Dolan v. Kent Research & Mfg. Co., Inc.

• Decision Date: 01 September 1984
• Docket Number: No. 891,891
• Citation: 491 A.2d 1226,63 Md.App. 55
• Parties: James A. DOLAN, et ux. v. KENT RESEARCH & MANUFACTURING CO., INC. ,
• Court: Court of Special Appeals of Maryland

Page 55

63 Md.App. 55

491 A.2d 1226

James A. DOLAN, et ux. v. KENT RESEARCH & MANUFACTURING CO., INC.

No. 891, Sept. Term, 1984.

Court of Special Appeals of Maryland.

May 9, 1985.

Rona S. Dadds, Baltimore (Patrick A. O'Doherty, Baltimore, and David M. Williams of Chestertown, on the brief), for appellants

Gerard F. Miles and Richard H. Lerch, Baltimore (Lerch and Huesman, Baltimore, on the brief), for appellee.

Argued before WILNER, ALPERT and ROSALYN B. BELL, JJ.

ROSALYN B. BELL, Judge.

What started as a typical workmen's compensation claim has become more complex, because the employee sustained his injuries while on property owned by a subsidiary of his employer company. Following the resolution of the claim the employee and his wife sued the subsidiary in tort. As a result, we must consider whether the subsidiary shares the immunity of the parent company by virtue of the relationship of the two corporations. The Workmen's Compensation Act provides that an employer who complies with the Act remains immune from a common-law action in tort. Md.Code Ann., Art. 101, § 15 (1957, 1979 Repl.Vol., 1984 Cum.Supp.). In effect, the Act replaces common-law liability.

Before we describe the accident which gave rise to this suit, we will discuss briefly the background of the two companies involved.

Dixon Valve and Coupling Company (Dixon, appellee/cross-appellant), a Pennsylvania corporation, manufactures and sells industrial parts. Kent Research and Manufacturing, Inc. (KRM) ¹, is a wholly-owned subsidiary of Dixon and owns some of the property on which Dixon operates its business. In 1975, KRM purchased a building in Chestertown, Maryland, and leased 25% of it to Dixon in a written contract dated July 1, 1976. Dixon used the space James Dolan (appellant/cross-appellee) originally was employed by KRM. In 1978, when Dixon shifted supervisors and salaried employees from the KRM payroll to Dixon's payroll, Dolan became an employee of Dixon. Both before and after the change, Dolan worked in the Chestertown plant and had the same duties.

                as a storage area and as an office from which to operate its subsidiaries.   Early in 1978, Dixon began transferring KRM employees and operations to Dixon as a prelude to closing KRM
                

On June 1, 1978, the manager of the warehouse and shipping department of Dixon asked Dolan to retrieve a part from KRM's plating department. While walking through the area, Dolan tripped on a plating hook that had become lodged between the wooden planks of the floor. In attempting to regain his balance, he slipped on a wet spot on the floor allegedly created by a leaking roof and a leaking chemical storage tank.

Dolan filed a claim for workmen's compensation benefits against Dixon based on the injuries sustained in his fall. At the hearing before the Workmen's Compensation Commission, Dolan and Dixon stipulated that Dolan "sustained an accidental injury arising out of and in the course of his employment...." On July 17, 1979, the commissioner ordered that the claim be held pending a determination of whether the resulting disability was permanent.

In 1981, Dolan and his wife ² filed a declaration against KRM seeking damages in tort for the injuries he sustained on KRM's property. KRM responded by filing a general issue plea and a motion for summary judgment The case proceeded to trial and, both at the end of KRM's case and after all the evidence, KRM moved for a directed verdict. These motions asserted KRM's statutory immunity, ³ Dolan's contributory negligence, and the insufficiency of the evidence. The court reserved ruling on the motions and allowed the jury to consider the issues. The jury returned a verdict for Dolan, whereupon KRM moved for judgment notwithstanding the verdict (j.n.o.v.) or a new trial. ⁴ The Circuit Court for Baltimore City granted the j.n.o.v., finding that KRM was entitled to employer immunity, and it denied the motion for new trial. ⁵ Dolan and his wife appeal the decision; KRM cross-appeals.

                claiming it was immune from liability because of its relationship to Dixon.   Specifically, KRM alleged that "[it] is an instrumentality of Dixon, and therefore is entitled to the exclusive remedy defense provided to employers under the Workmen's Compensation laws for the injuries alleged...."
                

Appellants and cross-appellees raise two alternate issues on appeal:

1. Whether the trial court erred in focusing on the relationship between KRM and Dixon, rather than that between KRM and Dolan, in deciding the question of KRM's immunity from suit under Md.Code Ann., Art. 101, § 15; or 2. If the trial court was correct in focusing on the relationship of KRM and Dixon, whether it erred in finding that Dixon controlled KRM sufficiently to entitle KRM to immunity and, therefore, erred in granting KRM's motion for judgment n.o.v.

