Liberty Northwest Ins. Corp. v. State Compensation Ins. Fund

• Decision Date: 08 July 1998
• Docket Number: No. 97-691,97-691
• Parties: LIBERTY NORTHWEST INSURANCE CORPORATION, Appellant/Insurer for, BRAND S LUMBER, Employer, v. STATE COMPENSATION INSURANCE FUND, Respondent.
• Court: Montana Supreme Court

Page 1167

962 P.2d 1167

1998 MT 169

LIBERTY NORTHWEST INSURANCE CORPORATION, Appellant/Insurer for, BRAND S LUMBER, Employer, v. STATE COMPENSATION INSURANCE FUND, Respondent.

No. 97-691.

Supreme Court of Montana.

Submitted on Briefs June 11, 1998.

Decided July 8, 1998.

Larry W. Jones, Missoula, for Appellant/Insurer.

Laurence A. Hubbard, State Compensation Insurance Fund, Helena, for Respondent.

NELSON, Justice.

¶1 This is an appeal by Liberty Northwest Insurance Corporation (Liberty) from the October 1, 1997 order of the Workers' Compensation Court dismissing for lack of subject matter jurisdiction Liberty's petition filed against the State Compensation Insurance Fund (State Fund). We affirm.

Background

¶2 On August 25, 1997, Liberty filed in the Workers' Compensation Court a Petition for Hearing naming the State Fund as the respondent. In its petition, Liberty alleged that it was the workers' compensation carrier for Brand S Lumber (Brand S). According to Liberty, Brand S subcontracted with McNeilly Line Logging (McNeilly) for McNeilly to provide Brand S with logs. On November 25, 1994, the State Fund wrote to Brand S stating that McNeilly had applied for coverage with the State Fund and that "we will also notify you if cancellation procedures are initiated for any reason."

¶3 Liberty's petition also alleged that on September 25, 1995, McNeilly's employee, Durwood Park (Park), was injured. Brand S and Liberty then discovered that McNeilly was without workers' compensation insurance. As a result, Liberty began paying benefits to Park pursuant to § 39-71-405, MCA. Basically, this statute requires that an employer (in this case Brand S) who contracts with an independent contractor (McNeilly) is liable for payment of benefits to the employees of the independent contractor (Park) if the independent contractor has not properly complied with the coverage requirements of the Workers' Compensation Act (the Act).

¶4 Liberty alleged that prior to Park's injury the State Fund never notified Brand S that it (the State Fund) did not provide coverage for McNeilly. Liberty also alleged that State Fund's letter of November 25, 1994, was provided to Brand S for its guidance in its business transactions and that the statement in the letter referred to above was a false statement or, alternatively, made without the reasonable exercise of care or competence in obtaining or communicating this information. Liberty's petition claimed that State Fund provided the information in its letter to Brand S for its benefit and guidance; that State Fund knew or was charged with knowing that Brand S intended to rely on that information; and that State Fund failed to observe a duty of care to Brand S in supplying information for use in commercial transactions. Finally, Liberty alleged that it demanded that State Fund accept liability and reimburse Liberty for money paid to Park and that State Fund refused.

¶5 In response to Liberty's petition, State Fund moved to dismiss on the ground that the Workers' Compensation Court lacked subject matter jurisdiction to decide Liberty's cause of action because it sounded in tort. The Workers' Compensation Court agreed and dismissed Liberty's petition. This appeal followed.

Issue

¶6 The sole issue on appeal is whether the Workers' Compensation Court has subject matter jurisdiction to hear and determine Liberty's petition.

Standard of Review

¶7 When deciding a motion to dismiss based on lack of subject matter jurisdiction, a trial court must determine whether the complaint states facts that, if true, would vest the court with subject matter jurisdiction. This conclusion is a question of law. Poteat v. St. Paul Mercury Ins. Co. (1996), 277 Mont. 117, 119, 918 P.2d 677, 679 (citations omitted). Our review of the Workers' Compensation Court's conclusions of law is plenary; we simply determine whether its legal conclusions are correct. Heath v. Montana Municipal Ins. Authority, 1998 MT 111, p 9, --- Mont. ----, p 9, 959 P.2d 480, p 9, 55 St.Rep. 437, p 9 (citing Loss v. Lumbermens Mut. Cas. Co. (1997), 282 Mont. 80, 81, 936 P.2d 313, 314).

Discussion

¶8 Liberty contends that the allegations in its petition state a claim under the holding in Jim's Excavating Service v. HKM Assoc. (1994), 265 Mont. 494, 878 P.2d 248 (adopting Restatement (Second) of Torts § 552 (1977)(information negligently supplied for the guidance of others)) and Restatement (Second) of Torts § 551 (1977) (liability for non-disclosure). Furthermore, Liberty concedes that "[u]ndeniably [its] theory 'sounds in tort.' " Notwithstanding, Liberty maintains that the underlying subject matter of its dispute with the State Fund is the State Fund's alleged liability for the payment of workers' compensation benefits, and that, accordingly, the Workers' Compensation Court has subject matter jurisdiction of its cause of action. We agree that Liberty's cause of action sounds in tort; we disagree, however, with Liberty's conclusion that the Workers' Compensation Court has jurisdiction of this cause nonetheless.

¶9 The jurisdiction of the Workers' Compensation Court is set forth in § 39-71-2905, MCA, (1995), which, in relevant part provides:

Petition to workers' compensation judge. A claimant or an insurer who has a dispute concerning any benefits under chapter 71 of this title may petition the workers' compensation judge for a determination of the dispute after satisfying dispute resolution requirements otherwise provided in this chapter [at § 39-71-2401, MCA]. [Emphasis added.]

¶10 Even though the Workers' Compensation ...