Evans v. Thompson

• Decision Date: 01 September 1994
• Docket Number: No. 60186-1,60186-1
• Citation: 124 Wn.2d 435,879 P.2d 938
• Court: Washington Supreme Court
• Parties: Diane EVANS, individually and as Personal Representative of the Estate of Frederick I. Evans, deceased; and Julie Kanning, individually and as Personal Representative of the Estate of Daniel J. Kanning, Petitioners, v. Robert J. THOMPSON and Amber D. Thompson, husband and wife, Respondents.

Page 435

124 Wn.2d 435

879 P.2d 938

Diane EVANS, individually and as Personal Representative of

the Estate of Frederick I. Evans, deceased; and Julie

Kanning, individually and as Personal Representative of the Estate of Daniel J. Kanning, Petitioners, v. Robert J. THOMPSON and Amber D. Thompson, husband and wife,

Respondents.

No. 60186-1.

Supreme Court of Washington,

En Banc.

Sept. 1, 1994.

Reconsideration Denied Nov. 4, 1994.

Paul L. Stritmatter and Stritmatter, Kessler & McCauley, Hoquiam, for petitioners.

Lee, Smart, Cook, Martin & Patterson, P.S., Inc., by David L. Martin and Gregory P. Turner, Seattle, for respondents.

BRACHTENBACH, Justice.

This action arises from the deaths of Frederick I. Evans and Daniel J. Kanning. Their widows sued individually and as representatives of the respective estates. The decedents were employees of Santana Trucking & Excavating, Inc. Defendants, Robert J. and Amber D. Thompson, husband and wife, are the shareholders, officers and directors of Santana.

Defendants, as individuals, own real property on which Santana dumped fill materials. A storm drain system on the property included a 20-foot-deep manhole. Decedents and a third Santana employee were on the property to inspect the drain system. Evans dropped a calculator into the manhole. He proceeded down the manhole, but did not return. Kanning went after Evans. Both died from methane gas accumulated at the bottom of the manhole.

Plaintiffs' complaint alleges a breach of the duties owed by Defendants as owners of the real property, specifically: "The injuries and deaths ... were proximately caused by the concealed (latent) ultrahazardous condition of Defendants' property." Clerk's Papers, at 6. Defendants moved for summary judgment on the basis that Plaintiffs' claims were barred by the Industrial Insurance Act because the Defendants and decedents were in the "same employ". Therefore, Defendants claim the third party action against Defendants as individual landowners is not authorized by the third party statute, RCW 51.24.030(1). The trial court granted summary judgment to Defendants; the Court of Appeals affirmed in an unpublished opinion, 121 Wash.2d 1014, 854 P.2d 42. We reverse and remand.

Two questions are presented: (1) When the defendants are landowners and constitute a completely separate legal entity from the employer of a worker, are the defendants immune under the Industrial Insurance Act for breach of their duties as landowners?; and (2) Are the officers and directors of a corporate employer immune, as a matter of law, as coemployees of a person employed by the corporation, even though at least one of the officers and directors is not employed by the corporation and performs no duties for the corporation?

The Legislature has provided for a third party action: "If 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 ... the injured worker or beneficiary may elect to seek damages from the third person." RCW 51.24.030(1). The Legislature evidences a strong policy in favor of actions against third parties by assigning the cause of action to the Department of Labor and Industries if the workman elects not to bring a third party suit. RCW 51.24.050(1). The interest of the Department in reimbursement from the recovery from a third party, RCW 51.24.040, clearly supports that policy. These legislative declarations mandate policy decisions by the courts which give appropriate recognition to the third party action.

The deceased workers in this case were employed by a corporation. Plaintiffs do not sue that corporation. Rather they sue an entirely separate legal entity, legally cognizable, Defendants, husband and wife, as individuals.

These Defendants, as a legal entity entirely separate from the corporation, own the real property upon which the deceased workers met their deaths, allegedly from conditions of that real estate. Decedents are alleged to be invitees. As such, they may be owed well-established duties from Defendant husband and from Defendant wife, as landowners.

Under our holdings, the plaintiffs do not necessarily recover. Rather, we hold that there are genuine issues of material fact as to whether Defendants, particularly Defendant wife, were in fact coemployees of the decedents. There are issues of law as to what Defendants' duties are as landowners and factual issues as to whether those duties were breached. These latter issues are not briefed, apparently by mutual agreement.