In addition to arguing that KRM is immune from suit, appellee and cross-appellant presents the following issues for review:

1. Whether appellant failed to establish certain elements of his claim and, therefore, entitled appellee to judgment as a matter of law.

2. Whether the court erred in admitting into evidence the workmen's compensation commission order entered in a proceeding to which KRM was not a party.

3. Whether appellant's claim was barred by the doctrines of assumption of risk and contributory negligence.

4. Whether some of the jury instructions were erroneous and prejudicial to KRM.

Preliminarily, we note that we will reverse the j.n.o.v. and would have reinstated the jury verdict, because the trial court did not apply the correct test in granting the j.n.o.v. Based on the cross-appeal, however, we will reverse the judgment and remand the case for a new trial on the ground that the admission of the workmen's compensation commission order constituted prejudicial error. In reaching these decisions, we discuss the issues presented by the parties on appeal and cross-appeal to provide guidance to the trial court upon remand.

THE APPEAL

Dolan (appellant) disputes KRM's (appellee) immunity on two bases. First, employer immunity is not determined by the relationship of two corporations with each other. Second, even if that relationship did govern, appellee was not so controlled by Dixon as to share the same immunity.

When a court considers a motion for judgment n.o.v., it "resolves all conflicts in the evidence in favor of the plaintiff and assumes the truth of all evidence and such inferences as may naturally and legitimately be deduced therefrom which tend to support the plaintiff's right to recovery. The evidence ... must, therefore, be considered in the light most favorable to the appellant." (citations omitted).

Beck v. Baltimore Transit Company, 190 Md. 506, 509, 58 A.2d 909 (1948); accord, Stoskin v. Prensky, 256 Md. 707, 709, 262 A.2d 48 (1970).

The trial court in this case instructed the jury that the issue involved whether Dixon "controlled [KRM] to such an extent that the plaintiff, Mr. Dolan, was in fact an employee of both [Dixon] and [KRM]." The jury returned a verdict in favor of appellant on this issue, which supports an inference that Dixon did not control appellee sufficiently to render it immune from suit and that appellant was not an employee of appellee.

In granting the j.n.o.v., however, the court did not "resolve all conflicts" in favor of appellant. Rather, it based its ruling solely on the relationship of the two companies with each other. No mention was made of the employer-employee aspect of the issue.

On this ground, we must reverse the j.n.o.v. For reasons that will appear later, we will remand the case on a different ground. As a result of this conclusion, we need not address appellee's assertion that appellant failed to establish the elements of his claim. To provide guidance for the trial court, however, we will explain our decision that the court erred in focusing on the relationship of the two corporations and that it erred in finding that KRM was an instrumentality of Dixon.

Relationship Between KRM and Dixon

The issue submitted to the jury improperly focused on the relationship between appellee and Dixon, i.e., whether appellee was an instrumentality of Dixon. The determination Appellee contends that the Court of Appeals in Saf-T-Cab Service, Inc. v. Terry, 167 Md. 46, 172 A. 608 (1934), did not consider the employer-employee relationship, but determined that one company so controlled another as to render them both employers of the claimant.

                of whether a tort action is precluded by Md.Code Ann., Art. 101, § 15, supra, however, depends upon whether appellee was an employer of appellant.   Mackall v. Zayre Corporation, 293 Md. 221, 443 A.2d 98 (1982)
                

Although the Court in Saf-T-Cab Service, Inc., supra, did consider the relationship of the two companies, it did so as a means of determining whether they were employers of the claimant. The Court pointed out that, based on the perceived "relationship," "both corporations may be regarded as claimant's employers ... and both may be responsible for compensation to him under the Workmen's Compensation Act." 167 Md. at 49, 172 A. 608. This analysis is consistent with the Court's subsequent recognition that "a person ... may be the employee of two employers." Mackall, 293 Md. at 229, 443 A.2d 98; Keitz v. National Paving and Contracting Company, 214 Md. 479, 491, 136 A.2d 229 (1957); see Baur v. Calic, 166 Md. 387, 398-401, 171 A. 713 (1934).

The Court in Mackall, supra, explained the requisite evaluation:

"In determining whether the employer-employee relationship exists, this Court has established at least five criteria. These include (1) the power to select and hire the employee, (2) the payment of wages, (3) the power to discharge, (4) the power to control the employee's conduct, and (5) whether the work is part of the regular business of the employer. The decisive test in determining whether the relation of employer and employee exists is whether the employer has...