Graphic Arts Mut. Ins. v. Time Travel

• Decision Date: 02 February 2005
• Docket Number: No. B175741.,B175741.
• Citation: 126 Cal.App.4th 405,23 Cal.Rptr.3d 864
• Court: California Court of Appeals Court of Appeals
• Parties: GRAPHIC ARTS MUTUAL INSURANCE COMPANY, Plaintiff and Appellant, v. TIME TRAVEL INTERNATIONAL, INC., Defendant and Respondent.

23 Cal.Rptr.3d 864

126 Cal.App.4th 405

GRAPHIC ARTS MUTUAL INSURANCE COMPANY, Plaintiff and Appellant, v. TIME TRAVEL INTERNATIONAL, INC., Defendant and Respondent.

No. B175741.

Court of Appeal, Second District, Division 2.

February 2, 2005.

Review Denied May 11, 2005.

Law Offices of Marina Macchiagodena and Marina Macchiagodena, Pasadena; Ford, Walker, Haggerty & Behar and Maxine J. Lebowitz, Long Beach, for Plaintiff and Appellant.

Law Offices of Douglas R. Holmes and Douglas R. Holmes, Whittier, for Defendant and Respondent.

DOI TODD, J.

The parties agree that the issue presented here is one of first impression: May an insurance carrier held liable for workers' compensation benefits under Labor Code section 5500.5¹ pursue an action in civil court seeking reimbursement from an unlawfully uninsured employer or does the Workers' Compensation Appeals Board (WCAB) have exclusive jurisdiction? Because we find that plaintiff and appellant Graphic Arts Mutual Insurance Company may proceed in superior court, we reverse the judgment of dismissal following the sustaining of a demurrer without leave to amend.

FACTUAL AND PROCEDURAL BACKGROUND

On appeal from a judgment of dismissal following a demurrer sustained without leave to amend, we assume the truth of all well-pleaded facts, as well as those that are judicially noticeable. (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814, 107 Cal. Rptr.2d 369, 23 P.3d 601; Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)

From September 15, 1993 through September 15, 1994, appellant insured defendant and respondent Time Travel International, Inc., for workers' compensation benefits. Thereafter, respondent was "illegally uninsured" for such benefits. In the fall of 2000, Joe Garcia, who was formerly employed by respondent as a travel agent, filed an amended application for workers' compensation benefits, alleging a cumulative trauma injury during his employment by respondent from 1988 through June 24, 1997. During an arbitration before the WCAB, appellant, as the last carrier to insure respondent for workers' compensation benefits, was held liable for the full payment of benefits to Garcia in the amount of approximately $80,000, pursuant to section 5500.5, subdivision (a). The arbitrator's opinion was issued on June 20, 2002, and upheld on August 13, 2002 by the WCAB on a petition for reconsideration. Both the arbitrator's opinion and the arbitrator's report on the petition for reconsideration stated in dicta that appellant would have the right of reimbursement from respondent under section 5500.5, subdivision (a).

In 2003, appellant filed a complaint in superior court seeking indemnity from respondent under section 5500.5, subdivision (a), as well as equitable indemnity. Respondent demurred to the complaint on the ground that the WCAB had exclusive jurisdiction of the matter under subdivision (e) of section 5500.5, and that appellant had failed to file a petition for contribution with the WCAB within the required one-year timeframe after the award of benefits was issued. The trial court agreed and sustained the demurrer without leave to amend. This appeal followed.

DISCUSSION

Appellant contends the trial court has jurisdiction over its complaint for indemnity against respondent pursuant to section 5500.5, subdivision (a). Respondent contends that the WCAB has exclusive jurisdiction under section 5500.5, subdivision (e).

A. Standard of Review

We review the trial court's sustaining of a demurrer without leave to amend de novo, exercising our independent judgment as to whether a cause of action has been stated as a matter of law. (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300, 58 Cal.Rptr.2d 855, 926 P.2d 1042; Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125, 271 Cal.Rptr. 146, 793 P.2d 479.) We apply the abuse of discretion standard when reviewing the trial court's denial of leave to amend. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318, 216 Cal.Rptr. 718, 703 P.2d 58; Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497-1498, 57 Cal.Rptr.2d 406.) Appellant bears the burden of proving the trial court erred in sustaining the demurrer or abused its discretion in denying leave to amend. (Blank v. Kirwan, at p. 318, 216 Cal.Rptr. 718, 703 P.2d 58; Coutin v. Lucas (1990) 220 Cal. App.3d 1016, 1020, 270 Cal.Rptr. 93.)

