McDonald v. Ponderosa Enterprises

June 16 2015
DA 14-0316
Case Number: DA 14-0316
IN THE SUPREME COURT OF THE STATE OF MONTANA
2015 MT 160
CODY McDONALD,
Plaintiff, Appellant, and Cross-Appellee,
v.
PONDEROSA ENTERPRISES, INC.,
RTK CONSTRUCTION, INC., and
JOHN DOES 1-10,
Defendants, Cross-Appellant, and Appellees.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and For the County of Gallatin, Cause No. DV-12-148C
Honorable John C. Brown, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Lucas J. Foust, Foust Law Office, P.C., Bozeman, Montana
Elizabeth A. Brennan, Brennan Law & Mediation, PLLC, Missoula,
Montana
For Appellees:
Randall G. Nelson, Nelson Law Firm, P.C., Billings, Montana
(Attorney for RTK Construction, Inc.)
Edward J. Guza, Guza, Nesbitt & Putzier, PLLC, Bozeman, Montana
(Attorney for Ponderosa Enterprises, Inc.)
Submitted on Briefs: February 25, 2015
Decided: June 16, 2015
Filed:
__________________________________________
Clerk
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 Cody McDonald (“McDonald”) appeals from the order of the Eighteenth Judicial
District Court, Gallatin County, granting summary judgment to Ponderosa Enterprises,
Inc. (“Ponderosa”). McDonald also appeals certain evidentiary rulings made by the
District Court. Ponderosa cross-appeals. Appellee RTK Construction Inc. (“RTK”)
requests fees and costs associated with this appeal.
FACTUAL AND PROCEDURAL HISTORY
¶2 Ponderosa is a framing company located in Bozeman, Montana. Matt Orrell
(“Orrell”) is the principal of Ponderosa. McDonald is a construction worker in Bozeman,
Montana, doing business as Head First Construction. McDonald was approved as an
independent contractor by the Montana Department of Labor on April 16, 2008.
¶3 RTK, a construction company, hired Ponderosa to frame a quilt shop in Sidney,
Montana. Ponderosa then hired McDonald as an independent contractor to assist with the
framing.
¶4 McDonald and Orrell each worked on building a separate wall for the quilt shop.
Orrell’s wall was approximately 24-30 feet long and 12 feet tall. Estimates for the weight
of the wall ranged from 880 lbs. to 1,028 lbs.
¶5 On June 28, 2011, Orrell asked McDonald and two plumbers working on the
building to help him manually lift the wall. As the men were lifting the wall it collapsed
and fell on McDonald and Orrell. McDonald was seriously injured.
¶6 In September 2011, McDonald filed for Worker’s Compensation benefits and
began receiving $633 per week in Temporary Total Disability payments from State Fund.
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In doing so, McDonald contended that he had been an employee of Ponderosa at the time
of the accident.
¶7 On February 29, 2012, McDonald brought suit against Ponderosa and RTK,
alleging, in part, negligence and violation of §§ 50-71-201, et. seq., MCA, of the
Montana Occupational Safety and Health Act (“MOSHA”). In his complaint, McDonald
claimed to be an employee of Ponderosa.
¶8 In February 2013, McDonald reached a settlement with State Fund dismissing his
claim in exchange for $332,000. The settlement was approved by the Worker’s
Compensation Court in an order on February 27, 2013, and the case was dismissed.
¶9 On March 18, 2013, Ponderosa moved for summary judgment on the MOSHA
claims, arguing that McDonald was in fact an independent contractor rather than an
employee at the time of the accident and thus MOSHA did not apply.
¶10 On August 7, 2013, while Ponderosa’s motion for summary judgment was
pending, McDonald filed an Unopposed Stipulation with the District Court. The
stipulation was intended to resolve the question of McDonald’s status by declaring that
he was an independent contractor at the time of his injury. The District Court approved
the stipulation in an order on August 28, 2013.1
¶11 The District Court granted Ponderosa’s motion for summary judgment on the
MOSHA claims on January 2, 2014. The court reasoned that, because McDonald was an
independent contractor, not an employee, at the time of his injury, Ponderosa did not owe
1
We acknowledge the confusion engendered by McDonald’s shift from employee status
to independent contractor status. However, because that issue is not before us, we do not
address it here.
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him any duties of safety under MOSHA. On January 16, 2014, the District Court issued
an order clarifying that RTK also had no safety duties towards McDonald under
MOSHA.
