731 F.2d 1388 (9th Cir. 1984), 83-1948, Prescott v. United States

Docket Nº:83-1948, 83-1949.
Citation:731 F.2d 1388
Party Name:Keith L. PRESCOTT, Plaintiff-Respondent, v. UNITED STATES of America, Defendant-Petitioner. Keith L. PRESCOTT, Plaintiff-Respondent-Appellee, v. UNITED STATES of America, et al., Defendants, and Reynolds Electrical and Engineering Company, Inc., a Nevada Corporation, Defendant-Petitioner-Appellant.
Case Date:April 25, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1388

731 F.2d 1388 (9th Cir. 1984)

Keith L. PRESCOTT, Plaintiff-Respondent,

v.

UNITED STATES of America, Defendant-Petitioner.

Keith L. PRESCOTT, Plaintiff-Respondent-Appellee,

v.

UNITED STATES of America, et al., Defendants,

and

Reynolds Electrical and Engineering Company, Inc., a Nevada

Corporation, Defendant-Petitioner-Appellant.

Nos. 83-1948, 83-1949.

United States Court of Appeals, Ninth Circuit

April 25, 1984

Argued and Submitted Feb. 15, 1984.

Page 1389

Stewart L. Udall, Phoenix, Ariz., Larry C. Johns, Alan R. Johns, Johns & Johns, Las Vegas, Nev., for plaintiff-respondent-appellee.

J. Paul McGrath, Asst. Atty. Gen., Jeffrey Axelrad, Director, Torts Branch, Donald E. Jose, Asst. Director, Torts Branch, Washington, D.C., John Thorndal, Thorndal, Backus & Maupin, Las Vegas, Nev., for defendant-petitioner-appellant.

Appeal from the United States District Court for the District of Nevada.

Before DUNIWAY, FARRIS, and PREGERSON, Circuit Judges.

FARRIS, Circuit Judge:

The question certified for this interlocutory appeal is whether an agreement between the Atomic Energy Commission and the Nevada Industrial Commission is a valid device for providing workers' compensation coverage for radiation-related injuries and diseases for the employees of Reynolds Electrical and Engineering Company. The district court held that the agreement was not a valid device because it failed to meet the requirements of the Nevada Industrial Insurance Act and the Nevada Occupational Diseases Act. We affirm.

FACTS

The United States, through the Atomic Energy Commission and other agencies, has tested nuclear weapons and nuclear devices at the Nevada Test Site since the early 1950's. Reynolds Electrical and Engineering Company is a contractor at the Nevada Test Site. From 1961 to 1968, Reynolds employed Prescott as an operating engineer. Prescott alleges that he was exposed to radiation when he was regularly sent into highly contaminated test areas immediately after nuclear detonations to retrieve test instruments. In 1969, he was diagnosed as having multiple myeloma, a cancer of the bone marrow. Prescott brought tort actions against Reynolds and the United States, alleging that he contracted the disease as a result of exposure to radiation while employed at the Nevada Test Site.

Page 1390

Reynolds and the Atomic Energy Commission had agreed that Reynolds would provide insurance coverage for its employees under the Nevada Industrial Insurance Act and the Nevada Occupational Diseases Act and would pass the insurance costs on to the United States. Although employers typically purchase such insurance by paying premiums to the state insurance fund, Reynolds has not paid any premiums to purchase insurance for employees who suffer radiation-related harm. Instead, in 1956, the Atomic Energy Commission and the Nevada Industrial Commission entered into an agreement which was intended to provide coverage for radiation-related diseases and injuries for employees of Reynolds and other contractors and subcontractors at the Nevada Test Site. The agreement provided that when an employee filed a claim, the Nevada Industrial Commission would determine if the claim was compensable under Nevada workers' compensation laws. If compensable, the Nevada Industrial Commission would make payments to the employee for injuries, disabilities or death resulting from work-related radiation exposure. The Atomic Energy Commission promised to reimburse the Nevada Industrial Commission for payments made to employees. This agreement has been extended and modified nine times since 1956, but the substance of the agreement remains unchanged. The Department of Energy has since assumed the responsibilities of the Atomic Energy Commission.

In 1979, Prescott filed a claim with the Department of Energy. When no action was taken on the claim, Prescott sued Reynolds and the United States in tort. Reynolds and the United States moved to dismiss Prescott's suit, arguing that the Nevada Industrial Insurance Act and the Nevada Occupational Diseases Act provided his exclusive remedy. The district court held that the agreement between the Atomic Energy Commission and the Nevada Industrial Commission failed to satisfy the defendants' obligations to provide coverage under the acts. Prescott v. United States, 523 F.Supp. 918 (D.Nev.1981). The district court held that the agreement was void because the Nevada Industrial Commission lacked authority to enter into the agreement and because the agreement impermissibly modified the terms of defendants' liabilities created by the Nevada Occupational Diseases Act. The court concluded that since no workers' compensation insurance had been purchased, Prescott could sue Reynolds and the United States in tort. On motion for reconsideration, the district court held that no premiums had been paid to purchase coverage for radiation-related diseases. Prescott v. United States, No. 80-143 (D.Nev. Mar. 28, 1983). The court again concluded that since Reynolds had not purchased insurance, Prescott could sue the defendants in tort. Pursuant to 28 U.S.C. Sec. 1292(b), the district court certified for interlocutory appeal the question of the validity of the agreement between the Atomic Energy Commission and the Nevada Industrial Commission.

ANALYSIS

In determining the liability of Reynolds and the United States, the district court interpreted Nevada law. We recently granted rehearing en banc to decide whether a "clearly wrong" or a de novo standard applies when reviewing a district court's determination of the law of the state in which it sits. See In re McLinn, F/V Fjord, 721 F.2d 666 (9th Cir. rehearing en banc granted Dec. 6, 1983). Under either standard, we affirm.

PLEDGE OF ASSETS

The Nevada Industrial Insurance Act requires that employers pay to the state insurance fund premiums in the form of advance deposits. 1 It is undisputed that Reynolds did not contribute to the fund to cover the payment of benefits to employees

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for work-related radiation injuries and diseases. Reynolds and the United States argue instead that the agreement between the Atomic Energy Commission and the Nevada Industrial Commission satisfied Reynolds' obligation under the Nevada Industrial Insurance Act. Nev.Rev.Stat. Sec. 616.395(3) permits the state industrial insurance system to accept as a substitute for premiums a "bond or pledge of assets." 2 The district court held that the agreement between the Atomic Energy Commission and the Nevada Industrial Commission is not a pledge of assets within the meaning of Nev.Rev.Stat. Sec. 616.395(3).

The Nevada Industrial Insurance Act does not define "pledge of assets." Nevada courts have not defined the term. The sparse legislative history provides no guidance. We must therefore look to other sources to determine whether the agreement qualifies as a "pledge of assets."

The Restatement defines a "pledge" as "a security interest in a chattel or in an intangible represented by an indispensable instrument, the interest being created by a bailment for the purpose of securing the payment of a debt or the performance of some other duty." RESTATEMENT OF SECURITY Sec. 1 (1941). The essential elements of a common-law pledge are: 1) the existence of a debt or obligation and 2) the transfer of property to the pledgee, to be held as security and, if necessary, to be used to assure performance of the obligation. See, e.g., Madsen v. Prudential Federal Savings & Loan Ass'n., 558 P.2d 1337, 1339 (Utah 1977). The pledgee takes possession of the pledged property and has a right to retain the property until the debt is satisfied....

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