Defendants, as individuals, acquired title to these several parcels, where the deaths occurred, for investment purposes. Clerk's Papers, at 88, 90-92. They, as individuals, paid $91,000 to $94,000 for several parcels. They, as individuals, owe some contract balance on one parcel. The contract payments are made by the corporation, but recognizing and claiming their separate capacity, they, as individuals, show that as income in their personal tax returns. Clerk's Papers, at 81-82, 88, 91.

Defendants, as individuals, list the property as their residence address (which it is not) to qualify their children for a certain school. Clerk's Papers, at 97. Defendant husband lists the property as his home address on his driver's license. Clerk's Papers, at 99. A construction permit and a grading permit were obtained by Defendants, as individuals, for work on the property, again listing the property as their residence address. Clerk's Papers, at 74, 100. Defendants, as individuals, pay the real estate taxes, thereby gaining a tax benefit, as individuals. Clerk's Papers, at 82. They plan ultimately to use the property for purposes entirely unconnected to the corporation. Clerk's Papers, at 78-80.

In short, the Defendants, as individuals, as a legal entity entirely separate from the corporation-employer, own the property. They have paid for most of it as individuals and recognize the corporation payments as individual income. They, as individuals, obtain the tax benefits of ownership. They falsely represent to the state and a school district that this property is their residence. There is no written lease or other agreement between Defendants and the corporation. Clerk's Papers, at 79-80.

Can Defendants, as a separate legal entity, or either of them, be liable as landowners owing duties to the decedents as invitees? More accurately, are there genuine issues of material fact about the relationships between the corporation-employer, the decedents and the Defendants, as a separate legal entity, or either of them?

There are cases in other jurisdictions supporting the Plaintiffs' theory. Directly in point is Perkins v. Scott, 554 So.2d 1220 (Fla.Dist.Ct.App.1990). The facts are remarkably similar. The plaintiff worked for a corporation, S & S Pro Color, Inc. He worked in a building owned by Mr. Scott and his wife (same as here). The Scotts were the sole shareholders of S & S Color, Inc. (same as here). Mr. Scott was the president of the corporation (same as here). Plaintiff was injured when he fell down a stairway at his place of employment (same type incident as here). Plaintiff received worker compensation benefits, but sued Scott in his capacity as landlord (same as here). The court noted:

Mr. Scott argues that he is entitled to workers' compensation immunity based either on his status as a coemployee, or on a theory that he is entitled to pierce his corporation's veil and receive its workers' compensation immunity [same as here]. We reject both arguments.

Perkins, at 1221.

The court's reasoning in Perkins is compelling:

If Mr. Scott has in fact retained duties, as the owner of the building, separate and distinct from his duties as an employee of S & S Pro Color, fellow-employee immunity provides no protection for negligent breaches of those duties....

... Having created a separate corporation to employ Mr. Perkins and having leased the building to that corporation, Mr. Scott does not have the luxury to now pierce the veil of his own corporation to receive the benefit of its immunity.... If Mr. Scott were sued by a third party who had been injured by an employee of S & S Pro Color in the scope and course of the employee's employment, it is clear that Mr. Scott would raise the corporate veil to protect his individual assets. Mr. Scott is not free to raise the corporate veil to block liability and yet lower it to receive immunity.

(Citation omitted.) Perkins, at 1221-22.

Doggett v. Patrick, 197 Ga.App. 420, 398 S.E.2d 770 (1990) is in point. There the plaintiff was injured in the course of his employment, allegedly due to the condition of the building leased by his employer, but owned by the defendant, individually, who was the president of the corporate employer (same as here). Plaintiff received workers' compensation benefits, but sued defendant as the landowner (same as here). In reversing a summary judgment in favor of the landowner, the court cited Professor Larson's text. The court in Doggett said:

Pursuant to that doctrine, " '(a)n employer may become a third person, vulnerable to tort suit by an employee, if--and only if--he possesses a second persona so completely independent from and unrelated to his status as employer that by established standards the law recognizes it as a separate legal person.' Larson's Workmen's Compensation Law, § 72.81, Vol. 2A."

Doggett, at 421, 398 S.E.2d 770 (quoting Porter v. Beloit Corp., 194 Ga.App. 591, 593, 391 S.E.2d 430) (quoting 2A Arthur Larson, Workmen's Compensation § 72.81 (1988)), cert. denied, 194 Ga.App. 912 (1990). The court also noted:

The premises were not owned in this case by the corporation-employer but by defendant Patrick in his individual capacity [same as here].... Thus, at least an issue of fact is presented concerning whether the duties imposed upon defendant as a landowner are separate from those imposed upon him as a representative of plaintiff's employer.

Doggett, at 421, 398 S.E.2d 770.

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