¶12 A five-day jury trial was held, beginning on January 17, 2014, on the remaining
negligence claims against Ponderosa and RTK. At the outset of trial, the District Court,
at Ponderosa’s request, ordered the parties to refrain from discussing the existence of
“rules” in place on a job site. The court allowed the parties to discuss the “duty to use
reasonable care” and “custom and practice.” At the conclusion of the second day of trial,
RTK moved for a directed verdict, arguing that insufficient evidence had been presented
to establish that it had breached its duty of reasonable care towards McDonald. Neither
Ponderosa nor McDonald objected to the motion, and the court dismissed RTK from the
case.
¶13 The jury returned a verdict that Ponderosa was not negligent. McDonald appealed
on May 27, 2014. On June 3, 2014, Ponderosa moved this court to include RTK as a
party to the appeal. RTK opposed the motion. Ponderosa filed a notice of cross-appeal
on June 11, 2014. On July 1, 2014, we ordered all pleadings to be served on RTK as a
party to the appeal. On August 21, 2014, RTK filed a motion to be dismissed from the
appeal. The motion was opposed by Ponderosa. We denied RTK’s motion on
September 9, 2014.
STANDARDS OF REVIEW
¶14 We review a grant of summary judgment de novo, applying the same criteria as
the district court. Bonilla v. University of Montana, 2005 MT 183, ¶ 10, 328 Mont. 41,
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116 P.3d 823. We review a court’s evidentiary rulings for abuse of discretion. State v.
Bonamarte, 2009 MT 243, ¶ 13, 351 Mont. 419, 213 P.3d 457. A court abuses its
discretion if it acts arbitrarily or unreasonably and a substantial injustice results.
Bonamarte, ¶ 13.
DISCUSSION
¶15 McDonald presents two issues:
1. Did the District Court err when it found that MOSHA did not create a duty of
safety running from an employer to an independent contractor?
2. Did the District Court err when it prohibited testimony related to “rules” in
place on a construction site?
¶16 RTK raises a single issue:
3. Is RTK entitled to fees and costs for being improperly joined as an appellee by
Ponderosa?
¶17 Because we affirm, we need not reach Ponderosa’s issues raised on cross-appeal.
¶18 1. Did the District Court err when it found that MOSHA did not create a duty of
safety running from an employer to an independent contractor?
¶19 The crux of this case is whether § 50-71-201, MCA, creates a duty for employers
to meet certain safety guidelines with respect to independent contractors. Based on the
plain language of the Montana Code, we must conclude that it does not.
¶20 Section 50-71-201, MCA, in part, requires an employer to:
(1) furnish a place of employment that is safe for each of the employer’s
employees;
. . .
(3) adopt and use practices, means, methods, operations, and processes that are
reasonably adequate to render the place of employment safe; and
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(4) do any other thing reasonably necessary to protect the life, health, and safety of
the employer’s employees.
MOSHA incorporates the definition of “employee” from the Worker’s Compensation
Act, § 39-71-118, MCA. Section 50-71-204, MCA. The Worker’s Compensation Act
defines an “employee,” in relevant part, as, “each person in this state, including a
contractor other than an independent contractor, who is in the service of an employer, as
defined by 39-71-117, under any appointment or contract of hire, expressed or implied,
oral or written.” Section 39-71-118(1)(a), MCA (emphasis added). The Worker’s
Compensation Act clearly excludes an independent contractor from its definition of an
“employee.” Based on the plain language of this statute, therefore, we must conclude
that MOSHA does not create a duty of safety running from an employer to an
independent contractor.
¶21 Here, it is undisputed that McDonald was a licensed independent contractor when
Ponderosa hired him to frame the quilt shop. Despite McDonald’s descriptions of
himself as a subcontractor or sub-subcontractor, the only relevant distinction in the
statutes is whether he was an independent contractor, which he admits he was. We
therefore conclude that neither Ponderosa nor RTK owed him a special duty of care under
MOSHA.
¶22 McDonald seeks to overcome the statutory exclusion of independent contractors
from this portion of MOSHA by directing us to a series of prior opinions by this Court.
Specifically he cites Shannon v. Howard S. Wright Constr. Co., 181 Mont. 269, 593 P.2d
438 (1979); Stepanek v. Kober Constr., 191 Mont. 430, 625 P.2d 51 (1981); and Cain v.
