Chapa v. Koch Refining Co.

985 S.W.2d 158, 1998 WL 902265

• Court: Court of Appeals of Texas
• Decided: January 28, 1999
• Docket: 13-97-167-CV
• Status: Published

Opinions

OPINION

RODRIGUEZ, Justice.

Appellant, Juan Chapa, sustained an on-the-job injury while working on Koch Refining Company’s (“Koch”) premises. He and his wife, Adelina, sued appellees, Koch, H & S Constructors, Inc. (“H & S”), and Stafftek, Inc., for alleged negligence resulting in his injury. The trial court granted summary judgment for all appellees. By two points of error, the Chapas assert the trial court erred in granting summary judgment. We affirm in part and reverse and remand in part.

Koch retained H & S as an independent contractor to provide maintenance work at its plant site. H & S hired Chapa from an employee-leasing company, Stafftek. In December 1991, Chapa was injured on the plant site when he attempted to lift a heavy pipe. He filed a workers’ compensation claim and received medical and wage benefits pursuant to a workers’ compensation insurance policy issued to Stafftek. The Chapas then sued Stafftek, H & S, and Koch alleging their negligence was a proximate cause of Chapa’s injuries. Their allegations against H & S and Stafftek included the failure to: (1) establish procedures for the training of then-employees; (2) establish procedures for the supervision of their employees; (3) properly train Chapa and his fellow employees; (4) properly supervise Chapa and his fellow employees; and (5) provide a safe place to work. The Chapas allegations against Koch included the failure to: (1) establish proper safety procedures; (2) properly supervise its contractors; and (3) provide Chapa a safe place to work. The Chapas alleged appellees’ conduct proximately caused them past and future medical expenses, pain and suffering, mental anguish, impairment, disfigurement, lost wages, loss of household services, and loss of consortium.

The appellees filed separate summary judgment motions. Koch’s motion stated it owed no duty to Chapa because he was injured as a result of pipe-fitting operations he was performing on its premises as an employee of H & S, an independent contractor, and H & S controlled the details of the work he performed. H & S’s motion stated Chapa was its borrowed servant and a covered employee under the Workers’ Compensation Act,¹ that H & S was a subscriber under the Act, and that the Act barred his claim against it. Stafftek’s motion also stated it was entitled to immunity under the Texas Workers’ Compensation Act. In three separate orders the trial court granted summary judgment for the appellees. Appellants appeal all three summary judgments.

In point of error two, the Chapas assert the trial court erred in granting summary judgments for Stafftek and H & S.

Granting of a defendant’s motion for summary judgment is proper only when the evidence establishes there is no genuine issue of material fact concerning at least one essential element of a plaintiffs cause of action or conclusively establishes each element of an affirmative defense. Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979). When reviewing a summary judgment we take as true all evidence favorable to the nonmovant and indulge every reasonable inference in the non-movant’s favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 549 (Tex.1985).

Texas courts have long recognized the rule that a general employee of one employer may become the borrowed servant of another. Sparger v. Worley Hosp., Inc., 547 S.W.2d 582, 583 (Tex.1977); Lara v. Lile, 828 S.W.2d 536, 538 (Tex.App.—Corpus Christi 1992, writ denied). When one becomes a borrowed servant, the person who has the right of control to whom he is loaned is recognized as the employer. In that relationship, the employer is responsible for the employee’s torts under respondeat superior and, if a subscriber to workers’ compensation insurance, is exempt from other liability for the employee’s injuries under the Texas Worker’s Compensation Act. Acts 1917, 35th Leg., ch. 103, part I, §§ 3, 5, 1917 Tex. Gen Laws 269 (repealed 1993) (current version at TEX. LAB. CODE ANN. § 408.001 (Vernon 1996)); see Denison v. Haeber Roofing Co., 767 S.W.2d 862, 864-65 (Tex.App.—Corpus Christi 1989, no writ). The central inquiry is which employer had the right of control of the details and the manner of the employee’s work. The test is set forth in Producers Chem. Co. v. McKay, 366 S.W.2d 220 (Tex.1963) as follows:

If the general employees of one employer are placed under control of another employer in the manner of performing their services, they become his special or borrowed employees. If the employees remain under control of their general employers in the manner of performing their services, they remain employees of the general employer and he is liable for the consequences of their negligence.

