Bacon v. DBI/Sala

Decision Date02 November 2012
Docket NumberNo. S–11–194.,S–11–194.
PartiesRonald “Tim” BACON, appellant, v. DBI/SALA, also known as DB Industries, Inc., appellee. and Davis Erection Co., Inc., employer, and Liberty Mutual Group, its workers' compensation carrier, subrogees, appellees.
CourtNebraska Supreme Court


Syllabus by the Court

[284 Neb. 579]1. Statutes: Appeal and Error. Statutory interpretation is a question of law that an appellate court resolves independently of the trial court.

2. Workers' Compensation: Subrogation. The employer's right to a future credit does not depend upon who brought the action which led to the employee's recovery or who happens to “recover” first.

3. Workers' Compensation: Subrogation.Neb.Rev.Stat. § 48–118 (Reissue 2010) was enacted for the benefit of the employer.

4. Statutes: Intent. In construing a statute, a court must look to the statutory objective to be accomplished, the evils and mischiefs sought to be remedied, and the purpose to be served, and then must place on the statute a reasonable or liberal construction that best achieves the statute's purpose, rather than a construction that defeats the statutory purpose.

5. Statutes: Appeal and Error. When possible, an appellate court will try to avoid a statutory construction that would lead to an absurd result.

6. Statutes: Judicial Construction: Legislature: Presumptions. It is presumed that when a statute has been construed by the Nebraska Supreme Court and the same statute is substantially reenacted, the Legislature gave to the language the significance previously accorded to it by the Supreme Court.

7. Workers' Compensation: Subrogation: Words and Phrases. “Third person” under the Nebraska Workers' Compensation Act includes any person other than the employer or those whom the act makes an employer.

8. Corporations: Stock. Two separate corporations are generally regarded as distinct legal entities even if the stock of one is owned wholly by the other.

9. Corporations: Presumptions. There is a strong presumption that a parent company is not the employer of its subsidiary's employees.

10. Insurance: Subrogation. Under the antisubrogation rule, an insurer has no right of subrogation against its own insured or coinsured for a claim arising from the very risk for which the insured was covered.

[284 Neb. 580]11. Insurance: Subrogation. The antisubrogation rule does not prohibit subrogation against any third party who is neither a named nor an implied coinsured, but who has some kind of duty relationship with the insured.

12. Insurance: Subrogation. The prohibition of insurers' subrogation against their own insureds applies only to claims arising from the very risk for which the insured was covered by that insurer.

13. Workers' Compensation: Subrogation. An employer may waive its subrogation protections under applicable workers' compensation laws.

14. Subrogation: Waiver. Waivers of subrogation are strictly construed.

15. Workers' Compensation: Subrogation. A claimant is entitled to deduct the reasonable expenses incurred in reaching settlement from the portion of the settlement subject to subrogation claims.

16. Workers' Compensation. The portion of a settlement which is not actually recovered by the employee—because of a prior apportionment agreement—should not be treated as advance payment by the employer on account of any future installments of compensation.

17. Rules of the Supreme Court: Appeal and Error. A cross-appeal must be properly designated under Neb. Ct. R.App. P. § 2–109(D)(4) (rev.2008) if affirmative relief is to be obtained.

18. Appeal and Error. Errors argued but not assigned will not be considered on appeal.

James E. Harris and Britany S. Shotkoski, of Harris Kuhn Law Firm, L.L.P., Omaha, and Robert G. Pahlke, of Robert Pahlke Law Group, Scottsbluff, for appellant.

Julie A. Martin, of Nolan, Olson & Stryker, P.C., L.L.O., Omaha, for appellees Davis Erection Co., Inc., and Liberty Mutual Group.




