Crees v. Chiles

437 N.W.2d 249, 1988 WL 149836
CourtCourt of Appeals of Iowa
DecidedJanuary 4, 1989
Docket88-69
StatusPublished
Cited by6 cases

This text of 437 N.W.2d 249 (Crees v. Chiles) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crees v. Chiles, 437 N.W.2d 249, 1988 WL 149836 (iowactapp 1989).

Opinions

HAYDEN, Judge.

Plaintiffs appeal the ruling of the district court granting summary judgment for defendant Richard L. Heideman on the ground he was the alter ego of the corporation which employed plaintiff Barry A. Crees, and thus was immune from suit under Iowa Code section 85.20(2). Plaintiffs claim the trial court erred as a matter of law in finding Heideman was the alter ego of the corporate employer and therefore not subject to the court’s jurisdiction under section 85.20(2). We reverse and remand for trial.

Plaintiff Barry A. Crees was employed by Heideman Drywall, Inc. Defendant Richard L. Heideman and his wife were the sole stockholders and officers of the corporation. Defendant Heideman and Vern Chiles were also employees of the corporation.

In the course of his employment with Heideman Drywall, Inc. Barry Crees operated a flat bed truck and he stopped at a pay telephone to call the company’s office to get further instructions about the job he was on. While he was talking on the phone, the brakes or the clutch of the truck failed and, the truck rolled from where it was parked, struck him, and pinned him to [251]*251the phone booth and ground. He was severely injured.

. Both defendants were supervisory coem-ployees of Barry Crees and responsible for the truck. Both were previously warned and advised of the truck’s dangerous condition, and were aware of the brake and clutch deficiencies in the truck.

In their petition, plaintiffs alleged specific and individual acts of gross negligence against both defendants as coemployees.

Defendant Heideman filed a motion for summary judgment on the ground he was the alter ego of the corporation and so should be considered Crees’s employer. Iowa Code section 85.20(2) permits suits only against coemployees whose gross negligence amounts to a wanton disregard for the safety of another. The district court found Heideman ran the corporation as if he were the sole proprietor or sole manager. The court relied on the case of Pappas v. Hughes, 406 N.W.2d 459 (Iowa App.1987), for the proposition that an individual who is the sole shareholder of a corporation is in fact the alter ego of such a corporation and is protected as the “employer” under Iowa law by the exclusive remedy provision of Iowa Code section 85.20, even though the shareholder was also an employee of the corporation. The court granted the motion for summary judgment as to Heideman only.

Crees claims the trial court erred in considering Heideman to be the alter ego of Heideman Drywall, Inc. He states a corporation is treated as a separate entity from its shareholder, and a shareholder who created a corporate status would be to his disadvantage. Crees argues the Iowa workers’ compensation statutes do not allow the court to construe an employee shareholder to be the corporation’s alter ego, exempt from coemployee liability. He claims the court ignored the definition of “employer” and “employee” found in section 85.61, and the court improperly imposed an amendment to the statutory definitions.

This court in Pappas held that defendant Hughes, who was the sole shareholder, sole director, and sole officer of Mondo’s Restaurant, Inc., was the alter ego of that corporation. The fact he was also employed by the corporation does not change this conclusion. Pappas v. Hughes, 406 N.W.2d 459, 461 (Iowa App.1987).

The Pappas court relied upon the 1969 Arkansas case of Neal v. Oliver, 246 Ark. 377, 438 S.W.2d 313 (Ark.1969), for authority. In Neal the court held:

Under compensation coverage the employer gives up the defense of contributory negligence and the injured employee is relieved of the burden of proving negligence but he gives up the right to sue his employer in a court of law.
A president of a corporation or the owner of a business may or may not be an employee of the corporation, or in the business, for the purpose of determining liability for compensation benefits under the Workmen’s Compensation Law. That would depend on what he does. In the case at bar Mr. and Mrs. Oliver owned the corporate business and they, as well as the corporation, were the employers.

Neal v. Oliver, 246 Ark. 377, 438 S.W.2d at 318 (citations omitted).

The Pappas court also noted a comment from 2A Larson’s Workman’s Compensation Law, section 72.13 (1983), as follows:

If the defendant so dominates the corporation, perhaps as stockholder, president, and manager, that he can honestly be said to be the alter ego of the corporation, this in itself may suffice to bar any action against him.

The Pappas court did not look any further than Neal or that sole comment from Larson in arriving at its decision.

In the case before us, we first look at section 85.61 of the 1985 Iowa Code entitled “Definitions.” In this section the Iowa Legislature has defined employer, worker, or employee for the worker’s compensation chapter. We set out the relevant portions as follows:

85.61 Definitions.
In this and chapters 86 and 87, unless the context otherwise requires, the following definitions of terms shall prevail:
[252]*2521. “Employer” includes and applies to any person, firm, association, or corporation, state, county, municipal corporation, school corporation, area education agency, township as an employer of volunteer firemen only, benefited fire district and the legal representatives of a deceased employer.
2. “Worker” or “employee” means a person who has entered into the employment of, or works under contract of service, express or implied, or apprenticeship, for an employer, every executive officer elected or appointed and empowered under and in accordance with the charter and bylaws of a corporation, including a person holding an official position, or standing in a representative capacity of the employer, and including officials elected or appointed by the state, counties, school districts, area education agencies, municipal corporations, or cities under any form of government, and including members of the Iowa highway safety patrol and conservation officers, except as hereinafter specified.
* * * * * *
3. The following persons shall not be deemed “workers” or “employees:”
# * # * * *
c. Partners; directors of any corporation who are not at the same time employees of such corporation; or directors, trustees, officers or other managing officials of any nonprofit corporation or association who are not at the same time full-time employees of such nonprofit corporation or association. [Emphasis ours.]

It is clear to us the Iowa Legislature has, by definition, included corporations as employers.

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Bluebook (online)
437 N.W.2d 249, 1988 WL 149836, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crees-v-chiles-iowactapp-1989.