#29718-a-SPM 2022 S.D. 52
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
****
DOUGLAS RIES, Plaintiff and Appellant,
v.
JM CUSTOM HOMES, LLC, Defendant and Appellee.
APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA
THE HONORABLE ROBERT GUSINSKY Judge
HEATHER M. LAMMERS BOGARD of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, LLP Rapid City, South Dakota Attorneys for plaintiff and appellant.
GARY D. JENSEN BRETT A. POPPEN of Beardsly, Jensen & Lee, Prof. LLC Rapid City, South Dakota Attorneys for defendant and appellee.
CONSIDERED ON BRIEFS JANUARY 10, 2022 OPINION FILED 08/24/22 #29718
MYREN, Justice
[¶1.] Douglas Ries received workers’ compensation benefits from his
employer following an employment-related injury at a construction site where his
employer was a subcontractor. After receiving those workers’ compensation
benefits from his employer, Ries filed a negligence claim against the general
contractor responsible for the construction project. After extensive discovery, the
general contractor sought leave from the circuit court to amend its answer to assert
statutory immunity under SDCL 62-3-10, which the circuit court granted. The
general contractor subsequently moved for summary judgment based on that
statutory immunity. The circuit court granted summary judgment after concluding
that the general contractor remained potentially liable for workers’ compensation
under SDCL 62-3-10. Given the exclusivity provision found in SDCL 62-3-2, the
circuit court concluded that workers’ compensation was the sole remedy available to
Ries. Ries appeals, and we affirm.
Facts and Procedural History
[¶2.] JM Custom Homes, LLC (JM) was the general contractor constructing
a home in Rapid City, South Dakota. JM subcontracted with Pine Tree Plumbing
(Pine Tree) to complete the plumbing work on the home. Pine Tree employed Ries.
[¶3.] On June 6, 2017, Ries was injured in the home when he fell through an
unanchored, plywood stair leading from the main level to the basement. The stair
caused him to fall and hang upside down on the staircase. Ries sustained injuries
to his right knee, left hip, and forearms. He later underwent several surgeries,
including a right knee replacement. Following the incident, Ries filed a workers’
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compensation claim under Pine Tree’s policy because the injury occurred during the
course and scope of his employment with Pine Tree. Pine Tree’s insurer, Acuity
Insurance, paid Ries’s workers’ compensation benefits. Ries then filed a negligence
suit in circuit court against JM, the general contractor, alleging JM was negligent
because it used unanchored, half-inch plywood on each step and failed to install
handrails.
[¶4.] After the parties had engaged in extensive discovery, JM filed a motion
to amend its answer to include statutory immunity as a defense. Ries opposed the
motion to amend, arguing that JM waived its ability to assert statutory immunity
because it failed to plead the defense in its initial answer. Both parties submitted
affidavits regarding the motion to amend answer, provided briefs, and presented
oral arguments to the circuit court. The circuit court signed an order granting JM’s
motion to amend answer on March 3, 2021. That order does not explain the circuit
court’s ruling, and there is no written decision in the record. 1 JM filed its amended
answer on March 9, 2021, asserting statutory immunity under SDCL 62-3-10, which
provides that “[a] principal, intermediate, or subcontractor is liable for
compensation to any employee injured while in the employ of any subcontractor and
engaged upon the subject matter of the contract, to the same extent as the
immediate employer.”
1. The record does not contain a transcript of the March 2, 2021 hearing on the motion to amend. Although it appears the circuit court issued a bench ruling, because of the absence of that transcript, we are unable to review any analysis or explanation provided by the circuit court. However, during a later hearing regarding the motion for summary judgment, the circuit court indicated that it had “found there was no prejudice that would prevent the amendment of the answer and the raising of the affirmative defense.”
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[¶5.] JM moved for summary judgment on May 14, 2021, arguing that
because it was subject to potential liability for workers’ compensation benefits
under SDCL 62-3-10, Ries’s sole remedy was from workers’ compensation. See
SDCL 62-3-2 (“The rights and remedies granted to an employee subject to this title
. . . exclude all other rights and remedies of the employee . . . except rights and
remedies arising from intentional tort.”).
[¶6.] In response, Ries argued that JM was not entitled to statutory
immunity under SDCL 62-3-10 because of language in JM’s insurance policy.
