Henderson v. Charles E. Smith Management, 87-1114.

• Decision Date: 08 December 1989
• Docket Number: No. 87-1114.,87-1114.
• Citation: 567 A.2d 59
• Parties: Gary S. HENDERSON, and Eunice Foreman, Appellants, v. CHARLES E. SMITH MANAGEMENT, INC., Appellee.
• Court: D.C. Court of Appeals

567 A.2d 59

Gary S. HENDERSON, and Eunice Foreman, Appellants, v. CHARLES E. SMITH MANAGEMENT, INC., Appellee.

No. 87-1114.

District of Columbia Court of Appeals.

Argued November 10, 1988.

Decided December 8, 1989.

Leonard P. Buscemi, with whom Edward J. Connor, Landover, Md., and Steven L. Willner, Suitland, Md., were on the brief, for appellants.

Steven M. Levine, Washington, D.C., with whom Walter J. Smith was on the brief, for appellee.

Before NEWMAN, BELSON and SCHWELB, Associate Judges.

NEWMAN, Associate Judge:

Appellants, both maintenance workers at the Brandywine Apartments, owned by the Brandywine Company (Brandywine), were severely injured¹ when a valve dislodged from a boiler, causing scalding water and steam to spew out of the boiler and onto Appellants. Appellants brought suit against the Charles E. Smith Management Company (CES), alleging negligence in the maintenance and repair of the boiler. CES was under contract with Brandywine to perform certain rental, leasing, and management functions at the apartment building. The trial court determined that CES acted as an agent for Brandywine, and, thus, that it was immune from suit pursuant to the workers's compensation laws of the District of Columbia, D.C.Code § 36-304(b) (1981); accordingly, it entered summary judgment for CES. Because a material question of fact exists as to whether CES had the right to exercise such control regarding decisions about the maintenance and repair of the boiler so as to include CES within the definition of "agent" for the purposes of workers' compensation it was error to grant summary judgment We reverse.

I

On January 1, 1981, Brandywine entered into a five-year management agreement with CES (Management Agreement). This agreement designated CES as Brandywine's "exclusive Rental and Management Agent" and vested CES with authority over some matters concerning personnel, leasing, and management of the Brandywine Apartments, although this authority was not absolute.

At the time of the accident, the Brandywine Apartments were heated by two steam boilers that had been installed in 1953. Several individuals were involved in the inspection, supervision, and maintenance of these boilers. Walter Moore, the mechanical specialist, apparently ranked at the top of the boiler supervision team — which of CES or Brandywine was his employer, is disputed on the record. Moore supervised Byong Kim, the mechanical supervisor. Whether CES or Brandywine was Kim's employer is also disputed on the record. Kim was responsible for the daily inspection of the Brandywine boiler, as well as those at seven other buildings.²

On February 20, 1984, seven days before the accident, Kim, along with Elbert Faulk, the maintenance supervisor employed by Brandywine, found a leak in the boiler. Kim testified that he told Faulk not to take action until after he (Kim) had consulted with Walter Moore. Moore's exact instructions are unclear from the record, although he apparently instructed Kim that he and Faulk should fix the boiler. On February 27, 1984, the day of the accident, Kim told Faulk to add a new valve to the boiler. Upon completion of his job, Faulk ordered Henderson and Foreman to collect the old piping that lay on the floor of the boiler room. As they did so, the valve dislodged, permitting scalding water and steam to escape and injure them. The trial judge ruled that "it was unequivocally clear" that an agency relationship had been created between CES and Brandywine, and consequently granted CES's motion for summary judgment. We disagree.³

II.

The Workers' Compensation statute of the District of Columbia imposes liability on employers for job-related injury or death, D.C.Code § 36-303 (1988), and constitutes the exclusive remedy against the employer for job-related injuries. D.C. Code § 36-304(a) (1988); see Grillo v. Natl. Bank of Washington, 540 A.2d 743, 747 n. 11 (D.C. 1988). The statute provides further that agents of such employers are immune from suit:

The compensation to which an employee is entitled under this chapter shall constitute the employee's exclusive remedy against the employer or . . . any employee, officer, director, or agent of such employer . . . for any illness or injury, or death arising out of and in the course of his employment.

D.C.Code § 36-304(b) (1988) (emphasis added).

