Griffith v. MacAllister Rental, LLC
| Citation | 173 N.E.3d 115 |
| Decision Date | 26 May 2021 |
| Docket Number | NO. C-200311,C-200311 |
| Parties | Glenn GRIFFITH, and Leona Griffith, Plaintiffs, v. MACALLISTER RENTAL, LLC, Defendant-Third Party Plaintiff-Appellant, John Doe Companies #1-5, John Doe Employee, and Bureau of Workers’ Compensation, Defendants, v. Architectural Glass & Metal Co., Inc., Third Party Defendant-Appellee. |
| Court | United States Court of Appeals (Ohio) |
McCaslin, Imbus & McCaslin, Thomas J. Gruber and Michael P. Cussen, Cincinnati, for Defendant-Third Party Plaintiff-Appellant.
Green & Green, Lawyers, Jared A. Wagner and Jane M. Lynch, Dayton, for Third Party-Defendant-Appellee.
{¶1} A construction worker suffered an injury after a boom lift allegedly malfunctioned and ejected him from the lift platform. In addition to receiving workers’ compensation benefits, the employee sued the rental company that provided the lift for negligent maintenance and related claims. In turn, the rental company sued the contractor that rented the lift from it, seeking to enforce an indemnity provision contained in the parties’ rental agreement. The trial court granted summary judgment in the contractor's favor, reasoning that the indemnity agreement could not overcome Ohio's workers’ compensation immunity with respect to claims arising from employment. After reviewing the law and the record, we agree with the trial court's decision and affirm its judgment.
{¶2} The facts of this case are uncontroverted. Third-party defendant-appellee Architectural Glass served as a subcontractor on a large construction project in Cincinnati. To assist in completing the work, Architectural Glass rented a boom lift from third-party plaintiff-appellant MacAllister Rental. Both companies are located in Indiana, but MacAllister Rental agreed to deliver the lift to the job site in Ohio. As part of the rental agreement, Architectural Glass promised to indemnify MacAllister Rental from any liability arising out of the use of the lift, and to insure it from "loss or damage." MacAllister Rental delivered the lift and Architectural Glass began using it, apparently without incident. However, Architectural Glass subsequently loaned the lift to another subcontractor on the project, and that subcontractor's employee, Glenn Griffith, was injured after faulty settings allegedly caused the lift to buck him off.
{¶3} Mr. Griffith received workers’ compensation benefits from the general contractor that managed the entire project. Unlike typical workers’ compensation claims, Mr. Griffith filed his claim with the general contractor because it received permission, pursuant to R.C. 4123.35, to self-insure for that project. And as subcontractors on that project, both Architectural Glass and Mr. Griffith's employer were enrolled in that self-insured program, under the general contractor's umbrella.
{¶4} Because the injury arose out of his employment, Mr. Griffith was precluded from pursuing any legal claim against the general contractor, Architectural Glass, or his employer. Ohio law generally provides liability protections to employers that are compliant with workers’ compensation regulations, rendering them immune from suit. And on a self-insured construction project, such as this one, that immunity extends beyond the employer to all enrolled contractors.
{¶5} But MacAllister Rental was not an enrolled contractor on this project—its only connection was supplying the lift to Architectural Glass. Mr. Griffith sued MacAllister Rental, alleging negligent maintenance and related claims. MacAllister Rental in turn filed a third-party complaint against Architectural Glass, seeking indemnification and contribution pursuant to their rental agreement. MacAllister Rental also alleged that Architectural Glass breached their agreement by failing to insure the lift. For its part, Architectural Glass did not dispute the existence of the indemnity agreement, instead arguing that the provision in question did not apply because workers’ compensation immunity extends to third-party claims. As to the failure-to-insure claim, Architectural Glass maintained that it should also be dismissed because no "loss or damage" occurred to the lift.
{¶6} The trial court agreed and granted summary judgment in Architectural Glass's favor, which we review de novo. Neyer, LLC v. Westfield Ins. Co. , 2020-Ohio-5417, 163 N.E.3d 106, ¶ 13 (1st Dist.) (). MacAllister Rental now appeals, presenting two assignments of error that challenge the trial court's dismissal of its claims and its decision to apply Ohio law.
