Lora Brenner and Shawn Brenner v. All Steel Carports, Inc., All Steel Carports and Buildings, LLC, Chavez Real Estate and Ignacio Chavez

FILED
Apr 18 2019, 9:03 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES
David A. Anderson Joseph P. Hunter
Todd C. Peabody Muncie, Indiana
Anderson & Associates, PC Storrs W. Downey
Indianapolis, Indiana Jeffrey E. Kehl
Bryce Downey & Lenkov, LLC
Chicago, Illinois
IN THE
COURT OF APPEALS OF INDIANA
Lora Brenner and Shawn April 18, 2019
Brenner, Court of Appeals Case No.
Appellants-Plaintiffs, 18A-CC-1342
Appeal from the Delaware Circuit
v. Court
The Honorable John M. Feick,
All Steel Carports, Inc., All Steel Judge
Carports and Buildings, LLC, Trial Court Cause No.
Chavez Real Estate and Ignacio 18C04-1612-CC-985
Chavez,
Appellees-Defendants.
Riley, Judge.
Court of Appeals of Indiana | Opinion 18A-CC-1342 | April 18, 2019 Page 1 of 15
STATEMENT OF THE CASE
[1] Appellants-Plaintiffs, Lora and Shawn Brenner (collectively the Brenners),
pursue this interlocutory appeal from the trial court’s dismissal of their claims
against Appellees-Defendants, Ignacio Chavez (Ignacio) and Chavez Real
Estate.
[2] We reverse and remand for further proceedings.
ISSUE
[3] The Brenners present us with four issues on appeal, which we consolidate and
restate as: Whether the trial court improperly dismissed their claims against
Ignacio and Chavez Real Estate.
FACTS AND PROCEDURAL HISTORY
[4] Lora was an employee of All Steel Carports, Inc., and All Steel Carports and
Buildings, LLC, (collectively All Steel), whose business premises was located in
Munice, Indiana. All Steel’s business premises had been owned by Ignacio, but
ownership of the real estate was transferred to Chavez Real Estate at some
point prior to the instant litigation. Ignacio had been the president of All Steel
Carports, Inc., since 2006 and of All Steel Carports and Buildings, LLC, since
2009. Lora was terminated from All Steel in July 2016.
[5] On December 27, 2016, the Brenners filed a Complaint, which they amended
once, against All Steel, Ignacio, and Chavez Real Estate, (collectively the
Defendants), raising claims of negligence, gross negligence, wrongful
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termination, and loss of consortium based on their allegations that Lora had
been exposed to contaminants during her employ with All Steel which had
made her ill. The Defendants moved the trial court to dismiss the Amended
Complaint, arguing that the trial court lacked subject matter jurisdiction
because all of the Brenners’ claims, apart from the wrongful termination claim,
were barred by the Worker’s Compensation Act (WCA). On September 27,
2017, the trial court granted the Defendants’ motion to dismiss without entering
findings of fact or conclusions of law.
[6] On December 22, 2017, the Brenners filed their Second Amended Complaint
against the Defendants in which they made the following relevant allegations:
3. [] Chavez Real Estate is a domestic Limited Liability
Company. Said Defendant is the “owner” of the real estate in
question.
4. [Ignacio,] located at 2200 N. Granville Ave[.], Muncie,
Indiana, 47303, was the “former owner” of said real estate.
****
6. [Lora] was an employee of [All Steel] in Muncie, Indiana
(herein “the Employers”).
7. [Shawn] is married to Lora [] and has been at all relevant times
relating to this lawsuit.
8. While working for the Defendant Employers and while on the
Defendant owners’ property, [Lora] was exposed to extreme
amounts of dust, ground contaminants, pollutants and mold.
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9. In 2016, Lora [] discovered that a significant amount of mold
was present in the office building where she worked.
10. During her time working for the “Employers” on the
“owner” and “former owner’s” premises, Lora [] was exposed to
mold and other toxins that were present in the structure and air
and others that were introduced during a remodeling project on
the premises. The structure and building she was working in is
located at 22 N. Granville Ave., Muncie, Indiana, 47303.
11. She suffered severe illness from exposure to toxins, ground
contaminants, pollutants, and mold present in the building.
