Donald B. Mullins and Blue Sky Right of Way, L.L.C. v. Martinez R.O.W., LLC F/K/A Martinez Investments

Opinion

ACCEPTED 01-15-00152-cv FIRST COURT OF APPEALS HOUSTON, TEXAS 8/26/2015 2:56:24 PM CHRISTOPHER PRINE CLERK

NO. 01-15-00152-CV FILED IN 1st COURT OF APPEALS In the Court of Appeals HOUSTON, TEXAS For the First Judicial District of Texas 8/26/2015 2:56:24 PM at Houston CHRISTOPHER A. PRINE Clerk

DONALD B. MULLINS and BLUE SKY RIGHT OF WAY, LLC Cross-Plaintiff(s) — Appellants

VS.

MARTINEZ R.O.W., L.L.C. f/k/a MARTINEZ INVESTMENTS, L.L.C. Cross—Defendant — Appellee

On Appeal from the 149"‘ District Court of Brazoria County, Texas; Trial Court Cause No. 79750—CV

BRIEF OF APPELLEE MARTINEZ R.O.W., LLC F/K/A MARTINEZ INVESTMENTS, L.L.C.

WRIGHT & GREENHILL, P.C. David P. Boyce State Bar No. 02759770 dboyce@w—g.com 221 W. 6"‘ Street, Suite 1800 Austin, Texas 78701 512-476-4600 512-476-5382 (Fax)

ATTORNEYS FOR APPELLEE IDENTITY OF PARTIES AND COUNSEL

Cross- Donald B. Mullins and Blue Sky Right of Way, L.L.C.‘ Plaintiffs and Appellants Counsel for Patrick F. Timmons Cross- Timmons Law Firm Plaintiffs 8556 Katy Freeway, Suite 120 and Houston, Texas 77024-1806 Appellant 713/465-7638 — Telephone 713/465-9527 - Facsimile

Cross- Martinez R.O.W., L.L.C. f/k/a Martinez Investments, L.L.C. Defendant and Appellee Counsel for David P. Boyce Cross- Wright & Greenhill, P.C. Defendant 221 West 6"‘ Street, Suite 1800 and Austin, Texas 78701 Appellee 512/476-4600 — Telephone 512/476-5382 - Facsimile

'

Blue Sky Right of Way, L.L.C. (“Blue Sky”) is listed as Appellant on Appellant’s Briefbut was not a party before the trial court and was not granted leave to appear as a cross-plaintiff in the Court below.

ii TABLE OF CONTENTS

Identity of Parties and Counsel ................................................................................ ..

Table of Contents .............................................................................. .. iii

Index of Authorities ................................................................................................. ..

Statement of the Case ............................................................................................... ..

Issues Presented for Review .................................................................................... ..

Statement Regarding Oral Argument ....................................................................... ..

Citations to the Record ............................................................................................. ..

Statement of Facts .................................................................................................... ..

Scope and Standard of Review ................................................................................ ..

Summary of Argument ............................................................................................ ..

Argument ................................................................................................................. .. ll

I. The Court was correct in granting Appellee’s Motion for Summary Judgment under Tex. Labor Code § 417.004 because itnegated the statutory exception and Appellant failed to produce any evidence to satisfy the exception .................................... .. 11

II. The trial court correctly denied Appellant’s Motion to Vacate Judgment and for New Trial and for Leave to File Amended Pleading and Supplemental Material in Response to Cross-Defendant Martinez R.O.W., L.L.C.’s Motion for Summary Judgment ......................................................................... .. 21

Conclusion and Prayer ............................................................................................. .. 30

Certificate of Compliance ........................................................................................ .. 32

Certificate of Service ............................................................................................... .. 32

iii

Tab 1 —— Tex. Civ. Stat. Ann., Art. 8306 § 3

Tab 2 — Tex. Civ. Stat. Ann., Art. 8306 § 3(d)

Tab 3 — Tex. Labor Code § 401.011

Tab 4 — Tex. Labor Code § 408.001

Tab 5 — Tex. Labor Code § 417.004

iv INDEX OF AUTHORITIES

Cases

Automaker, Inc. v. CCRT Company, Ltd., 976 S.W.2d 744, 746 (Tex. App. — Houston [1" Dist] 1998, no pet.) ....................................................... .. 22

Boarder to Boarder Trucking C0,, Inc. v. Mondi, Inc., 831 S.W.2d 495, 498-99 (Tex. App. — Corpus Christi 1992, no writ) ......................................... .. 22

City ofBeaumont v. Graham, 441 S.W.2d 829 (Tex. 1969) .................................... .. 12

City 0fEl Paso v. Collins, 440 S.W.3d 879 (Tex. App. — E1Paso 2013, no pet.) 29

Ensearch Corp. v. Parker, 794 S.W.2d 2 (Tex. 1990) ............................................ .. 13

Fairfield Insurance Company v. Stephens Martin Paving, LL. ., C 246 S.W.3d 653 (Tex. 2008) .................................................................................... .. 24

Gilbane Building Co. v. Keystone Structural Concrete, 263 S.W.3d 291 (Tex. App. — Houston [151 Dist.]2007, no pet.) ....................................................... .. 14

Granite Construction Co. v. Bituminous Insurance Cos., 832 S.W.2d 427, 430 (Tex. App. — Amarillo 1992, no writ) Argument ..................................................... .. 16

Henkel v. Norman, 441 S.W.2d 925, 927 (Tex. 1996) ............................................ .. 8

Hill Milani, 678 S.W.2d 203, 205 (Tex. App. — Austin 1984) v.

affd 686 S.W.2d 610 (Tex. 1985) ........................................................................... .. 22

Houston Lighting & Power Co. v. Eller Outdoor Advertising Company, 635 S.W.2d 133 (Tex. App. ~— Houston [1S' Dist.] 1982, writ ref’d n.r.e.) ............... .. 19

Johnson & Johnson Med, Inc. v. Sanchez, 924 S.W.2d 925, 927 (Tex. 1996) ....... .. 8

Koninklyke Nederlandsche Stoomboot Maalschappy, N. V v. Royal Netherlands Steamship Company, 301 F.2d 741 (5‘“ Cir. 1962) .................................................. .. 26

Leinen Buflington 's Bayou City Service Co., 824 S.W.2d 682, 685 v.

(Tex. App. ~ Houston [14"' Dist] 1992, no writ) Argument ................................... .. 22

Monsanto Co. v. Owens-Corning Fiberglas Corp., 764 S.W.2d 293, 294 (Tex. App. ~ Houston [1s' Dist.] 1988) Argument ................................................... .. 18, 19 Nall v. Plunkett, 404 S.W.3d 552, 555 (Tex. 2013) ................................................. .. 8

Port Royal Development Corp. v. Braselton Construction Co., 716 S.W.2d 630 (Tex. App. — Colpus Christi 1986, writ refused n.r.e.) ................. .. 13

Randall ’s Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995) ........ .. 8

Scottsdale Insurance Co. v. Shahinpour, 2006 WL 870642 (S.W.2d Tex) ............. .. 16

Texas General Indem. Co. v. Ellis, 888 S.W.2d 830, 831-32 (Tex. App. — Tyler 1994, no writ) ............................................................................ .. 22

Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005) .................... .. 8

Varela v. American Petrofina Co. o_/‘Texas, Inc., 658 S.W.2d 561 (Tex. 1983) ..... .. 28

West Texas Renner, 32 S.W.2d 264 (Tex. Civ. App. — Eastland Utilities Co. v.

1930, affd, 53 S.W.2d 451 (Tex. Comm’n App. 1932) .......................................... .. 25, 26

Westfall v. Lorenzo Gin Company, 287 S.W.2d 551 (Tex. Civ. App. ~ Eastland 1956, no writ) ........................................................................................................... .. 25, 26

Statutes and Rules

Tex. Labor Code

§401.011(18) ............................................................................................... .. 14 §408.001 ...................................................................................................... .. 14,30 §408.001(a), (b) .......................................................................................... .. 30 §408.001(b), (c) ~ 30 §4l7.004 ...................................................................................................... .. 33,37

Tex. Civ. Stat. Ann.

Art. 8306 § 3 ................................................................................................ ..I7, 18, 19 Art. 8306 § 3(d) ....... .. 17, 33 Art. 2212(a) (repealed) ................................................................................. 34 ~ ..

vi Tex. Civ. Prac. & Rem. Code

§ 33.oo4(;)(1)(2) .. 35 § 33.oo4(1)(1). 35 §33.o11(3).... 16 § 33.011(6). 34 § 33.015 ........................................................................................................ .. 34

vii STATEMENT OF THE CASE An entity owned or controlled by Appellant Donald Mullins (“Mullins”), Blue

Sky Right of Way, L.L.C. (“Blue Sky”) entered into a contract with Southern Brush

S.W., Inc. to perform certain clearing of land and trimming of trees along a right of way.

(lCR:l92—195). Blue Sky in turn subcontracted a portion of the work to Martinez Right

of Way, L.L.C. f/k/a Martinez Investments, L.L.C. (“Martinez”). (lCR:25). In the

course of performing that work, one of Martinez’s employees, Bonifacio Gomez, suffered

an injury in the course and scope of his employment and he later initiated an action for

damages against Mullins, among others. (lCR:5—12). Mullins asserted defenses to Mr.

Gomez’s allegations and filed a cross-claimz against Martinez, arguing that Martinez had

agreed to indemnify and hold harmless Blue Sky, as well as Mullins individually, for any

liability arising from Martinez’s work pursuant to its agreement with Blue Sky, including

supervision of its own employees at the job site. (lCR:5—12). Mullins sought indemnity

based on that alleged agreement, as well as contribution under Chapter 33 of the Tex.

Civ. Prac. & Rem. Code. (lCR:5—12).

Martinez’s answer included a general denial, as well as the affirmative defense

that it was afforded protection under the Texas Workers’ Compensation Act because it

was covered for workers’ compensation insurance at the time of the on the job injury

suffered by its employee, Bonifacio Gomez. (2CR:7—9).

Martinez then moved for a no evidence and traditional summary judgment with

respect to Mullins’ claims for indemnity and contribution, under § 417.004 of the Tex.

Labor Code. That provision insulates an employer protected by workers’ compensation

from any claim for reimbursement asserted by a third party in an action for damages

2 While incorrectly styled as a cross—claim, Mullins was actually asserting a third party action.

1 brought by the injured employee against that third party, unless the employer executed,

prior to the time of the on the job injury, a written agreement to assume the third party’s

liability. (lCR:l4-20).

