Taylor v. Academy Iron & Metal Co. ( 1988 )

Wright, J.

The primary issue presented in this appeal is whether a third-party tortfeasor, when sued by or on behalf of an injured or deceased employee, is entitled to indemnity from an employer who is a participating member of the Ohio workers’ compensation system. In other words, does the workers’ compensation law bar an indemnification claim by a third-party tortfeasor against an employer for damages that are suffered by an employee who is injured or killed in the course of his employment?

In our view, the Ohio Constitution and R.C. Chapter 4123 effectively preclude, on both procedural and substantive grounds, such a claim for indemnification. Procedurally, a third-party tortfeasor has no standing to seek indemnification from an employer who is in compliance with the workers’ compensation law. Substantively, the law relieves a complying employer from common-law liability to anyone for damages suffered by an employee who is injured or killed in the course of his employment, unless, of course, the injury or death was caused by intentional tortious conduct of the employer and the employee himself brings a common-law action against the employer.

The above holdings rely upon a common premise: the workers’ compensation system was designed to operate as an employer’s exclusive form of liability for work-related injuries or deaths to employees. The rationale behind the adoption of the Ohio workers’ compensation law was set forth by this court in Blankenship v. Cincinnati Milacron Chemicals, Inc. (1982), 69 Ohio St. 2d 608, 614, 23 O.O. 3d 504, 508, 433 N.E. 2d 572, 577, certiorari denied (1982), 459 U.S. 857, where we stated:

“* * *The Act operates as a balance of mutual compromise between the interests of the employer and the employee whereby employees relinquish their common law remedy and accept lower benefit levels coupled with the greater assurance of recovery and employers give up their common law defenses and are protected from unlimited liability.* * *”

To accomplish this twofold goal of employer immunity and improved recovery by injured employees, an amendment to the Ohio Constitution was adopted in 1912 that paved the way for a compulsory workers’ compensation law.¹ This amendment, as embodied in Section 35, Article II of the Constitution,² provides, in pertinent part:

“For the purpose of providing compensation to workmen and their dependents, for death, injuries or occupational disease, occasioned in the course of such workmen’s employment, laws may be passed establishing a state fund to be created by compulsory contribution thereto by employers, and administered by the state, determining the terms and conditions upon which payment shall be made therefrom. Such compensation shall be in lieu of all other rights to compensation, or damages, for such death, injuries, or occupational disease, and any employer who pays the premium or compensation provided by law, passed in accordance herewith, shall not be liable to respond in damages at common law or by statute for such death, injuries or occupational disease* * *” (Emphasis added.)

In addition, R.C. 4123.74³ specifically provides that:

“Except as authorized in section 4121.80 of the Revised Code, employers who comply with section 4123.35 of Revised Code shall not be liable to respond in damages at common law or by statute for any injury, or occupational disease, or bodily condition, received or contracted by any employee in the course of or arising out of his employment, or for any death resulting from such injury, occupational disease, or bodily condition occurring during the period covered by such premium so paid into the state insurance fund, or during the interval of time in which such employer is permitted to pay such compensation directly to his injured employees or the dependents of his killed employees, whether or not such injury, occupational disease, bodily condition, or death is compensable under sections 4123.01 to 4123.94 of the Revised Code.”

As these provisions explicate, the General Assembly, in carrying out its constitutional mandate and adopting a workers’ compensation law, provided complying employers with immunity from damages for employee injuries that arise in the course of employment. Such immunity, however, is not limited to employee claims but also applies to claims by third parties.

We agree with the Ohio appellate courts that have addressed this issue and held that these provisions demonstrate the legislature’s intention to “provide against liability of the employer to anyone for damages arising from any injury, disease or bodily condition of an employee arising out of his employment,” Williams v. Ashland Chemical Co. (1976), 52 Ohio App. 2d 81, 86-87, 6 O.O. 3d 56, 59, 368 N.E. 2d 304, 308, as will be discussed infra. See, also, Maynard v. Henderson (1982), 3 Ohio App. 3d 403, 405, 3 OBR 469, 471, 445 N.E. 2d 727, 729; Davis v. Consolidated Rail Corp. (1981), 2 Ohio App. 3d 475, 476-477, 2 OBR 601, 603, 442 N.E. 2d 1310, 1312.

I

“The doctrine of standing requires a litigant to be in the proper position to assert a claim. The issue of standing involves both constitutional and prudential considerations.* * *

“Apart from its constitutional elements, the doctrine of standing also requires that a plaintiff’s injury be arguably within the zone of interests to be protected or regulated by the statute in question.” J. V. Peters & Co. v. Ruckelshaus (N.D. Ohio 1984), 584 F. Supp. 1005, 1008, affirmed on other grounds sub norm,., J. V. Peters & Co. v. Admr., Environmental Protection Agency (C.A. 6, 1985), 767 F. 2d 263.