(Appellants’ App. Vol. II, p. 19). The Brenners further alleged that others
employed by All Steel had become ill, Lora had ordered an environmental
inspection of the All Steel business premises, and that All Steel had terminated
her for allowing the inspection to take place. The Brenners also alleged that All
Steel did not maintain worker’s compensation insurance for Lora. The
Brenners re-asserted their claims of negligence, gross negligence, and loss of
consortium as to all the Defendants and re-asserted their claim of wrongful
termination only as to All Steel. The Brenners sought the costs of Lora’s
medical treatment, lost wages, lost earning capacity, and punitive damages.
[7] On January 16, 2018, Chavez Real Estate answered the Second Amended
Complaint. On February 2, 2018, All Steel and Ignacio answered the Brenners’
Second Amended Complaint and raised the affirmative defenses that the
Brenners had failed to state a claim upon which relief could be granted and the
trial court lacked subject matter jurisdiction because the Worker’s
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Compensation Board had sole jurisdiction over their negligence, gross
negligence, and loss of consortium claims. The Defendants also filed the
Affidavit of Scott Boylan, the controller for All Steel, and attached verification
that All Steel had worker’s compensation insurance when the Brenners filed
their original Complaint in 2016.
[8] On February 7, 2018, All Steel and Ignacio filed a motion to dismiss with an
accompanying memorandum, seeking the dismissal of all of the Brenners’
claims, except that for wrongful termination, based on the previously-raised
affirmative defenses. On April 2, 2018, Chavez Real Estate joined in All Steel’s
and Ignacio’s motion. On April 3, 2018, the trial court heard argument on the
Defendants’ motion to dismiss, but no additional evidence was introduced. On
April 4, 2018, Chavez Real Estate filed a response to the Brenners asserting that
the Brenners were precluded from pursuing any third-party tort claims without
first seeking relief under the WCA. On April 23, 2018, the trial court entered its
Order granting the Defendants’ motion to dismiss the Brenners’ negligence,
gross negligence, and loss of consortium claims. The trial court entered no
findings of fact or conclusions of law.
[9] On May 21, 2018, the Brenners sought leave of the trial court to pursue an
interlocutory appeal of the trial court’s Order dismissing their claims. On May
22, 2018, the trial court granted the Brenners’ request. This court accepted
jurisdiction over the Brenners’ appeal on July 18, 2018.
[10] The Brenners now appeal. Additional facts will be provided as necessary.
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DISCUSSION AND DECISION
[11] The Brenners contend that the trial court had jurisdiction and, thus, improperly
dismissed their claims against Ignacio and Chavez Real Estate. 1 In their
motion to dismiss pleadings, Ignacio and Chavez Real Estate argued that the
WCA provided the Brenners with their exclusive remedy, and they properly
challenged the Brenners’ claims through a motion to dismiss for lack of subject
matter jurisdiction under Indiana Trial Rule 12(B)(1). GKN Co. v. Magness, 744
N.E.2d 397, 401 (Ind. 2001). We note that the trial court granted the motion to
dismiss based upon the pleadings and without having an evidentiary hearing.
We also note that the jurisdictional facts contained in the record are not in
dispute. In such circumstances, we review de novo a trial court’s decision to
dismiss claims for lack of subject matter jurisdiction. Id.I. The WCA
[12] The WCA provides compensation to employees for accidental injuries which
arise out of, and in the course of, employment. Campbell v. Eckman/Freeman &
Assocs., 670 N.E.2d 925, 930 (Ind. Ct. App. 1996), trans. denied; see also Ind.
Code 22-3-2 et seq. According to the WCA’s exclusive remedy provision,
[t]he rights and remedies granted to an employee subject to IC
22-3-2 through IC 22-3-6 on account of personal injury or death
by accident shall exclude all other rights and remedies of such
1
The Brenners do not appeal the trial court’s dismissal of their negligence, gross negligence, and loss of
consortium claims against All Steel. The record does not reflect that the Brenners have filed a Worker’s
Compensation claim against All Steel.
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employee, the employee’s personal representatives, dependents,
or next of kin, at common law or otherwise, on account of such
injury or death, except for remedies available under IC 5-2-6.1.
I.C. § 22-3-2-6. Therefore, if an employee is injured in an accident arising out
of, and in the course of, employment, he is entitled to compensation under the
WCA, and the exclusive remedy provision precludes a trial court from hearing
a common law action brought by the employee for the same injuries. Campbell,
670 N.E.2d at 930. It is the employer-employee relationship that defines the
parameters of the immunity granted by the WCA’s exclusive remedy provision.
