Stokes v. Golden Triangle, Inc.

July 14 2015
DA 14-0726
Case Number: DA 14-0726
IN THE SUPREME COURT OF THE STATE OF MONTANA
2015 MT 199GREGORY STOKES and SHERRY STOKES,
Plaintiffs and Appellants,
v.
GOLDEN TRIANGLE, INC.,
Defendant and Appellee.
APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. CDV 11-259
Honorable Kenneth R. Neill, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Michael G. Barer, Barer Law Offices; Great Falls, Montana
Benjamin R. Graybill, Graybill Law Firm, P.C.; Great Falls, Montana
For Appellee:
Oliver H. Goe, Morgan M. Weber, Browning, Kaleczyc, Berry & Hoven,
PC; Helena, Montana
Submitted on Briefs: May 20, 2015
Decided: July 14, 2015
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 Gregory Stokes (Stokes) appeals from an order issued by the Eighth Judicial
District Court, Cascade County, granting summary judgment in favor of Golden Triangle,
Inc. (Golden Triangle). After recovering workers’ compensation insurance benefits in
the amount of $207,147, Stokes brought a civil action against his employer, Golden
Triangle, seeking additional damages for injuries he sustained during the course of his
employment. Stokes contended Golden Triangle was an uninsured employer under the
Workers’ Compensation Act (Act), thereby permitting him to pursue a civil claim against
Golden Triangle. The District Court determined that Golden Triangle was an insured
employer under the Act and entitled to tort immunity pursuant to § 39-71-411, MCA.
¶2 We affirm and address the following issue on appeal:
¶3 Did the District Court err by concluding that Golden Triangle was entitled to tort
immunity pursuant to § 39-71-411, MCA, of the Workers’ Compensation Act?
FACTUAL AND PROCEDURAL BACKGROUND
¶4 Golden Triangle is a Montana corporation that does business as First National
Pawn in Great Falls. FNP, Inc. (FNP) is a corporation that owns and controls pawn shops
in Billings and Bozeman. Golden Triangle and FNP have the same shareholders, but are
separate corporate entities.
¶5 On June 11, 2009, PayneWest Insurance Company (PayneWest), an insurance
broker, submitted an application to Employers Compensation Insurance Company
(ECIC), requesting workers’ compensation insurance on behalf of FNP and Golden
Triangle. Nathan Allie (Allie), an insurance agent for PayneWest, handled the account
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and facilitated preparation of the application. The application listed FNP as the sole
named applicant, but provided Golden Triangle’s premises as an additional location;
listed Golden Triangle’s Federal Employer Identification Number (FEIN); and included
Golden Triangle’s payroll information. Allie testified that by providing Golden
Triangle’s information, principally its FEIN, the application was clear that Golden
Triangle was requesting insurance as an additional named insured.
¶6 Allie received a quote back from ECIC and prepared a Workers’ Compensation
Summary (Summary) for Steve Costin, an employee of FNP and Golden Triangle, to
allow Costin to decide whether to insure the corporations through ECIC. The Summary
identified both FNP and Golden Triangle under the Schedule of Named Insureds, and
stated that an entity must be named in the insurance policy to receive coverage. After
reviewing the Summary, Costin approved insuring through ECIC.
¶7 On June 26, 2009, PayneWest issued an Insurance Binder. The Binder listed FNP
as the first named insured, listed Golden Triangle as an additional named insured, and
stated the Binder would be cancelled when replaced by a policy. Allie testified that
PayneWest issued the Insurance Binder to inform FNP and Golden Triangle of the
purchased coverage for the upcoming year.
¶8 On June 29, 2009, ECIC issued workers’ compensation insurance policy no.
EIG115294800 (hereinafter, the Policy). The Policy listed FNP as a named insured, but
did not designate Golden Triangle as a named insured or otherwise reference Golden
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Triangle or Golden Triangle’s premises. However, the Policy used Golden Triangle’s
payroll to calculate the premiums.
¶9 In addition to the Policy, PayneWest retained what Allie described as an electronic
copy of the Policy. Attached to the electronic copy was a Schedule of Supplementary
Names, which identified Golden Triangle as an additional named insured. Allie testified
that the Schedule of Supplementary Names was created from the information submitted
on the application and that it matched the application submitted to ECIC. Allie testified
that, because Golden Triangle was a named insured in the Schedule of Supplementary
Names, it was a covered insured, regardless of whether the Policy itself expressly
identified Golden Triangle. He also testified that PayneWest had authority under its
contract with ECIC to bind ECIC and that PayneWest uses the electronic copy to decide
whether an entity is insured.
