Doman v. Atlas America, Inc.

J-A26034-16
2016 Pa. Super. 233
THOMAS R. DOMAN, JR., AS : IN THE SUPERIOR COURT OF
ADMINISTRATOR OF THE ESTATE OF : PENNSYLVANIA
ROCK A. DOMAN, Deceased, :
:
Appellant :
:
v. :
:
ATLAS AMERICA, INC. (De.), ATLAS :
ENERGY RESOURCES, LLC, ATLAS :
RESOURCES, LLC, SUCCESSOR IN :
INTEREST TO ATLAS RESOURCES, :
INC., ATLAS AMERICA, LLC, :
SUCCESSOR IN INTEREST TO ATLAS :
AMERICA, INC. (Pa.) ATLAS ENERGY, :
INC., SUCCESSOR IN INTEREST TO :
ATLAS AMERICA, INC. (De.) AND :
ATLAS ENERGY RESOURCES, LLC, :
ATLAS ENERGY OPERATING COMPANY :
LLC AND ATLAS ENERGY FINANCE :
CORPORATION : No. 153 WDA 2016
Appeal from the Order December 30, 2015
in the Court of Common Pleas of Allegheny County,
Civil Division, No(s): GD-09-013573
BEFORE: BENDER, P.J.E., RANSOM and MUSMANNO, JJ.
OPINION BY MUSMANNO, J.: FILED OCTOBER 27, 2016
Thomas R. Doman, Jr. (“Thomas”), as administrator of the Estate of
Rock A. Doman (“the Doman Estate”), deceased, appeals from the Order
granting summary judgment in favor of Atlas America, Inc. (De.); Atlas
Resources, LLC, successor in interest to Atlas Resources, Inc.; Atlas
America, LLC, successor in interest to Atlas America, Inc. (Pa.); Atlas
Energy, Inc., successor in interest to Atlas America, Inc. (De.), and Atlas
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Energy Resources, LLC; Atlas Energy Operating Company, LLC; and Atlas
Energy Finance Corporation (collectively, “Atlas”).1 We affirm.
In September 2006, Atlas entered into an oil and gas lease with Frieda
Springer (“Springer”), for the purpose of drilling, operating, producing, and
removing oil and gas from her property in Greene County. Atlas
subsequently entered into a Drilling Bid Proposal and Footage Drilling
Contract (“Footage Drilling Contract”) with Gene D. Yost & Son, Inc.
(“Yost”), a drilling contractor, to drill multiple wells in Fayette County and
Greene County, including Well No. 13 on Springer’s property (“the Springer
Well”).2 Under the terms of the Footage Drilling Contract, Yost was required
to provide the necessary equipment and labor, and to drill the wells to the
contract footage depth, as specified by Atlas.
Yost began drilling at the Springer Well site in November 2007, and
the well reached the contract footage depth on December 2, 2007. Yost
personnel worked overnight to remove the drilling pipe from the Springer
Well and “shut in” the well, leaving the gas in the well bore. The Tulsa
1
Although the Doman Estate named each of the above-mentioned Atlas
entities as defendants in the Amended Complaint, the parties agreed that
the only proper defendant is Atlas Resources, LLC.
2
The Springer Well is a shallow, low-pressure vertical well drilled into the
Upper Devonian Shale formation. Such wells commonly involve footage
contracts with well-drilling companies, whereby the oil and gas lessee pays
the drilling company a per-foot rate to drill to a specified depth, referred to
as the contract footage depth. When drilling is complete, the contracted
drilling company is required to remove the drilling pipe, “shut in” the well,
and remove the drilling equipment so the lessee can move into the
production stage.
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Valve, which is situated on top of the well head and is used to contain the
gas within the well, was closed at this time. Rock A. Doman (“Doman”) and
another Yost employee began removing the blow-out preventer flange,
which was attached to the Tulsa Valve, from beneath the rig platform. While
the men unscrewed the flange from the Tulsa Valve assembly, they
inadvertently loosened the pressurized piping below the Tulsa Valve. The
Tulsa Valve and the blow-out preventer flange detached from the well head
and struck Doman. Doman was thrown approximately 60 feet above ground
level before landing about 30 to 40 feet from the well rig, and was fatally
injured.
