Martelli v. R.A. Chambers and Associates

• Decision Date: 08 November 1990
• Citation: 310 Or. 529,800 P.2d 766
• Parties: Ronald L. MARTELLI, Respondent on Review, v. R.A. CHAMBERS AND ASSOCIATES, an Oregon corporation, Petitioner on Review. TC 87-1402; CA A49992; SC S 36892.
• Court: Oregon Supreme Court

Page 766

800 P.2d 766

310 Or. 529

Ronald L. MARTELLI, Respondent on Review, v. R.A. CHAMBERS AND ASSOCIATES, an Oregon corporation Petitioner on Review.

TC 87-1402; CA A49992; SC S 36892.

Supreme Court of Oregon.

Argued and Submitted July 10, 1990.

Decided Nov. 8, 1990.

Lloyd W. Helikson, Albany, argued the cause for petitioner on review. On the petition was John E. Jaqua, Eugene.

Karen Werner, Albany, argued the cause for respondent on review. On the response was James C. Egan, Albany.

Before PETERSON, C.J., and CARSON, GILLETTE, VAN HOOMISSEN, FADELEY and UNIS, JJ.

FADELEY, Justice.

In this case the court is asked to interpret and apply the exclusive liability provisions of ORS 656.018(1)(a). ¹ Defendant general contractor claims immunity under that statute from the negligent injury claim of a plaintiff who worked for defendant's subcontractor. The issue is: Are Oregon Workers' Compensation benefits the exclusive remedy of a subcontractor's employee injured allegedly because of the acts or omissions of the general contractor? The trial court granted defendant's motion for summary judgment holding that the general contractor was "immune" based on a finding "that defendant was an employer as contemplated under the Workman's [sic ] Compensation Law." ²

The Court of Appeals reversed and remanded, holding that the summary judgment should not have been granted because the general contractor was not the injured worker's employer as that term is used in ORS 656.018, notwithstanding ORS 656.029(1), ³ and that the exemption from liability extends only to an actual employer as defined in ORS 656.005(14) (1985). Martelli v. R.A. Chambers and Associates, 99 Or.App. 524, 783 P.2d 31 (1989). We affirm the decision of the Court of Appeals.

FACTS

Lebanon Community Hospital accepted the total bid of defendant to construct and remodel per plans and specifications provided by the hospital. In the summer of 1985 and in documents entitled "Subcontract," defendant contracted with Associated Sheet Metals, Inc., to do parts of the work which defendant had become obligated to do under its general contract with the hospital. Under the subcontract, Associated was to

"furnish all materials, labor, tools, equipment and supplies necessary for performance of this subcontract as provided herein, in a proper, efficient and workmanlike manner, and in strict accordance with the subcontract and contract documents, and any and all building codes or state, county or municipal laws, orders or regulations applicable to the work."

The contract documents described the end result which Associated was to produce.

Defendant's form subcontracts required that Associated maintain several kinds of insurance, including "Statutory Workmens' Compensation as required by law," and provided that "certificates of above insurance shall be forwarded to contractor [defendant] immediately after subcontract has been accepted. All insurance policies shall include a clause that insurance shall not be cancelled or reduced, restricted or amended until ten (10) days after the contractor has received written notice."

Plaintiff, who was on Associated's payroll only, and for whom Associated in fact provided workers' compensation coverage, was assigned by Associated to work on the roof of the hospital project. A stairway constructed by defendant for use of workers on the roof collapsed, causing plaintiff's injuries, on November 5, 1985. Defendant maintained a foreman with general supervisory authority at the hospital project site.

Defendant asserts that it was plaintiff's "employer" as that term is used in ORS 656.018(1) or, alternatively, that it should be deemed plaintiff's employer because it would have been responsible for providing workers' compensation coverage for plaintiff under ORS 656.029(1), had Associated failed to do so. Therefore, defendant generally argues that it should be granted immunity as plaintiff's employer. Because these points depend upon a construction of the relevant statutes, we turn to that subject.

LEGAL HISTORY OF THE IMMUNITY CLAIMED

Oregon's Workers' Compensation Law first came into being as an innovation adopted legislatively in 1913. Its original form included direct antecedents of present statutory provisions important to the decision of this case. Oregon Laws 1913, chapter 112, section 12, in part provided:

"[T]he right to receive such sum or sums [as workers' compensation] shall be in lieu of all claims against his employer on account of such injury or death except as hereinafter specially provided."