¶10 On February 18, 2010, while in the course and scope of his employment with
Golden Triangle, Stokes suffered serious injuries when a large column of ice, which had
formed on an outside corner of the building where Stokes worked, fell and hit Stokes on
the head. The same day, Golden Triangle sent a First Report of Injury to ECIC,
identifying FNP as Stokes’ employer. Stokes filed a workers’ compensation claim with
ECIC. ECIC accepted the claim and, as of June 4, 2013, made payments in the amount
of $207,147. Gina Douglas, an underwriter for ECIC, testified that Golden Triangle was
a covered insured under the Policy, the benefit payments were made on behalf of Golden
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Triangle, and ECIC would not have made the payments had Golden Triangle not been a
covered insured under the Policy.
¶11 Following an inquiry by the State of Montana Workers’ Compensation Division
regarding Stokes’ claim, ECIC reviewed the Policy. ECIC determined that, while Golden
Triangle was a covered insured under the Policy, Golden Triangle was inadvertently not
expressly identified on the Policy. Consequently, ECIC issued a policy endorsement to
clarify that Golden Triangle was a covered insured. Golden Triangle’s premium
remained unchanged after the endorsement.
¶12 On November 1, 2012, Stokes brought the present action against Golden Triangle.
Stokes alleged that Golden Triangle was an uninsured employer at the time of the
accident. Golden Triangle submitted a motion to dismiss, which the District Court
converted into a motion for summary judgment and, after entertaining argument by the
parties, issued an order granting summary judgment in favor of Golden Triangle. The
court determined that, given the affidavits and documents submitted by Golden Triangle,
“there is no dispute in the record regarding whether or not Golden Triangle was an
intended insured under [the] Policy.” The District Court concluded that Golden Triangle
was an insured employer under the Act and therefore was entitled to claim immunity
pursuant to § 39-71-411, MCA.
STANDARD OF REVIEW
¶13 We review a district court’s ruling on a motion for summary judgment de novo,
applying the same criteria of M. R. Civ. P. 56 as the district court. Steichen v. Talcott
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Props., LLC, 2013 MT 2, ¶ 7, 368 Mont. 169, 292 P.3d 458. Summary judgment is
appropriate when “the pleadings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law.” M. R. Civ. P. 56(c)(3).
DISCUSSION
¶14 Did the District Court err by concluding that Golden Triangle was entitled to tort
immunity pursuant to § 39-71-411, MCA, of the Workers’ Compensation Act?
¶15 “The Montana Constitution sets forth the basis for the workers’ compensation
exclusive remedy provision.” Walters v. Flathead Concrete Prods., 2011 MT 45, ¶ 11,
359 Mont. 346, 249 P.3d 913. Article II, Section 16 provides, in part, that “[n]o person
shall be deprived of this full legal redress for injury incurred in employment for which
another person may be liable except as to fellow employees and his immediate employer
who hired him if such immediate employer provides coverage under the Workmen’s
Compensation Laws of this state.” This constitutional provision “is implemented by
Section 39-71-411, MCA.” Adsem v. Roske, 224 Mont. 269, 271, 728 P.2d 1352, 1353
(1986).
¶16 Section 39-71-411, MCA, of the Act grants insured employers tort immunity from
negligence actions brought by their employees when the complained of injury is work
related, providing that an insured employer “is not subject to any liability whatever for
the death of or personal injury to an employee covered by the Workers’ Compensation
Act . . . .” However, uninsured employers are not entitled to the benefit of tort immunity.
Section 39-71-508(1)(b), MCA, permits an employee who suffers an injury while
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working for an “uninsured employer” to “pursue all remedies” against the employer,
including but not limited to “a damage action against the employer.” An “uninsured
employer” is defined as an “employer who has not properly complied with the provisions
of 39-71-401.” Section 39-71-501, MCA. In turn, § 39-71-401, MCA, requires that an
employer “elect to be bound” by the provisions of a workers’ compensation insurance
plan.
