Gunderson v. Harrington

632 N.W.2d 695, 2001 Minn. LEXIS 592, 2001 WL 1013573

• Court: Supreme Court of Minnesota
• Decided: September 6, 2001
• Docket: C7-00-999
• Status: Published

Opinions

OPINION

STRINGER, Justice.

Appellant Corliss Gunderson was employed as a receptionist by Harrington Orthodontics, a closely held corporation owned by respondent Dr. Mark Harrington (Harrington), an orthodontist. Gun-derson resigned in July of 1998 and brought a civil action against Harrington alleging assault, battery, intentional infliction of emotional distress and negligence. Gunderson’s complaint was dismissed by the district court on summary judgment on the basis, in part, that as her employer, Harrington is immune from common law claims for damages arising in the course and scope of employment under the Minnesota Workers’ Compensation Act, MinmStat. §§ 176.001-.862 (2000) (WCA). The court of appeals affirmed. Gunderson appeals, arguing that Harrington is not an employer under the act. In the alternative, she argues that she has raised a genuine issue of material fact that Harrington’s conduct was actionable under the intentional injury exception to the WCA. We affirm.

Harrington practices orthodontics in Plymouth, Minnesota and is the president and sole shareholder of Harrington Orthodontics.¹ His wife Monica is the treasurer. Gunderson was hired in February of 1994 as a part-time receptionist and resigned on July 11, 1998 alleging that Harrington assaulted her on July 10, 1998 and on four other occasions leading up to the July 10 incident. Gunderson alleges the first incident occurred in approximately May of 1997. She testified that she was sitting at her desk when Harrington struck her on top of her head with his open hand and scolded her for forgetting something. She testified in deposition that she felt “belittled.” When asked, “Do you think he meant to hurt you?” Gunderson replied “No.”

Gunderson testified that in approximately August of 1997, Harrington again hit her on the head with his hand while she sat at the reception desk and expressed annoyance at her failure to write a patient’s name in the scheduling book. She stated that she felt a tingling sensation on the top of her head for a couple of minutes and felt “embarrassed.” When asked at deposition “Do you think Dr. Harrington meant to hurt you on that occasion?” Gunderson answered, “I don’t know.”

Gunderson claims that the third incident occurred when Harrington hit her on the top of the head with a heavy ballpoint pen in November of 1997, again criticizing her for a mistake connected with her job duties. She stated that this blow “hurt more” than the earlier incidents and she felt embarrassed and intimidated. When asked “Do you think he meant to hurt you when he hit you with the pen?” Gunder-son again responded, “I don’t know.”

Gunderson alleges that Harrington hit her the fourth time in February of 1998 with his open hand on the back of her head in front of three patients and reproached her for not knowing whether a patient had scheduled a follow-up appointment. Gun-derson testified that this blow was harder than the ones before and recalled “rubbing the area” for half an hour after the incident. Gunderson again testified in deposition that she did not know whether Harrington intended to hurt her with the blow. Following this incident, Gunderson complained to her co-workers about Harrington’s behavior but did not raise the issue with Harrington or his wife.

Gunderson alleges that Harrington struck her so severely a fifth time on July 10, 1998 that she decided to resign the next day. Gunderson testified that she was sitting at the reception desk when Harrington came into the area accompanied by a young boy who had just received braces. When she asked the patient for his name, Harrington forcefully hit her on the back of the head with his open hand while reprimanding her for not knowing his name after he’d spent two hours having his braces put on. Gunderson stated that the force of the blow caused her head to go forward “like whiplash,” straining her neck. Gunderson claims that the boy witnessed the blow and that she and the boy looked at one another for a moment after Harrington hit her. In deposition she was asked whether she thought Harrington meant to hurt her and she answered, “I think with the force of the hit, I think it was intentional.” When asked, “Is it possible that he just got carried away out of frustration without intending to hurt you?” Gunderson answered, “I don’t know.”

Gunderson testified that she did not speak with Harrington and finished her work quickly that day so she could leave the office. Later in the evening she discussed the incident with her husband and friends. They urged her to go to the police and quit her job. The next day Gunderson went to the Plymouth police station and filed a report, and on the advice of the police she then went to an urgent care center. Gunderson testified that a physician examined her head and noted swelling. The record does not contain a medical report.

Gunderson testified that she suffered from head and neck pain following the July 10 incident and she had feelings of insecurity, embarrassment and humiliation. She also stated that bruising and swelling on the back of her head made it difficult for her to comb her hair or rest her head on a pillow for one to two weeks.

