Drewes v. Grand Valley State Colleges, Docket No. 46667

• Decision Date: 03 June 1981
• Docket Number: Docket No. 46667
• Citation: 308 N.W.2d 642,106 Mich.App. 776
• Parties: William N. DREWES, Plaintiff-Appellee, v. GRAND VALLEY STATE COLLEGES, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 642

308 N.W.2d 642

106 Mich.App. 776

William N. DREWES, Plaintiff-Appellee, v. GRAND VALLEY STATE COLLEGES, Defendant-Appellant.

Docket No. 46667.

Court of Appeals of Michigan.

June 3, 1981.

Released for Publication Aug. 5, 1981.

Jonathan S. Damon, Grand Rapids, for defendant-appellant.

Robert N. Alt, Jr., Grand Rapids, for plaintiff-appellee.

Before MAHER, P. J., and R. B. BURNS and WALSH, JJ.

R. M. MAHER, Presiding Judge.

Defendant appeals by leave granted the order of the trial court denying defendant's motion for accelerated judgment. Pursuant to GCR 1963, 806.3(1)(a) (ii) the trial court certified that the order "involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation".

The facts are not in dispute. Plaintiff was employed as a musician with the Woody Herman Orchestra of New York. Defendant, Grand Valley State Colleges, engaged the services of the orchestra as part of a music workshop held at the defendant's campus in Allendale, Michigan, on May 13, 1977. While the orchestra was performing on that date pursuant to its contract with the defendant, plaintiff walked to the rear of an elevated stage at the colleges' Louis Armstrong Theater and fell off, apparently tumbling down to a set of concrete steps leading to an unused orchestra pit. As a result of the fall plaintiff sustained various injuries, including serious head injuries.

Plaintiff petitioned for workers' compensation benefits listing Woody Herman as his employer and defendant as his "statutory employer". The petition also recited that the Woody Herman Orchestra was uninsured for workers' compensation in Michigan. On September 1, 1977, before a decision was rendered on the petition, plaintiff filed suit against defendant in Federal District Court seeking damages resulting from the fall. Plaintiff filed the instant action in the Court of Claims on February 2, 1979, also seeking damages from the defendant because of the fall. On April 11, 1979, the Federal District Court case was dismissed by stipulation of the parties.

The Bureau of Workmen's Compensation mailed its decision on May 8, 1979. The administrative law judge found that the Woody Herman Orchestra was uninsured and that a principal-contractor relationship existed between Grand Valley State Colleges and the orchestra. Accordingly, plaintiff was awarded benefits against defendant. Defendant appealed this ruling contesting its liability for workers' compensation benefits, ¹ but the present record does not reflect the present status of that appeal.

A hearing was held on defendant's motion for accelerated judgment on June 27, 1979, at which time defendant argued that it was entitled to the immunity afforded by the exclusive remedy provision of the Worker's Disability Compensation Act (the act) since it had already been found liable for and was paying workers' compensation benefits to plaintiff. The motion was denied ² and this interlocutory appeal followed.

The issue on appeal is whether defendant may claim the immunity from suit granted by the exclusive remedy provision of the act. Accordingly, a short recitation of the statutory framework is in order. Under § 171(1) of the act, M.C.L. § 418.171(1); M.S.A. § 17.237(171)(1), whenever an employer who is subject to the act (referred to as the "principal") contracts with another who is either not subject to the act or who is otherwise uninsured for purposes of workers' compensation (referred to as the "contractor"), the principal becomes liable for the workers' compensation benefits due to the employees of the contractor. Section 171(1) further provides that "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 * * * ". ³ The exclusive remedy provision is found in § 131 of the act, M.C.L. § 418.131; M.S.A. § 17.237(131). This section provides in part that "(t)he right to the recovery of benefits as provided in this act shall be the employee's exclusive remedy against the employer". An injured worker may still bring suit, however, to enforce the liability of any third party other than a fellow employee. M.C.L. § 418.827(1); M.S.A. § 17.237(827)(1). Any amount recovered in such a suit must first be applied to reimburse the party paying the workers' compensation benefits. M.C.L. § 418.827(5); M.S.A. § 17.237(827)(5). If a principal is held liable for benefits under § 171(1), it is entitled to be indemnified by the contractor under § 171(2), M.C.L. § 418.171(2); M.S.A. § 17.237(171)(2).