Noting that Pine Tree carries workers’ compensation insurance, Ries claimed that
JM’s insurance policy excludes liability for subcontractors who operate under the
Workers’ Compensation Act (Act).
[¶7.] The circuit court granted JM’s motion for summary judgment and
entered judgment on July 6, 2021. The circuit court determined that JM was
potentially liable to Ries for workers’ compensation under SDCL 62-3-10 and,
because of the exclusivity provisions of SDCL 62-3-2, workers’ compensation was
Ries’s sole remedy. Ries appeals and asserts that the circuit court abused its
discretion when it allowed JM to amend its answer and that the court erred in
granting JM’s motion for summary judgment.
Whether Ries’s notice of appeal included JM’s motion to amend answer.
[¶8.] As an initial matter, we address JM’s claim that Ries cannot challenge
the circuit court’s decision to grant JM’s motion to amend because Ries’s notice of
appeal did not specifically indicate an intention to appeal the circuit court’s decision
to allow JM to amend its answer.
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[¶9.] “On an appeal from a judgment this court may review intermediate
orders. However, they must involve the merits and necessarily affect the judgment
appealed from.” Lang v. Burns, 77 S.D. 626, 631, 97 N.W.2d 863, 866 (1959).
Moreover, notices of appeal should “be liberally construed in favor of their
sufficiency.” People ex rel. S.D. Dep’t of Soc. Servs., 2011 S.D. 26, ¶ 8, 799 N.W.2d
408, 409 (quoting Int’l Union of Operating Eng’rs Loc. No. 49 v. Aberdeen Sch. Dist.
No. 6-1, 463 N.W.2d 843, 844 (S.D. 1990)) (internal quotation marks omitted).
[¶10.] The amendment to JM’s answer asserted the exclusivity provisions of
SDCL 62-3-2, which provided the basis for the circuit court’s order granting
summary judgment. Because the order granting the amendment involves the
merits of summary judgment, the issue is before this Court as part of Ries’s appeal
of the circuit court’s decision granting summary judgment.
Whether the circuit court abused its discretion by granting JM’s motion to amend its answer.
[¶11.] We review the circuit court’s decision to grant or deny a motion to
amend pleadings using the abuse of discretion standard of review. McDowell v.
Citicorp Inc., 2008 S.D. 50, ¶ 7, 752 N.W.2d 209, 212. “An abuse of discretion occurs
when ‘discretion [is] exercised to an end or purpose not justified by, and clearly
against, reason and evidence.’” Id. (alteration in original) (quoting In re Name
Change of L.M.G., 2007 S.D. 83, ¶ 6, 738 N.W.2d 71, 73–74).
[¶12.] “Under South Dakota law, a defendant is required to plead any and all
affirmative defenses in the answer to plaintiff’s complaint.” Jurgensen v. Smith,
2000 S.D. 73, ¶ 21, 611 N.W.2d 439, 442. However, “[a] trial court may permit the
amendment of pleadings before, during, and after trial without the adverse party’s
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consent.” Klutman v. Sioux Falls Storm, 2009 S.D. 55, ¶ 14, 769 N.W.2d 440, 446
(quoting Burhenn v. Dennis Supply Co., 2004 S.D. 91, ¶ 20, 685 N.W.2d 778, 783);
see SDCL 15-6-15(a) (“[A] party may amend his pleading . . . by leave of court or by
written consent of the adverse party; and leave shall be freely given when justice so
requires.”). “An affirmative defense is not waived if the pleadings are properly
amended to include the unpled defense or if the issue was tried by express or
implied consent.” Dakota Cheese, Inc. v. Ford, 1999 S.D. 147, ¶ 25, 603 N.W.2d 73,
78 (quoting Beyer v. Cordell, 420 N.W.2d 767, 769 (S.D. 1988) (emphasis removed)).
“[T]he most important consideration in determining whether a party should be
allowed to amend a pleading is whether the nonmoving party will be prejudiced by
the amendment.” Id. ¶ 24, 603 N.W.2d at 78 (quoting Isakson v. Parris, 526 N.W.2d
733, 736 (S.D. 1995)). “Prejudice is often shown when a party is surprised and
unprepared to meet the contents of the proposed amendment.” Robinson-Podoll,
2020 S.D. 5, ¶ 14, 939 N.W.2d at 38 (quoting Tesch v. Tesch, 399 N.W.2d 880, 882
(S.D. 1987)).