The workers’ compensation insurer for Harrington Orthodontics, Berkley Administrators, accepted Gunderson’s claim for a July 10, 1998 head injury and agreed to pay reasonable medical expenses. In an application for reemployment insurance benefits, Gunderson characterized the first four incidents as “little swats on the head.”

Harrington was charged with fifth-degree assault for the July 10 incident. According to Harrington, he paid $100 in costs, completed anger management classes, and committed no similar offenses for one year, in exchange for the city dismissing the charge.²

Gunderson brought this civil action against Harrington alleging assault, battery and intentional infliction of emotional distress. The complaint was later amended to include claims of negligent failure to refrain from making offensive contact with Gunderson and negligent failure to take reasonable steps to ensure that the workplace at Harrington Orthodontics was free from violence.

Harrington submitted an affidavit stating that Gunderson “was one of my most valued and trusted employees, and I considered her a friend. I would never do anything to intentionally injure anyone, certainly not a valued employee whom I considered to be a friend.” At deposition, Harrington testified that he does not recall the first four alleged incidents and that, “I do believe that it is possible that I could have done that, but I don’t have a specific recollection of any particular incidents.” Harrington denied hitting Gunderson on July 10, 1998 and stated that he never intended to injure her. Harrington identified the patient whom Gunderson alleged witnessed the July 10 assault as 14-year-old Ryan Wolcott. In a statement not under oath, apparently prepared by the attorney representing Harrington on the fifth-degree assault charge, Wolcott asserted “I never saw Dr. Harrington hit his receptionist or any other employee.” Gun-derson acknowledged it was Walcott who witnessed the assault.

The district court dismissed Gunderson’s suit on summary judgment. The court held that because Dr. Harrington is the alter ego of Harrington Orthodontics, Harrington is Gunderson’s employer, and because the alleged injuries arose in the course of employment, Gunderson must seek the remedies provided by the WCA unless some exception applies. The court further held that the intentional injury exception does not apply because, accepting all of Gunderson’s allegations as true, the record does not support a reasonable inference that Harrington acted with conscious and deliberate intent to injure Gunderson. The court noted that Gunderson stated she did not think that Dr. Harrington meant to hurt her when he first hit her on the top of the head in late spring of 1997, and that she did not know if Harrington meant to hurt her when he hit her on the other occasions. The court stated, “[t]o allow an employee a civil tort action for what Gun-derson herself has characterized as little swats on the head would trivialize the intentional injury exception and eviscerate the exclusive remedy doctrine.” Finally, the court concluded that Gunderson’s claims for intentional infliction of emotional distress fail as a matter of law because she offered no proof of extreme emotional distress nor physical manifestation of her emotional distress.

The court of appeals affirmed in a divided opinion. The court held that Harrington is the only agent of Harrington Orthodontics and as such, a “[hjolding that respondent was not appellant’s employer would ignore reality.” Gunderson v. Harrington, 619 N.W.2d 760, 763 (Minn.App.2000). Further, Harrington allegedly injured Gunderson while acting in his capacity as her supervisor because he was dissatisfied with her job performance. The court of appeals held that denying Harrington the protection of the exclusive liability provision because he chose to do business as a corporation would frustrate the stated purpose of the WCA: mutual renunciation of common law rights and defenses by employers and employees alike. Gunderson, 619 N.W.2d at 763 (quoting Minn.Stat. § 176.001 (1998)). In reaching its decision, the court cited Fox v. Swartz for the well-accepted principle that the WCA governs the master-servant relationship “to the exclusion of any liability at common law.” Fox v. Swartz, 228 Minn. 233, 36 N.W.2d 708, 710 (1949) (holding employee may not maintain separate damages suit under the civil damages act for injury compensable under workers’ compensation).

The court also affirmed the dismissal of Gunderson’s claim under the intentional injury exception to the WCA, ruling that she failed to present facts supporting a reasonable inference that Harrington acted with a conscious and deliberate intent to injure her. The dissent agreed with the majority that the intentional injury exception does not apply under the facts, but asserted that Harrington is an employee of Harrington Orthodontics and therefore subject to suit as Gunderson’s co-employee. Gunderson, 619 N.W.2d at 766 (Klaphake, J., dissenting).

On review here, Gunderson argues that dismissal was error as a matter of law because the corporation and not Harrington is her “employer” under the WCA,³ and therefore Harrington’s actions should be measured by the standards applicable to co-employees. Gunderson argues that Minn.Stat. § 176.011, subd. 10 clearly and unambiguously defines the employer as the corporation and does not state that “sole shareholders” or “alter egos” of a corporation are also employers for purposes of the act. Gunderson argues that it would be fundamentally unfair to allow Harrington to “have it both ways” — having the benefit of the corporate entity as a shield against personal liability for actions by creditors and others while at the same time claiming the protection offered by the exclusive remedy provision of the workers’ compensation statute as the “alter ego” of Harrington Orthodontics.

