Carrera v. Sunheaven Farms

• Decision Date: 04 October 2016
• Docket Number: No. 47397–6–II,47397–6–II
• Citation: 383 P.3d 563,196 Wash.App. 240
• Court: Washington Court of Appeals
• Parties: Basilio Cornelio Carrera, an unmarried Individual; Department of Labor & Industries, as statutory assignee of Basilio Cornelio Carrera, Petitioners, v. Sunheaven Farms, a Washington general Partnership; Sunheaven Farms, LLC, a Washington limited liability company; Brent Schulthies Farms, LLC, a Washington limited liability company; Brent Schulthies and Elaine Schulthies, husband and wife, and the marital community comprised thereof, individually and as general partner of Sunheaven Farms ; and John Does and Jane Does 1 through 10 inclusive, Respondents, Thomas S. Olmstead and Barbra E. Olmstead, husband and wife, and the marital community comprised thereof; Law Office of Thomas S. Olmstead, a Washington sole proprietorship; John Does and Jane Does 1 through 10 inclusive, Defendants.

196 Wash.App. 240

383 P.3d 563

Basilio Cornelio Carrera, an unmarried Individual; Department of Labor & Industries, as statutory assignee of Basilio Cornelio Carrera, Petitioners,

v. Sunheaven Farms, a Washington general Partnership; Sunheaven Farms, LLC, a Washington limited liability company; Brent Schulthies Farms, LLC, a Washington limited liability company; Brent Schulthies and Elaine Schulthies, husband and wife, and the marital community comprised thereof, individually and as general partner of Sunheaven Farms ; and John Does and Jane Does 1 through 10 inclusive, Respondents,Thomas S. Olmstead and Barbra E. Olmstead, husband and wife, and the marital community comprised thereof; Law Office of Thomas S. Olmstead, a Washington sole proprietorship; John Does and Jane Does 1 through 10 inclusive, Defendants.

No. 47397–6–II

Court of Appeals of Washington, Division 2.

October 4, 2016

Herbert Glenn Farber, Attorney at Law, P.O. Box 69, Bellevue, WA, 98009–0069, Bryan Daniel Doran, Doran Law, P.S., 400 108th Ave. N.E., Ste. 500, Bellevue, WA, 98004–5575, for Petitioners.

Sylvia Karen Bamberger, Russell Charles Love, Betts Patterson & Mines PS, 701 Pike St., Ste. 1400, Seattle, WA, 98101–3927, for Respondents.

Bjorgen, C.J.

The Department of Labor and Industries (L & I) appeals the superior court's order granting partial summary judgment in a third party action brought under the Industrial Insurance Act (IIA), title 51 RCW, ag ainst farming conglomerate Sunheaven Farms and certain persons associated with its operations. The action arose from injuries to Basilio Carrera, an employee of Sunheaven's member company Brent Hartley Farms LLC. The superior court ruled that L & I could not seek damages in an assigned third party action beyond the amount L & I had paid to Carrera for workers' compensation benefits because the statute of limitations had run on his claims. L & I argues that this ruling was in error because (1) it may seek noneconomic damages in an assigned third party action and (2) it was acting in the State's interest and, therefore, was not subject to the statute of limitations due to statutory and sovereign immunity.

¶2 We hold first that L & I may seek and recover, but may not retain, noneconomic damages in an assigned third party action. Instead, it must disburse those damages through the distribution formula prescribed by statute. Second, we hold that when L & I seeks such damages in an assigned third party action, it does so in part on behalf of the State and is, therefore, not subject to any statute of limitations. Accordingly, we reverse the superior court's order of summary judgment in favor of Sunheaven and remand for proceedings consistent with this opinion.

FACTS

¶3 In the summer of 2009, Carrera was hired by Brent Hartley Farms, one of Sunheaven's constituent farms, to perform seasonal agricultural labor. Sunheaven contracted to provide safety compliance services at the farm but was not Carrera's direct employer. On August 14, Carrera was grievously injured while working with a conveyor belt. According to the complaint, Carrera had not been properly trained to use the machine, and the machine's safety features did not meet state standards.

¶4 Carrera brought a negligence suit against his employer, but the suit was dismissed because such claims are not allowed under the IIA. L & I was notified of the suit after the dismissal and identified Sunheaven and other entities as potential third party defendants subject to suit under the IIA's third party action statutes. As required by those statutes, L & I notified Carrera on December 24, 2013 that he must elect whether he would pursue a third party action. When he failed to respond within 60 days as required, the action was assigned to L & I by operation of law.

¶5 Choosing to prosecute the assigned action, L & I filed an amended complaint against Sunheaven, Brent Hartley Farms and others on April 7, 2014, more than four years after Carrera was injured, asserting negligence claims and seeking both economic and noneconomic damages. This amended complaint included legal malpractice claims against Carrera's counsel in the earlier action against his employer. Among its affirmative defenses, Sunheaven claimed that a statutory three-year statute of limitations period had run and that applicable statutes allowed L & I to pursue Carrera's claims to recover only the amount it had paid Carrera for workers' compensation benefits.

