88 Hawai'i 140, Frank v. Hawaii Planing Mill Foundation
| Decision Date | 15 September 1998 |
| Docket Number | No. 20343,20343 |
| Citation | 963 P.2d 349,88 Hawaii 140 |
| Parties | 88 Hawai'i 140 Peter FRANK, Respondent-Appellant, v. HAWAII PLANING MILL FOUNDATION and Hawaii Planing Mill, Ltd., Petitioners-Appellees, and HM Black, Inc., dba Express Employment, Respondent-Appellee. |
| Court | Hawaii Supreme Court |
Dean E. Ochiai (of the Law Office of Dean E. Ochiai) and Thomas E. Cook and Steven Y. Otaguro (of Lyons, Brandt, Cook & Hiramatsu), on the briefs, for petitioners-appellees.
Arthur Y. Park, Laurent J. Remillard, Jr. and JohnC. McLaren (of Park Park Yu & Remillard), on the briefs, for respondent-appellant.
Andrew L. Pepper and Melani S. Mito (of Marr Jones & Pepper) and Robert C. Rice, pro hac vice (of Rice & Associates, Houston, TX), on the briefs, for amicus curiae National Association of Professional Employer Organizations.
Andrew L. Pepper and Melanie S. Mito (of Marr Jones & Pepper), on the briefs, for amicus curiae Altres, Inc.
Lyle Y. Harada (of Watanabe, IngKawashima) and Charles S. Birenbaum and Robert Spagat, pro hac vice (of Thelen Reid & Priest, LLP, of San Francisco, CA), on the briefs, for amicus curiae National Technical Services Association and National Association of Temporary and Staffing Services.
Stephen D. Whittaker and David W. Lacy (of Whittaker & Lacy), on the briefs, for amicus curiae Land-N-Sea Welding, Inc.
Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.
Following the Intermediate Court of Appeals' (ICA) disposition of this case by published opinion, filed on May 29, 1998, petitioners-appellees Hawaii Planing Mill Foundation and Hawaii Planing Mill, Ltd. (collectively HPM or statutory employer 1) petitions this court for a writ of certiorari. 2 HPM argues that the ICA erred in holding that respondent-appellant Peter Frank was permitted to bring a negligence action against HPM, notwithstanding his workers' compensation award. 3
On July 2, 1998, we granted HPM's petition for a writ of certiorari. For the reasons set forth below, we reverse the decision of the ICA.
The facts of this case are undisputed.
Frank was employed by H.M. Black, Inc., d.b.a. Express Employment (Express or original or lending employer 4), a temporary employment agency, which placed Frank with HPM. Express and HPM memorialized their lending/statutory employer agreement in writing, agreeing, inter alia, that the fee paid by HPM to Express covered all expenses, including workers' compensation premiums. In accordance with the agreement, Express paid a workers' compensation insurance premium to Island Insurance Company, and Frank was duly covered under a policy (the Policy).
Frank began working at the HPM mill site, and, while there, HPM had "the power and authority to dictate the time and place [of Frank's work]; work rules; manner of work; quality; and all other aspects of [Frank's] performance at [HPM Defendants' mill]." Frank v. Hawaii Planing Mill Foundation, 88 Hawai'i 465, 468, 967 P.2d 662, 665 (App.1998).
On July 19, 1993, while operating a radial saw at HPM's planing mill, Frank suffered permanent injuries to his right hand. He made a workers' compensation claim against Express. Although Frank was awarded benefits under the Policy, he also filed a negligence action against HPM on July 12, 1995. HPM moved for summary judgment on the ground that HPM was Frank's statutory employer, and, therefore, that Frank's exclusive remedy was workers' compensation, thus precluding him from suing HPM in tort. HPM relied on HRS Chapter 386 (entitled "Workers' Compensation Law") to support its contention. Specifically, HPM cited HRS § 386-5 (1993), which provides:
§ 386-5 Exclusiveness of right to compensation; exception. The rights and remedies herein granted to an employee or the employee's dependents on account of a work injury suffered by the employee shall exclude all other liability of the employer to the employee, the employee's legal representative, spouse, dependents, next of kin, or anyone else entitled to recover damages from the employer, at common law or otherwise, on account of the injury, except for sexual harassment or sexual assault and infliction of emotional distress or invasion of privacy related thereto, in which case a civil action may also be brought.