Gunderson asserts that her position is supported by a recent decision of the court of appeals, Buck v. Freeman, 619 N.W.2d 793, 796 n. 3 (Minn.App.2000) (concluding that appellant failed to present a genuine issue for trial on claim that principal was co-employee because appellant presented no evidence that respondent organized his business as a corporation), and decisions from other jurisdictions. See Crees v. Chiles, 437 N.W.2d 249 (Iowa App.1988) (holding that corporation is the employer for purposes of the state workers’ compensation act); see also Barnette v. Doyle, 622 P.2d 1349, 1352-55 (Wyo.1981) (holding that president, director, and shareholder of corporation was co-employee). Gunderson further argues that the court of appeals decision would require workers’ compensation insurers to insure “alter egos” as “employers.” ⁴

Finally, Gunderson argues that even if the court determines Harrington is her employer for purposes of the WCA, she has raised genuine issues of material fact regarding Harrington’s liability under the intentional injury exception to the statute. She argues that Minnesota law does not immunize employers who assault and batter their employees. Gunderson maintains that the court of appeals improperly intruded on the province of the trier of fact by making a credibility determination at the summary judgment stage and making a factual determination as to Harrington’s intent. Further, Gunderson asserts that the ruling below has created an impossible burden of production requiring an admission by the employer that he intended to injure the employee.

Harrington counters that the workers’ compensation definition of employer, “any person who employs another to perform a service for hire,” Minn.Stat. § 176.011, subd. 10, unambiguously establishes that he was Gunderson’s employer at the time of the alleged assaults. Further, Harrington argues that changing the form of his business from a sole proprietorship to a corporation, without change as to substance, should not strip him of the protection he would have had as a sole proprietor under the workers’ compensation statute. Harrington asserts that if Gunderson is allowed to maintain a common law suit against him it would frustrate the legislative intent of mutual renunciation of common law rights and defenses embodied in the workers’ compensation scheme.

Harrington further contends that Gun-derson has failed to state facts supporting a claim under the intentional injury exception to the WCA. He cites Gunderson’s failure to seek medical attention until ad-, vised to do so by the police, her deposition testimony that she did not know whether Harrington meant to hurt her and her characterization of the first four assaults as “little swats on the head.” Harrington argues that a reasonable jury could at worst infer that he acted impulsively or reflexively but could not find he acted with “the mental deliberation necessary to form an actual intent to injure.” Any other finding, Harrington argues, would require the use of the “implied intent” or “substantial certainty” tests- rejected by this court in claims involving the intentional injury exception to the WCA. See Hildebrandt v. Whirlpool Corp., 364 N.W.2d 394, 396-97 (Minn.1985).

I.

On review of summary judgment, we view the evidence in the light most favorable to the party against whom summary judgment was rendered. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). The court determines whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990). The interpretation of a statute and the determination of whether a genuine issue of material fact exists are subject to de novo review. Brookfield Trade Center v. Ramsey County, 609 N.W.2d 868, 874 (Minn.2000).

As an initial observation, we note that the WCA is based on a policy of “mutual renunciation of common law rights and defenses by employers and employees.?’ Minn.Stat. § 176.001 (2000). The exclusive remedy provision of the WCA states that “[t]he liability of an employer prescribed by this chapter is exclusive and in the place of any other liability to such employee * * * entitled to recover damages on account of such injury or death.” Minn.Stat. § 176.031 (2000). The WCA defines an employer as “any person who employs another to perform a service for hire; and includes [a] corporation, partnership, limited liability company, association, group of persons, state, county, town, city, school district, or governmental subdivision.” Minn.Stat. § 176.011, subd. 10.

Both parties argue that the clear and unambiguous language of the WCA supports their position regarding whether Harrington is Gunderson’s employer. Gunderson emphasizes that the act states that a corporation may be an employer but doesn’t list “shareholder” or “alter ego” in the definition of employer. She also notes, that a corporation is a legal entity separate-from its shareholders. Harrington argues that as the court of appeals held, the “common sense” reading of “any person who employs another to perform a service for hire” includes Harrington, and that as sole shareholder and president of Harrington Orthodontics, a corporation organized solely to support his professional practice as an orthodontist, he and the corporation are virtually indistinguishable.

