Brown v. Tennessee Gas Pipeline Co.

• Decision Date: 12 June 1980
• Docket Number: No. 78-3186,78-3186
• Parties: John M. BROWN, Plaintiff-Appellant, v. TENNESSEE GAS PIPELINE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 450

623 F.2d 450

John M. BROWN, Plaintiff-Appellant, v. TENNESSEE GAS PIPELINE COMPANY, Defendant-Appellee.

No. 78-3186.

United States Court of Appeals Sixth Circuit.

Argued April 8, 1980.

Decided June 12, 1980.

Robert Homes, Jr., August J. Bubert, Metairie, La., for plaintiff-appellant.

David O. Welch, Ashland, Ky., for defendant-appellee.

Before WEICK, LIVELY and KENNEDY, Circuit Judges.

WEICK, Circuit Judge.

Plaintiff-Appellant John Brown is appealing from the District Court's order granting judgment n. o. v. for the defendant after the jury had returned a verdict of $250,000 in Brown's favor. Jurisdiction was based on the diversity of citizenship between the parties. The primary issue presented for review is whether a master/servant relationship existed between the plaintiff and Tennessee Gas Pipeline Co. (Tennessee Gas) at the time of the accident causing the plaintiff's injuries.

The District Court held that such a relationship did exist based on the jury's answer to one of several special interrogatories submitted to it. The District Court also held that the existence of this master/servant relationship would bar the plaintiff's suit because of the Kentucky Workmen's Compensation Statute which provides that an employee is barred from suing his employer in tort where the employee has received or is eligible to receive Workmen's Compensation benefits (KRS 342.015 (1956); now KRS 342.610 (1973)). We affirm.

John Brown was a welder foreman employed by Tex-Ten, Inc. The defendant, Tennessee Gas, entered into a contract with Tex-Ten for the purpose of having Tex-Ten perform federally mandated hydrostatic testing on Tennessee Gas' natural gas pipelines. The contract labeled Tex-Ten as an independent contractor, but it included a detailed set of specifications governing the testing operations. Control over the natural gas was specifically reserved to Tennessee Gas. The contract also provided that Tex-Ten would indemnify Tennessee Gas for any liability which might arise out of the testing operations even where such liability arose from the negligence of Tennessee Gas or its employees.

On August 27, 1971, while the plaintiff was working on a Tennessee Gas Pipeline in Carter County, Kentucky, an explosion occurred severely injuring the plaintiff. Mr. Brown claimed and received Workmen's Compensation benefits for his injuries. This action against Tennessee Gas was filed on August 7, 1972 seeking to recover damages in addition to the Workmen's Compensation benefits which Mr. Brown has already received from Tex-Ten's workmen's compensation insurer. Tennessee Gas filed a Third Party Complaint against Tex-Ten for indemnification under the contract. The District Court entered a final order prior to the trial holding Tex-Ten liable for any judgment entered against Tennessee Gas. Tex-Ten took over defense of this suit and is now the real party in interest. ¹

I

The Kentucky Workmen's Compensation Statute (KRS 342.015 (1956)) which was in effect at the time of the injury limited the compensation which an employee could recover from his employer to the statutorily prescribed workmen's compensation benefits. The word "employer" defines both the scope of liability for Workmen's Compensation benefits and the scope of the bar against liability in tort. While normally a corporation which contracts with an independent contractor to do work on the corporation's own premises is considered a third party rather than an employer for the purposes of the Workmen's Compensation Statute, ² the owner can become the "employer" of its contractor's employees if it exercises control "as to the means, or as to the mode, manner and details of the performance of the work." King v. Shelby Electric Cooperative Corp., 502 S.W.2d 659, 664 (Ky.1973). See also, United Engineers and Constructors, Inc. v. Branham, 550 S.W.2d 540 (Ky.1977); and Mahan v. Litton, 321 S.W.2d 243 (Ky.1959).

In this case the evidence that Tennessee Gas controlled the mode, manner and details of the operation at the time of the explosion was strong. In addition to the explicit specifications in the contract on how the work was to be conducted, Tennessee Gas had six inspectors to insure compliance with those specifications while Tex-Ten only employed approximately ten people, including supervisory personnel, to actually do the work.

Control over the details of the work was particularly evident after things started to go wrong on the day before the accident. There was testimony to the effect that every major decision was made by the Tennessee Gas inspectors right down to deciding which valve to turn and which bolt to loosen. Sometime during the night before the accident the Chief Inspector for Tennessee Gas put Tex-Ten on "force accounts." This meant that Tennessee Gas, in recognition of the fact that things were going wrong and Tex-Ten would be required to do more work than was contemplated under the contract, agreed to reimburse Tex-Ten for all expenses, including wages and equipment costs, until such time as the difficulties in the testing process were remedied. Tex-Ten remained on "force accounts" until August 30, 1971, three days after the explosion. There was testimony that because of the "force account" situation, Paul Curry, the Chief Inspector for Tennessee Gas, became interested in not only seeing that the work was done in accord with the specifications, but also that the work was done without any delays. It was the plaintiff's theory that the concern over possible delay was the primary consideration which lead Paul Curry to force Brown into the dangerous situation which ultimately caused the explosion.

II

The appellant first contends that the Workmen's Compensation Statute cannot be relied upon to bar his claim against Tennessee Gas because the statutory bar imposed by the Workmen's Compensation Statute is an affirmative defense which must be raised in the pleadings and because the parties stipulated and admitted the independent contractor status of Tex-Ten. While the application of a statutory bar in a Workmen's Compensation Statute has generally been considered to be an affirmative defense, Kentucky has not decided the question. We need not decide the question in this case as we find that the defense was sufficiently raised under federal practice.

Tex-Ten was brought into the case by means of the Third Party Complaint of Tennessee Gas. In its Answer to the Third Party Complaint Tex-Ten alleged that:

The plaintiff herein was an employee of Third-Party Defendant, entitled to receive workmen's compensation under KRS Chapter 342 and has received such compensation, and this action is barred by KRS 342.015(1).

A copy of this pleading was served on the plaintiff. While this pleading was framed to respond to the third-party complaint, it did point the plaintiff to the applicable statute. Any doubt that workmen's compensation remained an issue in the case should have been quelled when the issue of the Workmen's Compensation bar again arose in a bench conference during the defendant's opening statement (before the plaintiff's evidence was submitted). The Court ruled that any mention of the fact that the plaintiff had received workmen's compensation benefits would be inappropriate and that the Court would decide that issue as a matter of law. No objection to the introduction of this issue was made. The issue was again raised and discussed at length in the conference at the bench following the defendant's motion for a directed verdict at the close of the plaintiff's evidence. Again no objection to this issue was raised. Finally, the issue of the applicability of the Workmen's Compensation Statute was argued in the post-trial briefs. Only a technical and formalistic approach to pleadings would justify a finding that the issue was not properly raised. Such an approach has long since been discarded in federal practice.

The record clearly shows that the parties stipulated that Tex-Ten was an independent contractor in their contract and admitted this fact in their pleadings. Under federal law, stipulations and admissions in the pleadings are generally binding on the parties and the Court. Morelock v. N. C. R. Corp., 586 F.2d 1096, 1107 (6th Cir. 1978); cert. den. 441 U.S. 906, 99 S.Ct. 1995, 60 L.Ed.2d 375 (1979); Jackson v. United States, 330 F.2d 679 (8th Cir. 1964); Hall v. United States, 314 F.Supp. 1135 (N.D.Cal.1970); Verkouteren v. District of Columbia, 346 F.2d...