Immediately following that grant to an employer of immunity from other claims by its workers, and coupled with it by sentence structure, the first compensation act provided for an injured worker's action against a negligent third party, as follows:

"[P]rovided, however, that if the injury to a workman occurring away from the plant of his employer is due to the negligence or wrong of another not in the same employ, the injured workman * * * shall elect whether to take under this act or seek a remedy against such other, such election to be in advance of any suit, and if he take under this act the cause of action against such other shall be assigned to the State for the benefit of the accident fund. * * * Any such cause of action assigned to the State may be prosecuted or compromised by the department in its discretion."

In return for immunity granted to his employer, the worker injured in the course of employment, and in a way defined by that act, was guaranteed compensation, regardless whether a fault or neglect on the part of the employer caused the injury. The worker, however, retained the right to seek damages from parties other than his employer where those others were at fault. And the State, for the benefit of the accident insurance fund, simultaneously acquired legal rights in any injured worker's claim against other parties at fault.

From the inception of the first compensation act, these rights and immunities expressly depended upon who was a worker and who was his or her employer. Section 14, a definition section, in part provided:

"The term 'employer' used in this act shall be taken to mean any person, firm or corporation, but not including municipal corporations, that shall contract for and secure the right to direct and control the services of any person, and the term 'workman' shall be taken to mean any person, male or female, who shall engage to furnish his or her services subject to the direction or control of an employer." (Emphasis added.)

All three of these legislative ideas--the right of the worker to compensation regardless of fault, the right of the employer providing compensation insurance to immunity, and the right of both the worker and the insurance fund to recover from third parties at fault--have continued to the present day. Likewise, the "right to direct and control" was and is the test for employer status when the immunity based on that status is in issue.

When the compensation law was extensively revised in 1965 so that insurance could be provided by the employer directly, by purchasing it from a private insurer, or by purchasing it from the State Accident Insurance Fund, each of those legislative ideas was retained. Oregon Laws 1965, chapter 285, section 4(12) and (20), continued to define employer and worker in terms of "the right to direct and control the services of any person," and in terms of "remuneration" for which the worker "engages to furnish his services * * * subject to the direction and control of an employer," and for which the employer "contracts to pay," just as present ORS 656.005(27), supra note 2, still does. Damage recovery from a third party, to benefit both worker and the insurance carrier, was continued in sections 44-49 of Oregon Laws 1965, chapter 285, essentially as provided now in ORS 656.576 to 656.593. The immunity of an employer from any worker's claims, other than for workers' compensation, was continued in section 6 of the 1965 act, as worded in the 1913 Act, quoted supra, and now phrased in modern terms, in ORS 656.018(1), supra note 1.

The 1913 Act, section 24, provided in part:

"In respect to any injury happening to any of his workmen during the period of such default in any payment required hereunder, the defaulting employer shall not, if such default be after demand for payment, be entitled to any of the benefits of this act, but shall be liable to the injured workman * * * as he would have been prior to the passage of this act."

This penalty by loss of immunity, continued in section 7 of the 1965 revision, today is found in ORS 656.020 and implemented by ORS 656.578.

Unlike the Workers' Compensation Law provisions we have just discussed, ORS 656.029(1), note 3, had no direct antecedents in the 1913 Act. Its idea was not enacted until Oregon Laws 1933, chapter 116, section 2. However, the problem addressed was not unknown during the 1913 to 1933 period. Employers and workers avoided the law's protections of the worker and its corollary immunity of the employer by not establishing a direct, master-servant employment relationship. See, e.g., Smith v. State Ind. Acc. Comm., 144 Or. 480, 482, 23 P.2d 904, reh. granted, 144 Or. 480, 25 P.2d 1119 (1933) (relation of master and servant and "contract for hire" required before compensation law applies); Vient v. State Industrial Acc. Com., 123 Or. 334, 262 P. 250 (1927) (claimant lather held independent contractor not entitled to workers' compensation under home builder's coverage because no master-servant relationship with right to exercise complete control existed).

Oregon Laws 1935, chapter 113, section 1, amending the 1933 Act, in part provided:

"[I]f any person engaged in a business and subject to this act as an employer, in the course of such business shall let a contract the principal purpose of which is the performance of labor, such labor to be performed by the person to whom the...