Dorden v. C.H. Heist Corp.

• Decision Date: 15 October 1984
• Docket Number: No. 83-3188,83-3188
• Citation: 743 F.2d 1135
• Parties: Benjamin F. DORDEN, Plaintiff-Appellant, v. C.H. HEIST CORP., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1135

743 F.2d 1135

Benjamin F. DORDEN, Plaintiff-Appellant, v. C.H. HEIST CORP., et al., Defendants-Appellees.

No. 83-3188.

United States Court of Appeals, Fifth Circuit.

Oct. 15, 1984.

Frederick J. Gisevius, Jr., New Orleans, La., for plaintiff-appellant.

Wood Brown, III, New Orleans, La., for Heist.

Daniel J. Caruso, New Orleans, La., for Penn Truck.

Charles W. Schmidt, III, Lance R. Rydberg, New Orleans, La., for bison ford.

Thomas M. Nosewicz, New Orleans, La., for T-W Truck & Travelers.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before RUBIN, REAVLEY and TATE, Circuit Judges.

TATE, Circuit Judge:

This is a Louisiana diversity action. Pursuant to Fed.R.Civ.P. 54(b) certification, the plaintiff Dorden appeals from the dismissal by summary judgment of his tort suit against one of the defendants, a New York corporation ("Heist"). Dorden was seriously injured by the crash of a truck that he was driving for his employer, a Texas corporation that was a wholly-owned subsidiary of Heist.

The district court held that Heist was statutorily immune, La.R.S. 23:1032 (1976), 1061 (1950), from the tort recovery sought against it for the defective design, manufacture, and assembly of the truck, because: (1) as the parent-corporation principal of its subsidiary corporation (the employer of Dorden), Heist was exclusively liable to the plaintiff Dorden for Louisiana worker's compensation; and (2) at any rate, as a stockholder of the corporate employer of Dorden, Heist was for similar reasons immune from tort suit. We reverse, finding that disputed issues of material fact prevent summary judgment on the (1) ground, and that the district court erred as a matter of law as to the (2) ground.

I. Parent Corporation a Statutory Principal of a Wholly Owned Subsidiary

Under the Louisiana Worker's Compensation Law, La.R.S. 23:1021 et seq., the compensation remedy afforded an injured employee against his employer or "any principal" thereof is exclusive, thus barring a tort remedy. La.R.S. 23:1032 (1976). A "principal" is a person that "undertakes to execute any work, which is part of his trade, business or occupation" through a "contractor," in which event the principal is liable in compensation benefits to employees of the contractor injured in the execution of the work so undertaken as "if the employee had been immediately employed by him [the principal]." La.R.S. 23:1061 (1950). ¹ See also La.R.S. 23:1032 (1976), defining "principal" for purposes of the statutory immunity as "any person who undertakes to execute any work which is a part of his trade, business or occupation."

In Lewis v. Exxon Corporation, 441 So.2d 192 (La.1983), the Supreme Court of Louisiana recently summarized the purpose ² and the requirements ³ of a tort immunity claimed by a compensation principal under La.R.S. 23:1032, 1061. Stating that "the facts of each individual case" must be examined "to determine whether a particular activity is within the scope of a principal's trade, business or occupation," the court observed that, in general, to be so considered, the work must be "routine or customary ... or some other type of activity which is necessary for the principal's day to day activity" or, "[p]ut another way," "those activities that are an actual part of the nature and purpose of the principal's enterprise." Lewis, supra, 441 So.2d at 198. Also, "the entire scope of the work contract must be considered" in order to determine whether the work in which the injured employee of the contractor was injured was part of the principal's trade, business or occupation. Id. See also Hodges v. Exxon Corporation, 727 F.2d 450, 453 (5th Cir.1984).

Under these jurisprudential tests, which the district court felt to be "inapposite" on the basis of two Louisiana intermediate court decisions (to be discussed below), there were genuine disputes of material fact concerning whether the plaintiff's immediate employer, although a wholly-owned subsidiary of Heist, was performing part of Heist's trade, business, or occupation. As will be shown, the employer was a separate and distinct corporation, with its own employees, assets, and customers, performing work not shown to be part of Heist's routine and customary day to day activity performed by its own employees. Under usual Louisiana compensation principles, Heist would no more be liable as a "principal" for worker's compensation to injured employees of its corporate subsidiary than it would be liable under ordinary tort principles for the subsidiary's employees' torts that injured third persons.