Martinez presented summary judgment evidence that it was covered by a policy

of workers’ compensation at the time of Mr. Gomez’s accident and that there was no

written agreement under which Martinez assumed Mullins’ liability. (lCR:41-95).

Mullins filed a motion to continue the summary judgment hearing (lCR:98-101)

and a response in which he asserted that a certificate of insurance “authorized” by

Martinez and the existence of a liability policy covering Martinez demonstrated an intent

to indemnify Mullins and thus satisfied the statutory exception under Tex. Labor Code §

417.004. (lCR:l08-176).

The trial court denied Mullins’ motion for continuance (lCR:330) and granted the

Motion for Summary Judgment (2CR:24) and Martinez’s motion to sever the claims

Mullins had asserted against it from the main action (lCR:328—329). Mullins filed a

motion to vacate the judgment and for new trial, for leave to file an amended pleading,

and for leave to file supplemental materials in response to Martinez’s Motion for

Summary Judgment (2CR:366-372), relief that was overruled by operation of law on

February 9, 215 as to the Motion to Vacate and for New Trial, and denied by the Court on

February 10, 2015 (2CR:420) at the same time the Court sustained Appellee’s objections

to Mullins’ affidavit. This appeal followed. ISSUE PRESENTED FOR REVIEW Mullins presented no summary judgment evidence of any written agreement

executed by Martinez prior to Bonifacio Gornez’s on the job injury of June 7, 2010,

arguing instead that a certificate of insurance and the existence of a liability policy

covering Martinez sufficed to satisfy the statutory exception.

Did the district court properly grunt Martinez ’s Motion for Summary Judgment

under Tex. Labor Code § 417.004 absent evidence that any pre-accident written

agreement had been executed by Martinez under which it assumed Mullins’

liability? STATEMENT REGARDING ORAL ARGUMENT Oral argument should not be necessary. The statute in this case is unambiguous,

the limited and well defined exception is inapplicable here and the two additional

exceptions advanced by Appellant have no basis in law.

CITATIONS TO THE RECORD “CR” refers to the two volume C1erk’s Record, with volume number listed before

“CR,” followed by a colon and then page number. STATEMENT OF FACTS The facts material to Martinez’s Motion for Summary Judgment are not disputed.

Appellant unsuccessfully attempted to supplement the summary judgment record with

deposition excerpts from Mr. Gomez and his own conclusory statements regarding

alleged gross negligence on the part of Martinez. The Court disallowed Mullins’ motion

for leave to supplement the summary judgment record. In any event, testimony allegedly

indicating gross negligence on the part of Martinez is irrelevant to the issue before the

Court.

Appellant Mullins owns Blue Sky Right of Way, L.L.C. (“Blue Sky”), whose

business includes the clearing of land, tree trimming and related work (1CR:1 16). Blue

Sky contracted with Southern Brush S.W., Inc. to perform certain clearance and tree

trimming work along a right—of—way (lCR:l92—195) and in turn entered into an

agreement with Martinez to provide labor at a location in Brazoria County, Texas.

(1CR:1 16). Bonifacio Gomez was an employee of Martinez, an employer covered by

workers’ compensation insurance. (lCR:4l—92; lCR:l09). Mr. Gomez was injured at

the job site while working for Martinez and performing the work Martinez had agreed to

undertake for Blue Sky. (1CR:116).

There was no written agreement between Martinez and Blue Sky or Mullins

pertaining to Martinez’s work on the “Southern Brush” job site in Brazoria County,

something Mullins acknowledged under oath in his deposition that was taken on June 5,

2013, well before Martinez’s entiy into the lawsuit. (lCR:94). It appears that either prior

to or contemporaneous with Martinez’s commencement of the work Mullins received a

certificate of insurance dated June 7, 2010, that shows as the insured Martinez Investments, L.L.C., and identifies three separate policies of insurance issued by three

insurers for comprehensive general liability, automobile liability and workers’

compensation, respectively. The certificate identifies as “certificate holder” Blue Sky

Right of Way, L.L.C. It nowhere indicates that Blue Sky or Mullins would be shown as

an additional insured under any of the three policies. (lCR:l20).

Mullins contends that Martinez agreed to assume Blue Sky’s or his liability for

injuries to Martinez’s employees on the job, and to provide insurance for Blue Sky, but

there is no written proof to support either assertion. Martinez was protected by an

insurance policy issued by the Travelers’ Indemnity Company of Connecticut that

contained commercial general liability coverage, a (possibly incomplete) copy of which

was attached to Mullins’ summary judgment response, but the policy nowhere mentions

Blue Sky or Mullins, nor is there any evidence that it provided additional insurance

coverage for either at the time of the accident.

Mr. Gomez initiated a personal injury action against Mullins and others, in

response to which Mullins asserted certain affirmative defenses (lCR:5—l3). On March

27, 2014, Mullins included with his second amended answer what he titled as a “cross-

clairn,” although it initiated actions against persons and entities who were not prior

parties to the case (Martinez and Hallmark Specialty Insurance Company), and should

have been identified as an original third party action. (lCR:5—l3).

As to Martinez, Mullins sought contractual indemnity as well as contribution

pursuant to Chapter 33 of the Tex. Civ. Prac. & Rem. Code, noting he joined in a motion

to designate Martinez as a responsible third party. Martinez filed its original answer on May 15, 2014, asserting a general denial and

as an affinnative defense, the protections afforded to it under the Texas Workers’

Compensation Act, in View of its position as a covered employer, as those terms are

defined in the Act. (2CR:7~9).

On October 17, 2014, Martinez filed its no evidence and traditional motion for

partial summary judgment.3 As a basis for its motion, Martinez relied on Tex. Labor

Code § 417.004, insulating a covered employer under the Act from a reimbursement

claim by a third party who is potentially liable to an injured employee, unless the

employer executed before the on the job injury a written agreement with that third party

to assume its liability. (1CR:l4—20).

Mullins filed a motion to continue the summary judgment hearing (lCR:98-101)

and a response to Martinez’s summary judgment motion (lCR:l08-176), with exhibits.

The trial court denied Mullins’ motion for continuance and granted Martinez’s summary

judgment motion (2CR:24) and its Motion for Severance (1CR:328—329). Thereafter,

Mullins filed a motion to vacate the judgment and for new trial, and for leave to file an

amended pleading and to supplement the summary judgment evidence. (2CR:366-372).

That motion was overruled by operation of law on February 9, 2015 and denied by the

Court on February 10, 2015, which further sustained Martinez’s objections to Mullins’

supplemental affidavit. (2CR:420). This appeal followed.

3 The motions were designated as “partial" because Mullins had cross-claims pending against Hallmark and, of course, Plaintiff Bonifacio Gomez had asserted causes of action against a number of parties, including Mullins and Southern Brush, S.W., Inc. SCOPE AND STANDARD OF REVIEW This Court’s review of the district court’s Order granting Martinez’s no evidence

and traditional motion for summary judgment is de novo. Valence Operating Co. v.

Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A defendant may move for summary

judgment on an affirmative defense that has been pled or raised in the motion itself.

Randall’s Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995). When it

does so, it must prove each element of its defense as a matter of law. Johnson & Johnson Med, Inc. v. Sanchez, 924 S.W.2d 925, 927 (Tex. 1996). A defendant may move for

summary judgment by disproving as a matter of law an essential element of the plaintiff’ s

cause of action. Henkel v. Norman, 441 S.W.3d 249, 251 (Tex. 2014); Nall v. Plunkett,

404 S.W.3d 552, 555 (Tex. 2013).

SUMMARY OF THE ARGUMENT This case is controlled by statute, specifically § 417.004 of the Tex. Labor Code,

which effectively insulates a covered employer4 from an action seeking contribution and

indemnity brought by parties who have been sued by the subscribing employer’s

employee for injuries in the course and scope of employment. The exclusive remedy

provision of the Workers’ Compensation Act, Tex. Labor Code § 408.001, protects the

covered employer from a common law cause of action asserted by an employee or the

legal beneficiaries of an employee injured or killed in the course and scope of

employment, with the sole exception a suit for exemplary damages brought by the spouse

4 The Act defines “Employer” as “a person who makes a contract of hire, employs one or more employees, and has workers‘ compensation coverage.” Tex. Labor Code § 401.011(18). By definition, an employer carries workers’ compensation coverage. or heirs of the body of the deceased employee for intentional or grossly negligent conduct

on the part of the employer.

Tex. Labor Code § 417.004 protects the employer from having to reimburse a

third party that is sued by the employee or his beneficiaries for damages, barring the

liable third party’s claims for contribution and indemnity unless the employer has

executed, before the on the job injury or death, a written agreement with the third party to

assume its liability.

Mullins’ “cross—claim” against Martinez was clearly an attempt by a third party

sued by the covered employee, Bonifacio Gomez, to obtain reimbursement from

Martinez in the form of contractual indemnity, or contribution under Chapter 33 of the

Tex. Civ. Prac & Rem Code. Martinez promptly asserted the protections of the Texas Workers’ Compensation

Act in its initial pleading. Its summary judgment motion established its status as an

employer covered by a policy of workers’ compensation issued by Texas Mutual

Insurance Company. It further established the lack of any pre—injury written agreement

executed by Martinez to assume Mullins’ potential liability to Mar’tinez’s employees

injured on the job. Martinez negated as a matter of law the one exception to the statutory

protection afforded it against third party claims for contribution or indemnity, and indeed,

produced sworn testimony from Mullins acknowledging the absence of any written

agreement between Mullins (or Blue Sky) and Martinez relevant to the work underway at

the time of Mr. Gomez’s injuries.

At that point, the burden shifted to Mullins to present evidence of Martinez’s

execution of a written agreement under which it expressly assumed Mullins’ liability to Martinez’s employees. Mullins presented no evidence to meet that burden, claiming

instead that the statutory exception could be satisfied with circumstantial proof that there

” was an “inten on the part of Martinez to assume Mullins’ liability, namely, a certificate

of insurance delivered to Mullins at or before Martinez’s commencement of the work, as

well as a copy of Martinez’s general liability policy. (lCR:l08-l76). However, a

certificate of insurance is not the equivalent of a written agreement to indemnify a party,

and the policy simply shows that Martinez had insurance coverage in place at the time of

the accident. Neither document is evidence that Martinez undertook, in writing, on or

before June 7, 2010, to assume Mullins’ liability.

In Mullins’ belated motion to vacate, amend his pleading and supplement the

summary judgment record, he advanced for the first time the argument that there was

another exception to the statutory protection afforded covered employers from third party

claims, that being when the employee’s non-fatal injuries allegedly result from employer

gross negligence. Tex. Labor Code § 417.004 does not mention such an exception, nor

does any other Labor Code provision or case handed down in the last 50 years even hint

at such an exception.

