National Fruit Product Co., Inc. v. Baltimore and Ohio R. Co.

• Decision Date: 18 April 1985
• Docket Number: No. 16077,16077
• Citation: 174 W.Va. 759,329 S.E.2d 125
• Court: West Virginia Supreme Court
• Parties: NATIONAL FRUIT PRODUCT CO., INC. v. BALTIMORE AND OHIO RAILROAD CO. and Consolidated Railroad Corp.

Page 125

329 S.E.2d 125

174 W.Va. 759

NATIONAL FRUIT PRODUCT CO., INC. v. BALTIMORE AND OHIO RAILROAD CO. and Consolidated Railroad Corp.

No. 16077.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 29, 1985.

Decided April 18, 1985.

Syllabus by the Court

1. "A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Ins. Co., 148 W.Va. 160, 133 S.E.2d 770 (1963).

2. A cause of action for indemnity cannot be implied from the relationship between an employer and a negligent third party so that the employer may recover benefits paid pursuant to the Workers' Compensation Act to one of its employees who is injured by the negligence of such third party.

3. "An employer may not maintain an action to recover damages from a tort-feasor for the loss of services of his employee when such action is based on the negligent injury of the employee by said tort-feasor." Syllabus, Nemo Foundations, Inc. v. New River Co., 155 W.Va. 149, 181 S.E.2d 687 (1971).

Lacy I. Rice, Jr., Rice, Hannis & Douglas, Martinsburg, for appellant.

Clarence E. Martin, III, Walter M. Jones, III, Martin & Seibert, Martinsburg, for appellees.

MILLER, Justice:

The issue presented is whether an employer has a cause of action against a third party to recover benefits paid pursuant to the West Virginia Workers' Compensation Act to one of its employees who was injured on the job by the negligence of the third party. The Circuit Court of Berkeley County held that such an action cannot be maintained. It granted the motion for summary judgment filed by the defendants, the Baltimore & Ohio Railroad Company and the Consolidated Rail Corporation. The employer, National Fruit Product Company (National Fruit), contends that the circuit court erred, but we disagree and affirm the decision of the circuit court.

National Fruit alleged in its complaint that on December 8, 1978, two of its employees were seriously injured when the bulkhead door of a boxcar owned and operated by the defendants fell on them as they were preparing to load the boxcar. As a result of the defendants' negligence, National Fruit alleges that it will be required to make increased payments into the Workers' Compensation Fund to cover the benefits that will be received by the injured employees. National Fruit argues that it is entitled to recover this increase in payments from the defendants under either a theory of implied indemnity or loss of employees' services. ¹

I.

The general rule that we have applied in summary judgment cases is stated in Syllabus Point 3 of Aetna Casualty & Surety Co. v. Federal Ins. Co., 148 W.Va. 160, 133 S.E.2d 770 (1963):

"A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law."

See also Syllabus, Beverly Manor Assocs. v. West, W.Va., 309 S.E.2d 66 (1983); Syllabus Point 1, Perlick & Co. v. Lakeview Creditor's Trustee Comm., W.Va., 298 S.E.2d 228 (1982); Syllabus, Chambers v. Sovereign Coal Corp., W.Va., 295 S.E.2d 28 (1982); Syllabus Point 1, Karnell v. Nutting, W.Va., 273 S.E.2d 93 (1980).

In examining an appeal from a summary judgment, we will view the facts in the light most favorable to the party against whom judgment was rendered, which in this case was National Fruit. Beverly Manor Assocs. v. West, supra; Board of Education v. Van Buren & Firestone Architects, Inc., W.Va., 267 S.E.2d 440, 442 (1980). Although we have recognized the harshness of summary judgment, we hold that in this case it was appropriate because the issue presented is controlled by the applicable law and is not contingent upon any controversy in the facts.

National Fruit concedes that the West Virginia Workers' Compensation Act contains no provision authorizing an employer to recover workers' compensation benefits paid to employees injured by negligent third parties. It is generally recognized that West Virginia, Georgia, and Ohio are the only states that have not by statute given employers the right, through subrogation, to recover workers' compensation benefits paid to employees injured by a third-party's negligence. See 2A A. Larson, The Law of Workmen's Compensation § 71.30 (1983). The statutory method for subrogation varies among the different state compensation acts, as shown by the following summary in 2A A. Larson, supra, § 74.00:

"The mechanics of subrogation vary between the states, some subrogating the payor of compensation absolutely, some allowing the subrogation right and the employee's direct right to sue the third party to stand side by side, and some establishing a sequence under which first one, then the other, has the right to bring the third-party suit. Under all forms, however, the ultimate result of following out the statutory procedure is approximately the same: reimbursement of the payor of compensation, with any excess--or most of the excess--going to the employee."