Appellant asserts that it has standing to bring a third-party action against appellee for indemnification, citing as support our holding in Blankenship. In that case, we held that an intentional tort was not an “injury” arising out of the course of employment. Therefore, the workers’ compensation law “does not bestow upon employers immunity from civil liability for their intentional torts and an employee may resort to a civil suit for damages.” Id. at 613, 23 O.O. 3d at 508, 433 N.E. 2d at 576.

Appellant asserts that Bobby Taylor’s death and Scargill’s injuries were the result of appellee’s “intentional” acts within the meaning of Blankenship and Jones v. VIP Development Co. (1984), 15 Ohio St. 3d 90, 15 OBR 246, 472 N.E. 2d 1046. Thus, appellant contends that it, as a third-party tortfeasor, may pursue a civil suit, i.e., indemnification, against the appellee to recover damages it paid for the work-related death of Taylor and injury to Scargill.

Such a contention, however, lacks merit. We will assume that the facts in this case would support a cause of action under the “intentional tort” doctrine enunciated in Blankenship, an assumption that appellee vigorously disputes. Accepting such a premise, we would note that Blankenship expressly states that “ an employee may resort to a civil suit” to recover damages from an employer for intentional torts. As this language clearly indicates, only an employee or his legal representative, not a third-party tortfeasor, may bring a civil suit against an employer alleging that the employer committed intentional torts leading to an employee’s work-related death, disease, or injury.

In addition, to allow this type of third-party practice to prevail under appellant’s interpretation of Blankenship would work to emasculate the major premise upon which the workers’ compensation system is based, i.e., employers relinquish their common-law defenses in return for protection from unlimited liability. As such, it is apparent that appellant’s injury is not “arguably within the zone of interests to be protected or regulated” by the Ohio workers’ compensation law. Therefore, a third-party tortfeasor has no standing to bring an indemnification claim against an employer, who is acting in compliance with the Ohio workers’ compensation law, for damages suffered by an employee in the course of or arising out of his employment.

II

Even if appellant did have standing, the legal grounds on which it bases its claim for indemnification are questionable at best. This court distinguished the concepts of indemnification and contribution in Travelers Indemnity Co. v. Trowbridge (1975), 41 Ohio St. 2d 11, 13-14, 70 O.O. 2d 6, 8, 321 N.E. 2d 787, 789, where we stated:

“Although the two forms of reimbursement are similar, there is a distinct difference. Contribution, when it exists, is the right of a person who has been compelled to pay what another should pay in part to require partial (usually proportionate) reimbursement and arises from principles of equity and natural justice.* * * Indemnity, on the other hand, arises from contract, express or implied, and is a right of a person who has been compelled to pay what another should pay in full to require complete reimbursement.* * *”

Appellant seeks to bring in appellee as a third-party defendant for indemnification purposes as stated above.

In Bevis v. Armeo Steel Corp. (1951), 156 Ohio St. 295, 305-306, 46 O.O. 172, 176, 102 N.E. 2d 444, 448-449, we recognized that an employer can expressly “assume an obligation to indemnify, notwithstanding that the provisions of the statutes relative to workmen’s compensation would otherwise provide him with immunity from such an obligation. That immunity is obviously not of such a character that it cannot be so waived.”

While express indemnity contracts, where an employer voluntarily waives his workers’ compensation immunity, are valid to impose liability on an employer who could otherwise avoid it, we cannot accept the argument that indemnity contracts can be implied between an employer and third-party tortfeasor to impose liability on the employer. Such an implication would contravene the intent and purpose of the workers’ compensation law. In fact, we agree with the holdings of other Ohio courts interpreting this issue that a surrender of the employer immunity must be made by a specific, express waiver. See Davis v. Consolidated Rail Corp. (1981), 2 Ohio App. 3d 475, 2 OBR 601, 442 N.E. 2d 1310; Schwierking v. Sun Petroleum Products Co. (Jan. 20, 1984), Lucas App. No. L-83-250, unreported.

In the instant case, no express indemnity contract or specific waiver of immunity was executed. Instead, appellant asserts that the doctrine of equitable (as opposed to contractual) indemnification should apply to the facts here. Appellant suggests the indemnity claim can be allowed based on a theory of active (primary) versus passive (secondary) torfious conduct. Appellant claims that its negligence, which can be characterized as passive or secondary, combined with the alleged intentional wrongful conduct of appellee, which can be characterized as active or primary, entitles appellant to indemnification.

