Allen v. EXHIBITION HALL AUTHORITY

• Citation: 842 So.2d 373
• Decision Date: 09 April 2003
• Docket Number: No. 2002-C-1072.,2002-C-1072.
• Parties: Louise ALLEN, v. The STATE of Louisiana through the ERNEST N. MORIAL—NEW ORLEANS EXHIBITION HALL AUTHORITY and Scottsdale Insurance Company.
• Court: Supreme Court of Louisiana

842 So.2d 373

Louise ALLEN, v. The STATE of Louisiana through the ERNEST N. MORIAL—NEW ORLEANS EXHIBITION HALL AUTHORITY and Scottsdale Insurance Company.

No. 2002-C-1072.

Supreme Court of Louisiana.

April 9, 2003.

John G. Allelo, Baton Rouge, Holly A. Graphia, Kelly Y. Scott, Crawford & Lewis for Applicant.

George H. Jones, New Orleans, for Respondent.

Stevan C. Dittman, New Orleans, Alonzo T. Stanga, III, Metairie, for Louisiana Trial Lawyers Association (Amicus Curiae)

WEIMER, Justice.

We granted certiorari in this case to resolve a conflict in the courts of appeal with respect to whether the "two contract" theory of the statutory employer defense, embodied in Louisiana Revised Statutes 23:1032 and 23:1061, contains a temporal requirement. More specifically, we granted writs to determine whether a defendant who seeks to invoke the "two contract" theory of the statutory employer defense must enter into a contract with a third party for the performance of specified work before entering into a subcontract for the performance of all or part of that work in order to avail itself of the statutory employer defense. Finding no basis for the imposition of a temporal requirement in either the language or the purpose of LSA-R.S. 23:1032 and 23:1061, we reverse the decision of the court of appeal and reinstate the judgment of the district court granting summary judgment in favor of defendant, Ernest N. Morial-New Orleans Exhibition Hall Authority (hereinafter "Convention Center") and its liability insurer, Scottsdale Insurance Company. In so doing, we expressly overrule the decisions of the courts of appeal that have jurisprudentially imposed a temporal requirement upon the "two contract" theory of defense.¹

FACTS AND PROCEDURAL HISTORY

In 1983, Convention Center, through its managing body, New Orleans Public Facility Management, entered into a long-term contract with Aramark to provide catering services for conventions and other special events that Convention Center would routinely be sponsoring. This 1983 contract was later superceded in 1989 by a substantially similar contract between the parties. Approximately five years later, ACE Hardware Corporation ("ACE") contracted with Convention Center to provide a venue for its 1994 Annual Fall National Show. During the ACE convention, Louise Allen, an employee of Aramark, was allegedly injured on the premises of Convention Center while in the course and scope of her employment with Aramark. Allen filed suit for damages against Convention Center and its insurer, alleging that an unevenness between the floor of the building and the door of an elevator caused her to trip and fall. Allen has since recovered workers' compensation benefits from her direct employer, Aramark.

In response to Allen's petition, Convention Center and its insurer filed a motion for summary judgment, asserting tort immunity under the statutory employer doctrine. According to Convention Center, because it was Allen's statutory employer under the "two contract" theory of the statutory employer defense, Allen's exclusive remedy lies in receiving worker's compensation benefits.

At the hearing on Convention Center's motion for summary judgment in the district court, Allen's attorney appeared in court, but expressed no opposition to the court's granting Convention Center's motion. The district court judge entered judgment accordingly, dismissing Allen's suit against Convention Center and its insurer with prejudice. Allen timely filed a motion for new trial, which the district court denied without a hearing.²

Allen subsequently appealed the district court's grant of summary judgment, alleging that Convention Center is barred from asserting the "two contract" theory of the statutory employer defense because it cannot satisfy the temporal requirements imposed upon LSA-R.S. 23:1032 and 23:1061 by the case law interpreting those statutes. More specifically, Allen argued that because Convention Center entered the principal contract with ACE after entering the Aramark "sub-contract" to provide catering services for the event, Convention Center is not Allen's statutory employer. Convention Center, on the other hand, argued that the temporal requirement of the "two contract" theory is neither statutorily nor jurisprudentially mandated; all that is required to satisfy the "two contract" theory of the statutory employer defense is a showing that the defendant entered a contract with a third party; that pursuant to that contract, work must be performed; and that in order for defendant to fulfill its contractual obligation to perform the work, defendant entered into a subcontract for all or part of the work to be performed.