Under a typical subrogation statute, the injured employee's ability to recover in a separate action against the negligent third party is diminished by the amount of workers' compensation benefits he receives. Thus, statutory subrogation precludes the injured employee from obtaining workers' compensation benefits and at the same time recovering the total amount of his damages against the negligent third party. His rights under statutory subrogation are limited as against the negligent third party to the extent that his employer can recoup his compensation payments from any award obtained against the negligent third party.

The absence of a subrogation statute in West Virginia has been a critical factor in the few cases we have decided involving the right of employees to keep both their workers' compensation benefits and any damages awarded in a negligence suit against a third party. In Mercer v. Ott, 78 W.Va. 629, 89 S.E. 952 (1916), the administrator for an employee killed on the job by the negligence of a third party brought suit against the third party and recovered damages in a settlement of the claim. The Commissioner refused to award any workers' compensation benefits to the deceased employee's surviving dependents, claiming that the settlement with the third party precluded payment of any benefits. In rejecting the Commissioner's holding, we stated in Syllabus Point 3:

"Where a workman is killed by an accident arising in the course of and resulting from his employment, and a tort-feasor other than his employer is responsible therefor, the right to compensation from the workmen's compensation fund by a dependent of the deceased is not lost by a recovery of damages against the tortfeasor, by the personal representative of the deceased."

In our discussion in Mercer, 78 W.Va. at 636, 89 S.E. at 954, we noted:

"The compensation acts of a number of jurisdictions of the United States and of Canada provide, in substance, that where an employee has been injured by the negligence of a third person under such circumstances as to render him legally liable, and compensation for the injury has been paid by the employer, he is subrogated to the employee's rights against such third person and may bring an action against the latter for damages....

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"The statute of this state does not in terms release the tort-feasor, or assign the right of action, when compensation is paid out of the workmen's compensation fund."

The comments we made in 1916 in Mercer are just as applicable to the present case because the legislature has yet to include a subrogation statute in our Workers' Compensation Act.

In Jones v. Appalachian Elec. Power Co., 145 W.Va. 478, 115 S.E.2d 129 (1960), the third party attempted to have the amount of damages awarded against it, in a negligence action filed by a deceased employee's dependent, reduced through remittitur by the amount of workers' compensation benefits payable to the dependent. After noting that our Workers' Compensation Act did not have a subrogation statute, we held in Syllabus Point 3: "The amount of compensation received for injury or death from the Workmen's Compensation Fund is not a proper subject for a remittitur in an action by the injured person, or the administrator of his estate in case of death, against a third party responsible for his injury or death."

Similarly, we held in Syllabus Point 3 of Jones v. Laird Foundation, Inc., 156 W.Va. 479, 195 S.E.2d 821 (1973), that workers' compensation benefits received by an injured employee cannot be used to mitigate damages awarded against a negligent third party:

"Workmen's Compensation benefits for an original work related injury and for aggravation of an original injury, or for a separate injury occasioned by medical treatment administered for a work related injury, are within the 'Collateral Source Rule' in the same way as accident insurance, health insurance and life insurance, and, therefore, benefits from Workmen's Compensation cannot be applied to reduce damages in an action against a successive tort-feasor such as a physician or hospital for injury caused by negligent or unskillful treatment of a compensable injury." ²

Although not binding on this Court, the Fourth Circuit Court of Appeals in Crab Orchard Improvement Co. v. Chesapeake & O. Ry. Co., 115 F.2d 277, 282 (4th Cir.), cert. denied, 312 U.S. 702, 61 S.Ct. 807, 85 L.Ed. 1135 (1940), in construing West Virginia law particularly our decision in Mercer, rejected the argument that an employer has a right of indemnity against a negligent third party for workers' compensation benefits paid:

"[T]he third party tort-feasor receives no benefit by the employer's payment under the [Workers' Compensation] Act. Furthermore, as the duty and obligation of the employer...