B. The Enactment of Section 5500.5

Section 5500.5, characterized by our Supreme Court in Flesher v. Workers' Compensation Appeals Bd. (1979) 23 Cal.3d 322, 325, 152 Cal.Rptr. 459, 590 P.2d 35 as "long and complex," was enacted in 1951 to codify the principles announced in Colonial Ins. Co. v. Industrial Acc. Com. (1946) 29 Cal.2d 79, 172 P.2d 884. (See Tidewater Oil Co. v. Workers' Comp. Appeals Bd. (1977) 67 Cal.App.3d 950, 957, 137 Cal. Rptr. 36.) In Colonial, the Supreme Court held that a worker who sustained an industrial injury over a number of years in a number of different jobs is entitled to obtain the entire recovery from one or more of the successive employers or successive insurance carriers. The employer or carrier providing the recovery can then petition for apportionment of the amount paid from among the worker's other employers and other carriers. (Tidewater Oil Co. v. Workers' Comp. Appeals Bd., supra, at p. 957, 137 Cal.Rptr. 36; Colonial, supra, 29 Cal.2d at p. 82, 172 P.2d 884.)

In 1973, section 5500.5 was amended to expressly cover cumulative injury as well as occupational disease claims. (Flesher v. Workers' Compensation Appeals Bd., supra, 23 Cal.3d at p. 327, 152 Cal.Rptr. 459, 590 P.2d 35.) It was also amended to limit the employers against whom compensation could be sought to those who had employed the worker during the preceding five-year period. (Ibid.) In 1977, section 5500.5 was amended to reduce the five-year period to a one-year period. (Flesher, supra, at p. 327, 152 Cal.Rptr. 459, 590 P.2d 35.) "The purpose of these amendments was to provide greater certainty to insurers in anticipating costs and necessary reserves, to simplify the proceedings by reducing the number of employers and insurers required to be joined as defendants, and to reduce the burden placed on the entire system by the former procedures. [Citations.] The insurance industry favored these amendments and reasoned that the total burdens and benefits upon employers and insurers would more or less even out, for while they might be required to assume a larger liability in some cases, they would also be absolved of liability in other cases." (Id. at pp. 327-328, 152 Cal.Rptr. 459, 590 P.2d 35.)

At issue here is the third paragraph of section 5500.5, subdivision (a), which was added as part of the 1977 amendments: "Any employer held liable for workers' compensation benefits as a result of another employer's failure to secure the payment of compensation as required by this division shall be entitled to reimbursement from the employers who were unlawfully uninsured during the last year of the employee's employment, and shall be subrogated to the rights granted to the employee against the unlawfully uninsured employers under the provisions of Article 1 (commencing with Section 3700) of Chapter 4 of Part 1 of Division 4."²

Section 5500.5 also currently provides under subdivision (e): "At any time within one year after the appeals board has made an award for compensation benefits in connection with an occupational disease or cumulative injury, any employer held liable under the award may institute proceedings before the appeals board for the purpose of determining an apportionment of liability or right of contribution."

C. Appellant Qualifies as an "Employer"

Division 4 of the Labor Code (sections 3200 to 6099) is entitled Workers' Compensation and Insurance. Section 3850, subdivision (b), contained in part 1, chapter 5, "Subrogation of Employer," provides that "as used in [Chapter 5], `employer' includes insurer as defined in this division." As earlier set forth, section 5500.5, subdivision (a) allows any "employer" to seek reimbursement from another employer who failed to secure the payment of compensation as required by law. Appellant contends that it qualifies as an employer pursuant to section 3850, subdivision (b). Respondent argues that this definition is limited to chapter 5 and has no application to the provisions permitting reimbursement set forth in section 5500.5, which is contained in chapter 3 of division 4. We agree with appellant that section 5500.5, subdivision (a) must include an insurer seeking reimbursement, as well as an actual employer.

At the time the Legislature amended subdivision (a) of section 5500.5 to add the reimbursement language at issue here, case law had already interpreted the statute's reference to "employer" to include insurance carriers. For example, in State of Calif. v. Industrial Acc. Com. (1957) 49 Cal.2d 354, 317 P.2d 8, several insurance carriers successfully obtained a reimbursement award against the state's subsequent injuries fund pursuant to pre-amendment section 5500.5. The state challenged the award, claiming "the language of the statute does not authorize reimbursement to an insurance carrier as distinguished from an employer." (State of Calif. v. Industrial Acc. Com., supra, at pp. 355-356, 317 P.2d 8.) The Supreme Court affirmed the award, noting "various other statutory provisions indicate that no distinction is intended as between the employer and the carrier with respect to reimbursement rights." (Id. at p. 356, 317 P.2d 8; see also Harrison v. Workmen's Comp. Appeals Bd. (1974) 44 Cal.App.3d 197, 199-200, 118 Cal.Rptr. 508.) The Legislature is deemed to have approved of such interpretation of the statute. (Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721, 734-735, 180 Cal.Rptr. 496, 640 P.2d 115; In re Cindy B. (1987) 192 Cal.App.3d 771, 777-778, 237 Cal.Rptr. 677.) Indeed, the Legislature itself...