Producers Chem. Co., 366 S.W.2d at 225. “Where both employers are operating under a contract expressly assigning the right to control, a court can dispose of the borrowed-servant issue without the necessity of considering the facts and circumstances of the project.” Bucyrus-Erie Co. v. Fogle Equip. Corp., 712 S.W.2d 202, 204 (Tex.App.—Houston [14th Dist.] 1986, writ ref'd n.r.e.) (citing Producers Chem. Co., 366 S.W.2d at 226).

In the instant case, H & S and Stafftek entered into a written employee-leasing agreement in which Stafftek would hire labor for work under H & S’s supervision. The agreement stated H & S “will be responsible for supervision and direction of employees.” Also, the agreement provided Stafftek would carry workers’ compensation insurance on the workers and would obtain an alternate employer endorsement for H & S’s benefit. Stafftek fulfilled both requirements.

James Fagan, Stafftek’s records’ custodian, testified in his deposition that leased employees were included in a workers’ compensation policy bought by Stafftek. H & S paid Stafftek the gross wages of all the employees leased to it, the workers’ compensation premiums which Stafftek paid to cover the leased employees under a workers’ compensation program, and an additional amount as a percentage of the gross payroll to cover the service fee.

Mike Scott, H & S’s vice-president, stated in his affidavit that when Chapa was injured he was on Stafftek’s payroll and was paid according to the time he worked for H & S. H & S was a subscriber under the Texas Workers’ Compensation Act when he was injured. H & S instructed him in the details of the work he was performing. It provided the equipment he used and gave him instructions about what to do on the job. Furthermore, H & S would select the people to be hired including Chapa. Stafftek offered no guidance to any of H & S’s workers and was not present on the job site when Chapa was injured. H & S was in control of Chapa’s performance of the task being conducted when he was injured. It controlled the hours he worked and when he could take lunch and breaks.

Based upon the contract and the circumstances surrounding Chapa’s employment, he was placed under H & S’s control in the manner of performing his services. Accordingly, he served as H & S’s borrowed servant. See Producers Chem. Co., 366 S.W.2d at 225. Therefore, H & S is exempt from common-law liability. See Denison, 767 S.W.2d at 864.

Further, under the version of the Texas Workers’ Compensation Act in place when Chapa was injured, an employer who provided compensation coverage for its employees was insulated from suits for damages for personal injuries.² The evidence showed H & S provided for Chapa’s workers’ compensation coverage.

Concerning Stafftek’s liability, Stafftek’s workers’ compensation carrier paid Chapa’s medical bills and weekly indemnity benefits. It is uncontroverted Stafftek had a workers’ compensation policy in effect when Chapa was injured, and he received benefits under the policy pursuant to the Act. Accordingly, the Act’s exclusive-remedy provision barred Chapa’s suit against Stafftek. We hold the trial court did not err by granting summary judgments favorable to H & S and Stafftek. Point of error two is overruled.

In them first point of error, the Chapas assert the trial court erred in granting summary judgment for Koch. The Chapas’ cause of action was based upon negligence, which consists of four elements: (1) a legal duty owed by one person to another; (2) a breach of this duty; (3) the breach was a proximate cause of injury; and (4) actual injury. Aim v. Aluminum Co. of Am., 717 S.W.2d 588, 595 (Tex.1986).³ As stated above, Koch’s summary judgment was predicated upon it not owing a legal duty to Chapa. The existence of a duty is a threshold question of law. Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex.1990). The nonexistence of a duty ends the inquiry into whether negligence liability may be imposed. Id.

Generally, an owner or occupier of land owes no duty to ensure an independent contractor “safely” performs its work. Hoechst-Celanese Corp. v. Mendez, 967 S.W.2d 354, 356 (Tex.1998) (per curiam). However, such a duty may arise if the employer retains “some control over the manner in which the independent contractor's work is performed.” Redinger v. Living, Inc., 689 S.W.2d 415, 418 (Tex.1985). In Redinger, the supreme court held that where an owner/occupier “retain[sj the power to direct the order in which the work [is] to be done and to forbid the work from being done in a dangerous manner,” it owes a duty to an independent contractor’s employee “to exercise [its] supervisory control in a reasonable manner.” Id.