Ronald “Tim” Bacon was severely injured while working on a construction project as an employee of Davis Erection Co., Inc. (Davis). Davis and its insurer, Liberty Mutual Group (Liberty), began paying lifetime workers' compensation benefits. Bacon brought a separate negligence action against Davis' parent company, Ridgetop Holdings, Inc. (Ridgetop), and joined Davis and Liberty for workers' compensation subrogation purposes. Ridgetop's safety director had worked on the project under the supervision of Davis' project manager, and Bacon alleged Ridgetop was independently liable for the safety director's negligent acts which contributed to his injury. Bacon reached a settlement agreement with Ridgetop, after which the trial court granted Davis and Liberty's motion, pursuant to Neb.Rev.Stat. § 48–118 (Reissue 2010), for a future credit in the amount of Bacon's settlement with Ridgetop against its continuing workers' compensation obligations. Bacon appeals the order granting the future credit. At issue is whether Ridgetop is a “third person” under § 48–118 and whether Liberty waived its right to a future credit through a waiver clause in the policy or statements during settlement negotiations.


Metropolitan Entertainment & Convention Authority (MECA) contracted with Kiewit Construction Co. (Kiewit) to build the Omaha Convention Center and Arena (the Arena). Pursuant to their agreement, MECA was required to purchase, maintain, and administer an “Owner Controlled Insurance Program” (OCIP), which would provide comprehensive builder's liability insurance, including workers' compensation coverage, for all the contractors working on the Arena. The agreement stated that the OCIP was to fully insure the risk of Kiewit, as construction manager, and those subcontractors and suppliers performing “the Work.” Kiewit was specifically required to name itself, its subcontractors, and its suppliers as “additional insureds.” The agreement also specified that the insurance coverage was to contain waivers of subrogation.

Kiewit contracted with Liberty to provide the OCIP. The policies to the various subcontractors apparently bore separate policy numbers.1 However, the senior technical claims specialist for Liberty described an OCIP as a single policy written for a given construction contract, insuring all of the subcontractors under that program. In this manner, Kiewit was insured by Liberty under a commercial liability and workers' compensation policy for the duration of its work on the Arena. Kiewit had additional liability coverage through a policy with RSUI Indemnity Company (RSUI). The specific policy between Kiewit and Liberty is not in the record.

Contract and Policy with Davis

Kiewit hired Davis as a subcontractor to perform work on the Arena. The agreement is not in the record. Bacon instead entered into evidence two pages of what appears to be a subcontract agreement between Kiewit and another subcontractor for the Arena project. Liberty does not contest that the agreement is representative of Kiewit's other subcontractor agreements. The agreement contained the following waiver of subrogation:

Subcontractor hereby waives all rights of recovery under subrogation because of deductible clauses, inadequacy of limits of any insurance policy, limitations or exclusions of coverage, or any other reason against Owner, Contractor, the OCIP Administrator, its or their officers, agents, or employees, and any other contractor or sub-subcontractor performing Work or rendering services on behalf of Owner or Contractor in connection with the planning, development and construction of the Project. Subcontractor shall also require that all Subcontractor maintained insurance coverage related to the Work include clauses providing that each insurer shall waive all of its rights of recovery by subrogation against Owner and Contractor together with the same parties referenced immediately above in this Section. Subcontractor shall require similar written express waivers and insurance clauses from each of its sub-subcontractors. A waiver of subrogation shall be effective as to any individual or entity even if such individual or entity (a) would otherwise have a duty of indemnification, contractual or otherwise, (b) did not pay the insurance premium directly or indirectly, and (c) whether or not such individual or entity has an insurable interest in the property damaged.

(Emphasis supplied.)

Davis was an enrollee in the OCIP, pursuant to which Liberty issued a workers' compensation and employers' liability policy. A four-page excerpt of the policy between Davis and Liberty is in evidence. It contains a “Waiver of Our Right to Recover From Others Endorsement,” which provides:

We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.)

This agreement shall not operate directly or indirectly to benefit any one not named in the Schedule.

Under the title “Schedule,” on the same page of the waiver, the policy states, “Where required by written contract.”

Parent Company Ridgetop

Davis is a wholly owned subsidiary of Ridgetop. Ridgetop was not a named enrollee of the OCIP. It does not appear from the record that there was any contract between Ridgetop and MECA or between Ridgetop and Kiewit to perform work on the Arena. Ridgetop has several wholly owned subsidiary companies, including Davis Rebar, Inc.; Northwest Steel Erection; Crane Sales & Service; and Crane Rental & Rigging Co.

Ridgetop's employee David Sowl is a safety director. Sowl is regularly loaned out to work as the safety director for each of Ridgetop's subsidiaries, under the supervision and control of...

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