Massey v. Armco Steel Co.

• Decision Date: 13 May 1982
• Docket Number: No. C2927,C2927
• Citation: 635 S.W.2d 596
• Parties: Leroy MASSEY, Appellant, v. ARMCO STEEL COMPANY, et al., Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 596

635 S.W.2d 596

Leroy MASSEY, Appellant, v. ARMCO STEEL COMPANY, et al., Appellees.

No. C2927.

Court of Appeals of Texas, Houston (14th Dist.).

May 13, 1982.

Rehearing Denied June 3, 1982.

Norman W. O'Neil, Jr., Houston, for appellant.

Jan Steinberg, Brock C. Akers, Gay C. Brinson, Jr., Vinson & Elkins, Houston, for appellees.

Before MILLER, PRICE and JAMES, JJ.

MILLER, Justice.

This is an appeal from an order granting summary judgment and severance in favor of appellees. The trial court held appellant failed to plead a cause of action against appellees and, that therefore, no genuine issue of material fact existed to be adjudicated. We hold appellees were not proper parties to appellant's suit because the cause of action was barred by Article 8306 § 3, Tex.Rev.Civ.Stat.Ann. (Vernon 1967). We therefore agree no genuine issue of material facts existed, and we affirm the judgment of the trial court.

This appeal originated as a workers' compensation suit. Although some facts are in contention, those occurrences important to our resolution of the case are as follows. While in the employment of appellee Armco Steel Company, appellant suffered an industrial injury to his left hand which ultimately resulted in the amputation of his fifth finger. In connection with that injury, appellant alleged certain associated injuries to his left arm, shoulder and neck, and emotional trauma in the form of near-psychotic reactive depression. (It has been appellant's contention throughout this action the medical evidence of his injuries is uncontradicted.) Appellant timely filed a claim for worker's benefits with Armco Steel's compensation carrier, American General Fire & Casualty Co., who was also a defendant below. Appellant's claim was heard by the Texas Industrial Accident Board, which found him to be totally and permanently disabled and made an appropriate award.

American General invoked the provisions of Article 8307, § 5, Tex.Rev.Civ.Stat.Ann. (Vernon 1967), and appealed the IAB's award by filing suit in district court. Appellant answered and filed a counterclaim against American General, its employee James Sansing, and appellees Armco Steel and its agent Ray Lambright. In his first cause of action appellant asserted his right to recovery against American General under the workers' compensation insurance policy. Through his 2nd and 3rd causes of action appellant pled a claim against all cross-defendants for a breach of a duty of good faith and fair dealing owed under the contract of insurance and for intentional infliction of emotional distress. Appellees Armco Steel and Ray Lambright filed a Motion for Summary Judgment and severance on the basis that appellant's alleged cause of action against them was proscribed by the provisions of Art. 8306 § 3. No response was filed to appellees' motion. Upon a hearing, the Motion for Summary Judgment and severance was granted by the trial court, from which action appellant timely filed this appeal. At the time of this appeal, the workers' compensation suit and counterclaim for intentional torts against American General and Sansing remain pending in the original suit.

Appellant raises three points of error, claiming his second and third causes of action pled all the necessary elements of an intentional tort not barred by the exclusivity section of the Workers' Compensation Statute, Article 8306, § 3. Appellant maintains his causes of action sound in tort, instead of as a breach of the workers' compensation insurance contract. It is his assertion that appellee Armco Steel, through its agent, appellee Ray Lambright, controled the process of adjustment and settlement of appellant's worker's compensation claim with American General. Appellant alleges appellees read the uncontroverted medical evidence regarding his physical and psychological condition and made the conscious decision that he was not capable of withstanding extended settlement negotiations or a lengthy litigation period. He asserts appellees and American General made the further conscious decision to aggravate his physical and mental condition so as to force a settlement for less than he was entitled. This claim is evidenced, according to appellant, by American General's settlement-negotiation procedure and appellees' contention his injuries are limited to the loss of the finger, despite the uncontroverted medical evidence and the contrary finding of the IAB.

We disagree with appellant's contention that he pled a good cause of action against appellees. We read the exclusivity section of the Workers' Compensation Act, Art. 8306, § 3, as barring appellant's suit against appellees. That statute provides in pertinent part:

The employees of a subscriber ... shall have no right of action against their employer or against any agent, servant or employee of said employer for damages for personal injuries ... but such employees and their representatives and beneficiaries shall look for compensation solely to the association, as the same is hereinafter provided for ... No part of this Section is intended to lessen or alter the employees existing rights or cause of action either against his employer, its subscriber, or any third party.