The district court dismissed the plaintiff Dorden's claim by granting Heist's motion for summary judgment. A grant of summary judgment is appropriate only where it appears from the pleadings, depositions, admissions, answers to interrogatories, and affidavits--considered in the light most favorable to the opposing party--that there is "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Williams v. Shell Oil Company, 677 F.2d 506, 509 (5th Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 570, 74 L.Ed.2d 933 (1982), quoting, Fed.R.Civ.P. 56(c). Any doubt as to the existence of a material fact is to be resolved against the moving party. Id.; Murphy v. Georgia-Pacific Corporation, 628 F.2d 862, 866 (5th Cir.1980).

A. Factual Showing

The factual context, based upon the "depositions, answers to interrogatories, and admissions on file, together with the affidavits," Fed.R.Civ.P. 56(c), construed as required most favorably to the opponent (Dorden) to the summary-judgment motion, show:

The plaintiff was hired as a hydroblaster and truck driver by Hydro-Tech Corporation ("Hydro-Tech"), a Texas corporation, and his duties required him to drive the heavily loaded truck that crashed while he was at work. Hydro-Tech was engaged in the business of furnishing industrial cleaning for refineries and chemical companies in Louisiana, Texas, and Alabama. The allegedly defective truck which crashed had been designed, "specially manufactured," and assembled in New York by Heist, a New York corporation with executive offices in Florida, for use as a "pump truck" in the high-pressure industrial cleaning business, in which both Heist and Hydro-Tech were involved. Hydro-Tech had leased the truck from and had paid rentals to Heist. Hydro-Tech's Louisiana manager had authority to hire and fire Hydro-Tech employees, including the plaintiff Dorden. Hydro-Tech (but not Heist) paid state income and franchise taxes in Louisiana. So far as the record shows, Hydro-Tech secured and billed its own customers, maintained its own employment records, had assets in its own name, without day-to-day supervision or intervention by Heist.

In contending that summary judgment holding that Heist was Hydro-Tech's statutory principal was nonetheless proper, Heist relies solely upon its statement of allegedly uncontested facts attached to its motion for summary judgment. These pertinently show:

Hydro-Tech was a wholly-owned subsidiary of Heist. Heist "provided or supervised all accounting and administrative services for Hydro-Tech and maintained all bank accounts therefor." "[P]olicy for the management of Hydro-Tech was provided by Heist, and the management personnel of Hydro-Tech were held accountable by Heist for the successes and failures of their corporation." Although Heist had other facets of its business that Hydro-Tech did not share, "Heist and Hydro-Tech are generally in the same business, the furnishing of high-pressure cleaning." Hydro-Tech's equipment, premises, and payroll checks show it as a division of Heist. Heist's annual reports filed with the Securities and Exchange Commission show Hydro-Tech as "a wholly owned subsidiary and an operating division of Heist." ⁴

This showing, it should be noted, is negative of any indication that Heist undertook through Hydro-Tech to perform work that was part of Heist's trade, business, or occupation, as defined by the Louisiana supreme court in Lewis, supra. Likewise, with regard to a dispute of material fact, the showing is silent with regard to the affidavits and depositions earlier filed on behalf of Heist, offered by it in support of its motion to dismiss for lack of personal jurisdiction of the action filed in Louisiana federal district court; these emphasized the independent and separate nature of Hydro-Tech from Heist, and Heist's lack of supervision or control of Hydro-Tech, such as would dispute any factual contention that Hydro-Tech was an alter ego of Heist. Cf., Baker v. Raymond International, Inc., 656 F.2d 173, 179-81 (5th Cir.1981).

B. The Trial Court Ruling

The district court concluded that the statutory employer-principal decisions relied upon by the plaintiff Dorden were "inapposite" because the present facts involve the "distinguishable" issue of whether a subsidiary is so dominated by its parent corporation as to be considered a principal for workmen's compensation exclusive-remedy purposes. In therefore granting summary judgment on this domination theory, the court relied upon Coco v. Winston Industries, Inc., 330 So.2d 649 (La.App. 3d Cir.1975), amended on other grounds, 341 So.2d 332 (La.), and Nichols v. Uniroyal, Inc., 399 So.2d 751 (La.App. 3d Cir.1981), which were felt to be "virtually indistinguishable from the case at bar."

Nichols, however, involved a wholly-owned subsidiary organized solely to provide management and accounting services for stores owned by the parent corporation--as distinguished from a subsidiary such as Hydro-Tech that may have been engaged in business to service its own customers in the general public, and may not have functioned solely to perform services for the parent corporation that were part of the latter's trade, business, or occupation. Likewise distinguishably, Coco involved a wholly-owned subsidiary that "was in existence purely for the...