Finally, Mullins’ post—hearing motion argued that because Martinez had been

designated as a responsible third party under Chapter 33 of the Tex. Civ. Prac. & Rem. Code, it was subject to a claim for contribution under Chapter 33. That argument is

specious. Chapter 33 permits a defendant who is jointly and severally liable for damages

to the plaintiff to seek contribution against any other “liable defendant,” a term that is

defined in § 33.0ll(3) of the Tex. Civ. Prac. & Rem. Code in a way that clearly

distinguishes it from “responsible third party.” The fact that a party is designated as a

10 responsible third party does not make it a liable defendant. Because Martinez cannot be

liable to its employee, Bonifacio Gomez, for injuries in the course and scope of

employment, due to the exclusive remedy provisions of the Texas Workers’

Compensation Act, it cannot be a “liable defendant,” and accordingly, there is no viable

contribution claim against it under Chapter 33 of the Tex. Civ. Prac & Rem. Code.

ARGUMENT I. The Court was correct in granting Appellee’s Motion for Summary Judgment under Tex. Labor Code § 417.004 because it negated the statutory exception and Appellant failed to produce any evidence to satisfy the exception.

Mullins readily admits that there is no “separate contract of indemnity” that was

executed by Martinez prior to Mr. Gornez’s on the job injury on June 7, 2010.

(Appellant’s Brief, p. 8). He argues instead that Martinez “caused the delivery” of a

certificate of insurance referencing a liability policy (Id.), that it performed work pursuant

to an agreement (presumably oral) with Blue Sky, that it was later paid for that work, and

that Martinez’s liability policy “covers the activities undertaken by Blue Sky and Mullins

. . .” (Appellant Brief, p. 15). Appellant nowhere explains how a certificate of insurance

or a liability insurance policy is the equivalent of a written agreement executed by the

employer to assume the liability of a third party. Those two documents, taken singly or

together, do not constitute an explicit written agreement to indemnify Mullins, as even a

cursory review of the applicable case law makes clear.

Cases construing Tex. Labor Code. § 417.004, and its predecessor under the prior

Workers’ Compensation Act, Tex. Civ. Stat. Ann. Art. 8306 § 3 (later Article 8306, §

3(d), have held that to satisfy the statutory exception to a covered employer’s protection

11 from third party “reimbursement” actions, there must be a written, signed, pre—injury

indemnity agreement under which the employer explicitly assumes the liability of the

third party that seeks reimbursement or indemnity.

The Texas Supreme Court considered the question of what sort of indemnity

language would satisfy the exception in the prior Workers’ Compensation Act, Art. 8306,

§ 3, in City 0fBeaumont v. Graham, 441 S.W.2d 829 (Tex. 1969). An employee of a

workers’ compensation subscriber, Texas Tower & Construction Company (Texas

Tower) was fatally injured while working in an elevated storage tank belonging to the

City of Beaumont. Id. at 832. His beneficiaries sued the City, which in turn filed a third-

party action against Texas Tower seeking indemnity or contribution. Id. The Texas

Supreme Court noted that Texas Tower, as a workers’ compensation subscriber, was

protected against claims for indemnity and contribution by Art. 8306, § 3. Id. at 837.

The City contended that its contract with Texas Tower contained indemnity language

sufficient to satisfy the statutory exception.

The Texas Supreme Court disagreed, concluding that the indemnity provisions

showed an intent to indemnify the City only for damages or claims resulting solely from

the acts or conduct of Texas Tower. Id. at 838. The Texas Supreme Court agreed with

the Court below that the language in the City of BeaumonUTexas Tower contract did not

“evidence an intention of the parties that Texas Tower should indemnify the City for the

consequences of its own negligent conduct, or for the consequences of the joint

negligence of the parties, or for the consequences of the negligent conduct of the City and

the non—negligent conduct of Texas Tower.” Id. at 838-839. The Court concluded that

the City’s contribution and indemnity claims were not sustainable.

12 In Port Royal Development Corp. V. Braselton Construction C0,, 716 S.W.2d 630

(Tex. App. — Corpus Christi 1986, writ refused n.r.e.), the Court considered whether an

indemnity agreement between the general contractor for the work, Port Royal

Development Corporation, and the injured person’s employer, Braselton Construction

Co., satisfied the statutory exception to the workers’ compensation bar to Port Royal’s

reimbursement claim. The Court reviewed the indemnity language, noting that it

specifically excluded indemnity for injury arising out of the act or neglect of Port Royal.

The Court concluded that in View of the fact the indemnity agreement did not indemnify

Port Royal for its own negligence, it did not satisfy the statutory exception set forth in the

prior Workers’ Compensation Act, Art. 8306 § 3, Tex. Civ. Stat. Ann.

The Texas Supreme Court again considered what language was sufficient to

satisfy the statutory exception to the workers’ compensation bar against third party

reimbursement actions in Ensearch Corp. v. Parker, 794 S.W.2d 2 (Tex. 1990). In that

case, the Court held that the Act did not bar a pipeline owner’s claim for indemnity from

an independent contractor whose employees were asphyxiated during their work. Under

the indemnity agreement in that case, the independent contractor assumed “entire

responsibility and liability for any claims or actions based on or arising out of injuries,

including death, to persons . . . sustained or alleged to have been sustained in connection

with or to have arisen out of or incidental to the performance of this contract by

[independent contractor] . . . regardless of whether such claims or actions are founded in

whole or in part upon alleged negligence of [pipeline owner] . . . Id. at 6-7.

13 The Court concluded that the indemnity language in question sufficed to show

that the employer expressly assumed third party liability for injuries to its own employees

and thus met the exception to the workers’ compensation bar. Id. at 8.

A more recent decision that addresses the current statutory bar, Tex. Labor Code

§ 417.004, is Gilbane Building Co. v. Keystone Structural Concrete, 263 S.W.3d 291

(Tex. App. — Houston [151 Dist.] 2007, no pet.). In that case, Gilbane Building Co.

(“Gilbane”) and Keystone Stuctural Concrete, Ltd. (“Keystone”) contracted for Keystone

to act as subcontractor on a construction project, during which a Keystone employee

suffered injuries and sued Gilbane, resulting in a settlement. Id. at 294. Gilbane and its

liability insurer, Zurich, sued Keystone for, among other things, contractual indemnity.

Id. The Court first determined that the indemnity language in the Gilbane/Keystone

contract did not satisfy the express negligence test and was thus unenforceable, affirming

the trial court’s grant of summary judgment as to Gilbane’s contractual indemnity claim.

However, Gilbane also argued that Keystone had breached contractual obligations

relating to use of equipment that was in a safe condition and in compliance with

applicable regulations, codes, ordinances, etc. Id. at 302. In response, Keystone asserted

that Gilbane’s claim for breach of contract was merely a reformulation of its indemnity

claim and that regardless of how Gilbane characterized that reimbursement action, it was

barred by Tex. Labor Code § 417.004. The Court of Appeals agreed, noting that the

statute prohibited indemnity absent an express agreement by the employer to indemnify

the third party in writing. Id. at 303. The Court concluded:

The indemnity agreement here unenforceable because it fails to comply with is the express negligence rule [citation omitted]. Accordingly, we hold that § 417.004 bars Gilbane’s breach of contract claims against Keystone.

14 Id.

In short, Texas courts that have considered the applicability of Tex. Labor Code §

417.004 and its predecessor have concluded that the exception to the bar against third

party reimbursement actions requires an exp_l§i_t written agreement by the employer to

assume the liability of the third party in the form of enforceable indemnity language that

satisfies the express negligence test. In this case, by Mullins’ own admission, there is Q written agreement relating to Martinez’s work for Mullins or Blue Sky, much less a

conspicuous indemnity provision that meets the express negligence test.

Mullins does not cite any case holding that the statutory exception can be satisfied

by something other than a written contract of indemnity under which the employer

expressly assumes the third pa1'ty’s liability. Indeed, in the “contractual indemnity”

section of his brief (Appellant Brief, pp. 15-16), he cites no case at all. Rather, he argues

that there was in fact a written agreement to indemnify him evidenced by the certificate

of insurance he received and by Ma1tinez’s liability policy, which he attached to his

summary judgment response. (lCR:l23-176).5 The argument is unsuppoitable, for a

number of reasons.

First, the certificate of insurance that is dated June 7, 2010 specifically notes, at

the outset:

[THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSUR_ER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER] 5 The copy of the Travelers policy in the record is incomplete (lCR:l23-176); what appears to be a more complete copy is attached in the appendix to Appellant’s Brief.

15 The law regarding certificates of insurance is well established. A certificate of insurance is not the equivalent of an insurance policy, it cannot alter the terms of an

insurance policy, and it does not estabish any contractual relationship between the entity

issuing the certificate and the certificate holder. See, e.g., Scottsdale Insurance Co. v.

Shahinpour, 2006 WL 870642 (S.W.2d Tex) (certificate of insurance that states it does

not amend, extend or alter coverage afforded by the policies below, does not alter the

terms of any insurance policy, and creates no contract for insurance coverage); Granite

Construction Co. v. Bituminous Insurance Cos., 832 S.W.2d 427, 430 (Tex. App. -

Amarillo 1992, no writ) (any insurance afforded to Granite Construction Co., despite

being shown as an additional insured in a certificate of insurance, is afforded by the

policies and not the certificate itself). Accordingly, the certificate itself is not a written

“agreement” of any kind between Mullins or Blue Sky and the certificate issuer (an

insurance agency is identified as the producer), or any insurer of Martinez. It was not

executed by Martinez, and it certainly cannot constitute an express agreement by

Martinez to assume Blue Sky’s or Mullins’ liability for injury to one of Martinez’s

employees.

Second, setting aside the fact that the Martinez liability policy Mullins also relies

on is not certified or proven up through a business records affidavit of any kind, it has no

relevance here. The affidavit Mullins attached to his summary judgment response, in

paragraph 6 (lCR:ll6—ll7), offers his opinion that the policy in question “provides

liability insurance coverage for the officers and agents of covered organizations.”

Needless to say, the interpretation of an insurance policy presents an issue of law for the

Court, not susceptible to construction by interested parties.

l6 Mullins asserts in the summary judgment response itself that “Paragraphs l.a and

2.b(2) of the Coverage Form at pages 2 and 3 of 16” provide coverage for Blue Sky and

Mullins. (1CR:l 12). Mullins’ efforts at insurance policy construction do not avail him

here.