Texas courts have interpreted this statute to mean two things important to this case. First, employers or their agents are not proper parties to a negligence suit arising out of a workers' compensation claim. An employee must find relief for his injuries against the insurance carrier through the Workers' Compensation Act, which provides the employee with a substitute cause of action. Paradissis v. Royal Indemnity Co., 507 S.W.2d 526, 529 (Tex.1974); Grove Manufacturing Co. v. Cardinal Const. Co., 534 S.W.2d 153 (Tex.Civ.App.-Houston (14th Dist.) 1976, writ ref'd n. r. e.); Jones v. Jeffreys, 244 S.W.2d 924 (Tex.Civ.App.-Dallas 1951, writ ref'd).

Second, the Act does not bar an employee from recovering against his employer for intentional torts. Reed Tool Co. v. Copelin, 610 S.W.2d 736 (Tex.1980); Aetna Ins. Co. v. Hart, 315 S.W.2d 169 (Tex.Civ.App.-Houston 1958, writ ref'd n. r. e.). The Act cannot legislatively deprive an employee of his common-law right to recover for such wrongs. Reed Tool, supra.

If, however, an employee proceeds under the Act and files a claim for benefits, he is then prevented from asserting a common-law action for intentional torts. The filing of a claim for benefits waives an employee's right to proceed outside the Act. Grove Manufacturing, supra; Heibel v. Bermann, 407 S.W.2d 945 (Tex.Civ.App.-Houston 1966, no writ). An employee must make a choice between his statutory rights and those provided through the common-law.

In the instant case, appellant pursued his claim for workers' compensation benefits against American General, the insurer. This claim was not served from his counterclaim and represents a justiciable cause of action based on his industrial injury. Appellant's claim for intentional torts against appellees, however, is based on a cause of action arising out of the handling of his workers' compensation claim. He contends that appellees participated in bad faith settlement practices with American General, caused the suit in district court appealing the award of the IAB to be wrongly filed, and knowingly inflicted emotional distress on him by their involvement in refusing to settle the case and by protracting the litigation process. All of these claims, therefore, arise out of the workers' compensation relationship and are barred by Art. 8306 § 3. Paradissis, supra.

In our view, it is the insurance carrier that bears the ultimate responsibility for the handling and settlement of a workers' compensation claim. We therefore hold that under the provisions of Article 8306, § 3, appellees are not proper parties to a workers' compensation claim for an alleged cause of action arising out of the handling of that particular workers' compensation claim. In so holding, we do not decide here the duty or obligation of the insurance carrier in the handling of such claims. The issue of an insurer's duty of good faith settlement practice is not before us. We do decide, however, that an employer (Armco) and its agents (Lambright) do not occupy the same legal status as the compensation carrier under Article 8306, § 3. Accordingly, we hold that appellees are not proper parties to a suit for intentional torts arising out of the handling of the compensation claim, and that appellant has not alleged a cause of action against appellees based upon an implied duty of good faith and fair dealing in the handling of appellant's workers' compensation claim.

Judgment affirmed.

JAMES, Justice, dissenting.

I respectfully dissent from the opinion of the majority of this panel. In my opinion, appellant pled a cause of action against all original defendants in this suit, including appellees herein, for a breach of duty of good faith and fair dealing in insurance contracts. I therefore believe that an issue of material fact existed in the trial court below, and that the court erred in entering a summary judgment in favor of appellees. I would reverse the judgment of the trial court and remand the case for a trial on the merits.

This dissent is in complete agreement with the majority's presentation of the facts of this case. The majority however, reads this case strictly as a suit under the Workers' Compensation Act, Article 8307 § 5, Tex.Rev.Civ.Stat.Ann. (Vernon 1967), and that appellant's causes of action against appellees are barred by the exclusivity statute, Article 8306, § 3. Because the majority sees this action as arising out of the workers' compensation relationship, it finds it unnecessary to approach the important issues presented in appellant's brief. This dissent disagrees with the approach of the majority and analyzes this case from a different (but truer) direction. In that a cause of action for a breach of good faith and fair dealing exists in tort,...