Yost paid workers’ compensation benefits to Doman’s fiancé, for the
benefit of her minor child.3
The Doman Estate filed a Complaint on July 28, 2009 to initiate a
wrongful death and survival action, seeking damages in tort for the
beneficiaries of the Doman Estate, Thomas and Patti Doman (Doman’s
parents). The Doman Estate filed an Amended Complaint on November 25,
2009, asserting the following six counts: (I) negligence/premises liability;
(II) negligence/negligent orders; (III) negligence/retention of control; (IV)
negligence/direct liability/peculiar risk doctrine; (V) negligence/vicarious
liability/peculiar risk doctrine; and (VI) strict liability/ultrahazardous activity.
3
Although the child is not Doman’s natural son, he received workers’
compensation benefits as a dependent child under a theory of in loco
parentis.
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Atlas filed preliminary objections, seeking dismissal of each of the six
counts. On May 27, 2010, the trial court dismissed Counts V and VI.
On May 8, 2015, after almost five years of discovery, Atlas filed a
Motion for summary judgment on the remaining counts, alleging that Atlas is
a statutory employer under Section 302(a) of the Workers’ Compensation
Act (“the Act”), codified at 77 P.S. § 461, and, therefore, is immune from
tort liability. Following a hearing, the trial court granted summary judgment
in favor of Atlas on December 30, 2015. The Doman Estate filed a timely
Notice of Appeal.
On appeal, the Doman Estate raises the following question for our
review: “Whether the [l]ower [c]ourt erred in finding that Atlas, the owner
of the gas well where [] Doman, an employee of an independent contractor,
was killed, was shielded from tort liability as a statutory employer and, thus,
immune from civil liability under the [] Act[?]” Brief for Appellant at 4. 4
Our standard of review of an order granting a motion for summary
judgment is well-settled:
We view the record in the light most favorable to the non-
moving party, and all doubts as to the existence of a genuine
issue of material fact must be resolved against the moving party.
Only where there is no genuine issue as to any material fact and
it is clear that the moving party is entitled to a judgment as a
matter of law will summary judgment be entered. Our scope of
4
The Doman Estate claims that the trial court erred by granting summary
judgment in favor of Atlas, and finding that Atlas is immune from tort
liability as a statutory employer under Section 302(a). The Doman Estate
offers three separate sub-issues for our consideration, which we will consider
together.
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review of a trial court’s order granting or denying summary
judgment is plenary, and our standard of review is clear: the
trial court’s order will be reversed only where it is established
that the court committed an error of law or abused its discretion.
Daley v. A.W. Chesterton, Inc., 37 A.3d 1175, 1179 (Pa. 2012) (citation
omitted).
First, the Doman Estate argues that the trial court failed to
appropriately consider the Pennsylvania Supreme Court’s decision in
McDonald v. Levinson Steel Co., 153 A. 424 (Pa. 1930).5 Brief for
Appellant at 9. The Doman Estate points to the McDonald decision for the
proposition that property owners are not entitled to immunity as statutory
employers. Id. at 10.
The Doman Estate next argues that the trial court applied the wrong
test in determining that Atlas is immune from civil liability. Id. at 11. The
Doman Estate claims that the trial court should have applied Section 203 of
the Act rather than Sections 302(a) and 303 in determining whether Atlas is
a statutory employer, and asserts that Section 302(a) cannot be applied in
negligence actions. Id.
Additionally, the Doman Estate asserts that Section 302(a) cannot be
used to confer immunity to Atlas because Atlas did not have a contract with
5
In McDonald, the Supreme Court set forth the following five elements
necessary to create the statutory employer relationship: “(1) an employer
who is under contract with an owner or one in the position of an owner[;]
(2) premises occupied by or under the control of such employer[;] (3) a
subcontract made by such employer[;] (4) part of the employer’s regular
business [e]ntrusted to such subcontractor[;] [and] (5) an employee of such
subcontractor.” 153 A. at 426 (capitalization omitted).
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an owner, and Atlas did not pay workers’ compensation benefits. Brief for
Appellant at 15. The Doman Estate claims that Yost should be considered an
independent contractor rather than a subcontractor, and that Atlas should be
considered a property owner rather than a general contractor or statutory
employer. Id. at 16-17.
A contractor may be deemed a statutory employer if the requirements
of either Section 302(a) or Section 302(b) have been satisfied. See Emery
v. Leavesly McCollum, 725 A.2d 807, 813 (Pa. Super. 1999); see also
Gann v. Workmen’s Comp. Appeal Bd., 792 A.2d 701, 704 (Pa. Cmwlth.
2002) (stating that “Sections 302(a) and 302(b) of the Act [] confer
‘statutory employer’ status on certain entities for workers’ compensation
purposes”). Section 302(a) of the Act provides as follows:
§ 461. Coverage of employees of subcontractor;
subcontractor defined; exception.