Paragraph l.a of the Commercial General Liability Coverage Form (lCR:134)

simply states that the insurer “will pay those sums that the insured becomes legally

obligated to pay as damages because of “bodily injury” or “property damage” to which

this insurance applies . . .” That provision does not define the term “insured,” but

language preceding that provision on the same page of the policy indicates that the word

insured “means any person or organization qualifying as such under Section II — Who Is An Insured.” (ICR: 134).

The Section II — Who Is An Insured provision of the Commercial General

Liability Coverage Form in the policy included in the appendix to Appellant’s Brief,

subpart (c), states that if the named insured is a limited liability company (the case here),

the entity itself is an insured, its members, “but only with respect to the conduct of your

business,” and the named insured’s managers. That definition does not include either

Mullins or Blue Sky.

Mullins also appears to cite Exclusion 2(b)(2) on page 2 of the Commercial

General Liability Coverage Form in the Travelers policy (in the appendix to Appellant’s

Brief), but that provision merely excludes coverage for bodily injury for which the

insured “is obligated to pay damages by reason of the assumption of liability in a contract

or agreement.” There is an exception to the contractual liability exclusion for, among

other things, an “insured contract,” but Appellant makes no argument that the exception

17 applies here.6 Of course, the fact that Martinez’s liability policy may include coverage

for certain of its indemnity obligations is not evidence that such an indemnity obligation

exists. Once again, Mullins appears to believe, mistakenly, that proof of liability

coverage for Martinez, either in the form of a certificate of insurance or the liability

policy itself, somehow equates to an explicit assumption of Mullins’ or Blue Sky’s

liability. Proof of insurance that might cover an obligation is not the same as an explicit

assumption of that obligation.

In short, after acknowledging in sworn testimony that there was no written

agreement between himself or Blue Sky and Martinez, Mullins’ only response to the

Appellee’s summary judgment motion was to produce documents that at most evidence

insurance coverage for Martinez. Mullins cites no case that has held that a party seeking

indemnity from a covered employer need not produce any writing actually executed by

the employer expressly assuming such liability. Having failed to present any evidence

that meets the statutory exception to the employer’s protection from third party suits,

Mullins has no basis to challenge the correctness of the summary judgment granted

against him.

Mullins argues that a contract of indemnity (and presumably one sufficient to

satisfy the requirements of Tex. Labor Code § 417.004) may be either express or implied,

citing Monsanto Co. v. 0wens—Coming Fiberglas Corp., 764 S.W.2d 293, 294 (Tex.

App. — Houston [lS‘ Dist.] 1988), which in turn cites Houston Lighting & Power Co. v.

° The policy in question defines “insured contract” to include (subpart t): “That part of any other contract or agreement pertaining to your business under which you assume the tort liability of another party to . . .

pay for ‘bodily injury’ or ‘property damage’ to a third person or organization. Tort liability means the liability that would be imposed by law in the absence of any contract or agreement.” In effect, the “insured contract” exception restores coverage for explicit indemnity obligations by which the insured assumes the tort liability of another party.

18 Eller Outdoor Advertising Company, 635 S.W.2d 133 (Tex. App. ~ Houston [ls' Dist.]

1982, writ ret’d n.r.e.). Neither case supports the notion that anything other than a

“written agreement” executed by the employer pre—injury satisfies the exception to the

statutory protection afforded employers from third party actions. Monsanto involved an

employee of a subcontractor, Owens~Corning Fiberglas Corp. (“Owens-Corning”), who

brought a personal injury action against the Monsanto Company (“Monsanto”). Id. at

294. Monsanto asserted a third party action against Owens-Corning based on the

indemnification language contained in a written contract between the two companies.

Citing the indemnity provision at length, the Court noted that the provision nowhere

included the word “negligence” or adequately defined the scope of the protection that

was provided and: “Because the intent of the parties is not specifically stated within the

four corners of the contract, we find that this indemnity provision does not satisfy the

express negligence test.” Id. at 295.

The Court concluded, in effect, that the failure of the written indemnity provision

to satisfy the express negligence test did not bring it within the exception of the statutory

protection provided the employer under the Texas Workers’ Compensation Act (albeit an

earlier version of the Act).

The Houston Lighting & Power decision did not involve a written contract of

indemnity. Rather, an employee of Eller Outdoor Advertising Company of Texas

(“Eller”) was electrocuted after contacting an HL&P line. His widow and children sued

HL&P, which settled that action and then sought indemnification from Eller pursuant to a section of the Public Utilities Act setting forth the duties of any party working within six

feet of a high voltage line, a violation of which entitles the utility to indemnification

19 under an applicable provision of the Public Utilities Act. Eller argued the predecessor to

the Tex. Labor Code § 417.004 barred the indemnity action, but the Court concluded that

HL&P’s indemnity action was not “on account of’ injury to or death of Eller’s employee

but rather was an action arising from a breach of the duties Eller owed under the

applicable provision of the Public Utilities Act. Id. at 135.

The Court accepted HL&P’s reasoning, concluding that the “later, more specific

Public Utilities Act should be given controlling effect over the older, more general terms

of the Workers’ Compensation Act.” Id. The Houston Lighting & Power decision

simply recognizes that the specific indemnity granted to public utilities against entities

who violate the “six foot rule” trumps the statutory protection afforded employers under

the Texas Workers’ Compensation Act. It does not stand for the proposition that a third

party not entitled to statutory indemnity can dispense with the requirements of Tex. Labor

Code § 417.004 of a written agreement.

Finally, Mullins disputes the applicability of the express negligence rule. While

as noted above, numerous cases have held that written indemnity language that does not

satisfy the express negligence test does not meet the requirements of the statutory

exception in Tex. Labor Code § 417.004, that is not the dispositive issue here. While in

theory there may be language in a written agreement executed by the employer by which

it expressly assumes the liability of the third party that falls short of the express

negligence standard, that is not the case here. In the instant matter, there simply is Q indemnity agreement of any kind executed by Martinez and accordingly, the question of

whether or not the indemnity language must satisfy the express negligence test to meet

the statutory exception is moot.

20 II. The court correctly denied Appellant’s Motion to Vacate Judgment and trial for NewTrial and for Leave to File Amended Pleading and Supplemental Material in Response to Cross-Defendant Martinez R.O.W., L.L.C.’s Motion for Summary Judgment.

It appears Mullins’ primary complaint with respect to the Court’s denial of his

motion to vacate, etc. is the refusal to permit him to amend his pleading to add a new

party and to assert an entirely new basis to circumvent the workers’ compensation bar to

his third party action, and to present additional summary judgment evidence to support

same.

The trial court was correct in denying the motion, for a number of reasons. First,

the proposed first amended cross—claim attempted to add an entirely new party, Blue Sky,

for reasons nowhere addressed in the motion for leave itself. Blue Sky was not a

defendant in the action initiated by Bonifacio Gomez and accordingly, there would be no

legal basis under any theory alleged by Mullins, or later by Blue Sky, for it to seek

indemnity for liability it could not have had to Mr. Gomez, who had never asserted

claims against Blue Sky. Blue Sky could not seek indemnity or contribution for liability

it could not have to Plaintiff Bonifacio Gomez, who had never sued it.

Second, the proposed amended pleading attempted to add an entirely new basis

for contribution or indemnity, namely that Martinez was guilty of gross negligence with

respect to Mr. Gomez’s injuries, and that somehow supported Mullins’ claim for

contribution or indemnity. The assertions of gross negligence had never been pleaded

previously, and Mullins did not make such contentions in any amended pleading that he

could have filed, without leave of court, after Martinez’s Motion for Summary Judgment

was filed on October 17, 2014, and before it was heard on November 25, 2014.

21 It is well established that a trial court does not abuse its discretion by refusing to

allow a non-movant to amend its pleadings after the summary judgment hearing has

taken place. Leinen v. Bujfngtons Bayou City Service Co., 824 S.W.2d 682, 685 (Tex.

App. — Houston [14”' Dist.] 1992, no writ); Hill v. Milani, 678 S.W.2d 203, 205 (Tex.

App. — Austin 1984) affld 686 S.W.2d 610 (Tex. 1985). Furthermore, after the trial court

has rendered judgment on a motion for summary judgment, it cannot grant a motion to

amend the pleadings. Automaker, Inc. v. CCRT Company, Ltd., 976 S.W.2d 744, 746

(Tex. App. — Houston [151 Dist.] 1998, no pet.); Texas General Indem. Co. v. Ellis, 888

S.W.2d 830, 831-32 (Tex. App. ~ Tyler 1994, no writ); Boarder to Boarder Trucking

Co., Inc. v. Mandi, Inc., 831 S.W.2d 495, 498-99 (Tex. App. — Corpus Christi 1992, no

writ). In the present action, the Court granted Martinez’s Motion for Summary Judgment

and its Motion to Sever Mullins’ claims against it on November 25, 2014. (2CR:24;

1CR:328-329). The summary judgment order, combined with the severance, effectively

made the summary judgment final and appealable for all purposes and accordingly, the

Court acted correctly in refusing Mullins’ efforts to amend his pleadings post~summary

judgment hearing and post-final judgment.

The Court did not err in denying Mullins’ request to supplement the summary

judgment record with a new affidavit from Mullins (2CR:393-394)7 purporting to

address, for the first time, the circumstances of the accident, as well as excerpts from the

deposition of Bonifacio Gomez taken on April 30, 2013 (more than 18 months before the

summary judgment hearing in this matter). Mullins offered no basis for seeking

permission to submit summary judgment evidence four weeks after the summary

judgment hearing and the Order granting same, merely pointing out that he had

7 The Court sustained Martinez’s objections to Mullins’ supplemental affidavit. (2CR:420).

22 previously moved for a continuance to permit him “to submit additional argument and

authorities on the issue of Ma1tinez’s indemnifications of Mullins, in order to thoroughly

present that issue to the Court.” (2CR:367). In that regard, it is important to note that in

his original motion to continue the summary judgment hearing, he cited as a basis for

same the need to “properly respond” to case law, submit evidence to the Court of

payments made by Mullins to Martinez, and to permit Mullins to prepare a “detailed

affidavit” to discuss “the facts leading to the engagement of Martinez to provide labor,

and the consideration therefore . . .” None of the “supplemental” evidence Mullins

sought leave to submit post-hearing fits within any of the categories offered in support of

his prior motion to continue the summary judgment hearing.

Setting aside the fact Mullins offered no justification for his belated effort to

revise the pleadings, add a new party, assert new bases to circumvent the Texas Workers’

Compensation Act, and to offer summary judgment evidence that presumably was

available to him previously, neither the proposed amended pleading nor any of the

“supplemental” evidence affects the outcome here.