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Stevenson, 218 Mont. 101, 706 P.2d 128 (1985). He argues that these cases compel us to
extend MOSHA to include independent contractors. We will discuss each case in turn
and explain why we disagree.
¶23 In Shannon the employee of a plumbing subcontractor sued the owner and general
contractor after he was injured while constructing condominium units at Big Sky ski
resort when he was forced to reach his second floor work site by an unsecured ladder
because the owner and general contractor had refused to install stairs. Shannon, 181
Mont. 269, 593 P.2d 438. Our inquiry began with the common law rule that general
contractors and owners are usually not liable for injuries to employees of subcontractors.
Shannon, 181 Mont. at 275, 593 P.2d at 441. We concluded, however, that the general
rule did not apply because the owner and general contractor exercised a high degree of
supervision and authority over the worksite and in doing so caused the unsafe condition,
the lack of stairs, that led to the employee’s injury. Shannon, 181 Mont. at 281, 593 P.2d
at 445.
¶24 The bulk of our analysis in Shannon focused on common law liability rules
without reference to MOSHA. Though we stated that the plumbing company and its
employee were “independent contractors” for the purposes of our analysis, we did not
address this classification with regard to the applicability of MOSHA. Shannon, 181
Mont. at 276, 593 P.2d at 442. Our only discussion of MOSHA was in response to the
defendants’ argument that they did not qualify as “employers” under the then current
version of § 39-71-117, MCA, and that the district court had erred by basing a jury
instruction on that definition. Shannon, 181 Mont. at 281-82, 593 P.2d at 445-46. We
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did not consider whether MOSHA applied to the plumbers as independent contractors.
Shannon is not on point with this case.
¶25 Stepanek is equally inapplicable. There, we discussed MOSHA only to reaffirm
our holding in Shannon that MOSHA applies to general contractors, and imposes a duty
of safety running from a general contractor to the employees of a subcontractor.
Stepanek, 191 Mont. at 437-38, 625 P.2d at 55.
¶26 In Cain the issue was whether the duty of safety extended to subcontractors
themselves, rather than just to subcontractors’ employees. We first reaffirmed our
holdings in Shannon and Stepanek. Cain, 218 Mont. at 103-04, 706 P.2d at 130. We
then reasoned that to draw a distinction between a subcontractor who was employed by
another (or incorporated) and a self-employed subcontractor would defy the intent of the
legislature, especially given that “the emphasis in Section 50-71-201, MCA, is on the
‘place of employment’ rather than the status of the worker.” Cain, 218 Mont. at 104, 706
P.2d at 130-31. We therefore held that the safety duty imposed by MOSHA extended to
subcontractors as well as employees of subcontractors. Cain, 218 Mont. at 104, 706 P.2d
at 131.
¶27 Cain is distinguishable from the case at hand for the same reasons that Shannon
and Stepanek are. At no time did we discuss whether independent contractors fall under
the definition of “employee” for the purpose of MOSHA. Although the Cain Court noted
that the electrical subcontractor “furnished his own tools and worked under his own time
schedule,” the Court never determined him to be an independent contractor and never
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discussed the independent contractor exemption in § 39-71-118, MCA. Cain, 218 Mont.
at 102, 706 P.2d at 129.
¶28 McDonald points out that, despite frequently amending MOSHA since our Cain
decision, the legislature never directly responded to our holding there, and argues that the
legislature ratified our holding through its silence. Even if McDonald is correct that the
legislature’s silence after Cain ratified our holding that MOSHA applies to
subcontractors, such a ratification would be irrelevant to the question of whether an
independent contractor qualifies as an employee under § 39-71-118, MCA.
¶29 McDonald asks us to “finely parse” his employment status and find that, under the
loaned servant doctrine, he was an employee of Ponderosa during the lifting of the wall.
The loaned servant doctrine applies when an employer temporarily borrows and exercises
control over another’s employee. See Devaney v. Lawler Corp., 101 Mont. 579, 56 P.2d
746 (1936). In this case, McDonald had no employer to loan him. As an independent
contractor he was responsible for his own work and hours. His decision to help Orrell lift
the wall was not compelled or requested by an immediate supervisor. The loaned servant
doctrine is not applicable to this case.
¶30 No authority cited by McDonald grants relief from the plain language of the
statute exempting independent contractors from the status of “employees” under
MOSHA. The District Court’s ruling that MOSHA did not apply to McDonald is
affirmed.