Ross v. Schubert, 180 Ind. App. 402, 407, 388 N.E.2d 623, 627 (Inc. Ct. App.
1979), trans. denied, superseded by statute on other grounds. “In enacting the
[WCA], the legislature never manifested a desire to reach beyond the
employment relationship and benefit a third party,” and, thus, the WCA was
“never intended to abridge the remedies an employee has in tort against a
[t]hird party.” Id. The right of an employee to pursue remedies in tort against a
third party is embodied in Indiana Code section 22-3-2-13, titled “Claims
against third persons; subrogation; procedures”, which provides, in relevant
part, that
[w]henever an injury or death, for which compensation is
payable under chapters 2 through 6 of this article shall have been
sustained under circumstances creating in some other person than the
employer and not in the same employ a legal liability to pay damages
in respect thereto, the injured employee, or the injured employee's
dependents, in case of death, may commence legal proceedings against the
other person to recover damages notwithstanding the employer’s
or the employer’s compensation insurance carrier’s payment of
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or liability to pay compensation under chapters 2 through 6 of
this article.
(Emphasis added). With this provision the WCA creates an exception to the
exclusive remedy provision for actions to be brought against third parties,
namely someone other than the employer or a fellow employee, in which legal
liability was created by a WCA-compensable injury.
II. Ignacio
[13] The Brenners contend that its claims against Ignacio were improperly dismissed
because section 22-3-2-13 permitted them to proceed against Ignacio under a
premises liability theory in his third-party capacity as the previous owner of the
All Steel business premises. Ignacio counters that, as an officer of All Steel, he
was immune from liability under the WCA’s exclusive remedy provision. We
addressed similar facts in Jackson v. Gibson, 409 N.E.2d 1236 (Ind. Ct. App.
1980), and so find the case instructive. Jackson was the custodian at Sun
Realty Company and injured himself while performing his duties. Id. at 1236-
37. Gibson was the president, director, and manager of Sun Realty as well as
the owner of the building where Jackson injured himself. Id. at 1237. Jackson
argued that Gibson, as the owner of the building where he was injured, was
subject to suit under section 22-3-2-13 and brought a negligence action against
Gibson based on a premises liability theory. Id. The trial court concluded that
it lacked subject matter jurisdiction because Gibson and Jackson were both
employed by Sun Realty and that Gibson could not be held liable except as
provided for by the WCA. Id.Court of Appeals of Indiana | Opinion 18A-CC-1342 | April 18, 2019 Page 8 of 15
[14] In affirming the trial court, this court noted the provisions of Indiana Code
section 22-3-2-5 which provide immunity from personal suit to those persons
“conducting [his] employer’s business” and found that Gibson, who was
supervising and directing Jackson’s work, was conducting Sun Realty’s
business. Id. at 1238. We concluded that Gibson, therefore, could not be held
liable as the landowner as a separate entity. Id. at 1238-39.
[15] Jackson seems to suggest that an officer of a corporation make a showing that he
was conducting his employer’s business in order to come within the immunity
granted to employees. However, Indiana Code section 22-3-6-1(b)(1) provides
that, for purposes of the WCA, an “executive officer elected or appointed and
empowered in accordance with the charter and bylaws of a corporation . . . is
an employee of the corporation under IC 22-3-2 through IC 22-3-6.” In
addition, in Rodgers v. Hembd, 518 N.E.2d 1120 (Ind. Ct. App. 1988), trans.
denied, after citing section 22-3-6-1(b)(1), this court held that “an officer of a
corporation is an employee and is entitled to immunity under the fellow
employee rule, regardless of his dual capacity[],” without any showing that the
corporate officer in that case was actively conducting his employer’s business.
Id. at 1122-23.
[16] Here, the undisputed evidence before the trial court was that Ignacio was the
president of All Steel Carports, Inc. Following Jackson and Rodgers, and in light
of section 22-3-6-1(b)(1), we conclude that Ignacio was an employee of All Steel
Carports, Inc. Accordingly, as to All Steel Carports, Inc., Ignacio was not a
third party for purposes of section 22-3-2-13.