¶17 Stokes argues the District Court erred by concluding that Golden Triangle was an
insured employer. He argues Golden Triangle was not a covered insured under the
Policy, reasoning that the Policy “alone created ECIC’s obligation to provide workers’
compensation insurance” and “[b]ecause the Policy did not mention Golden Triangle, it
did not insure Golden Triangle.” Stokes suggests that the insurance benefits he received
were conveyed to him because FNP, not Golden Triangle, was insured under the Policy.
He asserts Golden Triangle is “a distinct corporation, separate from FNP” and
“[c]ompliance with the requirement to elect to be bound to a plan that provides workers’
compensation insurance can only be satisfied when an employer actually obtains
insurance, not by having another entity insure its employees.” Stokes contends this
Court’s decisions in Total Mechanical Heating & Air Conditioning v. Employment Rels.
Div., 2002 MT 55, 309 Mont. 84, 50 P.3d 108, and Dahl v. Uninsured Employers’ Fund,
1999 MT 168, 295 Mont. 173, 983 P.2d 363, are controlling and require reversal.
¶18 We have explained that “an insurance policy, like any other contract, must be
given that interpretation which is reasonable and which is consonant with the manifest
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object and intent of the parties.” United Nat’l Ins. Co. v. St. Paul Fire & Marine Ins. Co.,
2009 MT 269, ¶ 27, 352 Mont. 105, 214 P.3d 1260 (citation and brackets omitted).
Under general principles of contract law, insurance policies are to be construed “strictly
against the insurer and in favor of the insured.” Travelers Cas. & Sur. Co. v. Ribi
Immunochem Research, 2005 MT 50, ¶ 17, 326 Mont. 174, 108 P.3d 469.
¶19 Golden Triangle and ECIC agree that Golden Triangle was a covered insured
under the Policy. Only Stokes, a third-party, disputes Golden Triangle’s status, asking
this Court to disregard the stated intent of the parties to their contract. However, the
stated intent of Golden Triangle and ECIC is supported in the record. First, the Policy
used Golden Triangle’s payroll to calculate the premium. In doing so, the Policy
contemplated that coverage to Golden Triangle’s employees would be provided.
Although Stokes maintains the Policy used Golden Triangle’s payroll because Golden
Triangle misrepresented its employees as FNP’s employees in the application, the record
refutes his contention. The application submitted to ECIC provided Golden Triangle’s
information, including Golden Triangle’s FEIN. Allie testified the information made
clear to ECIC that Golden Triangle was requesting insurance as a covered insured, and
ECIC agreed that they were not misled. Second, the associated documents, including the
Insurance Binder, Schedule of Supplementary Names, and the Summary, all named
Golden Triangle as a covered insured. Third, the premiums remained unchanged after
ECIC issued the corrected endorsement stating that Golden Triangle was a covered
insured at the time of the accident. Fourth, Douglas testified that ECIC’s failure to
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expressly name Golden Triangle was inadvertent and Golden Triangle had always been a
covered insured under the Policy. Lastly, ECIC paid, and Stokes accepted, benefits under
the Policy in Golden Triangle’s name. Although Stokes suggests that the benefits were
paid in FNP’s name, noting the misidentification of his employer in the First Report of
Injury, there is no credible evidence showing ECIC mistakenly paid the benefits on
behalf of FNP. Rather, Douglas testified the benefits were paid on behalf of Golden
Triangle, not FNP, and ECIC would have not made the payments if Golden Triangle had
not been a covered insured. Therefore, given the evidence of intent to insure, we agree
with the District Court that Golden Triangle was a covered insured.
¶20 Stokes argues that our decisions in Total Mechanical and Dahl require a different
conclusion. We disagree. In Total Mechanical, the Uninsured Employers’ Fund (UEF)
determined that Human Dynamics Corporation (Dynamics) was uninsured and imposed
penalties accordingly. Total Mechanical, ¶¶ 17, 29. Dynamics had claimed it was
insured under a policy issued by Credit General Insurance Company (CGIC), but the
UEF disagreed and listed several concerns, the primarily concern being the policy did not
name Dynamics as an insured. Total Mechanical, ¶¶ 6, 36. We affirmed UEF’s
determination, concluding there was no “credible evidence that Dynamics was actually
insured under the CGIC policy.” Total Mechanical, ¶ 40. We explained that Dynamics
had failed to produce a “corrected endorsement from CGIC, or any other confirmatory
documentation of coverage” and the “only ‘proof’ offered by Dynamics was the
unpersuasive, self-serving testimony of Dynamics’ president.” Total Mechanical, ¶ 40.
