Lawrence v. CDB Services Inc.

Decision Date29 March 2001
Docket Number00-0201,No. 00-0142,00-0142
Citation44 Tex. Sup. Ct. J. 555,44 S.W.3d 544
Parties(Tex. 2001) Gary Lawrence, et ux., Martee Lawrence, Petitioners, v. CDB Services, Inc., Respondent Danny Lee Lambert and Teresa Lambert, individually, and as next friends of R. L., and R. L., Petitioners, v. Affiliated Foods, Inc., Respondent
CourtTexas Supreme Court

Page 544

44 S.W.3d 544 (Tex. 2001)
Gary Lawrence, et ux., Martee Lawrence, Petitioners,
v.
CDB Services, Inc., Respondent
Danny Lee Lambert and Teresa Lambert, individually, and as next friends of R. L., and R. L., Petitioners,
v.
Affiliated Foods, Inc., Respondent.
No. 00-0142, 00-0201
SUPREME COURT OF TEXAS
Argued October 2, 2000
Decided March 29, 2001

On Petitions for Review from the Court of Appeals for the Seventh District of Texas.

Page 545

Justice O'Neill delivered the opinion of the Court, joined by Justice Hecht, Justice Enoch, Justice Owen, Justice Abbott, and Justice Hankinson.

In these consolidated cases, employees of nonsubscribers to workers' compensation insurance under the Texas Workers' Compensation Act voluntarily elected to participate in employer benefit plans that provide injured employees specified benefits in lieu of common-law remedies. We must decide whether the Workers' Compensation Act prohibits voluntary pre-injury agreements of this type and, if not, whether we should hold them void on public policy grounds because they undermine the Legislature's workers' compensation scheme. In Lawrence v. CDB Services, Inc., we must also decide whether the waiver signed by the employee meets the express-negligence and fair-notice tests.

We discern no clear legislative intent to prohibit agreements such as those presented here. Although the parties and various amici have raised numerous fact-intensive public policy considerations favoring both sides of the issue, we believe these policy choices are best resolved by the Legislature. Absent any clear indication of legislative intent to prohibit such agreements, we decline to hold them void on public policy grounds. Finally, we hold that the waiver Lawrence executed satisfies the fair-notice and express-negligence tests. Accordingly, we affirm the court of appeals' judgments upholding summary judgments in favor of the employers. 16 S.W.3d 35; 20 S.W.3d 1.

I

A. Lawrence v. CDB Services, Inc.

At all times relevant to these proceedings, CDB Services was a nonsubscriber under the Texas Workers' Compensation Act. Instead of opting into the statutory workers' compensation scheme, CDB adopted an employee benefit plan that provides medical disability, dismemberment, and death benefits for its eligible employees who choose to participate in the plan. On his first day of employment with CDB, Gary Lawrence signed an election to participate in the plan. That election provided:

By executing this document, I voluntarily elect to participate in the CDB SERVICES, INC.'S EMPLOYEE BENEFIT PLAN AND TRUST (the "Plan"). According to the Plan, I agree that by accepting benefits under the Plan or executing this election form indicating an election to participate in the Plan:

* I agree to the Plan's terms.

* waive any right I may have to recover from CDB Services, Inc. (the "Employer"), or any of its Affiliated Employers, directors, officers, shareholders, employees, and agents for injuries I sustain or for my death if they arise out of and within the

Page 546

course and scope of my employment with Employer or any Affiliated Employers.

* I acknowledge that, if I am injured or killed in the course and scope of my employment, my only relief against Employer or any of its Affiliated Employers, directors, officers, shareholders, employees, and agents will be to receive the benefits provided by the Plan.

I understand that by electing to participate in the Plan, I will lose any right that I may have had to sue Employer or any of its Affiliated Employers, directors, officers, shareholders, employees, and agents because of any injuries, illness, or death I sustain in my employment with Employer or any of its Affiliated Employers resulting from their negligence or any other conduct actionable under the common law of the State of Texas, the statutes of the State of Texas, or under any otherwise available equitable relief. My only remedy will be to pursue benefits under the Plan. Executing this election involves the waiver and release of valuable legal rights.

(Bold-face in original). The election further recites that (1) Lawrence did not sign the election under duress, (2) he received a summary plan description, (3) no person made any representation to him on behalf of CDB or its affiliated employers that influenced him to sign the election, (4) Lawrence signed the election of his own free will, (5) he had the option of seeking professional advice before executing the election and had consulted an attorney to the extent he deemed necessary, and (6) he understood the language in the election. Lawrence does not claim that he was forced to sign the election under duress or that his decision to participate in the plan was anything other than voluntary.