Recognizing Harrington as Gun-derson’s employer is consistent with the reality that the form but certainly not the substance of his business changed when Harrington incorporated. The corporation was for all practical purposes Harrington personally as its sole principal and shareholder, and it could act only through him. To rigidly cling to the form of the corporation, ignoring Harrington’s sole authority to manage and direct Gunderson’s employment, would frustrate the purpose of the WCA: “mutual renunciation of common law rights and defenses by employers and employees alike.” Minn.Stat. § 176.001 (2000).⁵

The dissent correctly indicates that our holding is not based on an equitable pierce of the corporate veil. The dissent cites our decision in Wessin v. Archives Corp., 592 N.W.2d 460 (Minn.1999) for the proposition that a closely held corporation must be treated the same as all other corporations under Minnesota statutes for purposes of the WCA. The corporation in that case had a small number of shareholders and the issue presented was whether the actions brought were direct or derivative. Wessin, 592 N.W.2d. at 462. In this case, much like a sole proprietorship, Harrington is the president and sole shareholder of the corporation. The clear indication that Harrington himself acted as the corporation and the well-settled doctrine that the WCA is intended to replace the uncertainty of tort actions against employers and provide the exclusive remedy for employment-related injuries supports our holding that Harrington is Gunderson’s employer under the WCA.

We hold that Harrington Orthodontics is so completely dominated by and identified with Harrington that he must be considered Gunderson’s employer for purposes of the WCA. Therefore, Gunderson is restricted to the remedies provided by the WCA for injury by Harrington in the course of her employment.⁶ We affirm the court of appeals ruling that Harrington is Gunderson’s employer as defined by the WCA.

II.

We turn next to Gunderson’s claim that even if Harrington is deemed to be her employer, the intentional injury exception⁷ to the exclusive remedy provision of the WCA should apply. The intentional injury exception was first recognized in Boek v. Wong Hing, 180 Minn. 470, 231 N.W. 233 (1930) where the employer swung a heavy broom handle at the employee, dislocating two finger joints. We stated:

No case has been cited where it has been held that one who willfully assaults and injures a workman while in the course of his employment, be he an employe[e], employer or a stranger, when sued for the tort, can successfully interpose as a defense that the plaintiff and his employer are under the workmen’s compensation act, and his sole remedy is thereunder. And we think none can be found, for it would be a perversion of the purpose of the act so to hold.

180 Minn. at 471, 231 N.W. at 233-34. In Breimhorst v. Beckman, we rejected a claim under the intentional injury exception where the employee failed to present a triable issue of fact regarding whether the employer had “conscious and deliberate intent directed to the purpose of inflicting an injury, and such intent may not be inferred from mere negligence, though it be gross.” 227 Minn. 409, 426, 35 N.W.2d 719, 730 (1949) (holding that the exclusive remedy for employee’s injury from concealed spring gun on employer’s premises was under the WCA).⁸

Later in Hildebrandt v. Whirlpool Corp. we rejected the argument that an employer’s knowledge of a “substantial certainty” of injury to an employee should trigger the intentional injury exception and reiterated the “conscious and deliberate intent to inflict injury” standard. 364 N.W.2d 394, 396-97 (Minn.1985) (rejecting a claim under the intentional injury exception where employees presented evidence that the employer intentionally misrepresented the nature of a toxic chemical employees were required to handle). Most recently in Kaess v. Armstrong Cork Co. we stated again that a “conscious and deliberate intent to inflict injury” is necessary for the intentional injury exception to apply. 403 N.W.2d 643, 644-45 (Minn.1987) (dismissing an action in strict liability for injuries sustained through employee’s work with insulation materials containing asbestos manufactured by the employer).

To successfully oppose summary judgment Gunderson must identify material facts in the record creating a genuine issue as to whether Harrington consciously and deliberately intended to injure her. The stated purpose of the Rules of Civil Procedure — securing a just, speedy, and inexpensive determination of an action — is furthered by allowing a court to dispose of an action on the merits if there is no genuine dispute regarding the material facts, and a party is entitled to judgment under the law applicable to such facts. Minn. R. Civ. P. 1, 56.03. To raise a genuine issue of material fact, Gunderson must provide more than “evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of [her] case to permit reasonable persons to draw different' conclusions.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn.1997). She has failed to do so.