Frank responded that HPM was not entitled to Chapter 386's immunity because HPM did not satisfy the statutory requirements to be Frank's employer. At issue was whether HPM had "secured [workers'] compensation" insurance in accordance with statutory requirements such that HPM could be classified as Frank's "employer." The circuit court determined that HPM had done so by entering into the contract with Express and, accordingly, granted HPM's motion for partial summary judgment. In its order, the circuit court entered the following findings of fact (FOF) and conclusions of law (COL):
Defendants [HPM] were the borrowing employer of Plaintiff [Frank] in a borrowed employee context, with Express Employment being the lending employer.
Under the plain language of HRS § 386-1, in a borrowed employee context, the borrowing employer is considered to be the employer of the employee. However, if the borrowing employer does not secure compensation to the employee as provided for in HRS § 386-121, then the lending employer is considered to be the employer.
One means for fulfilling the requirement of securing compensation to the employee is for the borrowing employer to directly provide workers' compensation coverage on behalf of the employee. However, Defendants have not provided materials which indicate that they directly provided workers' compensation coverage for Plaintiff.
On the other hand, consistent with Ghersi v. Salazar, 883 P.2d 1352 (S.Ct.Utah 1994), the requirement may be met by Defendants' payment to the lending employer of a fee, a portion of which was used to pay for workers' compensation coverage for Plaintiff. This conclusion is based upon at least the following:
1) As a practical matter, Defendants have met the requirements of securing compensation to Plaintiff by indirectly purchasing workers' compensation coverage through the lending employer, Express Employment.
2) If an employee is allowed to sue in tort, the borrowing employer in a temporary labor services context, the employee would have more rights than ordinarily received in a typical employer-employee relationship.
Ordinarily, an employee is allowed workers' compensation benefits, but is not allowed to sue the employer in tort. However, in a temporary labor services context, if the employee can sue the borrowing employer in tort, the employee would be able to both receive workers' compensation benefits from the lending employer and sue the borrowing employer.
Further, in the temporary labor service context, if the employee suffers a work-related injury, it is most likely that the injury would be one suffered while engaged in services provided to the borrowing employer rather than the lending employer.
Simply put, if the lending employer were a temporary labor services provider, the employee a carpenter and the borrowing employer a general building contractor, an employee would most likely suffer a work-related injury on a job site performing construction work for the borrowing employer. It is less likely that the employee would suffer a work-related injury while filling out paper work at the lending employer's office.
This being the case, if an employee can sue a borrowing employer in tort in a temporary labor services context, then, in most instances of work-related injury, the employee would be able to both receive workers' compensation benefits from and sue in tort the employers. Again, this is more than what is contemplated in the ordinary employer-employee relationship.
3) Fonseca v. Pacific Construction Co., 54 Haw. 578, 513 P.2d 156 (1973) is distinguishable for at least the following reasons: (a) there the general contractor's liability was considered to be contingent and secondary while in this case the borrowing employers' liability is primary; (b) by contract, Express Employment assumed whatever obligation Defendants had to provide workers' compensation coverage for Plaintiff; and (c) there were significant indicia of an employer-employee relationship between Plaintiff and Defendants.
On appeal, the ICA reversed, holding that HPM, in failing to directly purchase workers' compensation insurance, had thereby failed to secure workers' compensation insurance in accordance with the scheme delineated in Chapter 386 and thus was not entitled to invoke the scheme's tort immunity provisions. HPM timely petitioned this court for a writ of certiorari and, on July 2, 1998, we granted certiorari to review the ICA's opinion. For the reasons set forth below, we reverse the ICA's opinion.
We review a circuit court's award of summary judgment de novo under the same standard applied by the circuit court. As we have often articulated: summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties.
Konno v. County of Hawai'i, 85 Hawai'i 61, 70, 937 P.2d 397, 406 (1997) (internal citations, brackets, and quotation marks omitted).
"The interpretation of a statute is a question of law reviewable de novo. Franks v. City & County of Honolulu, 74 Haw. 328, 334, 843 P.2d 668, 671 (1993).
When construing a statute, our foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be...
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