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[17] However, our inquiry does not end there. The Brenners also brought suit
against All Steel Carports and Buildings, LLC, of which Ignacio was also
president. All Steel Carports and Buildings is a limited liability company, not a
corporation, and so Ignacio was not an employee of that entity by virtue of
section 22-3-6-1(b)(1). The challenger of subject matter jurisdiction has the
burden of establishing lack of jurisdiction. GKN, 744 N.E.2d at 404. Thus,
following Jackson, Ignacio had the burden to produce some evidence that he
acted as employee of All Steel Carports and Buildings, LLC, in order to be
shielded by the immunity provided in sections 22-3-2-13 and 22-3-2-5. When a
trial court relies solely on the pleadings in ruling on a motion to dismiss, we
generally presume that the trial court was correct. Jennings v. St. Vincent Hosp. &
Health Care Center, 832 N.E.2d 1044, 1050 (Ind. Ct. App. 2005), trans. denied.
However, nothing in the pleadings filed in the trial court established that
Ignacio acted as an employee for All Steel Carports and Buildings, LLC, in
addition to holding the title of president of that entity.
[18] Ignacio argues that the Brenners essentially invoke the “dual-capacity”
doctrine, under which a plaintiff seeks to sue an employer on a theory outside
of the employer-employee relationship. Ignacio correctly points out that
Indiana has rejected this doctrine. See Procare Rehab Servs. of Community Hosp. v.
Vitatoe, 888 N.E.2d 349, 355 (Ind. Ct. App. 2008). However, because we have
determined that it was not established that Ignacio was acting as an employee
of All Steel Carports and Buildings, LLC, this is not a “dual-capacity” scenario
as to the limited liability company. All Steel Carports and Buildings, LLC, did
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not own the business premises, and Lora is suing Ignacio as the former
landowner. Thus, in this case, there are two different entities. We conclude
that Ignacio’s status as president of All Steel Carports and Buildings, LLC, did
not shield him from direct suit and that the Brenners are permitted to proceed
against him as a third party under section 22-3-2-13.
II. Chavez Real Estate
A. Employer-Employee Relationship
[19] The Brenners also argue that they had authority to sue Chavez Real Estate as a
third party pursuant to section 22-3-2-13. Chavez Real Estate counters that
Lora was an employee of Chavez Real Estate, and so her exclusive remedy
against it was through a WCA claim. The employer bears the burden to
establish lack of jurisdiction unless the plaintiff’s complaint demonstrates facts
establishing the employment relationship. GNK, 744 N.E.2d at 404. Chavez
Real Estate contends that “the Brenner’s [sic] pleadings establish that Lora
Brenner was an employee of Chavez Real Estate.” (Chavez Real Estate’s Br. p.
16). In support of that contention, Chavez Real Estate argues, without citation
to the record, that All Steel Carports, Inc., All Steel Carports and Buildings,
LLC, and Chavez Real Estate all have the same address, the same registered
agent, and the same owner, Ignacio. However, even if we were to assume those
facts were relevant, our examination of the pleadings before the trial court,
namely the Second Amended Complaint, the Answers filed by the parties, and
the dismissal motion filings, did not reveal the address for Chavez Real Estate,
the identity of the registered agents of any of those entities, or that Ignacio
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owned all of the named entities. Chavez Real Estate also contends that the
Brenners’ averment in their Complaint that “[c]ommunicating with other
companies and scheduling of such tasks was a routine part of Ms. Brenner’s
job” established that she worked for Chavez Real Estate. (Appellant’s App.
Vol. II, p. 20). However, the Brenners maintained throughout their Complaint
that Lora was an employee of All Steel, not Chavez Real Estate, and so there is
no basis in the remainder of the Complaint for linking the cited reference to
“job” to Chavez Real Estate. Because the Complaint did not establish an
employer-employee relationship, the burden to do so remained on Chavez Real
Estate.
[20] Inasmuch as Chavez Real Estate argues that Lora was employed by both it and
All Steel, under the WCA, it is possible for an employee to simultaneously have
two employers. See I.C. § 22-3-3-31. For purposes of the WCA, an employee is
every person, including a minor, in the service of another, under
any contract of hire or apprenticeship, written or implied, except
one whose employment is both casual and not in the usual course
of the trade, business, occupation, or profession of the employer.