While Gunderson alleges that Harrington struck her on five different occasions, as to the first incident she testified that she did not think Harrington intended to injure her, and as to the next three incidents she testified that she did not know if he intended to hurt her. She characterized .them as “little swats on the head,” failed to mention the first three incidents to anyone, and sought no medical treatment for the first four incidents. As to the incident on July 10, 1998 she gave conflicting testimony, at first saying that “with the force of the hit, I think it was intentional,” but later saying she didn’t know if Harrington might have hit her out of frustration but without intending to hurt her. As the only other evidence in the record of Harrington’s intent is his denial of an intent to injure, Gunderson’s testimony clearly is the evidence most favorable to her claim. We are compelled to conclude that Gunderson’s belief that Harrington did not intend to hurt her, her statement that she didn’t know if he intended to hurt her, and her conflicting beliefs as to the July 10 incident do not create genuine issues of material fact of Harrington’s intent to injure her to oppose summary judgment. “A genuine issue of material fact for trial must be shown by substantial evidence.” Brookfield, 609 N.W.2d at 874. The evidence most favorable to Gunderson’s claim falls short of the substantial evidence standard.

While the evidence supports a finding that Harrington’s conduct was inappropriate, Gunderson has failed to present sufficiently probative evidence to establish the existence of a genuine issue of material fact for trial on the question of whether Harrington acted with a conscious and deliberate intent to inflict physical injury. We hold that Gunderson has failed to raise a genuine issue of material fact regarding an essential element necessary to maintain an action under the intentional injury exception — that Harrington acted with a conscious and deliberate intent to inflict injury. Therefore Gunderson may not maintain a common law action for damages under the intentional injury exception to the exclusive remedy provided by the WCA.

Affirmed.

GILBERT, PAGE, PAUL H. ANDERSON, JJ., dissenting.

1 . The record refers to the corporation as both Harrington Orthodontics, Ltd. and Harrington Orthodontics, Inc.

2 . The record does not contain an official disposition of the criminal case.

3 . The WCA defines an employer as "any person who employs another to perform a service for hire; and includes [a] corporation, partnership, limited liability company, association, group of persons, state, county, town, city, school district or governmental subdivision." Minn.Stat. § 176.011, subd. 10 (2000).

4 . In response to Gunderson’s arguments regarding Buck v. Freeman, Harrington argues that the issue presented here was not before the court of appeals in that case. Buck v. Freeman, 619 N.W.2d at 796. Harrington asserts that this court should not follow the cases from other jurisdictions cited by Gun-derson as they are factually distinguishable and are based on the application of the particular language of their state workers' compensation statutes.

5 . See also 6 Larson's Workers' Compensation Law § 111.02[3] (2000) (stating that where "the defendant so dominates the corporation, perhaps as stockholder, president, and manager, that the defendant can honestly be said to be the alter ego of the corporation, this in itself may suffice to bar any action against him or her.”)

6 . The cases from other jurisdictions cited by Gunderson are not consistent with this court's interpretation of the WCA and fail to persuade this court to hold in Gunderson's favor. We declined to apply the "dual capacity” doctrine in Kaess v. Armstrong Cork Co. without clear indication that the employer possesses a second persona so separated from the status as employer that it is a separate legal entity. 403 N.W.2d 643, 645 (Minn.1987). The liability of the corporation owner in Barnette v. Doyle, a Wyoming case cited by appellant, was based on the holding that the owner's duties as manager of day-to-day operations gave rise to a duty in his capacity as co-employee. 622 P.2d 1349, 1353-56 (Wyo.1981). The holding in Crees v. Chiles was based on the unique language of the Iowa workers' compensation act and Barnette. 437 N.W.2d 249, 252-53 (Iowa App.1988). Gun-derson's argument based on the court of appeals decision in Buck is similarly unhelpful, as it relies upon dicta. See Buck, 619 N.W.2d at 796 n. 3.

7 . We utilize the term 'intentional injury exception' rather than 'intentional tort exception' throughout this opinion, as it most closely conforms with the well-settled standard 'conscious and deliberate intent to inflict injury. See, e.g., Kaess, 403 N.W.2d at 644—45, Hildebrandt, 364 N.W.2d at 396, Breimhorst v. Beckman, 227 Minn. 409, 426, 35 N.W.2d 719, 730 (1949); see also Boek v. Wong Hing, 180 Minn. 470, 472, 231 N.W. 233, 234 (1930) (utilizing the “willfully and intentionally inflicted bodily injuries” standard).

8 . The dissent argues that Breimhorst cannot stand for the principle that there must be an intent to inflict injury for the exception to apply because the facts presented in that case indicated the employer did not know of the device that injured the employee and was at most negligent. In response to arguments regarding newly discovered evidence that the employer knew that the device was on the premises and had once accidentally discharged tear gas, we held that "such knowledge only served to put him on notice * * * [of] a tear-gas mechanism which, if used for the purpose for which it was intended, might inflict temporary discomfort but not bodily harm.” Breimhorst, 227 Minn. at 419, 35 N.W.2d at 727. Therefore, our holding in Breimhorst requires an intent to inflict injury.