[¶13.] JM filed a motion to amend its answer approximately eight months
after its initial answer and after the parties had engaged in extensive discovery.
Although Ries had informally requested pretrial deadlines, none had been agreed to
by the parties or ordered by the circuit court. The circuit court had not set a trial
date. Ries’s ability to prepare to challenge JM’s assertion of this defense was not
restricted. Further, the circuit court found that allowing the amended answer
would not prejudice Ries. Accordingly, we conclude that the circuit court did not
abuse its discretion in granting JM’s motion to amend.
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Whether the circuit court erred in granting summary judgment.
[¶14.] “We review a circuit court’s entry of summary judgment under the de
novo standard of review.” Wyman v. Bruckner, 2018 S.D. 17, ¶ 9, 908 N.W.2d 170,
174 (quoting Heitmann v. Am. Fam. Mut. Ins. Co., 2016 S.D. 51, ¶ 8, 883 N.W.2d
506, 508). “We will affirm a circuit court’s ‘grant of a motion for summary judgment
when no genuine issues of material fact exist, and the legal questions have been
correctly decided.’” Harvieux v. Progressive N. Ins. Co., 2018 S.D. 52, ¶ 9, 915
N.W.2d 697, 700 (quoting Wyman, 2018 S.D. 17, ¶ 9, 908 N.W.2d at 174). We do not
give deference to the circuit court’s decision to grant summary judgment under de
novo review. Oxton v. Rudland, 2017 S.D. 35, ¶ 12, 897 N.W.2d 356, 360.
“Statutory interpretation is a question of law for the court to determine, and when
the trial court resolves the question in a litigant’s favor, summary judgment is
appropriate.” Sioux Valley Hosp. Ass’n v. State, 519 N.W.2d 334, 335 (S.D. 1994).
[¶15.] “The purpose of the South Dakota Worker’s Compensation Act is to
provide an injured employee with an expeditious remedy independent of fault and
to limit the liability of employers and fellow employees.” Thompson v. Mehlhaff,
2005 S.D. 69, ¶ 11, 698 N.W.2d 512, 516. “There is an inherent trade-off” as the
“employee is guaranteed compensation if injured on the job[,] but the employer’s
liability is limited in exchange for this certainty.” Id. ¶ 11, 698 N.W.2d at 516–17.
This “quid pro quo” under which the employer’s assumption of liability is traded for
immunity is codified in SDCL 62-3-2, which provides:
The rights and remedies granted to an employee subject to this title, on account of personal injury or death arising out of and in the course of employment, shall exclude all other rights and remedies of the employee . . . against the employer or any
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employee, partner, officer, or director of such employer, except rights and remedies arising from intentional tort.
(Emphasis added.) Thus, the Legislature designed workers’ compensation to be “the
exclusive method for compensating workers injured on the job in all but
extraordinary circumstances.” Harn v. Cont’l Lumber Co., 506 N.W.2d 91, 95 (S.D.
1993).
[¶16.] The Legislature did not limit the provisions on compensation
exclusivity and employer immunity to apply only to the employee’s immediate
employer. Rather, the Legislature extended the provisions to any “principal,
intermediate, or subcontractor,” as each is potentially liable for workers’
compensation. SDCL 62-3-10. While the employee must first bring a claim against
his immediate employer, the principal “remains liable to pay all or any unpaid part
of the compensation due.” Metzger v. J. F. Brunken & Son, Inc., 84 S.D. 168, 172,
169 N.W.2d 261, 263 (1969). This is evidenced by SDCL 62-3-10, which provides:
A principal, intermediate, or subcontractor is liable for compensation to any employee injured while in the employ of any subcontractor and engaged upon the subject matter of the contract, to the same extent as the immediate employer. Any principal, intermediate, or subcontractor who pays compensation under the provisions of this section may recover the amount paid from any person, who, independently of this section, would have been liable to pay compensation to the injured employee. Each claim for compensation under this section shall in the first instance be presented to and instituted against the immediate employer, but such proceeding does not constitute a waiver of the employee’s rights to recover compensation under this title from the principal or intermediate contractor. However, the collection of full compensation from one employer bars recovery by the employee against any others. The employee may not collect from all a total compensation in excess of the amount for which any contractor is liable. This section applies only in cases where the injury occurred on, in, or about the premises on which the principal contractor has
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undertaken to execute work or which are otherwise under the contractor’s control or management.