Mullins advanced as an “additional legal theory” (Appellant’s Brief, p. 26) the

notion that if Martinez’s conduct somehow constituted gross negligence, that would

create an exception to the statutory bar to third party actions absent a prior explicit

assumption of the third party’s liability. The argument is completely without merit, not

supported by any provision in the Texas Workers’ Compensation Act, and the only

decisions Mullins cites in support are more than 50 years old and pre~date the current

Workers’ Compensation Act by decades.

23 The Workers’ Compensation Act exclusive remedy provision, Tex. Labor Code §

408.001, recognizes only one exception to the protection afforded employers for injury to

or death of employees, that is, the “surviving spouse or heirs of the body of a deceased

employee whose death was caused by an intentional act or omission of the employer or

by the employer’s gross negligence” may bring an action against an employer. Tex.

Labor Code § 408.001(a), (b). Nothing in the Act indicates that in a non-fatal case, a

third party sued by the injured employee may seek contribution or indemnity from the

employer, if there is evidence that the latter is guilty of gross negligence. Presumably, if

such an exception existed, it would be set out in Tex. Labor Code § 4l7.004, dealing

specifically with an employer’s liability to a third party sued by the injured worker.

Mullins cites no case handed down since the effective date of the new Texas Workers’

Compensation Act that even suggests such a “gross negligence” exception to the

protection of the Act exists.

Mullins does cite a recent Texas Supreme Court decision, Fairfield Insurance

Company v. Stephens Martin Paving, L.L.C., 246 S.W.3d 653 (Tex. 2008). Fairfield in

no way supports Appellant’s argument regarding the “gross negligence exception.”

Rather, the case deals with the insurability of exemplary damages under a workers’

compensation/employer liability policy. An employee of Fairfield’s insured, Stephens

Martin Paving, suffered fatal injuries in the course and scope of his employment and his

spouse and children brought a suit for exemplary damages as permitted by Tex. Labor

Code § 408.001(b),(c). In a lengthy and well reasoned opinion, the Texas Supreme Court

concluded that the Fairfield policy’s employer liability provisions covered the employer

for gross negligence claims (Id. at 660), and that such insurance protection was not

24 against Texas public policy. Nothing in the decision suggests that there is any exception

to the exclusive remedy protection afforded employers under the Act, other than claims

brought by the surviving spouse and heirs of the body of an employee who suffers fatal

injuries in the course and scope of employment, allegedly as a result of the employer’s

gross negligence. No issue was presented to or discussed by the Court as to whether

gross negligence by the employer in a non-fatal injury context creates an additional

exception to the protection from third party claims.

The other two cases cited by Mullins are simply too remote to have any

precedential Value. In Westfall v. Lorenzo Gin Company, 287 S.W.2d 551 (Tex. Civ.

App. — Eastland l956, no writ), third parties that were sued by an employee of Lorenzo

Gin Company arising from a collison between two trucks sought contribution from the

gin company, a Texas Workers’ Compensation Act subscriber, alleging, among other

things, that the gin company was guilty of gross negligence, contributing to the accident.

The Court ultimately determined that the evidence the third parties had produced in

response to the gin company’s motion for summary judgment was insufficient to raise

any fact question on the issue of gross negligence, but language in the decision implied

that had there been such proof of gross negligence, a contribution or indemnity action

might have been sustainable. Id. at 554. In support of that proposition, the Court in

Westfall cited West Texas Utilities Co. v. Renner, 32 S.W.2d 264 (Tex. Civ. App. —

Eastland 1930), aft’ cl, 53 S.W.2d 451 (Tex. Comm’n App. 1932). In Rermer, the third

party utility company sought contribution and indemnity from its contractor, Mosher

Steel & Machinery Company, for a lawsuit brought against it by a Mosher employee who

sustained serious electrical injuries. Among other things, in affirming a directed verdict

25 in favor of Mosher, the Court of Appeals noted that the utility had failed to establish that

Mosher was guilty of “active negligence,” and thus, any common law right to

contribution was unsustainable, even setting aside the protections of the Workers’

Compensation Act. The Court went on to say, in what amounted to dicta, that Mosher

had “fully protected himself against his own negligence (not amounting to gross I

negligence) by providing compensation insurance for his employees, and could not be

compelled to pay indirectly when no liability existed to pay directly.” Id. at 270.

Needless to say, distinctions between active and passive negligence as a basis for

common law contribution have no relevance here, given the fact that actions for

contribution are controlled by Chapter 33 of the Tex. Civ. Prac. & Rem. Code, which

makes no such distinctions.

The other case cited by Mullins, Koninklyke Nederlandsche Stoomboot

Maalschappy, N.V. v. Royal Netherlands Steamship Company, 301 F.2d 741 (5“‘ Cir.

1962), effectively recognizes that a written stevedoring contract in a maritime context

enforceable under federally developed maritime law provided a basis for a third party

ship owner to sue a stevedoring company covered by Texas workers’ compensation for

indemnity, in an action brought by a longshoreman employee. The Court concluded that

if a longshoreman’s action against the shipping company was permitted, “a state

compensation act cannot prevent an action against the employer by the third party based

on a federally judicially established maritime contractual warranty.” Id. at 746.

In discussing Westfall and Rermer, the Court interprets the state of Texas law in

1962, suggesting “that Texas is a_sygt unwilling to to rule out an indemnity where there is

a showing of gross negligence on the part of the injured man’s employer, and it might

26 even be read to my that such an indemnity is not barred by Art. 8306.” Id. at 646

(emphasis added).

The Fifth Circuit decision from more than 50 years ago indicating Texas law (as

reflected in two appellate decisions from 1932 and 1956, respectively) was still unsettled

as to whether allegations of gross negligence on the part of the employer created an

exception to the Act’s protections from third party liability, has been echoed by no Texas

appellate court at any time in the ensuing five decades, and no case citing § 417.004 of

the new Act, which has been in effect since 1993, or any decision construing its

predecessor, Art. 8306, § 3(d), of the prior Texas Workers’ Compensation Act, dating all

the way back to the 1970s, suggests that any “gross negligence” exception actually exists.

In short, there is nothing in the current statutory provision relied on by Appellee,

any other provision in the current Texas Workers’ Compensation Act, or any case law

since the new Act became effective to support Mullins’ belated assertion of a “gross

negligence” exception to the statutory protection from third party actions for

reimbursement. Accordingly, even if the trial court had permitted a post-summary

judgment pleading raising this outdated theory, and permitted the supplemental summary

judgment evidence that Mullins argues raises a fact question regarding gross negligence,

the outcome would not have changed.

Finally, Mullins argued in his Motion to Vacate that because Martinez had been

designated as a responsible third party at some prior point, it is therefore “subject to the

rules that apply to proportionate responsibility unless an exception thereto is applicable.”

(Appellant’s Brief, p. 29). The argument is specious, as a simple reading of Chapter 33

of the Tex. Civ. Prac. & Rem. Code demonstrates. The definition of the term

27 “responsible third party” in pertinent part means “any person who is alleged to have

caused or contributed to causing in any way the harm for which recovery of damages is

sought . . .” § 33.0l1(6), Tex. Civ. Prac. & Rem. Code. That same section defines a

“liable defendant” as “a defendant against whom a judgment can be entered for at least a portion of the damages awarded to the claimant.” § 33.015, titled “Contribution,” states,

under subpart (a):

If a defendant who is jointly and severally liable under § 33.013 pays a percentage of the damages for which the defendant is jointly and severally liable greater than his percentage of responsibility, that defendant has the right of contribution for the overpayment against each other liable defendant .” . .

Emphasis added.

Accordingly, contribution would exist in favor of Mullins against Martinez only if

the latter could constitute a “liable defendant,” as the term is defined in Chapter 33.

Because Martinez cannot be liable to the “claiman ” (Bonifacio Gomez) for any portion

of the damages he is entitled to recover, because of the exclusive remedy provisions of

the Texas Workers’ Compensation Act, there exists no right of contribution against

Martinez under Chapter 33.

Case law also supports the notion that there can be no contribution claim against a

covered employer. In Varela v. American Petrofina C0. of Texas, Imn, 658 S.W.2d 561

(Tex. 1983), the Court construed the prior statute relating to contribution among joint

tortfeasors, Art. 22l2(a), Tex. Civ. Stat. Ann. (repealed), holding that the protections of

the prior Texas Workers’ Compensation Act were an exception to the statute permitting

contribution actions between joint tortfeasors.

28 The distinction between a liable defendant and a responsible third party is set out

plainly in the case of City of El Paso v. Collins, 440 S.W.3d 879 (Tex. App. — El Paso

2013, no pet).

The case involved the near drowning of a six year old girl while in the care of

Children’s Place Daycare. The child’s parents brought an action against the daycare,

which in turn designated the City of El Paso as a responsible third party. The plaintiffs

then amended their action to include the City as a defendant, incorporating the motion to

designate the City as a responsible third party as a basis for their affirmative claims

against the City. Id. at 882.

The El Paso Court of Appeals concluded that to the extent the plaintiffs attempted

to impose liability on the City based solely on the responsible third party designation,

without establishing a waiver of the City’s immunity, it was error to deny the City’s plea

to the jurisdiction. Id. The Court noted, citing Tex. Civ. Prac & Rem. Code §

33.004(i)(1)(2): “The filing or granting or a motion for leave to designate a person as a

responsible third party does not impose liability against that person and may not be used

in any other proceeding, on the basis of res judicata, collateral estoppel, or any other legal

theory, to impose liability on that person.”

The Court noted approving the City’s position that a responsible third party

designation could not establish liability against a party, stating: “The City is correct that

the filing or granting of a motion for leave to designate a person as a responsible third

party or a finding of fault against the person “does not by itself impose liability on the

person.” 141., citing Tex. Civ. Prac & Rem. Code §33.004(i)(l).

29 In short, the language of Chapter 33 itself, and in particular the definitions of

responsible third party and liable defendant, make it clear that a responsible third party

designation does not establish liability of the party so designated, and that a claim for

contribution under Chapter 33 can arise only against a liable defendant. Accordingly,

Mullins’ argument that the mere designation of Martinez, a covered employer, subjects it

to a contribution claim under Chapter 33 is entirely without merit.

