Ledex, Inc. v. Heatbath Corp., 83-1146

• Citation: 461 N.E.2d 1299,10 Ohio St.3d 126,10 OBR 449
• Decision Date: 18 April 1984
• Docket Number: No. 83-1146,83-1146
• Parties: , 10 O.B.R. 449 LEDEX, INC., Appellant, v. HEATBATH CORPORATION et al., Appellees.
• Court: United States State Supreme Court of Ohio

Page 126

10 Ohio St.3d 126

461 N.E.2d 1299, 10 O.B.R. 449

LEDEX, INC., Appellant, v. HEATBATH CORPORATION et al., Appellees.

No. 83-1146.

Supreme Court of Ohio.

April 18, 1984.

Syllabus by the Court

R.C. 4123.82 does not bar an employer whose employee suffers injuries and recovers workers' compensation therefor from recovering damages for increased workers' compensation premiums from a third party whose conduct caused the employee's injuries. (Fischer Constr. Co. v. Stroud, 175 Ohio St. 31 191 N.E.2d 164, overruled; Midvale Coal Co. v. Cardox Corp., 152 Ohio St. 437 , 89 N.E.2d 673, reinstated.)

An employee of appellant, Ledex, Inc., suffered serious acid burns in November 1978 when he slipped and fell into a chemical that had leaked from its container onto the floor of appellant's premises. Appellant had purchased the chemical, Duracat-14, from appellee, Heatbath Corporation ("Heatbath") in November 1977. Heatbath had purchased the container for the chemical from appellee, Container Corporation of America ("Container"). After sustaining the acid burns, appellant's employee filed for and was awarded workers' compensation, which resulted in an increase in appellant's workers' compensation premiums.

Appellant filed a complaint against Heatbath, alleging breach of warranty, negligence, and strict liability. The complaint sought $75,000 in damages, including $18,025 attributable to increased workers' compensation premiums. Heatbath then filed a third-party complaint against Container for contribution and indemnification.

The appellees each moved for partial summary judgment on the issue of the increased workers' compensation premiums. The trial court, "though sympathetic to * * * [appellant's] position," granted partial summary judgment in favor of the appellees on this question. The parties settled all the other claims, but appellant appealed the partial summary judgment entered against it.

The court of appeals affirmed the trial court on the authority of Truscon Steel Co. v. Trumbull Cliffs Furnace Co. (1929), 120 Ohio St. 394, 166 N.E. 368, and Fischer Constr. Co. v. Stroud (1963), 175 Ohio St. 31 , 191 N.E.2d 164. Judge Kerns concurred separately. He stated that his concurrence was "based entirely upon judicial subordination to the authority of the Supreme Court of Ohio in its disposition of a similar issue."

The cause is now before this court upon the allowance of a motion to certify the record.

Pickrel, Schaeffer & Ebeling, Andrew C. Storar and Robert G. Leland, Dayton, for appellant.

Young, Pryor, Lynn & Jerardi and Michael J. Burdge, Dayton, for appellee Heatbath Corp.

Lindhorst & Dreidame Co., L.P.A., Mark E. Elsener and Richard J. Schimpf, Cincinnati, for appellee Container Corp. of America.

SWEENEY, Judge.

The question presented is whether R.C. 4123.82 bars an employer whose employee suffers injuries and recovers workers' compensation therefor from recovering damages for increased workers' compensation premiums from a third party whose conduct caused the employee's injuries. This issue has vexed this court for decades.

R.C. 4123.82 states in pertinent part as follows:

"(A) All contracts and agreements are void which undertake to indemnify or insure an employer against loss or liability for the payment of compensation to workmen or their dependents for death, injury, or occupational disease occasioned in the course of such workmen's employment, or which provide that the insurer shall pay such compensation, or which indemnify the employer against damages when the injury, disease, or death arises from the failure to comply with any lawful requirement for the protection of the lives, health, and safety of employees, or when the same is occasioned by the willful act of the employer or any of his officers or agents, or by which it is agreed that the insurer shall pay any such damages. * * *."

