Nations v. Sun Oil Co. (Delaware), 82-4041

• Decision Date: 20 January 1983
• Docket Number: No. 82-4041,82-4041
• Citation: 695 F.2d 933
• Parties: Doyle NATIONS and Marie Nations, Plaintiffs-Appellees, v. SUN OIL COMPANY (DELAWARE) and Sun Production Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 933

695 F.2d 933

Doyle NATIONS and Marie Nations, Plaintiffs-Appellees, v. SUN OIL COMPANY (DELAWARE) and Sun Production Company,

Defendants-Appellants.

No. 82-4041.

United States Court of Appeals, Fifth Circuit.

Jan. 20, 1983.

D. Gary Sutherland, Hattiesburg, Miss., for defendants-appellants.

C.R. McRae, Pascagoula, Miss., Alfred Lee Felder, McComb, Miss., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Mississippi.

Before CLARK, Chief Judge, RUBIN and WILLIAMS, Circuit Judges.

CLARK, Chief Judge:

Doyle Nations is the last of three employees of Mississippi Welding Service to sue Sun Oil Company as a result of an explosion at an oil well site. He is also the only survivor of the trio. A jury awarded verdicts of $500,000 to Nations and $150,000 to his wife Marie. Sun Oil appeals the consequent judgments on a number of grounds, but most importantly because of a supervening decision of the Mississippi Supreme Court. This decision requires that the district court's judgments must be vacated and the action remanded to permit a proper determination of whether the status of Nations' employer made him a statutory employee of Sun Oil.

I. The Facts of the Case

Doyle Nations, Miller Howell, and Leon Falcone went to the G.L. Dean No. 1 well site on March 3, 1977 to work on a tank battery. Mississippi Welding, their employer, was under contract with Sun Oil to perform general maintenance and repair work at the well site. On March 3, the men were constructing a vent line for the tank battery. The afternoon weather was miserable as a rain storm moved across southern Mississippi. The workers were said to have heard the rumble of thunder prior to the explosion which rocked the well site. One 210-barrel tank exploded killing Howell and Falcone. Nations was set ablaze. He crawled into a slush pit on the site to extinguish the fire. Nations suffered second and third degree burns to 10% of his body and was later diagnosed to have suffered a shoulder injury, loss of hearing in his left ear and a permanent, but partial, psychiatric disability.

The estates of Howell and Falcone brought wrongful death suits against Sun Oil. Sun Oil filed a third party complaint against Mississippi Welding alleging that the negligence of Mississippi Welding's employees was the sole proximate cause of the explosion. The jury found that Mississippi Welding was not negligent and placed all liability upon Sun Oil. The jury granted money damages to both estates.

Doyle Nations' negligence suit against Sun Oil was tried separately and subsequently. His attorneys sought and the judge granted a partial summary judgment on the issue of liability. The judge approved the offensive use of collateral estoppel holding that Sun Oil was bound by the jury's findings in the earlier case. The case went to trial on damages alone.

II. Change in the Law

After filing its appellants' and reply briefs in this appeal, it came to the attention of Sun Oil that the Mississippi Supreme Court in Doubleday v. Boyd Construction Co., 418 So.2d 823 (Miss.1982), had recently altered Mississippi's workmen's compensation law granting immunity from tort suits for contractors that require their subcontractors to carry workmen's compensation insurance. Sun Oil submitted that case to this court as a supplemental authority under Fed.R.App.P. Rule 28(j). Because this court must apply the law current at the time of its decision, the Doubleday decision binds this court. Concerned Citizens of Vicksburg v. Sills, 567 F.2d 646, 649-50 n. 5 (5th Cir.1978); United States v. Scardino, 414 F.2d 925, 927 (5th Cir.1969).

Doubleday construes the statute granting immunity from tort suit to a general contractor that requires its subcontractors to provide workmen's compensation benefits. Despite Sun Oil's failure to raise a statutory employer defense in its motion for judgment notwithstanding the verdict or in its appellate briefs, it did raise this defense as an alternative affirmative defense in its answer to the complaint. It did not urge the issue again until after briefing was complete. The assertion of Doubleday as a supplemental authority prior to the argument of this case, however, provided Nations the opportunity to discuss Doubleday in a response it later filed. The question was fully argued before this court. The appellee was not misled and the issue was fully explored in supplemental briefs and at oral argument. The court will consider the issue.