CONCLUSION AND PRAYER The trial court was correct in granting Martinez’s Motion for Summary Judgment

based on the protections afforded it as an employer under the Workers’ Compensation

Act. Once Martinez demonstrated that it was a covered employer and that there was no

written agreement executed by Martinez before the Gomez accident under which it

expressly assumed the liability of Mullins and/or Blue Sky, it estabished a complete bar

to Mullins’ claims for indemnity or contribution. Mullins’ efforts to circumvent the

literal requirements of the statutory exception by producing a certificate of insurance

identifying policies covering Martinez, as well as a copy of Martinez’s commercial

insurance policy, establish merely that Martinez had liability coverage in place at the time

of the incident. Neither document constitutes proof of an explicit written agreement

executed by Martinez pre—accident under which it assumed the liability of Mullins and/or

Blue Sky.

Mullins’ belated effort to replead to include gross negligence allegations, or to

supplement the summary judgment evidence with information purporting to create a fact

question on the issue of gross negligence is of no use to him here because there is no

30 recognized exception to § 417.004 for an employer’s alleged gross negligence. Gross

negligence by the employer can provide a basis for recovery only to the spouse and heirs

of the body of an employee who suffers fatal injuries in the course and scope of

employment, not the case here.

Finally, Mullins’ argument that the designation of Martinez as a responsible third

party creates a right of contribution under Chapter 33 is contradicted by the plain

language of the statute itself.

WHEREFORE, PREMISES CONSIDERED, Appellee Martinez R.O.W., L.L.C.

f/k/a Martinez Investments, L.L.C. prays that this Court affirm the trial court’s judgment

and further grant Appellee all other relief to which it may show itself justly entitled.

Respectfully submitted,

WRIGHT & GREENHILL, P.C. 221 W. 6th Street, Suite 1800 Austin, Texas 78701 512/476-4600 512/476-5382 (Fax)

By:/s/ David P. Boyce David P. Boyce State Bar No. 02759770 dbo ceFzD\_v_-g.com

ATTORNEYS FOR APPELLEE

31 CERTIFICATE OF COMPLIANCE

Ihereby certify that the above and foregoing Brief of Appellee contains 6,740 words and therefore complies with the maximum length required under Tex. R. App. P. 9.4.

David P. Bovce /s/ David P. Boyce

CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing has been served on the following counsel of record in accordance with the Texas Rules of Civil Procedure, on this 26"‘ day of August, 2015:

Via ECF and Facsimile Patrick F. Timmons, Jr. 8556 Katy Freeway, Suite 120 Houston, Texas 77024-1806 pftfcbtiininonslawfirm.coin

David P. Boyce /s/ David P. Boyce

32 APPENDIX TAB 1 =ici.. 436 ssrn "LEGISLATURE-1-I'tEGULAR SESSION suspended; and that this Act shall take e&‘ect and be in force from and after its passage, and it is so enacted.‘ Passed the Senate, March 12, 1963: Yess 25, Nays 6; May 23. 1968, Senate concurred in House amendment by :1 Viva voee vote; passed the House, May 23, 1963, with amendment, by s non-record vote. Approved June 10, 1968. Efiective 90 days after May 24, 1963, date of adjournment.

WORKMEN’S COMPENSATION~—-LIABILITY OF ASSOCIATION CHAPTER 437 -

S. B. No. 223 A" AC‘ flmendlfli! ‘ha TEX“ Workman’; Compensation lnuursneo Lows 12! thlc mm:by amending Sectlon 3 of Article 3305, Revised Clvll statutes of 1025, so amended; providing n unvlnnu clause; and declaring an emer- Honey.

Be it enacted by the Legislature of the State of Texas: Section 1. Section 3 of Article 8306, Revised Civil Statutes of Texas, 1925, as amended,“ is amended to read hercnfter as follows: "Sec. 3. The employees of a subscriber and the parents of minor em- ployees shall have no right of action against their employer or ssuinst any agent, servsnt or employee of said employer for damages for personal in- juries, and the representatives and beneficiaries of deceased employees shall have no right of action against such subscribing employer or his agent, servant or employee for damages for injuries resulting in death, but such employees and their representatives and beneficiaries shall look for compensation solely to the association, as the same is hereinafter pro- vided Ior. All compensation mllowed under the succeeding sections herein shall be exempt from garnishment, attachment, judgment and all other suits or claims, and no such right of action end no such compensation and no part thereof or of either shall be assignable, except as otherwise herein provided, and any attempt to assign the same shall be void. If an action for damages on account of injury to or death of an employee of s subscrib- er is brought by such employee, or by the representatives or beneficiaries of such deceased employee, or by the association for the joint use and benefit of itself and such employee or such representatives or beneficiuries, against a person other than the subscriber, as provided in Section (is, Arti- cle'8307, Revised Civil Statutes of Texas, 1925, and if such action results in a judgment against such other person, or results in a settlement by such other person, the subscriber, his agent, servant or employee, shall have no liability to reimburse or hold such other person harmless on such judgment or settlement, nor shall the subscriber, his agent, servant or em- ployee, have any tort or contract liability for damages to such other person because of such judgment or settlement. in the sbsence of a written sgree— ment expressly assuming such liability, executed by the subscriber prior to such injury or death. No part of this Section is intended to lessen or alter the employees existing rights or cause of action either against his employer, its subscriber, or any third party. 65. Vex-non‘n Ann.Clv.St. art. 8305, g 3.

1132 LIBRARIES Ch. 438 “The Association. its agent, servant or employee, shall have no lia- bilitywith respect to any accident based on the allegation that such acci- dent was caused or could have been prevented by a program, inspection, or other activity or service undertaken by the association for the preven- tion of accidents in connection with operations of its subscriber; provid- ed, however. this immunity shall not aifect the liability of the association for compensation or as otherwise provided in this law, No ‘part of this Section is intended to lessen or alter the employees existing rights or cause of action either against his employer, its subscriber, or any third party.” Sec. 2. any Section, paragraph or provision of this Act he declared If unconstitutional or invalid for any reason, such holding shall not in any manner affect the remaining Sections, paragraphs or provisions of this Act, but the same shall remain in full force and effect. Sec. 8. The importance of this legislation and the crowded condition of the calendar in both Houses create an emergency and an imperative public necessity that the Constitutional Rule requiring bills to be read on three several days in each House be suspended, and said Rule is hereby suspended; and that this Act shall take atfect and be in force from and after its passage. and it is so enacted. Passed the Senate. March 21, 1963: Yeas 30, Nays 0; May 20, 1963, by authority of H.C.R. No. 100 bill was returned from Governor's ofiice and correction made; passed the House, May 8, 1963, by a non-record vote; May 20, 1963, I-I.G.R~ No. 100 was‘ adopted. Approved June 10, 1963. Effective 90 days after May 24, 1963, date of adjournment.

LIBRARIES—DIS'I"RIBU'I‘ION OF STATE DOCUMENTS CHAPTER 438 5‘

S. B. No. 266 An Act to establish depository libraries with nuihority in the Director and Librar- ian of the Texas state Library; requiring certain act: to be performed to facilitate distribution of state documents; and declaring an emergency.

Be it enacted bythe Lrgisloiicrc of ilic State of Texas: Section 1. The term "state document” as used in this Act means all publications of state agencies which the Texas State Library is authorized '

by Revised Civil Statutes, 1925, Article 5442, to acquire and distribute. Sec. 2. The term “depository libraries” as used in this Act means the Texas State Library, libraries of state institutions oi‘ higher education, and other libraries so designated by the Texas Library and Historical Com- mission upon determination that such designations are necessary to pro- vide adequaie access to state documents. Sec. 3. Each state agency shall furnish the Texas State Library with state documents in the quantity specified in the Revised Civil Statutes, 1925, Article 5442. See. 4. State documents shall be made available to depository li- braries under the direction of the Texas State Library. Sec. 6. To facilitate distribution of state documents, each state agen- cy shall furnish the Texas State Library with a list of state documents 65. Vernon's Ann.Ci\'.St. nrt. uuzn. H33 APPENDIX TAB 2 Bath LEGIl3LATURE—REGULAR smssxorq Ch. 131 and that this Act taxi: affect and be in fO!‘CI from Ind utter its ptluul, and it 1: no Inactld.

1983‘l’g;,sx;dnE)l:‘e.r§;2;11§:juV‘;:tx;April 21, 1988: Yen 31, Nxyn 0: passed the House on Mny 6,

Approved May 17, 1983.

Effective Aug. 29, 1983, 90 days after date of adjournment.

WORKERS‘ COMPENSATION—BENEFITS—ASSIGNMEN’l 1'0 INSURANCE COMPANY CHAPTER 131

H. B. No. 68

All AC1‘

ranting to the nniqnmont of cox-tnin vim-kart‘ compunution bnntfltl to An innurlncu complny. BE IT ENACTED BY THE LBOXSLATURE OE‘ ‘DEE STATE OF TEXAS: SECTION 1. sncczlon 3, Articlo B306, Rcviud Bntutu, in unnndudssto rand nu follmu: Etc. 3. _(__:_l Thu umpluyuuu or I uubucribor Ind thu plrlntn of minor employer: lhlll have nu right of action lqlinlt their omploycr or against any Iqont. nrvnnt or umplayto at Ilid Impluyor for dunnqn {or pcrnannl snjurhu, and thn rnpronntntivon and bnnuticluiu of dccmnad nnploycu nhnll hnvn no right a! nation nqninlt such subscribing ampluyor or his aunt. urvnnt or Iwloyu tar dun: on for injurhn rnlultinq in death, but such cmplcyucl uzé their rupx-uuntntivcn and bununcuri-I nhnu. look for canpnnntlon Iulcly to the unocintian, nu thy Inn: 1: hu-unnttur providod Int. All conspunution nllowod undur U1: Iuccaodinq uctionu _0_:_)_

huruin shun be oxnnpt {ram qlrninhacnt, nttnchnont, Judgment Ind :11 othu: suit: or clntmn. Ind no such right at action And no such campcnntion And no part theme: or ot nun: shall 1:: uuiqmhlo, cxcupf. an cthnrwiun h-rain prnvidnd, 111:! any attempt to usual: the |u..¢ shall bu void.