CES argues that it functioned as Brandywine's agent pursuant to the general terms of the Management Agreement and that the grant of summary judgment was proper. Henderson et al. focus on the narrower issue of the maintenance and repair of the boiler. They assert that Brandywine did not exercise the degree of actual control over CES in decisions regarding the boilers to make CES an "agent" within the meaning of D.C.Code § 36-304(b). Thus, they contend that CES is independently liable for injuries arising from any breach in the standard of care in their repair and maintenance.⁴ We disagree with the contention of Henderson et al., that the relevant inquiry for us is whether Brandywine exercised actual control over CES in decisions regarding the repair of the boiler. Rather, our inquiry must focus on whether Brandywine had the right to exercise such control. We hold that whether Brandywine had the right to exercise control over decisions regarding the repair and maintenance of the boiler is a disputed and material fact, and, thus, the agency issue was resolved improperly by summary judgment.

The existence of an agency relationship is a question of fact, for which the person asserting the relationship has the burden of proof. Smith v. Jenkins, 452 A.2d 333, 335 (D.C. 1982). "Generally, an agency relationship results when one person authorizes another to act on his [or her] behalf subject to his [or her] control, and the other consents to do so." Id. (citing Rose v. Silver, 394 A.2d 1368, 1371 (D.C. 1978). Stated differently, to determine whether a principal-agent relationship has been created, the court must analyze the relationship between the parties in its entirety and determine if two factors exist. First, the court must look for evidence of the parties' consent to establish a principalagent relationship. Second, the court must look for evidence that the activities of the agent are subject to the principal's control. Johnson v. Bechtel Assocs. Professional Corp., 230 U.S.App.D.C. 297, 717 F.2d 574, 580 (D.C.Cir. 1983), aff'g 545 F.Supp. 783 (D.D.C. 1982), cert. granted, 464 U.S. 1068, 104 S.Ct. 972, 79 L.Ed.2d 210, rev'd sub nom. on other grounds, Washington Metr. Area Transit Auth. v. Johnson, 467 U.S. 925, 104 S.Ct. 2827, 81 L.Ed.2d 768 (1984); see Smith, supra, 452 A.2d at 335; Rose, supra, 394 A.2d at 1371. We have held the control factor to mean the principal's power or right to control the actions of the agent,⁵ as opposed to the actual exercise of that power. Of course, as the court in Bechtel stated, the extent to which the dual factors of control and consent exist "is evidenced both by the terms of the contract and by the actual dealings between the parties." Bechtel, supra 717 F.2d at 579. The situation presented in Bechtel is similar to the case now before us, and we find its analysis instructive.

A. Terms of the contract

In Bechtel, the Washington Area Metropolitan Transit Authority (WMATA) contracted with Bechtel to administer the safety program on its subway construction project. WMATA was subject to Section 80 of the WMATA Compact, which provided that WMATA "shall be liable for its contracts and for its torts and those of its Directors, officers, employees, and agent." Id. at 577. The court in Bechtel had to determine whether Bechtel operated as an agent of WMATA. The court scrutinized the terms of the contract and found that "[t]aken as a whole, the contract provides that Bechtel shall act on behalf of and subject to the authority of WMATA." Id. at 579. (emphasis added). To support this conclusion, the court determined that the consent factor needed for a principalagent relationship was implicit in those terms of the contract granting Bechtel "authority to conduct operations for and in the name of WMATA." Id. As to the control factor, the court found persuasive those portions of the contract granting WMATA extensive oversight power over Bechtel in project operations, personnel, and safety aspects of the WMATA project. Of special importance to the court was the portion of the contract providing for a contracting officer, a full-time WMATA employee with pervasive supervisory control over Bechtel's actions.⁶

Unlike the WMATA-Bechtel contract, the terms of the Management Agreement between Brandywine and CES are much less clear as to whether Brandywine had the right to exercise control over CES's actions. Both parties concede that the Management Agreement evidences consent to enter into a principal-agent relationship. Indeed, similar to the WMATA — Bechtel contract, the Brandywine-CES contract provided that "[e]verything done by the Agent under [the] terms of this Agreement shall be done as Agent of the Owner." But, although the Brandywine-CES contract authorizes CES to "act in the name and at the expense of the owner" regarding various operations,⁷ unlike the WMATA-BECHTEL contract, the Brandywine-CES contract does not condition these actions upon Brandywine's approval, supervision, direction, or control. For example, the Management Agreement does not require CES to keep Brandywine informed of its operations, except for emergency and non-budgeted repairs in excess of $5,000.⁸ Moreover, there is no requirement that CES report unsafe conditions to the owner, that CES's activities be directed or evaluated by Brandywine, or that Brandywine be informed of CES's activities. Significantly, unlike the contract in Bechtel, the Management Agreement does not give any official of Brandywine supervisory power over the activities of CES.

Thus, the language of the contract by itself does not tell us whether Brandywine retained a...