A contractor who subcontracts all or any part of a contract and
his insurer shall be liable for the payment of compensation to the
employes of the subcontractor unless the subcontractor primarily
liable for the payment of such compensation has secured its
payment as provided for in this act. Any contractor or his
insurer who shall become liable hereunder for such
compensation may recover the amount thereof paid and any
necessary expenses from the subcontractor primarily liable
therefor.
For purposes of this subsection, a person who contracts with
another (1) to have work performed consisting of (i) the
removal, excavation or drilling of soil, rock or minerals, or (ii)
the cutting or removal of timber from lands, or (2) to have work
performed of a kind which is a regular or recurrent part of the
business, occupation, profession or trade of such person shall be
deemed a contractor, and such other person a subcontractor.
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This subsection shall not apply, however, to an owner or lessee
of land principally used for agriculture who is not a covered
employer under this act who contracts for the removal of timber
from such land.
77 P.S. § 461 (emphasis added).
Section 302(b) of the Act provides as follows:
§ 462. Coverage of laborer or assistant hired by employe
or contractor; contractor defined.
Any employer who permits the entry upon premises occupied by
him or under his control of a laborer or an assistant hired by an
employe or contractor, for the performance upon such premises
of a part of such employer’s regular business entrusted to that
employe or contractor, shall be liable for the payment of
compensation to such laborer or assistant unless such hiring
employe or contractor, if primarily liable for the payment of such
compensation, has secured the payment thereof as provided for
in this act. Any employer or his insurer who shall become liable
hereunder for such compensation may recover the amount
thereof paid and any necessary expenses from another person if
the latter is primarily liable therefor.
77 P.S. § 462.6
Section 203 of the Act sets forth the rights enjoyed by a statutory
employer.
6
Section 105 of the Act states the following:
The term “contractor,” as used in [Section 203] and [Section
302(b)], shall not include a contractor engaged in an
independent business, other than that of supplying laborers or
assistants, in which he serves persons other than the employer
in whose service the injury occurs, but shall include a
subcontractor to whom a principal contractor has sublet any part
of the work which such principal contractor has undertaken.
77 P.S. § 25.
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§ 52. Employers’ liability to employe of employe or
contractor permitted to enter upon premises.
An employer who permits the entry upon premises occupied by
him or under his control of a laborer or an assistant hired by an
employe or contractor, for the performance upon such premises
of a part of the employer’s regular business entrusted to such
employe or contractor, shall be liable to such laborer or assistant
in the same manner and to the same extent as his own employe.
77 P.S. § 52. The language of Section 203, which places the statutory
employer in the same position as the direct employer, coupled with Section
303’s mandate that “[t]he liability of an employer under this act shall be
exclusive and in place of any and all other liability to such employes,”
provides immunity from tort liability for statutory employers. 77 P.S.
§ 481(a); see also Peck v. Delaware County Bd. of Prison Inspectors,
814 A.2d 185, 188 (Pa. 2002) (stating that “[a]lthough not apparent from its
express terms, the language from Section 203 … confers upon the statutory
employer immunity from suit. This is because Section 303(a) … makes the
workers’ compensation system the exclusive remedy for an injured
employee seeking redress from an employer for an on-the-job injury.”).
Initially, a review of the relevant case law reveals
a degree of ambiguity inherent in the overall scheme for
statutory employer liability, arising out of differences in the
definitions for “contractor” as used in various provisions of the
[Act;] the idiosyncratic conception of subcontracting fashioned in
Section 302(a); the substantial overlap between Sections 302(a)
and (b); and the apparent differences in the depiction of the
concept of statutory employment as between the Act’s liability
and immunity provisions.
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Six L’s Packing Co. v. Workmen’s Comp. Appeal Bd., 44 A.3d 1148,
1158 (Pa. 2012). Indeed, there are two significant differences between
Section 302(a) and Section 302(b). Unlike Section 302(b) and Section 203,
on its face, Section 302(a) does not require the primary contractor to occupy
or control a worksite in order to be deemed the statutory employer of the
subcontractor’s employees. See 77 P.S. § 461. Additionally, Section 302(a)
sets forth a specialized definition of contractor, which, relevantly to this
case, includes “a person who contracts with another to have work performed
consisting of the removal, excavation or drilling of … minerals[.]” 77 P.S.
§ 461.
In Delich v. Workmen’s Comp. Appeal Board, 661 A.2d 936 (Pa.