(Emphasis added.)
[¶17.] This Court held in Metzger that a general contractor is subject to the
same non-fault liability for workers’ compensation as an immediate employer and
therefore has statutory immunity from negligence actions. Metzger, 84 S.D. at 172,
169 N.W.2d at 263. Metzger involved similar facts to this case; the defendant, a
general contractor, contracted with a subcontractor who employed Metzger. Id. at
169, 169 N.W.2d at 262. Metzger died while completing work for the subcontractor,
and his administrator filed a workers’ compensation claim against the
subcontractor. Id. Metzger’s estate received workers’ compensation benefits from
the subcontractor and then sued the general contractor, who sought statutory
immunity under SDC 64.0108. 2 Id. This Court concluded that due to the general
contractor’s potential liability under workers’ compensation law, the general
contractor “should enjoy the regular immunity of an employer from third-party suit
when the facts are such that he could be made liable for compensation,” as the
contractor is, “in effect, . . . the employer for the purposes of the compensation
statute.” Id. at 172, 169 N.W.2d at 263 (quoting Arthur Larson, The Law of
Workmen’s Compensation § 72.31(a)–(b) (current version at Arthur Larson, Larson’s
Worker’s Compensation Law § 111.04[1][a]–[b] (2021)).
[¶18.] Our holding in Thompson v. Mehlhaff reaffirmed these principles;
there, we stated, “[t]he general contractor receives immunity because the general
2. While Metzger contemplated SDC 64.0108, the statute was a predecessor of SDCL 62-3-10. The changes between the statutes are non-substantive.
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contractor is the back-up provider of workers’ compensation coverage.” 2005 S.D.
69, ¶ 16, 698 N.W.2d at 518. In Thompson, two men, each employed by separate
employers, were killed in a trucking collision while in the scope of their separate
employment. Id. ¶ 3, 698 N.W.2d at 515. The estates of both men collected
workers’ compensation from their respective employers. Id. ¶ 4, 698 N.W.2d at 515.
One worker’s estate then sought to recover from the other worker’s employer,
asserting that the employer was vicariously liable for its employee’s negligence. Id.
The employer denied liability and asserted statutory immunity. Id.
[¶19.] This Court determined that statutory immunity did not apply to this
“type of down-the-ladder” claim because although general contractors receive
immunity because they remain potentially liable for workers’ compensation
benefits, “the opposite is not true.” Id. ¶ 16, 698 N.W.2d at 518. “The reason for the
difference in result is forthright: the general contractor has a statutory liability to
the subcontractor’s employee, actual or potential, while the subcontractor has no
comparable statutory liability to the general contractor’s employee.” Id. (quoting
Arthur Larson, Worker’s Compensation Law § 111.04[2] (2002)).
[¶20.] Ries argues that JM’s insurance policy precludes the application of
SDCL 62-3-10 for two reasons: (1) the policy named JM as the “insured” rather than
a subcontractor; and (2) Pine Tree was operating under the Act; therefore
precluding JM’s liability. Ries relies on the following language found within JM’s
policy: “The Workers Compensation Law may make you responsible to the
employees of a contractor (or subcontractor) doing work for you, unless such
contractor (or subcontractor) is operating under the Workers Compensation Act.”
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Ries contends that JM would ordinarily be liable for subcontractors but for this
language. He argues that because Pine Tree was operating under the Act, the
insurance policy’s language eliminates JM’s liability for workers’ compensation
benefits owed to a subcontractor’s employee. Citing Metzger, Ries asserts that
because JM is not liable to the same extent as a subcontractor due to the policy’s
language, it cannot claim statutory immunity under SDCL 62-3-10. Ries also
argues that a disputed material fact exists regarding the statute’s application,
precluding summary judgment.
[¶21.] In response, JM argues that the language of the insurance policy
between JM and its insurer is irrelevant to the application of the statutory
immunity provided by the Legislature. Alternatively, JM asserts that
interpretation of the policy language and its effect on statutory immunity is a
question of law. Along that vein, JM argues that the policy language does not
exclude benefits to employees of a subcontractor; instead, they argued the “provision
advises the insured that a state’s workers’ compensation law may make the insured
liable to employees of a subcontractor unless the subcontractor is operating under a
workers’ compensation act.” JM also argues that the policy provided coverage when
it stated, “[w]e will pay promptly when due the benefits required of you by workers
compensation law.”