Less than a month after signing the election, Lawrence was injured on the job. He began receiving benefits under the CDB plan, and the record reflects that those benefits have continued. About seven months after he was injured, Lawrence sued CDB alleging that his injury was caused by CDB's negligence and negligence per se. CDB moved for summary judgment on the basis of waiver, election of remedies, release, and estoppel by acceptance of benefits. The trial court granted the motion, and the court of appeals affirmed, holding that the employee's waiver did not violate any public policy expressed in the Workers' Compensation Act. 16 S.W.3d at 44.

B. Lambert v. Affiliated Foods, Inc.

Affiliated Foods, Inc., a nonsubscriber to the workers' compensation insurance program, employed Danny Lee Lambert in May 1992. Although Affiliated did not have workers' compensation coverage, it had an employee disability plan that provided certain medical, disability, and death benefits to injured employees who agreed to release and waive any claims against their employer. The waiver recited:

I UNDERSTAND THAT BY EXECUTION OF THIS DOCUMENT, I WILL LOSE THE RIGHT TO SUE AFFILIATED FOODS, INC. AND PEOPLE EMPLOYED BY IT IN CONNECTION WITH INJURIES, ILLNESS OR DEATH SUSTAINED IN MY EMPLOYMENT WITH AFFILIATED FOOD, INC. AS A RESULT OF ITS OR THEIR NEGLIGENCE OR OTHER ACTIONABLE CONDUCT. MY ONLY REMEDY WILL BE TO BENEFITS UNDER THE PLAN.

. . .

EXECUTION OF THIS DOCUMENT INVOLVES THE WAIVER AND RELEASE

Page 547

OF VALUABLE LEGAL RIGHTS.

(Bold-face in original). The election also recites that (1) Lambert executed the document voluntarily and without duress, (2) no representation by Affiliated induced him to execute the document, (3) he carefully read and understood the document, (4) he signed the document of his own free will and with knowledge of the consequences, and (5) he had consulted an attorney to the extent he deemed necessary. Like Lawrence, Lambert does not claim that his election was in any way forced upon him or was not voluntary.

Almost nine months after he signed the waiver, Lambert was injured on the job. He received more than $57,000 in benefits before suing Affiliated for negligence and gross negligence. Affiliated moved for summary judgment, arguing that: (1) Lambert had waived and released his claims by signing the election; (2) he had ratified the waiver by accepting benefits under the plan; and (3) he was estopped from suing Affiliated because he had accepted plan benefits. The trial court granted Affiliated's motion. The court of appeals affirmed, holding that the election was not void as against public policy. 20 S.W.3d at 6-7.

C. Other Cases

These two cases are not the only ones to present the issue before us today. Recently, in Wolfe v. C.S.P.H., Inc., 24 S.W.3d 641 (Tex. App.--Dallas 2000, no pet.), the Fifth Court of Appeals held that voluntary pre-injury participation by a nonsubscriber's employee in an employer benefit plan in exchange for a waiver of the right to sue was neither prohibited by the Workers' Compensation Act nor contrary to public policy. On the other hand, in Reyes v. Storage & Processors, Inc., 995 S.W.2d 722, 729 (Tex. App.--San Antonio 1999, pet. denied), the Fourth Court of Appeals held that an employee's agreement to waive all claims for on-the-job injuries in exchange for employer-provided benefits was void on public policy grounds because the employer's benefits were inferior to those provided under the workers' compensation statute. The Third Court of Appeals followed the Reyes court's reasoning in Castellow v. Swiftex Mfg. Corp., 33 S.W.3d 890 (Tex. App.--Austin 2000, no pet.), holding that the employee's waiver of common law rights was unenforceable because the benefits offered under the employer's plan were inferior to statutory workers' compensation benefits. We granted these petitions to resolve this conflict among the courts of appeals.

II

A. No Prohibition under the Act

Petitioners argue that section 406.033 of the Workers' Compensation Act prohibits their nonsubscribing employers from asserting waiver as a defense. That section provides:

(a) In an action against an employer who does not have workers' compensation insurance coverage to recover damages for personal injuries or death sustained by an employee in the course and scope of the employment, it is not a defense that:

(1) the employee was guilty of contributory negligence;

(2) the employee assumed the risk of injury or death; or

(3) the injury or death was caused by the negligence of a fellow employee.

(b) This section does not reinstate or otherwise affect the availability of defenses at common law, including the defenses described by Subsection (a).

Page 548

(c) The employer may defend the action on the ground that the injury was caused:

(1) by an act of the employee intended to bring about the injury; or

(2) while the employee was in a state of intoxication.

(d) In an action described by Subsection (a) against an employer who does not have workers' compensation insurance coverage, the plaintiff must prove negligence of the employer or of an agent or servant of the employer acting within the general scope...

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