Garza v. Exel Logistics, Inc.

• Decision Date: 08 April 2005
• Docket Number: No. 02-1187.,02-1187.
• Citation: 161 S.W.3d 473
• Parties: Jose GARZA, Petitioner, v. EXEL LOGISTICS, INC. and Interim Services Pacific LLC, Respondents.
• Court: Texas Supreme Court

Page 473

161 S.W.3d 473

Jose GARZA, Petitioner, v. EXEL LOGISTICS, INC. and Interim Services Pacific LLC, Respondents.

No. 02-1187.

Supreme Court of Texas.

Argued February 18, 2004.

Decided April 8, 2005.

Loren George Klitsas, Klitsas & Vercher, P.C., Lauren L. Beck-Harris and Eileen

K. Wilson, Johnson, Spalding, Doyle, West & Trent, L.L.P., Houston, for Petitioner.

Robert D. Allen, Baker & McKenzie, LLP, Linda Marie Dedman, Dedman & Handschuch, Dallas, for Respondents.

E. Thomas Bishop and Alexander N. Beard, Bishop & Hummert, P.C., Dallas, for Amicus Curiae Utica National Insurance Group.

Neal Kieval, Phillips & Akers, P.C., Houston, for Amicus Curiae The Kroger Company.

Justice OWEN delivered the opinion of the Court.

A worker hired by a temporary employment agency was injured while performing tasks for the agency's client. The trial court granted summary judgment for the agency and its client, concluding that the Workers' Compensation Act's exclusive remedy provision bars the worker's common law claims.¹ The court of appeals affirmed.² We affirm the court of appeals' judgment as to the temporary employment agency. But because the client company did not establish that it is "covered by workers' compensation insurance coverage," which is necessary to come within the exclusive remedy provision, we reverse the court of appeals' judgment as to the client company and remand the case to the trial court for further proceedings.

I

Interim Services Pacific LLC, a temporary employment agency, employed Jose Garza as a laborer and assigned him to perform general labor at Exel Logistics, Inc., one of Interim's clients. Garza sued Interim and Exel after he was injured while crossing over a moving conveyor belt to turn off a machine at the request of an Exel supervisor.

Interim and Exel jointly moved for summary judgment, arguing that both companies were Garza's employers when he was injured, a workers' compensation policy that Interim obtained inured to Exel's benefit, and the Texas Workers' Compensation Act's exclusive remedy provision therefore bars Garza's claims. In response, Garza conceded that Interim was his employer and that he received workers' compensation benefits through a policy Interim procured, but he argued that Exel was not his employer and that there was insufficient proof that Exel was covered by workers' compensation insurance.

The trial court granted summary judgment in favor of Interim and Exel, and the court of appeals affirmed, holding that both Interim and Exel were entitled to summary judgment based on the exclusive remedy provision. The court of appeals concluded that the summary judgment evidence established that Interim and Exel were Garza's co-employers based on Exel's actual control over Garza and other temporary workers assigned to Exel.³ The court also determined that Exel was covered by Interim's workers' compensation insurance policy based on contract provisions requiring Exel to pay Interim for costs associated with maintaining workers' compensation insurance.⁴

On appeal to this Court, Garza does not dispute that workers' compensation is his exclusive remedy against Interim. Because we conclude that Exel did not conclusively establish that it is "covered by workers' compensation insurance coverage" within the meaning of the exclusive remedy provision,⁵ we reverse the court of appeals' judgment in part and remand the case to the trial court.

II

The causes of action available to Garza against Exel depend on whether Exel was (1) his employer and "covered by workers' compensation insurance coverage,"⁶ (2) his employer and not covered by workers' compensation insurance,⁷ or (3) not his employer. In the first instance, Garza's exclusive remedy would be recovery of workers' compensation benefits.⁸ In the second, Garza would be required to prove that his injuries were caused by the negligence of Exel or its agent, servant or employee acting within the general scope of employment, but Exel would be foreclosed from asserting certain defenses, including contributory negligence.⁹ In the third, Garza would have the full array of causes of action, and Exel would have all defenses available to it.