I.C. § 22-3-6-1(b). In addition, this court uses the seven-factor test set forth by
our supreme court in Hale v. Kemp, 579 N.E.2d 63 (Ind. 1991), to determine if
an employer-employee relationship has been established. See Jennings, 832
N.E.2d at 1050-51 (applying the Hale factors). The Hale factors are:
(1) the right to discharge; (2) mode of payment; (3) supplying tools or
equipment; (4) belief of the parties in the existence of an employer-
employee relationship; (5) control over the means used in the results
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reached; (6) length of employment; and (7) establishment of the work
boundaries.
Id.[21] Here, there was no evidence contained in the relevant pleadings as to any of
these factors which would establish that Lora was also employed by Chavez
Real Estate. We conclude that Chavez Real Estate did not carry its burden to
show that it was shielded from suit by the exclusive remedy provision of the
WCA.
B. WCA Claim as Co-requisite to Third-Party Suit
[22] Lastly, in what appears to be a novel legal argument, Chavez Real Estate
contends that the Brenners were required to pursue a WCA claim against her
employer “in concert” with any third-party suit. (Chavez Real Estate’s Br. p.
15). Before turning to the merits of this argument, we pause to note that, on
appeal, the Brenners contend that, “[i]n the present case, a worker’s
compensation action is being pursued against Ms. Brenner’s employer and . . .
remains unresolved at this time.” (Appellants’ Br. pp. 12-13). We agree with
Chavez Real Estate that there was nothing in the pleadings before the trial court
that established that the Brenners had pursued a WCA claim against All Steel,
and so we assume for purposes of our analysis that the Brenners have not done
so.
[23] The Brenners and Chavez Real Estate both claim that section 22-3-2-13
supports their position, and so we must examine the statute. When we are
faced with a question of statutory interpretation, we must first determine
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whether the language of the statute is clear and unambiguous. Smith v.
Champion Trucking Co., 925 N.E.2d 362, 365 (Ind. 2010). We will construe a
statute only if there is some ambiguity which requires construction. Id. As with
any statute, when we construe the WCA, the cardinal principle is to ascertain
and give effect to the legislature’s intent. Ross, 180 Ind. App. at 405, 388
N.E.2d at 626. The remedies provided in the WCA are in derogation of the
common law, and as such, they are strictly construed against limitations on a
claimant’s right to bring suit. Campbell, 670 N.E.2d at 931.
[24] As noted above, section 22-3-2-13, authorizes an employee to pursue a direct
suit against a third-party tortfeasor. It also contains elaborate subrogation
procedures applicable in the event that an employer or its insurance carrier has
paid for or is liable for payment for an injury. Neither party directs us to any
express language in the statute that supports its position, and our examination
of the WCA as a whole, and section 22-3-2-13 in particular, does not reveal that
the statute has any express provisions on the subject of whether an employee
must pursue a WCA claim against her employer prior to bringing suit against a
third party.
[25] Neither the Brenners nor Chavez Real Estate argues that section 22-3-2-13 is
ambiguous. However, we find that section 22-3-2-13’s provision that an
employee may bring suit against a third-party tortfeasor “[w]henever an injury
or death, for which compensation is payable under chapters 2 through 6 of this
article, shall have been sustained” is ambiguous, in that the phrase “is payable
under chapters 2 through 6 of this article” is reasonably subject to two different
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interpretations. The phrase could be understood to mean “is due”, from which
it would be inferred that a WCA claim must be pursued prior to third-party suit,
or it could be understood to mean “is potentially to be paid,” from which it
could be inferred that a WCA claim was not required to be filed before pursuit
of third-party litigation. Given the lack of express terms in the statute on the
subject, the ambiguity present in the statute’s wording, and our obligation to
construe the WCA strictly against limitations on a claimant’s right to bring suit,
we hold that an employee is not required to file a WCA claim against her
employer prior to pursuing litigation against a third-party tortfeasor. As such,
the Brenners were not precluded from initiating suit against Chavez Real Estate
by their failure to first file a WCA claim against All Steel.
CONCLUSION
[26] Based on the foregoing, we conclude that Ignacio and Chavez Real Estate
failed to established lack of subject matter jurisdiction, and, therefore, the trial
court improperly dismissed the Brenners’ claims against Ignacio and Chavez
Real Estate.
[27] Reversed and remanded for further proceedings.
[28] Bailey, J. and Pyle, J. concur
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