The court of appeal, in a four-to-one decision, reversed the district court's grant of summary judgment and the attendant dismissal of Allen's case. Allen v. State, through the Ernest N. Morial—New Orleans Exhibition Hall Authority, 00-1552 (La.App. 4 Cir. 3/20/02), 814 So.2d 644. In so doing, the court of appeal followed its own precedent holding that the temporal requirement must be satisfied before a defendant is entitled to tort immunity under the "two contract" theory of defense. See, Taylor v. Broadmoor Corp., 623 So.2d 674, 676 (La.App. 4 Cir.1993),

Crochet v. Westminster City Center Properties, 572 So.2d 720, 723 (La.App. 4 Cir.1990). Because the 1989 "sub-contract" with Aramark to provide catering services preceded the principal contract with ACE for its 1994 convention, the court of appeal held that Convention Center could not avail itself of the "two contract" theory of defense. In reaching this conclusion, the court of appeal expressly rejected the contrary holding of the Third Circuit Court of Appeal in Louviere v. Woodson Construction Company, 95-1075 (La.App. 3 Cir. 8/28/96), 679 So.2d 1013,

writ denied,

96-2387 (La.12/6/96), 684 So.2d 929, which ruled that the temporal requirement was not a necessary prerequisite for invoking the "two contract" theory of defense, but was instead a jurisprudentially imposed requirement that had been erroneously adopted by the courts of appeal based on dicta in this court's opinion in Berry v. Holston Well Services, 488 So.2d 934 (La. 1986).

We granted certiorari in this case to resolve the apparent split in the courts of appeal and to determine whether LSA-R.S. 23:1032 and 23:1061, in fact, impose a mandatory temporal requirement on the assertion of the "two contract" theory of the statutory employer defense. Allen, 02-1072 (La.6/21/02), 819 So.2d 341. Stated in its simplest terms, the issue we granted writs to resolve is whether, under the "two contract" theory of the statutory employer defense, the defendant must enter into a principal contract with a third party for the performance of specified work before entering into a subcontract for the performance of all or part of that work in order to avail itself of the statutory employer defense.

STANDARD OF REVIEW

Appellate courts review summary judgments de novo under the same criteria that govern the district court's consideration of whether summary judgment is appropriate. Schroeder v. Board of Supervisors of Louisiana State University, 591 So.2d 342 (La.1991). A court must grant a motion for summary judgment "if the depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law." LSA-C.C.P. art. 966(B). The summary judgment procedure is favored under our law. Id.

LAW AND ANALYSIS

Workers' compensation legislation was enacted in the early decades of the twentieth century, not to abrogate existing tort remedies that afforded protection to workers, but to provide social insurance to compensate victims of industrial accidents because it was widely believed that the limited rights of recovery under tort law were inadequate to protect these individuals.³ Roberts v. Sewerage and Water Board of New Orleans, 92-2048 (La.3/21/94), 634 So.2d 341, 345, citing Boggs v. Blue Diamond Coal Co., 590 F.2d 655 (6th Cir.1979)

. The legislation reflects a compromise between the competing interests of employers and employees: the employer gives up the defense it would otherwise enjoy in cases where it is not at fault, while the employee surrenders his or her right to full damages, accepting instead a more modest claim for essentials, payable regardless of fault and with a minimum of delay. Id.

The legislatures that adopted the early workers' compensation acts feared that employers would attempt to circumvent the absolute liability those statutes imposed by interjecting between themselves and their workers intermediary entities which would fail to meet workers' compensation obligations. Frank L. Maraist and Thomas C. Galligan, Jr., The Employer's Tort Immunity: A Case Study in Post-Modern Immunity, 57 La.L.Rev. 467, 488 (1997). To assure a compensation remedy to injured workers, these legislatures provided that some principals were by statute deemed, for purposes of liability for workers' compensation benefits, the employers of employees of other entities. Id. The legislative approaches to what is commonly referred to as the "statutory employer" doctrine varied.

Louisiana adopted a broad version of the statutory employer doctrine. The Louisiana Act expressly extends the employer's compensation obligation and its corresponding tort immunity to "principals."⁴ Thus, LSA-R.S. 23:1061, which establishes the workers' compensation responsibility of a principal under the statutory employer doctrine, provides in pertinent part:

When any person, in this Section referred to as the "principal", undertakes to execute any work, which is a part of his trade, business, or occupation or which he had contracted to perform, and contracts with any person, in this Section referred to as the "contractor," for the execution by or under the contractor of the whole or

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