Application of such a theory makes several assumptions: first, that appellee knew of the peril associated with the scrap aluminum sold by appellant; second, that this knowledge as well as other acts by appellee rose to a level of active or primary tortious conduct; and finally, and most importantly, that Ohio workers’ compensation law permits indemnification based on a theory of active-passive or primary-secondary tortious conduct. Because this appeal arose before the facts of this case were fully developed, the first two assumptions are difficult, if not impossible, to prove. But the final assumption, which involves a legal rather than factual question, is not difficult to rebut.

As previously noted, a waiver of employer immunity granted under the workers’ compensation law must be express. The type of indemnification sought in this case, by its very nature, is implied. To extend employer liability beyond the scope of the workers’ compensation law under the guise of implied indemnification would pervert the law far beyond its purpose.

Decisions in a number of other states agree with this position. See, e.g., Redwing Carriers, Inc. v. Crown Cent. Petroleum, Corp. (Ala. 1978), 356 So. 2d 1203; McCleskey v. Noble Corp. (1978), 2 Kan. App. 2d 240, 577 P. 2d 830; Roberts v. American Chain & Cable Co. (Me. 1969), 259 A. 2d 43; Outboard Marine Corp. v. Schupbach (1977), 93 Nev. 158, 561 P. 2d 450; Public Service Elec. & Gas Co. v. Waldroup (1955), 38 N.J. Super. 419, 119 A. 2d 172; Rucker Co. v. M & P Drilling Co. (Okla. 1982), 653 P. 2d 1239; Rupe v. Durbin Durco, Inc. (Tenn. App. 1976), 557 S.W. 2d 742; Seattle First Natl. Bank v. Shoreline Concrete Co. (1978), 91 Wash. 2d 230, 588 P. 2d 1308.

In addition, a 1945 Ohio appellate case with facts remarkably similar to those in the instant case adopted similar reasoning. In Bankers Indemn. Ins. Co. v. Cleveland Hardware & Forging Co. (1945), 77 Ohio App. 121, 43 Ohio Law Abs. 205, 32 O.O. 395, 62 N.E. 2d 180, plaintiff insured a supplier of bottled gas against injuries sustained by persons due to the supplier’s negligence. After oxygen was supplied to a purchaser ordering nitrogen, a severe explosion occurred, killing three of the defendant’s employees. The plaintiff settled with the employees’ estates and brought an action against the defendant employer for indemnification, claiming that the explosion was the result of the defendant’s negligence. The appellate court rejected the indemnification claim, stating:

“Under the Workmen’s Compensation Act, a subscribing and complying employer is relieved of any liability at common law because of injuries, death or occupational disease that befall his employees while acting in the course and scope of their employment, and such relief from liability extends to a case where a third person, having paid damages for the death of employees of such employer in an action based on the third person’s negligence, seeks to recover from the employer the amount of damages paid, on the ground that the liability of the employer is primary and that of the third person secondary.” Id. at paragraph three of the syllabus.

We believe this reasoning can be extended to cases such as the one here in which the party seeking indemnity alleges that the employer committed an intentional tort rather than negligence. Therefore, we hold that relief from common-law liability under the Workers’ Compensation Act extends to cases in which a third-party tortfeasor, having paid damages to an employee or his estate, seeks indemnity from the employer on the ground that the liability of the employer is primary or active and the liability of the third-party tortfeasor is secondary or passive.

III

Finally, appellant asserts that the court of appeals abused its discretion when it decided an issue not raised in the trial court or briefed by the parties on appeal, i.e., that R.C. 4121.80 barred appellant’s right to indemnification against the appellee. Appellant also asserts that R.C. 4121.80 is unconstitutional as a retroactive law. Since we uphold the trial court’s decision on other grounds, these propositions of law need not be addressed.

Accordingly, and for the foregoing reasons, we affirm the decision of the court of appeals.

Judgment affirmed.

Moyer, C.J., Locher, Holmes and H. Brown, JJ., concur. Sweeney and Douglas, JJ., separately dissent.

1 Ohio’s first workers’ compensation law was voluntary. In upholding the constitutionality of the first law, this court emphasized the voluntary nature of the Act and strongly suggested that coercive legislation would contravene constitutional provisions. State, ex rel. Yaple, v. Creamer (1912), 85 Ohio St. 349, 97 N.E. 602.

As a result, an amendment to the Constitution was proposed that would allow for a compulsory system of workers’ compensation. This amendment passed by a substantial margin on September 3, 1912, and on February 26, 1913, the General Assembly enacted a compulsory workers’ compensation law.

2 This constitutional provision was amended in 1923 to read as it does in its present form.

3 This statute was amended, effective August 22, 1986, adding the introductory phrase concerning the exception of R.C. 4121.80.