[¶22.] Ultimately, however, we think the question before us has less to do
with whether JM was obligated to cover this injury and is better focused more
broadly upon whether JM has accepted the obligation to be liable under the
workers’ compensation statute. As Metzger and Melhaff explain, a general
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contractor’s claim for immunity exists solely because of its ancillary liability to pay
workers’ compensation benefits to injured subcontractors’ employees under SDCL
63-3-10. This exchange of immunity for liability is emblematic of an indirect, more
remote relationship between a subcontractor’s employees and a general contractor
cast in the role of a statutory employer. Though it differs from the traditional
employee and employer relationship, it is no less connected to the statutory
moorings of our workers’ compensation system, which require, among other things,
that employers “accept” the provisions of our workers’ compensation statutes.
[¶23.] A private-sector employer is “deemed to have accepted” if it has
secured its obligation to pay benefits by purchasing insurance, entering into a
reciprocal or interinsurance contract, or complying with self-insurance rules. See
SDCL 62-3-5; SDCL 62-5-2 to -3, -5. An employer who fails to secure its liability
using one of these methods “shall be deemed to have elected not to operate under”
the workers’ compensation system. SDCL 62-5-7.
[¶24.] Thus, JM is incorrect when it argues that “worker’s compensation
coverage is irrelevant to whether worker’s compensation is Ries’s exclusive remedy
and that JM is immune from this negligence lawsuit.” To avail itself of statutory
immunity, JM must show that it has “accepted” the workers’ compensation statutes
by securing benefits for the employees of its subcontractors. JM’s insurance policy
secures such coverage.
[¶25.] The language found in SDCL 62-3-10 and SDCL 62-3-2 is clear. A
general contractor, which has availed itself of the workers’ compensation statutes,
is potentially liable to a subcontractor’s employee for workers’ compensation
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benefits under SDCL 62-3-10. Where such potential liability exists, as it does here,
SDCL 62-3-10 provides that Ries’s sole remedy is workers’ compensation. Such a
result is consistent with Metzger and Thompson. Here, JM is the general contractor
who, in turn, subcontracted with Pine Tree. Pine Tree employed Ries. Though Ries
was statutorily required to file a claim against Pine Tree, JM remained potentially
liable for workers’ compensation benefits under SDCL 62-3-10. Thus, the exclusive
remedy provision found in SDCL 62-3-2 limited Ries’s recovery to workers’
compensation, which he received from Pine Tree. The circuit court did not err in
granting JM’s motion for summary judgment. We affirm.
[¶26.] KERN, SALTER, and DEVANEY, Justices, concur.
[¶27.] JENSEN, Chief Justice, dissents.
JENSEN, Chief Justice (dissenting).
[¶28.] I agree with the majority opinion that “[t]o avail itself of statutory
immunity, JM must show that it has ‘accepted’ the workers’ compensation statutes
by securing benefits for the employees of its subcontractors.” However, I dissent
from the opinion affirming summary judgment because JM failed to make the
necessary showing that it is an “employer” entitled to immunity under the exclusive
remedy provisions of the workers’ compensation statutes.
[¶29.] To prevail on its motion for summary judgment, JM had the burden to
prove its affirmative defense that it was an employer entitled to claim the benefit of
the exclusive remedy provision in SDCL 62-3-2. See Zephier v. Cath. Diocese of
Sioux Falls, 2008 S.D. 56, ¶ 9, 752 N.W.2d 658, 663–64 (concluding that affirmative
statutory defenses require the defendant to first “presumptively establish[] the
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defense . . . [before] the burden then shifts to the plaintiff to establish the existence
of material facts in avoidance of the [defense].’”) (citation omitted).
[¶30.] JM failed to present any facts in support of its statement of material
facts showing that it paid Ries for any services he performed or that it is an
employer entitled to claim immunity as provided in the exclusive remedy statute in
SDCL 62-3-2. Instead, JM presented facts showing that Pine Tree was a
subcontractor of JM and that “Ries was an employee of Pine Tree[.]”
[¶31.] Ries’s response to the motion for summary judgment included a policy
declarations page showing that Pine Tree had workers’ compensation coverage in
force for its employees at the time Ries was injured. JM did not dispute this fact,
and its statement of material facts included a recitation that Ries made a workers’
compensation claim to Pine Tree and received benefits from Pine Tree’s workers’
compensation carrier. Ries’s submission also included the workers’ compensation
policy for JM in effect at the time of the injury. The declarations page shows that
the JM policy provided workers’ compensation coverage for seven of its employees.