Truscon Steel Co. v. Trumbull Cliffs Furnace Co. (1929), 120 Ohio St. 394, 166 N.E. 368, considered a self-insuring employer's claim for reimbursement of workers' compensation paid to an injured employee. The employer sought to recover the amount paid in compensation from the independent contractor whose employees' negligence caused the injuries that gave rise to the compensation payments to the self-insuring employer's employee. This court determined that the employer had no cause of action against the independent contractor and held in paragraph one of the syllabus that "[a]n employer, whether self-insurer or otherwise, cannot recover from any source any sum to reimburse an amount paid under the Workmen's Compensation Law to injured employees, whether the injury results from the negligence of some third party or otherwise." One judge concurred separately in Truscon to express the position that G.C. 1465-101, the predecessor of R.C. 4123.82, was inapplicable.

Midvale Coal Co. v. Cardox Corp. (1949), 152 Ohio St. 437 89 N.E.2d 673, involved the claim of an employer whose employee suffered injuries compensable under the workers' compensation statutes when an explosive cartridge supplied by a third party proved defective. The employer sought to recover the increased compensation premiums incurred as a result of the employee's injuries from the third-party supplier. The lower courts ruled in favor of the third party, but this court reversed, holding in paragraph three of the syllabus as follows:

"Where a third party negligently injures an employer's employee and such injury is a direct result of a breach of contract which the third party had with employee's employer, and as a direct result of such breach the employer suffers damages, such damages are recoverable by the employer against the third party in an action for breach of contract."

In Midvale the court stated at page 444, 89 N.E.2d 673 that " * * * it would seem that Section 1465-101 means that there shall be no agreements of insurance or indemnity in this state to insure or indemnify any employer for any sums he may have to pay an injured employee or his dependents under the Workmen's Compensation Act." This was essentially the view adumbrated in the Truscon concurrence.

Midvale distinguished Truscon on the basis that Truscon dealt with a claim arising from the negligence of a third party whereas in Midvale the claim arose from a breach of contract. The court at 445 determined that the first paragraph of the Truscon syllabus was "very broad in its language in the use of the words 'or otherwise,' " but concluded that the Truscon syllabus "must be confined and applied to the facts of that case." Id.

Fischer Constr. Co. v. Stroud (1963), 175 Ohio St. 31 191 N.E.2d 164, provided the authority for the lower courts' decisions against appellant in the case at bar. In Fischer, an employee was struck by a truck and killed while working as a highway flagman. The Industrial Commission granted a claim for the employee's death and consequently the employer's workers' compensation premiums increased. The employer sought to recover the amount of the increased premiums from the third party. The lower courts denied recovery, and this court affirmed, basically restating paragraph one of the syllabus in Truscon as the Fischer syllabus.

The court in Fischer also determined that Truscon and Midvale could not be reconciled and overruled Midvale. The court did not, however, explain the basis for its preference for Truscon over Midvale, other than to state at page 33, 191 N.E.2d 164 that "the Truscon case holding does not permit recovery for negligence of a third party, whereas the Midvale case holding permits recovery against a third party for breach of a contract which flows from negligence. We now think that such differing results are without basis in reason, and that the better rule under the law and statutes is the one laid down in the Truscon case."

The commentators have not been kind to Fischer. Professor Larson has written that in Fischer " * * * [t]he court supplies no discussion, no arguments, no authorities, no analogies, no reference to the fact that the result is inconsistent with that in every jurisdiction but one. The only supporting factor added is that the damages were speculative. * * *

" * * * As matters now stand in Ohio, the employee gets a double recovery [workers' compensation and damages from the third-party tortfeasor] and the employer gets no reimbursement even when he has been the victim of a breach of warranty by the third person." 2A Larson, The Law of Workmen's Compensation (1983) 14-778 to 14-779, Section 77.13.

Another commentator has described Fischer in similar terms: "The court explained its decision in only one paragraph. There was no analysis as such. In the words of Judge Matthias, the plaintiff's losses were merely a speculative and remote consequence of defendant's negligence. With that and a reference to Judge Taft's concurring opinion in Midvale [Coal Co. v. Cardox Corp. (1952), 157 Ohio St. 526, 532 (40 O.O. 428) ] 89 N.E.2d 673 the matter was put to rest." Butler, The Worker, A Defective Product, An Injury: Who Pays and Why, A Solution for Ohio (1981), 50 U.Cin.L.Rev. 31, 39. This commentator also criticized Truscon, the source of the Fischer rule, stating at page 36, 191 N.E.2d 164 that "[t]he court's reasoning, however, totally ignored statutory language that invalidated only contracts and agreements that insure or indemnify the employer. In Truscon there were no contracts or agreements of this nature. The purpose of the statute was to prevent the state fund system from being undercut by any form of reinsurance the employer might obtain. At the...