, this latter rule

allows an employer to avoid workers’ compensation liability for an otherwise

compensable work-related injury if it can establish the injury was caused by the

employee’s willful misconduct. See VanSteenwyk v. Baumgartner Trees &

Landscaping, 2007 S.D. 36, ¶ 12, 731 N.W.2d 214, 219. The statutory basis for the

willful misconduct defense is found in SDCL 62-4-37, which provides in relevant

part that “[n]o compensation may be allowed for any injury or death due to the

employee’s willful misconduct, including . . . willful failure or refusal to use a safety

appliance furnished by the employer, or to perform a duty required by statute.” The

text of SDCL 62-4-37 places “[t]he burden of proof under this section . . . on the

defendant employer,” and we have previously interpreted this provision to mean

that the employer must establish both an employee’s willful misconduct and “that

the injury was incurred ‘due to’ the employee’s willful misconduct.” Holscher, 2006

S.D. 35, ¶¶ 32, 48, 713 N.W.2d at 565, 567 (quoting Wells v. Howe Heating &

Plumbing, Inc., 2004 S.D. 37, ¶ 10, 677 N.W.2d 586, 590).

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[¶17.] “Willful misconduct under the workers’ compensation statutory scheme

‘contemplates the intentional doing of something with the knowledge that it is likely

to result in serious injuries, or with reckless disregard of its probable

consequences.’” Id. ¶ 48, 713 N.W.2d at 567 (quoting Fenner v. Trimac Transp.,

Inc., 1996 S.D. 121, ¶ 9, 554 N.W.2d 485, 487-88). We have applied a four-part test

to determine whether the employee’s violation of safety rules constituted willful

misconduct. Id. ¶ 49, 713 N.W.2d at 568-69 (citing 2 Larson’s Workers’

Compensation Law § 35.01). To prevail, an employer must show that:

(1) the employee [had] actual knowledge of the rule or appliance, and its purpose;

(2) the employee [had] an actual understanding of the danger involved in the violation of the rule or failure to use the appliance;

(3) the rule or use of the appliance must be kept alive by bona fide enforcement by the employer; and

(4) the employee had no valid excuse for violating the rule or failing to use the appliance.

Id. (citing 2 Larson’s Workers’ Compensation Law §§ 35.01-.04). 6

6. The third edition of Larson’s Workers’ Compensation applies a similar three- part test, but the parties have not directly asked us to adopt it in this case. See 3 Larson’s Workers’ Compensation Law §§ 35.02-.04. Stephanie has asked that we clarify the fourth part of the Holscher test to reflect what she believes to be a more accurate application of Professor Larson’s exposition of the employer’s willful misconduct defense. In her view, the requirement for an employer to show the employee had no valid excuse for violating a safety rule or failing to use a safety appliance could incorrectly allow the willful misconduct defense in instances where an employee has a plausible, but faulty, reason to explain the violation. However, given our analysis under Holscher’s third element, it is unnecessary to consider this argument further.

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[¶18.] We applied this test in Holscher where we held that the claimant had

engaged in willful misconduct by violating a safety rule that prohibited propping

open a valve used to dispense acid for cleaning. Id. ¶ 54, 713 N.W.2d at 569. The

claimant could not, therefore, recover benefits for injuries caused by a resulting acid

spill. Central to our determination was the fact that the claimant’s employer had

actively enforced the safety rule by reprimanding the claimant for an earlier

violation and by terminating another employee for violating the rule. Id. ¶¶ 10-15,

713 N.W.2d at 560-61. The employer had also emphasized the importance of the

rule by hanging signs and restricting access to the room where the acid was stored.

Id. ¶ 52, 713 N.W.2d at 569.

[¶19.] Here, the Department utilized the four-part test from Holscher to

determine that Bonebright had engaged in willful misconduct. Through her notice

of review to the circuit court, Stephanie argued the Department clearly erred when

it determined that the third and fourth parts of the test were met. 7 The circuit

court accepted the argument in part and determined that Bonebright had not

engaged in willful misconduct because the City had failed to meet the third part of

the Holscher test by demonstrating that it kept the safety rule alive through bona

fide enforcement.

[¶20.] We conclude that the circuit court correctly reversed the Department’s

willful misconduct finding. The undisputed facts contained in the record

demonstrate that the City did not enforce its safety rules for securing trenches,

7. The first and second parts of the test are, for the most part, not disputed by the parties. Bonebright’s actions demonstrated that he had knowledge of the safety rules and understood the danger posed by an unsecured trench.

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either historically or at the time of Bonebright’s death. Even though several city

council members, the mayor, and the electrical department superintendent,

Lewellen, were present at the job site at various times on July 8, no one ordered the

project stopped or reprimanded Bonebright for his failure to follow trench

excavation safety rules. This, despite the provisions of the City’s safety handbook

and well-founded concerns regarding the risk posed by the trench.

[¶21.] More illuminating, and in stark contrast to the facts in Holscher, is the

fact that the City never reprimanded its employees for not using the trench box or

sloping the sides of a trench. Testimony contained in the record suggests that the

city officials may have been unaware of the safety handbook’s existence and did not

believe they had the authority to reprimand Bonebright. However, even if this

testimony were credited, it does not change or excuse the inarguable fact that the

City did not undertake a bona fide effort to enforce the safety rule for securing

trenches over 48 inches deep.

[¶22.] The circuit court’s decision further rejected the Department’s

determination that the City could demonstrate bona fide enforcement by delegating

enforcement to Bonebright and finding fault with his lack of compliance:

[T]he Department’s decision appears to recognize that the City clearly had not been enforcing the policies in the [s]afety [h]andbook[] given the City official’s knowledge of instances where neither a trench box nor sloping were being utilized in excavations. But rather than finding that the City did not keep the safety rule or use of the safety device alive by bona fide enforcement, the Department instead shifted the focus toward Bonebright’s responsibility to ensure the projects were safe.

[¶23.] We share the circuit court’s concern with the Department’s reasoning,

which we view as coming perilously close to the prohibited concept of contributory

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negligence or fault. Determining whether an employee can be charged with willful

misconduct and consequently denied statutory workers’ compensation benefits

involves a different and more comprehensive inquiry under our Holscher analysis,

which includes scrutinizing the enforcement of established safety rules. This

examination, as our decision here illustrates, is fixed firmly upon the efforts of the

employer, not the employee. See Holscher, 2006 S.D. 35, ¶¶ 50-52, 713 N.W.2d at

569 (detailing employers’ efforts to enforce its safety rules). A different view could

introduce a comparative fault element into workers’ compensation disputes and

effectively allow employers to disclaim liability based solely on the existence of

safety rules without regard to their efforts to enforce them.

Conclusion

[¶24.] The circuit court did not err when it reversed the Department’s

determination on bona fide enforcement and proximate cause. Stephanie’s workers’

compensation claim is not precluded by willful misconduct because the City did not

demonstrate bona fide enforcement of its safety rules. Given this disposition, it is

unnecessary to address the question of proximate cause. We affirm.

[¶25.] GILBERTSON, Chief Justice, and KERN and JENSEN, Justices, and

KONENKAMP, Retired Justice, concur.

[¶26.] KONENKAMP, Retired Justice, sitting for DEVANEY, Justice,

disqualified.

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