JM made no showing that Ries was one of those employees or that it had purchased
workers’ compensation coverage for Ries under its policy. 3
[¶32.] SDCL 62-5-1 requires an “employer” under the workers’ compensation
statutes to “secure the payment of compensation to the employer’s employees in one
of the ways provided by § 62-5-2 or 62-5-3.” SDCL 62-5-2 and -3 provide that “[a]n
employer may secure the payment of compensation to any employee” by purchasing
3. Absent some showing that Ries was a covered employee under JM’s policy, the general policy language that the insurer will “pay promptly when due the benefits required of you by the workers compensation law[,]” is unavailing.
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workers’ compensation coverage for an employee under SDCL 62-5-2 or by
purchasing insurance to cover an employee through an association under SDCL 62-
5-3. Alternatively, SDCL 62-5-5 allows an employer to self-insure to secure the
payment of compensation under SDCL 62-5-1.
[¶33.] If an employer secures the payment of compensation, SDCL 62-5-1
limits the liability of an employer to an employee for any work-related injury
“arising out of and in the course of the employment only as specified by this title.”
However, SDCL 62-3-5 provides that no private employer “may be deemed to have
accepted the provisions of this title unless the employer has complied with the
provisions of §§ 62-5-1 to 62-5-5, inclusive.” The quid pro quo explained in Metzger
and Thompson is not implicated here as JM did not secure payment for Ries as
required for an employer under SDCL 62-5-1. “The employer’s immunity from
common-law liability arises from the fact that he contributes to the compensation
fund; absent contribution, no immunity exists.” Blumhardt v. Hartung, 283 N.W.2d
229, 233 (S.D. 1979) superseded by statute SDCL 62-3-2 as recognized by Canal Ins.
Co. v. Abraham, 1999 S.D. 90, ¶ 21 n.5, 598 N.W.2d 512, 517 n.5. Thus, JM cannot
claim the immunity provided to employers under SDCL 62-3-2, even if we could
somehow construe JM to be an “employer” under the statute.
[¶34.] In addition to JM failing to meet its burden on summary judgment, a
substantial question exists whether this Court should continue to rely on Metzger to
support general contractor immunity under the exclusive remedy statute in SDCL
62-3-2. While not directly addressed in the parties’ briefing, the exclusive remedy
statute has changed since Metzger was decided. In Metzger, the exclusive remedy
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statute in SDC 64.0104 foreclosed any “other rights and remedies” to an employee
receiving workers’ compensation benefits:
The rights and remedies herein granted to an employee subject to this title, on account of personal injury or death by accident arising out of and in the course of employment, shall exclude all other rights and remedies of such employee, his personal representatives, dependents, or next of kin, on account of such injury or death.
Applying this language, Metzger tied the broad immunity provided in SDC 64.0104
to SDC 64.0108, which made the general contractor secondarily liable for a workers’
compensation remedy when an employee of a subcontractor was injured on the
project and the employee did not receive full compensation from the subcontractor.
Based upon the secondary liability of a general contractor, Metzger treated the
general contractor as a “statutory employer” entitled to immunity from an injured
employee’s suit. At the time Metzger was decided, the plain language of the statute
did not prevent this extension of immunity to a non-employer general contractor.
[¶35.] The current language of SDCL 62-3-2 specifically limits the immunity
provided in the exclusive remedy statute to an employer by providing that “[t]he
rights and remedies granted to an employee . . . on account of personal injury or
death arising out of and in the course of employment, shall exclude all other rights
and remedies of the employee . . . against the employer or any employee, partner,
officer, or director of the employer[.]” (Emphasis added.) An “employer” is defined
by SDCL 62-1-2 to include (1) any individual or entity “using the service of another
for pay[,]” or (2) “[a]ny person performing labor incidental to the person’s own
occupation who has elected to proceed under the provisions of SDCL 58-20-3 by
purchasing workers’ compensation insurance to cover the person . . . irrespective of
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whether the person is using the services of another for pay.” JM does not meet
either definition of an employer.