¶6 Sunheaven sought summary judgment on the statute of limitations defense. The superior court granted the motion in part, barring L & I from seeking noneconomic damages and limiting economic damages to the amounts L & I paid or would pay in benefits. The superior court based its ruling on its “finding” that

[t]he State of Washington Department of Labor & Industries, as statutory assignee of any applicable third party claims, stands in the shoes of the injured worker Basilio Carrera in asserting the third party claims made herein, and therefore the State's claims for the injured worker's non-economic damages claimed against Defendants Sunheaven Farms and Brent Schulthies herein are subject to all of the defenses available against the injured worker, including the statute of limitations, notwithstanding the provisions of RCW 4.16.160.

Clerk's Papers (CP) at 404. The superior court determined that L & I had paid or would pay $788,418 in total benefits and, therefore, ordered that its damages be limited to that amount.

¶7 L & I appeals the superior court's grant of partial summary judgment.

ANALYSIS

¶8 We review a grant of summary judgment de novo, engaging in the same inquiry as the court granting the motion. Citizens All. for Prop. Rights Legal Fund v. San Juan County , 184 Wash.2d 428, 435, 359 P.3d 753 (2015). Summary judgment is proper 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.

CR 56(c). This appeal presents no genuine issue of fact that is material to the order of partial summary judgment. Therefore, our analysis is confined to issues of law.

¶9 To determine whether the superior court erred, we must assess the scope and nature of assigned third party claims under the IIA. We look first to the statutory scheme authorizing third party actions and their assignment. Within the context of this statutory scheme, we then consider L & I's right to prosecute assigned third party actions in light of the damages it may retain. Finally, we examine the operation of statutes of limitation on third party claims and whether L & I enjoys sovereign immunity in its prosecution of such claims.

I. STATUTORY SCHEME

¶10 This case involves a challenge to an action brought by L & I against third parties allegedly liable for Carrera's injuries. We begin by considering the statutes and case law treating the nature and operation of third party actions generally, as well as the State's right of recovery in such actions.

A. Third Party Actions under the IIA

¶11 The IIA grants workers injured on the job “speedy and sure relief” in the form of workers' compensation benefits, but prohibits them from bringing negligence actions against their employers. See Flanigan v. Dep't of Labor & Indus. , 123 Wash.2d 418, 422–23, 869 P.2d 14 (1994) (citing RCW 51.04.010 ). However, the IIA does not exempt third parties from liability in this manner, providing that

[i]f a third person, not in a worker's same employ, is or may become liable to pay damages on account of a worker's injury for which benefits and compensation are provided under this title, the injured worker or beneficiary may elect to seek damages from the third person.

RCW 51.24.030(1).

¶12 A worker may initiate a third party action, RCW 51.24.030(1) ; but where, as here, the worker fails to elect whether to do so, the right to bring the action is assigned to L & I or the worker's self-insuring employer by operation of law.

RCW 51.24.050(1).¹ L & I or the self-insurer may bring suit in the injured worker's name or compromise the claim as it sees fit. RCW 51.24.050(1). Any resulting damages award is subject to the following distribution arrangement: (1) L & I or the self-insurer is paid expenses incurred in making the recovery, including reasonable costs and attorney fees, RCW 51.24.050(4)(a) ; (2) 25 percent of the remaining balance goes to the injured worker, RCW 51.24.050(4)(b) ; (3) L & I or the self-insurer is then “paid the compensation and benefits paid to or on behalf of the injured worker or beneficiary,” RCW 51.24.050(4)(c) ; and (4) any remaining balance is paid to the injured worker, RCW 51.24.050(4)(d). Any such remaining balance paid to the injured worker is counted against the worker's future benefits. RCW 51.24.050(5).

B. L & I's Right of Recovery in Assigned Third Party Actions

¶13 To determine the boundaries of the State's right of recovery in assigned third party actions, we must interpret the opinions of our Supreme Court in Flanigan , supra, and Tobin v. Department of Labor & Industries , 169 Wash.2d 396, 239 P.3d 544 (2010), and decide whether those cases apply to recovery under RCW 51.24.050.

1. Flanigan and Tobin

¶14 Our Supreme Court has clarified that worker-initiated third party actions under RCW 51.24.060 may be brought seeking noneconomic damages that exceed the sums paid for workers' compensation benefits, but that L & I is not entitled to any resulting noneconomic damages. Tobin , 169 Wash.2d 396, 239 P.3d 544 ; Flanigan , 123 Wash.2d 418, 869 P.2d 14. Because workers' compensation benefits “cannot take into account noneconomic damages, such as an employee's own pain and suffering,” allowing a worker to recover such damages was intended to “increase his or her compensation beyond the Act's limited benefits.” Flanigan , 123 Wash.2d at 423–24, 869 P.2d 14. However, “where the Department has not paid...