Cmwlth. 1995), the Commonwealth Court considered the differences
between Section 302(a) and Section 302(b). Although we are not bound by
the Commonwealth Court’s holdings, we are persuaded by its analysis in
Delich.7 The Court noted that while Section 302(a) does not include a
7
In Delich, the Commonwealth Court considered the claim of a timber
worker who was injured by jumping off a piece of logging equipment after
being swarmed by hornets. Delich, 661 A.2d at 936-37. The workers’
compensation referee awarded benefits to Delich, to be paid by the timber
contractor as a statutory employer under Section 302(a). See id. at 937;
see also 77 P.S. § 461 (for the purposes of Section 302(a) of the Act, a
contractor includes one who “contracts with another to have work performed
consisting of … the cutting or removal of timber from lands”). However, the
Workmen’s Compensation Appeal Board reversed the decision, based on a
finding that the contractor did not occupy or control the premises. Delich,
661 A.2d at 937 (citing Wright Demolition & Excavating Co. v.
Workmen’s Comp. Appeal Bd., 434 A.2d 232, 234 (Pa. Cmwlth. 1981),
which held that an employer will not be held liable for workers’
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requirement that the contractor occupy or control the premises, Section
302(b) specifically includes such a requirement. Delich, 661 A.2d at 938.
More recently, in Six L’s Packing, the Pennsylvania Supreme Court
considered another specialized definition of contractor under Section 302(a),
specifically, “a person who contracts with another … to have work performed
of a kind which is a regular or recurrent part of the business, occupation,
profession or trade of such person.” 44 A.3d at 1150 (citing 77 P.S. § 461).
The Supreme Court declined to limit Delich’s holding to scenarios involving
the movement of soil, rocks, minerals and timber, and reiterated that
“Section 302(a), by its terms, is not limited to injuries occurring on premises
occupied or controlled by the putative statutory employer.” Six L’s
Packing, 44 A.3d at 1157.
Thus, because the legislature created two distinct sections, each with
its own requirements, we may not impute the requirements of one section
onto the other. See Delich, 661 A.2d at 938-39 (stating that “where, as
here, the legislature includes specific language in one section of a statute []
and excludes it from another [], it should not be implied where excluded.”);
compensation benefits unless the employer occupied or controlled the
premises where the injury occurred). Ultimately, the Commonwealth Court
held that the timber contractor was liable as a statutory employer,
regardless of whether it occupied or controlled the premises where the
worker was injured. Id. at 939. The Court distinguished Wright on the
basis that the factual circumstances of Wright did not implicate the
specialized definition of contractor found in Section 302(a), and the referee
had concluded that the contractor was a statutory employer under both
Sections 302(a) and 302(b). Delich, 661 A.2d at 938.
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see also id. at 938 (stating that “[i]n determining legislative intent, sections
of a statute must be read together and construed with reference to the
entire statute.”). Moreover, “[t]o require the imposition of an additional
requirement incident to Section 302(b) [] would not only ignore the clear
and unambiguous language of Section 302(a) of the Act, [] but also render it
meaningless.” Id. at 939; see also 1 Pa.C.S.A. §§ 1921(b) (providing that
“[w]hen the words of a statute are clear and free from all ambiguity, the
letter of it is not to be disregarded under the pretext of pursuing its spirit”),
1922(2) (stating the presumption “that the General Assembly intends the
entire statute to be effective and certain”).
Despite the differences between the two sections providing for
statutory employer status, the Doman Estate urges us to apply the factors
set forth in McDonald to the Section 302(a) statutory employer provision,
and asks us to find that Atlas is not Doman’s statutory employer because
Atlas, as a lessee, stood in the position of the property owner, and therefore,
is not immune from suit. However, the Supreme Court has held that
“neither the McDonald test, nor a per se owner exclusion, applies under
Section 302(a) of the [Act].”8 Six L’s Packing, 44 A.3d at 1159; see also
8
The McDonald test arose out of Section 203, and is more aptly applied in
considering statutory employer status under Section 302(b), because both
require that the employer occupy or control the worksite. See McDonald,
153 A. 424 (discussing the definition of “contractor” under Section 203, and
setting forth the requirements for statutory employer status); see also Six
L’s Packing, 44 A.3d at 1152 (stating that “the McDonald test also had
been extended from the Section 203 setting into the Section 302(b)
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id. at 1159 n.12 (stating that “since the relevant statutes employ differing
conceptions of ‘contractor’ and ‘subcontractor,’ we do not believe that direct
comparisons between McDonald and Section 302(a) serve a useful purpose.
Rather, Section 302(a) is best interpreted … according to its own terms.”).