III. Doubleday and the Statutory Employer

The workmen's compensation law of Mississippi provides that "in the case of an employer who is a subcontractor, the contractor shall be liable for and shall secure the payment of such compensation to employees of the subcontractor, unless the subcontractor has secured such payment." Miss.Code Ann. Sec. 71-3-7. If the subcontractor has not secured such payment, then the statute considers the contractor to be the employer of the subcontractor's employees. The contractor is made liable for the payment of workmen's compensation benefits, and is accordingly made immune from tort action brought by the employee of the subcontractor. Mills v. Barrett, 213 Miss. 171, 56 So.2d 485 (1952). The contractor becomes immune because workmen's compensation is an employee's exclusive remedy against his employer. Miss.Code Ann. Sec. 71-3-9.

Where the subcontractor has fewer than the number of employees required by the statute to be liable for workmen's compensation payments to the employee, the Supreme Court still will hold the general contractor liable for workmen's compensation payments and again recognize that he has immunity from tort suit brought by an employee of the exempt subcontractor. Jackson v. Fly, 215 Miss. 303, 60 So.2d 782 (1952); Mills v. Barrett, supra.

A third possible situation is where the subcontractor qualifies as an employer under the Act. Once denoted an employer, the subcontractor is liable for workmen's compensation payments but receives immunity from tort suits brought by employees. Miss.Code Ann. Sec. 71-3-9. However, the employee receiving workmen's compensation benefits, is only barred from bringing suit against his employer and the employer's insurance carrier. He still has the right to "sue any other party at law." Miss.Code Ann. Sec. 71-3-71.

The question presented here is: if the employee is covered by workmen's compensation benefits from the subcontractor, is the general or prime contractor a "third party" against whom a tort action may be brought?

In Doubleday, the Mississippi Supreme Court held the general or prime contractor that requires its subcontractors to protect their employees by providing workmen's compensation coverage is immune from suit.

It would be paradoxical, however, in our opinion, to hold as the appellant entreats that a general contractor risk personal injury judgments in common law suits if he complies with the statute by contractually securing compensation insurance by his subcontractor, but if he lets work to subcontractors who do not comply with the Act, then his liability is limited to the sums provided by the Act. We do not think the legislature intended such an improbable result.

418 So.2d at 826. The Court agreed with the Florida Supreme Court's interpretation of its differently worded workmen's compensation statute. "It is our opinion the legislature did not intend to subject a general contractor to common law liability if he complied with Sec. 71-3-7 by requiring the subcontractor to have Workmen's Compensation insurance." Id. The Doubleday court concluded that the situation presented was identical to Mosley v. Jones, 224 Miss. 725, 80 So.2d 819 (1955). Mosley protected himself from common law tort liability by procuring workmen's compensation insurance for the employees of his subcontractor. Boyd, the general contractor in Doubleday, accomplished the same end by contractually requiring Ratliff, the subcontractor, to secure a policy of insurance on its employees. Therefore, the court held, Boyd "secured" compensation insurance for Doubleday within the meaning of the Act.

Whether Doubleday applies to this case depends on the answer to two questions: (1) did Sun Oil require Mississippi Welding to have workmen's compensation insurance for the protection of its employees, and (2) is Sun Oil a contractor and is Mississippi Welding a subcontractor within the meaning of Doubleday so as to make Nations a statutory employee of Sun Oil under Mississippi law. If Sun Oil was a contractor that required its subcontractor Mississippi Welding to protect its employees by providing workmen's compensation protection then Doubleday bars this tort action by Nations against Sun Oil.

The contract between Sun Oil and Mississippi Welding stated that Mississippi Welding should provide workmen's compensation insurance "if [it was] applicable." The only logical reading of "if applicable" would require Mississippi Welding to carry workmen's compensation insurance under Miss.Code Ann. Sec. 71-3-5 if it is an employer of eight or more persons. ¹ Under this meaning Sun Oil plainly required that compensation insurance be carried by Mississippi Welding.

The test of Doubleday's application to today's case, therefore, narrows to determining whether Sun Oil is a general contractor and Mississippi Welding is a subcontractor. Under Mississippi law, a subcontractor "is one who enters into a contract, express or implied, for performance of an act with a person who has already contracted for its performance, or who takes a portion of a contract from the principal or prime contractor." Rodgers v. Phillips Lumber Co., 241 Miss. 590, 593, 130 So.2d 856, 857 (1961). The fact that the contract involved in this case characterizes Mississippi Welding as an independent contractor is not critical because an independent contractor may be a subcontractor for the purposes of workmen's compensation. Corban v. Skelly Oil Co., 256 F.2d 775,...