Dagenhardt v. Special Mach. & Engineering, Inc., Docket No. 67751

• Decision Date: 12 March 1984
• Docket Number: No. 17,Docket No. 67751,17
• Citation: 345 N.W.2d 164,418 Mich. 520
• Parties: Patricia DAGENHARDT, as Administratrix of the Estate of Frank Dagenhardt, Deceased, Plaintiff-Appellee, v. SPECIAL MACHINE & ENGINEERING, INC., a Michigan corporation, Defendant- Appellant, v. NATURALITE, INC., a foreign corporation, Defendant. Calendar418 Mich. 520, 345 N.W.2d 164
• Court: Michigan Supreme Court

Page 164

345 N.W.2d 164

Patricia DAGENHARDT, as Administratrix of the Estate of Frank Dagenhardt, Deceased, Plaintiff-Appellee, v. SPECIAL MACHINE & ENGINEERING, INC., a Michigan corporation, Defendant- Appellant, v. NATURALITE, INC., a foreign corporation, Defendant.

Docket No. 67751.

Calendar No. 17.

418 Mich. 520, 345 N.W.2d 164

Supreme Court of Michigan.

Argued April 7, 1983.

Decided March 12, 1984.

Klein & Bloom, P.C. by Gary M. Bloom, Livonia, for plaintiff-appellee.

Moore, Sills, Poling & Wooster, P.C. by Richard B. Poling, Jr., Birmingham, for defendant-appellant.

CAVANAGH, Justice.

The trial court granted summary judgment in favor of defendant Special Machine & Engineering, Inc. (hereinafter referred to as defendant) on the ground that plaintiff's cause of action was barred by the exclusive remedy provision ¹ of the Worker's Disability Compensation Act. ²

I

The facts in this matter were succinctly stated by the Court of Appeals:

"Frank Dagenhardt died as a result of injuries he sustained when he fell through a skylight on a building owned by defendant-appellee, Special Machine & Engineering, Inc. (hereinafter defendant). At the time this tragic accident occurred, Frank Dagenhardt was employed by Slasor Heating & Cooling Company, which had contracted with defendant to perform certain heating and cooling work. This work required Dagenhardt to go out onto the roof of defendant's plant.

"In the contract between Slasor and defendant, Slasor represented that it was fully covered by workers' disability compensation insurance. In fact, on the day of the accident Slasor did not carry such insurance, in violation of MCL 418.611; MSA 17.237(611). Consequently, defendant petitioned the Bureau of Workers' Disability Compensation to determine its liability under MCL 418.171; MSA 17.237(171), as a statutorily substituted employer. Notice of the proceedings were provided to plaintiff, Patricia Dagenhardt, Frank's widow. At the hearing, the administrative law judge ruled that, for purposes of the Worker's Disability Compensation Act, defendant would be liable for the payment of compensation benefits.

"A wrongful death action was commenced by plaintiff against defendant and Naturalite, Inc., a manufacturer of skylights who is not involved in this appeal. Defendant moved for summary judgment on the basis that MCL 418.131; MSA 17.237(131) operated to transfer to it the immunity to suit Slasor would have enjoyed under the act as decedent's employer. The trial court granted summary judgment in an order dated January 4, 1980.[ ³] " Dagenhardt v. Special Machine & Engineering, Inc., 108 Mich.App. 75, 77-78, 310 N.W.2d 41 (1981).

The Court of Appeals reversed the judgment of the trial court and remanded the case for trial, finding that plaintiff's wrongful death action was not barred by the exclusive remedy provision because: (1) it could see no compelling reason why a worker should not be able to sue a principal or contractor who might also be liable for compensation, especially since a principal or contractor held liable for payment of compensation is entitled to be indemnified by the uninsured contractor or subcontractor it employs, and (2) alternatively, since defendant voluntarily paid benefits to the decedent's dependents, a literal interpretation of Sec. 171 of the WDCA led to that result.

We granted leave to appeal.

II

Section 171 of the WDCA reads as follows:

"Sec. 171. (1) If any employer subject to the provisions of this act, in this section referred to as the principal, contracts with any other person, in this section referred to as the contractor, who is not subject to this act or who has not complied with the provisions of section 611, and who does not become subject to this act or comply with the provisions of section 611 prior to the date of the injury or death for which claim is made for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation under this act which he would have been liable to pay if that workman had been immediately employed by him; and if compensation is claimed from or proceedings are taken against the principal, then, in the application of this act, reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the workman under the employer by whom he is immediately employed. A contractor shall be deemed to include subcontractors in all cases where the principal gives permission that the work or any part thereof be performed under subcontract.