Defendant's argument on appeal begins with the fact that it has been held liable for benefits as a matter of law under § 171(1) as the "principal". It then notes that § 171(1) requires that when benefits are paid by a principal references to the principal are substituted for references to the employer in other sections of the act. It then concludes that it is entitled to the immunity provided by § 131 by substituting the word "principal" for the word "employer" in that section.

Plaintiff mounts a two-pronged response to this argument. He first claims, on the basis of policy, that the Legislature could not have intended the result for which defendant contends. He next gives these policy arguments a constitutional dimension, and contends that if the act is construed as defendant claims it should be he will be deprived of due process and equal protection of the laws. At the heart of both of plaintiff's arguments is the claimed unfairness of a situation which would have allowed the injured worker of an insured contractor to receive compensation benefits and to maintain a suit against the principal, ⁴ while injured workers employed by uninsured contractors must be satisfied with compensation benefits alone. Plaintiff points out that a principal such as the defendant in the instant case can seek indemnification from the contractor for benefits paid under § 171(2), so that, in the end, a principal might give up nothing in exchange for the immunity which defendant claims. Plaintiff also notes that any tort recovery he might realize from the defendant would first go to reimburse defendant for the compensation benefits paid to him under § 827(5) so that there is no danger of defendant having to pay twice. ⁵

Concerning plaintiff's first argument, there are circumstances in which a person's employer may be subject to suit regardless of the fact that the employer is also liable to pay workers' compensation benefits. These circumstances arise when the employer and the employee share a relationship other than the employer-employee relationship. In an appropriate case the employer may be subject to a suit brought by the employee if that suit is based on the alternative relationship:

"An employee may have ties with an employer other than the employer-employee relationship. They may be landlord and tenant; trustee and beneficiary; vendor and vendee and so on. We look to the laws governing the particular relationship involved to determine rights and obligations of the parties. The fact that the parties are also employer-employee does not automatically trigger the operation of the exclusive remedy provision of the WDCA (Worker's Disability Compensation Act). The exclusive remedy provision applies only to employers where conditions of liability under the WDCA pertain.

"The injured person in Mathis is seeking no-fault benefits from an insurer who happens to be his employer. Any liability to pay no-fault benefits is based on the status of being an insurer under the no-fault act. The employer-employee relationship does not determine the status of insurer, but simply fixes priority among those who do have that status. No conditions of liability under the WDCA exist affecting the employer as a self-insurer under the no-fault act. Accordingly we find no reason to apply the exclusive remedy provisions of the WDCA to bar the employee's cause of action." Mathis v. Interstate Motor Freight System, 408 Mich. 164, 184, 289 N.W.2d 708 (1980).

See Peoples v. Chrysler Corp., 98 Mich.App. 277, 296 N.W.2d 237 (1980), Robards v. Estate of Leopold J. Kantzler, 98 Mich.App. 414, 296 N.W.2d 265 (1980). See also Choate v. Landis Tool Co., 486 F.Supp. 774 (E.D.Mich., 1980). This concept is not, however, well suited to cases such as that now before us. Almost by definition, suits such as that between the plaintiff and the defendant in the instant case will be based on something other than the employer-employee relationship since the defendant stands in the place of the employer only by operation of law. Application of the dual capacity doctrine would tend to defeat the intent of the Legislature in cases such as this. ⁶

We believe that the Legislature's intention has been clearly stated. The attractiveness of plaintiff's policy arguments notwithstanding, the language which the Legislature employed in the act serves to afford the defendant the immunity of § 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. ⁷

This holding does not end matters as plaintiff has also argued that if the act is construed to grant immunity to the defendant it violates his right to the equal protection of law...