Several courts of appeals, interpreting Redinger, have held that “an employer does not incur a duty of care by requiring its contractor to comply with the employer’s standard safety practices and applicable laws.” Mendez, 967 S.W.2d at 356-57 (citing Campbell v. Adventist Health Sys./Sunbelt, Inc., 946 S.W.2d 617, 623 (Tex.App.—Fort Worth 1997, no writ); Good v. Dow Chem. Co., 945 S.W.2d 877, 882 (Tex.App.—Houston [1st Dist.] 1997, no writ); Davis v. R. Sanders & Assocs. Custom Builders, Inc., 891 S.W.2d 779, 782 (Tex.App.—Texarkana 1995, no writ); Welch v. McDougal, 876 S.W.2d 218, 223 (Tex.App.—Amarillo 1994, writ denied)). However, in rejecting these courts of appeals’ interpretation of Redinger, the Mendez court held that “consistent with the Restatement and [its own] precedent, safety requirements give rise to a narrow duty of care” that is “commensurate with the control [the employer] retains over the contractor’s work”. Id. at 357. While on its face this rule appears to add nothing new to the rule enunciated in Redinger, the court adds that an employer would incur a duty when, for example: (1) it is aware that the independent contractor routinely violates safety guidelines but fails to take corrective measures, id. (citing Tovar v. Amarillo Oil Co., 692 S.W.2d 469, 470 (Tex.1985)), (2) it maintains control over the safety of the premises but not necessarily control over operations, id. (citing Exxon Corp. v. Tidwell, 867 S.W.2d 19, 23 (Tex.1993)), or (3) the general contractor provides on-site orders or instructions on the means and methods of job performance. Id. (citing Redinger, 689 S.W.2d at 418 and Enserch Corp. v. Parker, 794 S.W.2d 2, 6 (Tex.1990)). In other words, there must be a nexus between the control retained and the condition or activity that resulted in the injury. Id.; see also Clayton W. Williams, Jr., Inc. v. Olivo, 952 S.W.2d 523, 528 (Tex.1997) (holding that for general contractor to be liable for injuries of an independent contractor’s employee, it must have exercised supervisory control over the injury causing activity).

As noted above, a defendant’s summary judgment is only proper when it has negated at least one element of the plaintiffs cause of action or conclusively established an affirmative defense. Martinez, 941 S.W.2d at 911; City of Houston, 589 S.W.2d at 678. We take as true all evidence favorable to the nonmovant and resolve any inconsistencies in their favor. Nixon, 690 S.W.2d at 549. In the present case, Chapa testified by deposition that the Koch “safety man” was on the job site to “tell us if we were to do something wrong, not to do it like that—not to go about it that way, to go about it a different way.” Also, Chapa stated that, on the day he sustained his injuries, he asked his foreman whether it was safe to pick up the pipe with the intention that Koch’s on-site safety man tell him that it would be unsafe to perform the questioned activity. Additionally, Cha-pa’s co-worker, Les Fitch testified that a Koch safety man was on-site to intervene if and when an independent contractor’s employees were not doing their job right.

The above testimony raised a fact question as to whether Koch, through its on-site safety man, retained control over the safety requirements of its independent contractor. Additionally, it raised a fact question as to whether Koch’s apparent acquiescence to the independent contractor’s order to perform an unsafe operation was sufficient to compel Koch to take corrective action as required under Tovar.⁴ Accordingly, we hold the trial court erred in granting Koch’s motion for summary judgment and reverse and remand this case to the trial court for further proceedings consistent with this opinion. Point of error one is sustained.

The judgment of the trial court is AFFIRMED as to H & S and Stafftek and REVERSED and REMANDED as to Koch.

Dissenting Opinion by Justice J. BONNER DORSEY.

1 . Tex. Lab. Code Ann. § 407.001 et seq. (Vernon 1996 & Supp.1998).

2 . The Act of Dec. 13, 1989, 71st Leg., 2d C.S., ch. 1, § 4.01, 1989 Tex. Gen. Laws 32, repealed by Act of May 22, 1993, 73rd Leg., R.S. ch. 269, § 1, 1993 Tex. Gen. Laws 987, 1175 (current version at Tex. Lab. Code Ann. § 408.001 (Vernon 1996)) provided "[R]ecovery of workers’ compensation benefits under this Act is the exclusive remedy of an employee or legal beneficiary against the employer or an agent, servant, or employee of the employer for the death of or a work-related injury sustained by a covered employee.” Section 1.03(19) of the 1989 Act defined employer as "a person that makes a contract of hire, that employs one or more employees, and that has workers' compensation insurance coverage.”

3 . We note that some courts have combined elements three and four to create a three-step analysis. See Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex.1990) (stating the third element of negligence is “damages proximately resulting from the breach"). We think, however, that the better analysis is the four element approach.

4 . The supreme court held in Tovar that a general contractor owes a duty where it ignores safety violations of its independent contractor. Tovar, 692 S.W.2d at 470.