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Here, in contrast, the credible evidence shows Golden Triangle was actually insured
under the Policy. Unlike Dynamics, Golden Triangle produced documents demonstrating
proof of insurance, including a corrected endorsement issued by ECIC. Therefore, Total
Mechanical is distinguishable in that Golden Triangle has offered ample proof of
insurance rather than unpersuasive, self-serving testimony.
¶21 In Dahl, the owner of a concrete business, Dwight Dahl, contracted with Olsten’s
Temporary Services (Olsten), a temporary service contractor, to provide him with
concrete workers and to obtain workers’ compensation insurance for his employees.
Dahl, ¶ 5. After completing an audit, the Uninsured Employers’ Fund concluded that
Dahl was an uninsured employer because the proper entity was not insuring the workers.
Dahl, ¶ 7. Dahl conceded he did not have workers’ compensation insurance in his own
name, but maintained that nothing in the Act required him to do so. Dahl, ¶ 9. The
Workers’ Compensation Court agreed, concluding that since Dahl’s employees were
insured under Olsten’s insurance policy, Dahl was not an uninsured employer. Dahl, ¶ 9.
This Court reversed, holding the Workers’ Compensation Court erred by failing to
conclude that § 39-71-401, MCA, required Dahl to obtain workers’ compensation
insurance in his own name. Dahl, ¶ 17. We explained that, because § 39-71-401, MCA,
“clearly and unambiguously requires the ‘employer’ to elect to be bound,” it is not
enough that a separate entity has obtained workers’ compensation insurance for the
employer’s employees. Dahl, ¶ 16. We reasoned the plain language of § 39-71-401,
MCA, requires the “employer [to] procure workers’ compensation insurance . . . for its
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employees.” Dahl, ¶ 16 (emphasis in original). Here, Golden Triangle has, unlike Dahl,
actually obtained workers’ compensation insurance for its employees. While Golden
Triangle was not expressly named in the Policy at the time of injury, Golden Triangle has
established that this was an inadvertent administrative error and that it was a covered
insured under the Policy. Therefore, Dahl is likewise distinguishable in that Golden
Triangle has in fact obtained insurance coverage in its own name.
¶22 Stokes also argues that Golden Triangle failed to comply with § 39-71-433, MCA,
which governs the purchase of workers’ compensation coverage by a group of two or
more employer entities and was thus an uninsured employer under our decision in
Buerkley v. Aspen Meadows Ltd. Pshp., 1999 MT 97, 294 Mont. 263, 980 P.2d 1046.
Noting the statute provides that “[t]wo or more business entities may join together to
form a group,” Golden Triangle responds that compliance with § 39-71-433, MCA, is
optional, but this is a misreading of the statute. Participation in an employer group is
optional, but compliance with the statute by such groups is not.
¶23 In Buerkley, we held that the defendants were uninsured employers because they
“had not properly complied with the enrollment requirement of § 39-71-401, MCA,” for
their workers’ compensation insurance plan. Buerkley, ¶ 13. Assuming, arguendo, that
Golden Triangle failed to comply with the group purchase requirements of § 39-71-433,
MCA, the facts here establish that Golden Triangle did comply with § 39-71-401, MCA,
by “elect[ing] to be bound by the provisions of compensation plan No. 1, 2, or 3,” which
is all that § 39-71-501, MCA, requires to be an insured employer and thereby receive tort
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immunity under § 39-71-411, MCA. Buerkley is therefore distinguishable and does not
require reversal.
¶24 In sum, the evidence presented before the District Court shows that, although
ECIC inadvertently failed to identify Golden Triangle in the Policy, ECIC and Golden
Triangle intended Golden Triangle to be a covered insured under the Policy and ECIC
paid out insurance benefits in accordance therewith. We conclude the District Court did
not err in concluding that Golden Triangle was an insured employer under the Workers’
Compensation Act and therefore was entitled to tort immunity pursuant to § 39-71-411,
MCA.
¶25 Affirmed.
/S/ JIM RICE
We concur:
/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ BETH BAKER
/S/ JAMES JEREMIAH SHEA
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