55. Vernon's Ann.Civ.SL art. 8306. § 3.

Addition: in text lndicaud by mngnflm; dolations by [Ma-ikoouu]

613 Ch. 131 each LEGlSLAT‘URE—REGULAR SESSION (c) In the event the unacietinn denies liability in n claim $6 an Accident or health innunnco congenx provide: benefits tn the Iglogee for medical aid hougitel ux-vice: nurling service: or medicine, then the right to recover Iuch amount may he unsigned by the emgleyee to the health or nccident inlurlnce COEEIHE. lg) X: In nation for denuqu on account at injury to or duth of An employee of e nubncriber is brought by such employee. or by the repreeentntiven or beneticilriel cf such deceeeed employee, or by the nseucietian for the joint ule end benefit of itself end such employee or luch reprenentetivex or beneficiaries, against | person other then the Iubscriber, II provided in Section

6:, Article 8307. Revised Civil Stetutel of Texts, 1925, end if such lction reeultl in a judgment ngninut much debt? person. at result: in I settlement by much other person, the subscriber, hi: nqant, Iervent or employee, shell hnve no liability to reimburse or hold much other person hnrmless on such judgment er settlement, nor Ihell the Iuhlcriber, hil luent. Iervnnt or employee, hIVl lny tort or conttlct linbility tar damage: to Iuch other person beceune or Iuch judgment or settlement, in the nbuence c£ : written Agreement expuuly euuminu Iuch lid:-ility, executed by the subscriber prior to much injury or death. [Ne-pertai-ehh~Snet-.§an-Le-éntendebte iesuen-or-alter-the-employee:-extntin[-:§¢hte-er--eeuee--e£--action either--eye§nIt--h§I-empieyerr-its-euheeribs:r-er-eny-third-pertyw] 131 The Alnocintion, its nqent, Iervnnt at employee, shall have no linbility with respect to my accident based on the Illeqetion thnt such Accident wnl ceueed or could have been prevented by e praqrem, inlpection. or other Activity or aervice undertaken by the nslecinticn for the prevention of Accident: in connection with uperetione oi its IUDICXLDUI; provided, hcweven thin immunity shall not -sue: the lhbility of the eseocinticn for compentntion or II otherwise pravided in this luv. Lg) Na pert of this Section is intended to Xesuen or Alter the gggiggggig [empieyeeej existing right: or clule a£ Action either eqeinlt his employer, its subscriber. or any third pnrty. Additions in text indicated by _u[n_§Lg,r_I‘mg: deletions by letnikoouiel 614 68th LEGISLATURE-REGULAR SESSION Ch. 132 station 2. ‘ma importanca at this lcqialation and tha crowded condition M the calandara in both hcuan craato an emergency and an inpcrativa public nacaaaity that th- conatitutiunal 2-uh x-aquix-inc billa to be raad can thus aavnnl. daya in cash noun ba auapnndod, and thin rule in ha:-oby auapandad, and that thin Act take afloat and be in torn from and any: ita pnnqa, and it in no enacted. Passed by the House on March 90, 1983: Yeas 137, Nays 0, 1 present, not voting; passed by the Senate on May 5. 1983: Yeas 31, Nays 0, Approved May 17, 1983.

Effective May 17, 1983.

WORKERS’ COMPENSATION——-DEATH BENEFITS- PBIOR INCAPACITY CHAPTER 132

H. E. No. 99 AN AC1‘

ralatinq to tan reduction of workcrfl companaation death benafita because at banafita paid for prior pariod 0! incapacity. BE IT ENACTED BY IEIE LEGISLATURE 0!‘ '1'!!! STATE 0!‘ TEXAS: SECTION 1. saction ab, Article 8305, Raviaod civil Statute: ct‘ Toxaa, 1925, is amcndndssto raad aa touovax sec. ah. 111 in can daath accu:-I as a result of tho injury after a period of total or partial incapacity. for which compansation haa been paid, thn period of incapacity shall be deducted from (‘Jun total pariod of compensation and tho bonufita paid thnraunder tron the maximum alloucd for the death. (13) Suction 8b deal net agglg to lifatima daath bonalita aa grovidad by section B or this article but aggllu only to than blnaficiariaa racaivin 360 vaoka of banelita. ~

SECTION 2. It in uncartain and has not bun judicially datormincd uhuthat tha oifant px-ovidcd by Saction Bb, Article 8306. Raviud civil statucaa oz’ Taxaa, X925, appliaa to thu utctima banatita proviaiana oz sanction 8 or that articla. Tha tact that nu db. Vernon‘: Ann.Civ.St. art. 8306, § Sb.

Addition: in text indicated by ,un_d_g_r_l1n_g; deletions by [ateikoeutsl 615 APPENDIX TAB 3 TITLE 5. WORKERS’ COMPENSATION SUBTITLE A. TEXAS WORKERS’ COMPENSATION ACT ~ CHAPTER 401. GENERAL PROVISIONS SUBCHAPTER A. SHORT TITLE; APPLICATION OF SUNSET ACT Sec. 401.001. SHORT TITLE. This subtitle may be cited as the Texas Workers’ Compensation Act.

Sec. 401.002. APPLICATION OF SUNSET ACT.

~ Ed: Repealed by Acts 2005, 79th Leg., H.B. 7, eff. Sept. 1,2005. As a division wit1n'u the Texas Department of Insurance (TDI), the Divsion of Workers’ Compensation is governed by the sunset provisons regarding TDI.

Sec. 401.003. ACTIVITIES OF THE STATE AUDITOR. (a) The division is subject to audit by the state auditor in accordance with Chapter 321, Government Code. The ~ state auditor may audit: (1) the structure and internal controls of the division; (2) the level and quality of service provided by the division to employers, injured employees, insurance carriers, sell‘-insured governmental entities, and other participants; (3) the implementation of statutory mandates by the division;

~ (4) employee turnover; (5) information management systems, including public access to nonconfidential information; (6) the adoption and implementation of administrative rules by the commissioner; and (7) assessment of administrative violations and the penalties for those violations. (b) Nothing in this section limits the authority of the state auditor under Chapter 321, Government Code.

Ed: This section was added by the 2001 Legislature.

SUBCHAPTER B. DEFINITIONS Sec. 401.011. GENERAL DEFINITIONS. In this subtitle: (1) “Adjuster” means a person licensed under Chapter 4101, Insurance Code.

Ed: Section 4101.001 of the Insurance Code defines “adjuster” as an individual who investigates or adjusts losses on behalf of an insurer as an independent contractor or as an employee of an adjustment bureau, an association, a general property and casualty agent, an independent contractor, aninsurer, or a managing general agent, or who supervises thehandling of claims. However, Section 4101.002 provides that this definition does not apply to, among others, clerical or salaried personnel not engaged regularly in the negotiation of contested claims, attorneys, photographers, private detectives, estimators, and other exp erts.

(2) “Administrative violation” means a violation of this subtitle, a rule adopted under this subtitle, or an order or decision of the commissioner that is subject to penalties and sanctions as provided by this subtitle. (3) “Agreement” means the resolution by the parties to a dispute under this subtitle of one or more issues regarding an injury, death, coverage, compensability, or compensation. The term does not include a settlement. (4) “Alien” means a person who is not a citizen of the United States.

16 Labor Code ~ Ed; This term does not include “psychologist.”

lag) “Employer” means, unless otherwise specified, a person who makes a contract of hire, employs one or more employees, and has workers’ compensation insurance coverage. The term includes a governmental entity EW O that scIf—insurcs, either individually or collectively. O. 0. /Ed: This definition is not strictly applied throughout the Act. For example, Subchapter A of Chapter 406, dealing with 0.

~ coverage, does not exclusively apply to subscribers. To that end, Section 406.001 provides: “In this subchapter, ‘employer’ I11

means aperson who employs one orinore employees.” Other sections, too, usethe term loosely due to subsequent legislative amendments. For example, in Section 408.042(c), dealing with the average weekly wage of employees with multiple V

employment, the use of the word “employer” is likewise not limited to subscribers.

(18-a)“Evidence-based medicine” means the use of current best quality scientific and medical evidence formulated from credible scientific studies, including peer-reviewed medical literature and other current scientifically based texts, and treatment and practice guidelines in making decisions about the care ofindividual patients.

Ed: Thistenn was added bythe200S Legislature and is usedin the definition of “health care reasonably required.” It arguably incorporates the concepts required for the admission of expert evidence under E.1. Dupont de Nemours and Co., Inc. v. Robinson, 923 S.W.2d 594 (Tex. 1995) or for areview of the sufficiency of the evidence underMerreIl Dow Pharmacezzticals v. Havner, 953 S.W.2d 706 (Tex. 1997).

(19) “Health care” includes all reasonable and necessary medical aid, medical examinations, medical treatments, medical diagnoses, medical evaluations, and medical services. The term does not include vocational rehabilitation. The term includes: (A) medical, surgical, chiropractic, podiatric, optornetric, dental, nursing, and physical therapy services provided by or at the direction of a doctor; (B) physical rehabilitation services performed by a licensed occupational therapist provided by or at the direction ofa doctor; (C) psychological services prescribed by a doctor; (D) the services of a hospital or other health care facility; (E) a prescription drug, medicine, or other remedy; and (F) a medical or surgical supply, appliance, brace, artificial member, or prosthetic or orthotic device, including the fitting of, change or repair to, or training in the use of the appliance, brace, member, or device.

Ed: All health care must be provided by or at the direction of a doctor. Vocational rehabilitation is not included in this Act, but may be provided by the Texas Department of Assistive and Rehabilitative Services (DARS) (See Section 409.012). Subsection (l9)(F) was amended in 2007 by SB. 458. The Senate Bill Analysis stated: “Currently, artificial limbs are not treated by all workers’ compensation carriers as a physical structure of the body. Therefore, an accident resulting in a broken leg would be treatable under workers’ compensation, but the same accident causing injury to an artificial leg would not cover repair or replacement of the artificial leg. ‘The goal of the workers’ compensation system is to get workers healthy and back to work. SenateBill 45 8 ensures workers’ compensation carriers treat artificial limbs as natural limbs.” To that end, definitions of “Oithotic device” and “Prosthetic device” were added, as well asredefining “health care” to include the fitting of, change to, or repair to, the device. However, the amendments do not achieve the desired effect, or for that matter, any change to the law at all. The Bill did not provide a change to the definition of “injury,” which still requires damage or harm to the “physical structure of thebody” as opposed to an artificial limb. Further, by only amending the definition of “health care,” the Bill still links the entitlement to such devices only to situations where the carrier would otherwise be liable for “health care.” Pursuant to Section 408.021, a claimant is only entitled to “health care” ifhe sustains “a compensable injury.” Thus, this amendment in no way “ensures workers’ compensation carriers treat artificial limbs as natural limbs.” Rather, it simply further defines certain terms and ensures that the carrier is liable for the replacement or repair of the device. As

such theAppeals Panel’s analysis in Texas Workers’ Compensation ComniissionAppeal No. 91001, decided July 31, 1991, is still applicable.