Exel asserts that it was Garza's employer and that it was covered by workers' compensation insurance. Garza contends there is a fact question on both scores. Because this case was decided on summary judgment, Exel must establish each of its contentions as a matter of law.¹⁰

The court of appeals decided this case before we issued our decision in Wingfoot Enterprises v. Alvarado.¹¹ In Wingfoot, we examined the Workers' Compensation Act and held that an employee of a temporary employment agency who is "injured while working under the direct supervision of a client company is conducting the business of both the general employer [the temporary employment agency] and that employer's client."¹² We further held, based on the provisions of the Act, that the injured "employee should be able to pursue workers' compensation benefits from either," and that "[i]f either has elected not to provide coverage, but still qualifies as an `employer' under the Act, then that employer should be subject to common law liability without the benefit of the defenses enumerated in section 406.033."¹³

In Wingfoot, it was undisputed that the client company had workers' compensation insurance coverage, and no one challenged the jury's finding that the client controlled the details of the employee's work at the time of her injury.¹⁴ The only question was whether the temporary employment agency that was Alvarado's general employer could also be an "employer" for purposes of the exclusive remedy provision in section 408.001.¹⁵ We held that the exclusive remedy provision applied to a general employer that had workers' compensation insurance coverage.¹⁶

In the case presently before us, we have the reverse situation. Garza concedes that his general employer Interim, a temporary employment agency, was his employer when he was injured and that his claims against Interim are limited to recovery of workers' compensation benefits. The question is whether Interim's client, Exel, was also Garza's employer and was covered by workers' compensation insurance.

In determining whether Exel established as a matter of law that it was Garza's employer, we begin with the provisions of the Workers' Compensation Act to determine who is an employee and who is an employer for workers' compensation purposes. The Act defines "employer" in section 401.011, the general definitions section:

"Employer" means, unless otherwise specified, a person who makes a contract of hire, employs one or more employees, and has workers' compensation insurance coverage. The term includes a governmental entity that self-insures, either individually or collectively.¹⁷

We consider below whether Exel "has workers' compensation insurance coverage" and conclude that is an unanswered question based on this record. However, and more importantly, the meaning of "employer" is "otherwise specified" in the Act when determining whether an employer has elected to obtain workers' compensation coverage. Section 406.001, found in the subchapter dealing with "Coverage Election," says: "In this subchapter, `employer' means a person who employs one or more employees."¹⁸ This definition is one piece to the puzzle, but it does not, in and of itself, tell us whether Garza was Exel's employee. "[A] person who employs one or more employees" is a less restrictive definition than the general definition in section 401.011. But it is obvious that an employer of one or more employees is not the employer of every person who is an employee. General Motors has more than one employee, but it is not the employer of Ford Motor Company employees, at least not as a general proposition. To fully answer the question of who is an employer and who is that employer's employee, we must look elsewhere in the Act.

The Act defines "employee" as "each person in the service of another under a contract of hire, whether express or implied, or oral or written."¹⁹ There is no indication from the legislative history of this definition that the Legislature intended to dispense with traditional notions of what it means to be "in the service of another." We are guided by the Code Construction Act,²⁰ which tells us that "[w]ords and phrases shall be read in context and construed according to the rules of grammar and common usage," and "[w]ords and phrases that have acquired a technical or particular meaning, whether by legislative definition or otherwise, shall be construed accordingly."²¹

In another section of the Workers' Compensation Act that pertains only to certain hiring contractors and independent contractors in the building or construction industry,²² the Legislature implicitly recognized that exerting "employer-like" controls might cause an employee of an independent contractor to be considered the employee of the hiring contractor for workers' compensation purposes.²³ The Legislature specified that controlling certain matters did not amount to "employer-like controls."²⁴

Accordingly, in determining if a general employee of a temporary employment agency is also an employee of a client company for purposes of the Act, we consider traditional indicia, such as the exercise of actual control over the details of the work that gave rise to the injury.

The material evidence in the summary judgment record in this regard is undisputed. Garza was working on Exel's premises when he was injured. He was supervised on those premises by an Interim employee, Joe Castaneda. Garza testified, however, that sometimes he was supervised by an Exel employee, Roberto Luna. When asked: "Generally, on a day-to-day basis, who was the person that told you exactly what to do and how to do it?," Garza replied: "As I said, sometimes it would be Roberto [an Exel supervisor]; and sometimes it would be Joe Castaneda [an Interim...