"(2) If the principal is liable to pay compensation under this section, he shall be entitled to be indemnified by the contractor or subcontractor. The employee shall not be entitled to recover at common law against the contractor for any damages arising from such injury if he takes compensation from such principal. The principal, in case he pays compensation to the employee of such contractor, may recover the amount so paid in an action against such contractor." M.C.L. Sec. 418.171; M.S.A. Sec. 17.237(171).

The question before us is whether the foregoing provision of the WDCA causes Sec. 131, the exclusive remedy provision, to apply in this case.

"Sec. 131. The right to the recovery of benefits as provided in this act shall be the employee's exclusive remedy against the employer. As used in this section and section 827 'employee' includes the person injured, his personal representatives and any other person to whom a claim accrues by reason of the injury to or death of the employee, and 'employer' includes his insurer, a service agent to a self-insured employer, and the accident fund insofar as they furnish, or fail to furnish, safety inspections or safety advisory services incident to providing workmen's compensation insurance or incident to a self-insured employer's liability servicing contract." M.C.L. Sec. 418.131; M.S.A. Sec. 17.237(131).

Essentially, defendant claims that, by the unambiguous language of Secs. 131 and 171, principals must be permitted to invoke the exclusive remedy provision and that it should not be penalized for having been forthright, i.e., for voluntarily paying compensation to decedent's dependents.

On the other hand, plaintiff claims that, because the applicable statutory language is ambiguous, principals are not employers within the meaning of Sec. 131 and that, in any event, defendant cannot invoke the exclusive remedy provision because it voluntarily paid compensation in this case. Plaintiff also claims that if the WDCA is interpreted in defendant's favor, then she will be deprived of her state and federal constitutional rights to due process and equal protection. However, we note that plaintiff's constitutional claims are not properly before this Court because they were not presented to the trial court. See Falk v. Macomb County Civil Service Comm., 57 Mich.App. 134, 137, 225 N.W.2d 713 (1974), lv. den. 394 Mich. 819 (1975), and the authorities cited therein.

III

Shortly before the Court of Appeals decision in this case, another panel of that Court considered the present issue and held that:

"the language which the Legislature employed in the act serves to afford the defendant the immunity of Sec. 131. The Legislature has clearly stated that, when a principal becomes liable for the payment of workers' compensation benefits, references to the principal are to be substituted for references to the employer in other sections of the act. There is no indication that the Legislature intended this to be true everywhere but in the exclusive remedy provision. While the logic of this situation may be questioned after examination of the entire statutory scheme, we are not allowed to substitute our ideas for the Legislature's. Accordingly, plaintiff's arguments concerning the construction of the act are more appropriately addressed to that forum." (Footnote omitted). Drewes v. Grand Valley State Colleges, 106 Mich.App. 776, 784, 308 N.W.2d 642 (1981).

We approve the foregoing language from Drewes. There is nothing in the workers' disability compensation scheme to suggest that Sec. 171 does not apply to the exclusive remedy provision. Indeed, the principal incurs liability for an injured worker's disability compensation benefits merely because that worker was employed by an uninsured employer and was injured while performing work which the principal contracted for the employer to perform. Once liability has been imposed and the injured worker seeks or receives disability compensation benefits from the principal, "then, in the application of this act, reference to the principal shall be substituted for reference to the employer". (Emphasis added). The statute's directive that "reference to the principal shall be substituted for reference to the employer" is clear and unambiguous. Thus, we need undertake no further interpretation or construction of its terms. Detroit v. Redford Twp., 253 Mich. 453, 455-456, 235 N.W. 217 (1931).

Conversely, Sec. 131 appears to limit the term "employer" to the employer, the employer's insurer, the employer's service agent if self-insured, or the accident fund. Thus, an apparent conflict with Sec. 171 is created because the directive of Sec. 171 is mandatory, "shall be substituted". State Highway Comm. v. Vanderkloot, 392 Mich. 159, 178-182, 220 N.W.2d 416 (1974) (opinion of Williams, J.). Nevertheless, since the intention of the Legislature in enacting the WDCA was to provide disabled workers with benefits during the periods of their disabilities so that they and their dependents might survive an otherwise catastrophic loss of needed income, McAvoy v. H.B. Sherman Co., 401 Mich. 419, 437, 258 N.W.2d 414 (1977), it is reasonable to interpret the term "employer" appearing in Sec. 131 as including the term "pr...