Labor Code 19 APPENDIX TAB 4 Notwithstanding Subsection (a), the guaranty fund is not liable for the payment of any penalties assessed for any act or omission on the part of any person other than the guaranty fund. |—.. ;> W,

~~ 407A.461. POSSESSION OF SECURITY BY GUARANTY FUND. O the assumption of obligations on behalf of an insolvent group by the guaranty fund under the commissioner’s W O, rmination, the guaranty fund is entitled to immediate possession of any assets ofthe insolvent group and any O _l1

my deposited or the proceeds of any surety bond deposited by the insolvent group, along with all interest on U security. All assessments from members of the insolvent group shall be paid to the guaranty fund. l'|'l

~~~ ~ 407A.462. RELEASE OF CLAIMINFORMATION T O GUARANTY FUND. If the guaranty fund has assumed pensation obligations on behalf of an insolvent group, information on a workers’ compensation claim may be

~~~ ased to the guaranty fund as provided by Section 402.084(a).

. 407A.463. GUARANTY FUND AS PARTY IN INTEREST. The guaranty fund is a party in interest in a proceeding involving a workers’ compensation claim against an insolvent group whose compensation obligations have been paid or assumed by the guaranty fund. The guaranty fund has the same rights and defenses as the insolvent group, including the right to: (1) appear, defend, or appeal a claim; 7

_ (2) receive notice of, investigate, adjust, compromise, settle, or pay a claim; and (3) investigate, handle, or deny a claim.

407A.464. PREFERENCES. ~~~ .

Benefit payments made by the guaranty fund under this subchapter are entitled to the same preference over § other debts ofthcinsolvent group as provided bylaw to benefit payments owed by the insolvent group to the person entitled to the benefits. The guaranty fund has the priority status provided by Section 8, Article 21.28, Insurance Code.

~~~ _407A.465. SPECIAL FUND. onies advanced by the association under this chapter do not become assets of the insolvent group but constitute special fund advanced to the commissioner, receiver, or other statutory successor only for the payment of

~~ mpensation liabilities, including the costs of claim administration and legal costs.

CHAPTER 408. WORKERS’ COMPENSATION BENEFITS UBCIIAPTER A. GENERAL PROVISIONS ~~~Sec. 408.001. EXCLUSIVE REMEDY; EXEMPLARY DAMAGES. , Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee. This section does not prohibit the recovery of exemplary damages by the surviving spouse or heirs of the body ofa deceased employee whose death was caused by an intentional act or omission of the employer or by the ‘

employer’s gross negligence. meaning assigned by Section 41.001, Civil Practice and Remedies In this section, “gross negligence” has the Code. A determination under Section 406.032, 409.002, or 409.004 that a worli—related injury is noneompensable ‘

/\ does not adversely affect the exclusive remedy provisions under Subsection (a).

. The right of recovery for a covered employee orlegal beneficiary against the employer or agent or employee of employer restricted solely to compensation benefits unless the employee dies as a result of an intentional act or the gross negligence

~~ bor Code 101 of the employer. In that situation, the spouse and children of the deceased can recover exemplary (punitive) damage from the employer. This exception to the general rule is required by Article 16, Section 26 of the Texas Constitution. “Gross negligence” is defined in the Civil Practice and Remedies Code as “more than momentary thoughtlessnessl CODE inadvertence, or error ofj udgment. It means such an entire want of care as to establish that the act or omission was the resu[( of actual conscious indifference to the rights, safety, or welfare of the person affected.” Additionally, despite the exclusivity language, Article 1, Section 13 of the Texas Constitution preserves the right to LABOR sue the employer for intentional injury. Unless the employee elects to take the compensation remedy, the right to sue for intentional injury is not destroyed by a mere statute. Further, the Constitution further protects the spouse’s right to sue the employer for loss of consortium due to intentional injury. Except for the election against benefits allowed by an employee by Section 406.034, an agreement to waive benefits is void. Section 406.035. See Section 504.002 regarding these issues as related to political subdivisions. Subsection (d) was added by the 2005 Legislature to addresspotential prohlemsraisedinthe Supreme Court cases, Walls Regional Hospital v. Bomar, 9 S.W.3d 805 (Tex. 1999) and Payne v. Glaen Hospital Hospital Corp., 28 S.W.3d 15 (Tex, 2000).

Sec. 408.002. SURVIVAL OF CAUSE OF ACTION. A right of action survives in a case based on a compensable injury that results in the employec’s death. Ed: The purpose of this section is not immediately clear in light of other sections in the 1989 Act. It is derived from Article 8306, §16 of the “old law.” It has been held that the former section didnotrefer to suits against a covered employer and gives no right of recovery against the employer; rather it was “intended to preserve causes of actions arising from those accidents to which the [workers’ compensation] insurance is applicable— i.e., injuries snstainedinthe course of employment, for which third parties are liable — and to prevent such causes of action against third persons not insured, from abatement by death.” Orange Ice, Light & Wafer v. Texas Compensation Ins. C o. , 278 F. 8 (5"' Cir 1922). In other words, if the employee is injured in the course and scope of his employment due to the negligence of a third party, and that injury subsequently results in death, the cause of action against the third party survives the employee’s death. This ensures, among other things, that the carrier’s subrogation interest is not eliminated. Although the language of this section is differentthan that contained in Article 8306, § 16, according to one of the authors of the 1989 Act, this section does not create a “substantive change from the prior law on survival of a cause of action.” 1 & A MONTFORD. Bzuznnn DUNCAN, GUIDE To TEXAS WORKERS’ Com. REFORM, § 4.03, at 4-39 (1991). Section 408.181(a) provides a derivative, but separate, cause of action to the beneficiaries for deaths that result from a compensable injury. When an employee dies of causes unrelated to the compensable injury (except in the case of a specific injury), “the only claim that survive[s] his death [is] one for benefits accrued and unpaid from the date of his injury until the date of his death.“ /lntwine v. Dallas1ndependentSchooI District,698 S.W.2d 226,228 (Tex.App.—Dallas 1985,writref’dn.r.e.). See aIsoBaz'Iey v. Travelers Insurance Co. , 383 S.W.2d 562 (Tex. 1964); Burris 'Estate v. Ass ocialedEmplayers Insurance C o. , 374 S.W.2d 223 (Tex. 1963): Fitzhugh v. Associated Indemnity Corp., 746 S.W.Zd36l (Tex.App.—Eastland l988,no writ). TheAppeals Panel has held that an estate’s right to accrued and unpaid benefits survives a non-compensable death. Texas Workers’ Compensation Commission Appeal No. 950310, decided April ll, 1995. However, regardless of the compensability of the death, Section 408.081(d)providesthat“[a]n interest infunu-2 income benefits does not survive after the employee’ s death.” Although it might be argued that impairment income benefits accrue on the date of maximum medical improvement if the impairment rating is known, pursuant to Section 408.l2l(a)(2), the decedent’s entitlement to these benefits ends on “the date of the en1ployee’s death.”

Sec. 408.003. REIMBURSABLE EMPLOYER PAYMENTS; SALARY CONTINUATION; OFFSET AGAINST INCOME BENEFITS; LIMITS. (a) After an injury, an employer may: (1) initiate benefit payments, including medical benefits; or (2) on the written request or agreement ofthe employee, supplement income benefits paid by the insurance carrier by an amount that does not exceed the am ount computed by subtracting the amount ofthcincome benefit payments from the employce’s net preinjury wages. (in) Ifan injuryis found to be compensable and an insurance carrier initiates compensation, the insurance carrier

102 Labor Code APPENDIX TAB 5 the court shall award to the attorney payable out of the rance carrier. In the absence of an agreement, mace carrier’s recovery: 3 reasonable fee for recovery of the insurance earrier’s interest that may not exceed one-third of the 5W insurance carrier’s recovery; and C proportionate share of expenses. PD ,. carrier shall make 0 no;-ney who represents the claimant and is also to represent the subrogated insurance O .U “written disclosure to the claimant before employment as an attorney by the insurance carrier. The mant must acknowledge the disclosure and consent to the representation. A signed copy of the disclosure I'll

be furnished to all concerned parties and made a part of the division file. A copy ofthe disclosure with ]aimant’s consent shall be filed with the claimant’s pleading before a judgment is entered and approved to which the attorney is otherwise he court. The claimant’s attorney may not receive a fee under this section fled under an agreement with the insurance carrier unless the attorney complies with the requirements his subsection. participates in obtaining a n attorney actively representing the insurance carrier’s interest actively very, the court shall award and apportion between the claimant’s and the insurance carrier’s attorneys payable out of the insurance carrier’s suhrogation recovery. In apportioning the award, the court shall the benefit accruing to the insurance carrier as a result of each attorney’s service. The total ider rney’s fees may not exceed one—third of the insurance carrier’s recovery. purposes of determining the amount of an attorney’s fee under this section, only the amount recovered benefits, including medical benefits, that have been paid by the insurance carrier may be considered.

ilethe carrier is still required to pay an attorney’s fee not to exceed one-third of its subrogation recovery to either the carrier’s lawyer, or both, the fee only applies to the past subrogation lien amount, rather than any t’s lawyer, ture amounts. On the other hand, carrier is now responsible for its proportionate share of expenses in recovering monies, said expenses to be paid out of the carrier’s part of the recovery.

~ e*ernployee’s attorney represents carrier for subrogation recovery, full disclosure of dual representation must be

~~ rnployec, furnished to all parties, ineludingthe commission, and filedwith the court prior to approval ofjudgment. observethat a claimant’s attorney representingboth the claimant and insurance company has an inherent conflict particularly when third party proceeds are inadequate to fund fully the subrogation interest and the desires of

~ giniant. Carrier’s own counsel should be employed independently to avoid conflict or violation of Texas Disciplinary /W rofessional Conduct of the State Bar of Texas.

04. EMPLOYER LIABILITY TO THIRD PARTY. tion for damages brought by an injured employee, a legal beneficiary, or an insurance carrier against a rty liable to pay damages for the injury or death under this chapter that results in a judgment against the ity or a settlement by the third party, the employer is not liable to the third party for reimbursement or shased on thcjudgnient or settlement unless the employer executed, before the injury or death occurred, In agreement with the third party to assume the liability.

mployee, beneficiary or carrier sues a third party and recovers either by judgment or settlement, the employer have liability to the thirdparty in the absence of an express written indemnity agreement creating liability executed he accident. Indemnity agreements are widespread in industry, and if drafted properly, valid and enforceable.

CHAPTER 418. CRIMINAL PENALTIES 01. PENALTY FOR FRAUDULENTLY OBTAINING OR DENYING BENEFITS. person commits an offense if the person, with the intent to obtain or deny payment ofbenelits, including cdical benefits, under this subtitle or Subtitle C, for himself or another, knowingly or intentionally: makes a false or misleading statement; '

misrepresents or conceals a material fact; or -

N16 243