{¶7} We first address MacAllister Rental's second assignment of error because it entails a threshold issue—whether Ohio law applies to this case. As the forum court, we apply Ohio choice-of-law rules to this determination. Estate of Sample through Cornish v. Xenos Christian Fellowship, Inc. , 2019-Ohio-5439, 139 N.E.3d 978, ¶ 17 (10th Dist.) (). And we afford no deference to the trial court's choice of law. See Woodside Mgt. Co. v. Bruex , 2020-Ohio-4039, 157 N.E.3d 295, ¶ 18 (9th Dist.) ().
{¶8} Ohio has adopted the Restatement of the Law 2d, Conflict of Laws (1971), "in its entirety," for resolving choice-of-law conflicts. American Interstate Ins. Co. v. G & H Serv. Ctr., Inc. , 112 Ohio St.3d 521, 2007-Ohio-608, 861 N.E.2d 524, ¶ 7-8. And the "general principle" underlying the Restatement's approach is that the law of the state having the "most significant relationship" to the case should apply. 1 Restatement of the Law 2d, Conflict of Laws, Section 6, comment c (1971); see Estate of Sample at ¶ 17 (). However, the more precise "choice-of-law rules depend on the ‘classification of a given factual situation under the appropriate legal categories and specific rules of law.’ " Ohayon v. Safeco Ins. Co. of Illinois , 91 Ohio St.3d 474, 476, 747 N.E.2d 206 (2001), quoting Restatement, Section 7, Comment b. For example, "different choice-of-law rules apply depending on whether the cause of action sounds in contract or in tort." Id. Here, both parties agree that this case sounds in contract.
{¶9} MacAllister Rental, as the drafter of the rental contract, could have included an Indiana choice-of-law provision, but it neglected to do so. And "in the absence of an effective choice of law by the parties, their rights and duties under the contract are determined by the law of the state that, with respect to that issue, has ‘the most significant relationship to the transaction and the parties.’ " Ohayon at 477, 747 N.E.2d 206, quoting Restatement, Section 188(1). To assist with that determination, the Restatement delineates the following factors:
Restatement, Section 188(2); see Ohayon at 477, 747 N.E.2d 206.
{¶10} Here, the place of contracting and place of negotiation occurred in Indiana, and both companies are incorporated in Indiana. Thus, the first, second, and fifth factors weigh in favor of applying Indiana law. However, we conclude that these considerations are substantially outweighed by the third and fourth factors—the place of performance and location of the subject matter. As already noted, MacAllister Rental delivered the lift to Ohio, knowing that it would be used on a construction project in Ohio.
{¶11} In affording the third and fourth factors more weight, we find the Restatement comments instructive. As to the place of performance, comment e of Section 188 explains: "When both parties are to perform in the state, this state will have so close a relationship to the transaction and the parties that it will often be the state of the applicable law even with respect to issues that do not relate strictly to performance." As to the location of the subject matter, the comments further explicate that when a contract pertains to a specific item or risk (as in the matter at hand), the law of the state containing the item or risk should apply. This is because "it can often be assumed that the parties, to the extent that they thought about the matter at all, would expect that the local law of the state where the thing or risk was located would be applied to determine many of the issues arising under the contract." Restatement, Section 188, comment e.
{¶12} Reinforcing these points, the Ohio Supreme Court emphasizes the centrality of workers’ compensation as a preeminent state interest. See American Interstate , 112 Ohio St.3d 521, 2007-Ohio-608, 861 N.E.2d 524. In American Interstate , the court evaluated whether tort choice-of-law principles should dictate which state's law applies to a workers’ compensation subrogation claim (a tort action). Under tort choice-of-law principles, a presumption arises that the law of the state where the injury occurred controls. Id. at ¶ 8. Although the employee suffered injury in Ohio, the court nonetheless held that Louisiana law applied because "the laws of the state in which the workers’ compensation benefits were paid are controlling." Id. at ¶ 10 (adopting Restatement, Section 185).
{¶13} Driving American Interstate's reasoning was the court's conclusion that workers’ compensation statutes represent a "social bargain." Id. And "[b]ecause they are a bargain codified in state law to ensure that both employers and employees receive the benefit of their bargain, the laws of the state in which compensation...
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