[¶36.] This Court has recognized that “proceedings under the Work[ers’]
Compensation Law . . . are purely statutory, and the rights of the parties and the
manner of procedure under the law must be determined by its provisions.” Martin
v. Am. Colloid Co., 2011 S.D. 57, ¶ 12, 804 N.W.2d 65, 68 (alteration in original)
(citation omitted). When called upon to interpret workers’ compensation statutes
we apply two rules of construction to determine the legislative intent:
The first rule is that the language expressed in the statute is the paramount consideration. The second rule is that if the words and phrases in the statute have plain meaning and effect, we should simply declare their meaning and not resort to statutory construction. When we must, however, resort to statutory construction, the intent of the legislature is derived from the plain, ordinary and popular meaning of statutory language.
Progressive Halcyon Ins. Co. v. Philippi, 2008 S.D. 69, ¶ 5, 754 N.W.2d 646, 649
(citation omitted). The language of SDCL 62-3-2 and SDCL 62-1-2 is clear that
workers’ compensation immunity is only extended to an “employer,” and JM is not
an “employer.”
[¶37.] This reading of SDCL 62-3-2 is consistent with other jurisdictions that
have analyzed whether a general contractor is the “statutory employer” of a
subcontractor’s employee when the exclusive remedy statute limits an injured
employee’s rights and remedies against only the employer. See, e.g., Munoz v.
Bulley & Andrews, LLC, No. 127067, 2022 WL 186573, at *5 (Ill. Jan. 21, 2022)
(holding that a general contractor was not entitled to immunity against a
subcontractor employee’s claim “under the plain language of [the exclusive remedy
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statute] . . . .” because it did not qualify as an employer); see also Meiggs v.
Associated Builders, Inc., 545 A.2d 631, 632 (D.C. 1988) (concluding that a general
contractor was not an employer of a subcontractor’s employee under the District of
Columbia workers’ compensation statutes, and therefore, did not enjoy immunity
under the exclusive remedy provision). In Munoz, the Supreme Court of Illinois
recently applied the plain language of its workers’ compensation exclusive remedy
statute to hold that “while the [workers’ compensation act] bars an employee from
bringing a civil suit directly against his or her employer, it does not limit the
employee’s recovery from a third-party general contractor.” Munoz, at *7.
[¶38.] Metzger’s analysis extending immunity to a general contractor is no
longer sustainable in view of the plain language of SDCL 62-3-2 limiting the
exclusive remedy protections to employers of the injured worker. 4 Additionally, the
quid pro quo immunity articulated in Metzger has no application under our current
workers’ compensation scheme where a general contractor has not purchased
coverage and contractually relies upon the subcontractor to purchase coverage for
its employees. “The intent of a statute is determined from what the legislature said,
rather than what the courts think it should have said, and the court must confine
4. Neither does SDCL 62-3-10 support an adherence to Metzger. A general contractor is secondarily liable under SDCL 62-3-10 to provide workers’ compensation benefits to a subcontractor’s employee, but only in the event the subcontractor’s employee does not receive “full compensation” from the subcontractor. SDCL 62-3-10 is simply a legislative mandate requiring a general contractor to ensure its subcontractors provide workers’ compensation to its employees. The statute is silent in terms of providing any immunity to a general contractor. Further, SDCL 62-3-10 has no application when a general contractor has not purchased workers’ compensation coverage or paid any benefits to an injured employee of the subcontractor.
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itself to the language used.” Martinmaas v. Engelmann, 2000 S.D. 85, ¶ 49, 612
N.W.2d 600, 611 (citations omitted).
[¶39.] Thompson is no more persuasive. The issue in Thompson was whether
a subcontractor was entitled to immunity under the workers’ compensation statutes
from an action by a general contractor’s employee. 2005 S.D. 69, ¶ 16, 698 N.W.2d
at 518. In concluding that the subcontractor could not claim the benefit of the
exclusive remedy statute in SDCL 62-3-2, Thompson seemingly reaffirmed Metzger,
in dicta, by reasoning that the “general contractor receives immunity because the
general contractor is the back-up provider of worker’s compensation coverage.” Id.
However, Thompson did not reexamine the applicability of the exclusive remedy
statute to a general contractor, and in particular, failed to consider the effect of the
legislative changes to the exclusive remedy provision in SDCL 62-3-2, limiting the
grant of immunity to an employer.
[¶40.] For these reasons, I would reverse the entry of summary judgment
because Ries’s complaint for negligence against JM is not prohibited by the
exclusive remedy statute in SDCL 62-3-2.
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