Here, based upon the plain language of the statute, we conclude that
the trial court correctly applied Section 302(a) to determine that Atlas is
Doman’s statutory employer. See Trial Court Opinion, 12/30/15, at 6-7.
Because Doman was employed by Yost to perform work involving the
“removal, excavation or drilling of … minerals” (natural gas), the facts of this
case implicate the specialized definition found in Section 302(a). Atlas, as
the primary contractor that subcontracted the drilling process at the
Springer Well, is Doman’s statutory employer as a matter of law.9 See 77
P.S. § 461. Consequently, Atlas is entitled to tort immunity, pursuant to
Section 203, regardless of the fact that Yost already had paid Doman’s
worker’s compensation benefits. See Patton, 89 A.3d at 645 (holding that
“[the Supreme] Court has previously determined that this immunity pertains
context.”); Vandervort v. Workmen’s Comp. Appeal Bd., 899 A.2d 414,
419 (Pa. Cmwlth. 2006) (stating that “[t]he McDonald test has been
utilized over the years to determine whether an entity is a statutory
employer under both the tort immunity section (203) and the insurer section
(302(b)).”). However, the McDonald test is not applicable to Section
302(a).
9
Accordingly, had Yost, as Doman’s direct employer, been unable to pay
Doman’s workers’ compensation benefits, Atlas would have been compelled
to pay. We note that even if Atlas had been required to pay Doman’s
workers’ compensation benefits, the beneficiaries of the Doman Estate would
not have received those benefits, as his benefits were directed to his
dependent child.
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by virtue of statutory[] employer status alone, such that it is accorded even
where the statutory employer has not been required to make any actual
benefit payments.”); see also Fonner v. Shandon, Inc., 724 A.2d 903,
906-08 (Pa. 1999) (stating that the 1974 amendments to the Act did not
change a statutory employer’s entitlement to tort immunity even if the direct
employer paid benefits for a worker’s injuries under the Act). Based upon
the foregoing, we are constrained by the terms of the Act and the relevant
case law to affirm the trial court’s Order granting summary judgment in
favor of Atlas.
However, we note that there have been prior calls to the legislature to
reconsider Pennsylvania’s statutory scheme. See Patton, 89 A.3d at 650
(Baer, J., concurring) (urging the legislature “to eliminate the doctrine, so
that it no longer serves as blanket immunity for general contractors,
thwarting a victim’s right to recover from a tortfeasor”); see also Fonner,
724 A.2d at 908 (Nigro, J., dissenting) (stating that “[c]ommon sense and
logic dictate that the general contractor should not reap the benefits of civil
liability unless it undertakes responsibility of compensation coverage.”). We
echo those calls and agree that, following the 1974 amendments to the Act,
the statutory employer doctrine no longer serves the remedial purpose of
the Act. Traditionally, the secondary liability imposed on statutory
employers was meant to ensure that an injured worker will be afforded
payment of benefits, even in the event of default by his primary employer.
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See Patton, 89 A.3d at 645; see also Six L’s Packing, 44 A.3d at 1158-
59 (stating that “the Legislature meant to require persons (including
entities) contracting with others … to assure that the employees of those
others are covered by workers’ compensation insurance, on pain of
assuming secondary liability for benefits payment upon a default.”). The
tort immunity associated with the imposition of secondary liability “reflects
the historical quid pro quo between an employer and employee whereby the
employer assumes liability without fault for a work-related injury….” Tooey
v. AK Steel Corp., 81 A.3d 851, 860 (Pa. 2013) (citation omitted).
However, the Act was amended in 1974 to require that all employers provide
workers’ compensation coverage. See Fonner, 724 A.2d at 905 (noting
that, prior to 1974, the Act contained “elective compensation” language).
Notwithstanding, the 1974 amendments allowed general contractors to
remain insulated from tort liability, despite never being required to provide
workers’ compensation benefits to injured employees of subcontractors, and
created a windfall immunity shield. Thus, “the mandatory nature of workers’
compensation has rendered the statutory employer doctrine obsolete[,] …
[and] adversely impact[s] worker safety by eliminating the traditional
consequences (money damages) when a general contractor’s negligence
harms a subcontractor’s employee.” See Patton, 89 A.3d at 650-51 (Baer,
J., concurring); see also Travaglia v. C.H. Schwertner & Son, Inc., 570
A.2d 513, 518 (Pa. Super. 1989) (“Section 203 of the [] Act, which was
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designed to extend benefits to workers, should not be casually converted
into a shield behind which negligent employees may seek refuge.”).
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/27/2016
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