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¶31 2. Did the District Court err when it prohibited testimony related to “rules” in
place on a construction site?
¶32 McDonald contends that the District Court’s trial rulings materially affected the
fairness of the trial. At Ponderosa’s request, the District Court ordered the parties and
witnesses to refrain from talking about “rules” governing a construction site. McDonald
argues that these rulings led to “absurd moments during trial” and instilled in the jury the
sense that any job site involving independent contractors is a hotbed of anarchy where
“there are no rules, no one is in charge, no one has responsibility to exercise good
judgment, and no one can be held responsible for exercising bad judgment.”
¶33 A review of the record belies this claim. After the court determined that MOSHA
did not apply, in order to succeed on his remaining claims McDonald needed to convince
the jury that either of the defendants breached their duty to use reasonable care, the
standard for a negligence action. Due to the absence of any formal safety regulations
governing the conduct of the parties, the District Court reasoned that it would be
prejudicial to imply that such regulations existed by using terms like “rules” in front of
the jury. The court allowed testimony regarding the “duty to use reasonable care,” as
well as “custom and practice.” McDonald’s expert was allowed to testify about safety
measures he felt Orrell should have used while attempting to lift the wall. In short,
nothing in the record indicates that the court’s trial ruling caused prejudice sufficient to
justify a new trial. The District Court used its discretion to limit the potential prejudicial
effect of testimony about hypothetical “rules.” The ruling was neither unreasonable nor
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arbitrary, and it did not result in a substantial injustice. The District Court is affirmed on
this issue.
¶34 3. Is RTK entitled to fees and costs for being improperly joined as an appellee by
Ponderosa?
¶35 RTK argues that it is entitled to fees and costs because it was unnecessarily joined
as a party to this appeal by Ponderosa. RTK bases its position on the fact that it received
an unopposed directed verdict at trial, and that, because Ponderosa did not object to the
District Court, it cannot now seek to join RTK as a party again.
¶36 Ponderosa acknowledges that it did not object to the directed verdict dismissing
RTK from trial, but points out that the dismissal took place after the District Court had
ruled that MOSHA did not apply to McDonald. At that point, the only claim remaining
against RTK was simple negligence. When, at the conclusion of McDonald’s main case,
McDonald had not attempted to demonstrate that RTK breached a duty of reasonable
care, the dismissal was proper. However, Ponderosa points out that, in the event we
agreed with McDonald’s position that MOSHA applies to independent contractors, the
MOSHA claims against both Ponderosa and RTK would have been resurrected.
Therefore, according to Ponderosa, RTK is a necessary party to this appeal.
¶37 We held in Buck v. Billings Mont. Chevrolet, 248 Mont. 276, 287, 811 P.2d 537,
544 (1991), that where a plaintiff acquiesced to the dismissal of one of the defendants in
the District Court, the plaintiff could not contest that dismissal on appeal. We awarded
costs and attorney fees on appeal to the dismissed defendant. Buck, 248 Mont. at 287,
811 P.2d at 544. In this case, however, RTK remained a party to the appeal by order of
11
this Court after considering both parties’ arguments. Because we previously denied
RTK’s motion to be dismissed from the appeal, we now deny its request for costs and
fees associated with this appeal.
CONCLUSION
¶38 The District Court’s holding that MOSHA does not apply to McDonald because he
is an independent contractor is affirmed. The District Court’s evidentiary ruling is
likewise affirmed. RTK’s request for costs and fees associated with this appeal is denied.
/S/ MICHAEL E WHEAT
We Concur:
/S/ JIM RICE
/S/ PATRICIA COTTER
/S/ BETH BAKER
Justice Laurie McKinnon, concurring and dissenting.
¶39 I concur with our decision, excepting our failure to award fees and costs on appeal
to RTK. The fact that this Court denied RTK’s motion to be dismissed from this appeal,
in order to have a complete record and full development of the issues, should not be
dispositive of RTK’s request for fees and costs. RTK has done nothing inconsistent with
its request for dismissal or its position taken in the District Court that would warrant
denying its request for fees and costs. Ponderosa conceded to the dismissal of RTK in
the District Court. Therefore, pursuant to Buck v. Billings Montana Chevrolet, Inc.,
248 Mont. 276, 287, 811 P.2d 537, 544 (1991), I would award RTK costs and attorney
fees.
/S/ LAURIE McKINNON
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