Neese v. Michelin Tire Corp.

• Decision Date: 10 September 1996
• Docket Number: No. 2578,2578
• Court: South Carolina Court of Appeals
• Parties: Samuel Terran NEESE, Appellant, v. MICHELIN TIRE CORPORATION and South Carolina Vocational Rehabilitation, Defendants, Of Whom Michelin Tire Corporation is Respondent. . Heard

Page 91

478 S.E.2d 91

324 S.C. 465

Samuel Terran NEESE, Appellant, v. MICHELIN TIRE CORPORATION and South Carolina Vocational

Rehabilitation, Defendants,

Of Whom Michelin Tire Corporation is Respondent.

No. 2578.

Court of Appeals of South Carolina.

Heard Sept. 10, 1996.

Decided Oct. 14, 1996.

Rehearing Denied Feb. 21, 1997.

Certiorari Denied Sept. 19, 1997.

H.W. Pat Paschal, Jr., of Miller & Paschal, Greenville, for appellant.

N. Heyward Clarkson, III, of Clarkson & Fortson, Greenville, for respondent.

HOWELL, Chief Judge:

Samuel Terran Neese (Neese) appeals from the circuit court's order concluding that Neese's action against Michelin Tire Corporation (Michelin) was barred by the exclusivity provision of the South Carolina Workers' Compensation Act. We affirm.

I.

In 1991, Neese was employed as a truck driver by Vanguard Services, Inc. (Vanguard), an interstate trucking company. Prior to December 1991, Vanguard and Michelin entered into a contract whereby Vanguard agreed to transport certain semi-finished products and packaging materials to and from Michelin's various facilities. Paragraph ten of the contract states:

Vanguard is an independent contractor of Lessee (Michelin) and nothing in this Agreement or in the relationship between Vanguard or its drivers, and Lessee shall be found to constitute otherwise. Vanguard shall have sole control over its employees including, but not limited to, the method and amount of wage and benefit payments, and control of all hiring, firing or discipline of employees as well as all policies and procedures related to all other terms and conditions of employment. In acknowledgment that Vanguard drivers are Vanguard's employees only, Vanguard will have each employee, performing duties pursuant to this Agreement, individually read and sign a separate document entitled "Waiver of Employment and Non-disclosure Agreement" ..., stating that he/she works for Vanguard and not for Michelin Tire Corporation, and that he/she makes no claim for coverage by, or participation in, any Michelin Tire Corporation benefit or right.

As to workers' compensation insurance, the contract provides that "Workers' Compensation and Unemployment insurance is the sole responsibility of Vanguard with no concurrent responsibility imposed upon Lessee for employees of Vanguard." The contract further requires each Vanguard employee to execute a "Waiver of Employment and Nondisclosure Agreement" stating that the employee works for Vanguard and not for Michelin and that the employee "makes no claim for coverage by, or participation in, any Michelin Tire Corporation benefit or right."

Michelin operates a plant in Sandy Springs, South Carolina, where it converts raw materials into semi-finished products utilized in the manufacture of tires. The semi-finished products are packaged and/or placed in containers, such as spools, pallets, and racks, which are then transported to Michelin tire manufacturing plants. Generally, after the semi-finished products have been used by the manufacturing plant, the empty containers and packaging are transported to the Sandy Springs plant for re-use. In this case, steel spools were first transported to the Anderson Vocational Rehabilitation Center (AVRC), where the spools were unloaded and stripped of any remaining steel cable, and then loaded into trailers for transport back to the Sandy Springs plant for re-use.

On December 20, 1991, Neese was attempting to unload the steel spools and was injured when he opened the truck doors and the spools fell on him. ¹ Neese received workers' compensation benefits from Vanguard for his injuries. Thereafter, Neese filed this action, contending Michelin employees negligently stacked the steel spools, causing his injuries. ² Michelin sought to dismiss Neese's claim, contending that Neese was its statutory employee, and, therefore, his claim was barred by the exclusivity provision of the Act. The circuit court agreed, and dismissed Neese's claims against Michelin. This appeal followed.

II.

On appeal, Neese first argues that "independent contractor" and "statutory employee" are mutually exclusive categories. Accordingly, because Neese was an independent contractor as to Michelin, Neese contends he could not have been Michelin's statutory employee. We disagree.

Coverage under the Workers' Compensation Act is generally dependent on the existence of an employer-employee relationship. McDowell v. Stilley Plywood Co., 210 S.C. 173, 182, 41 S.E.2d 872, 876 (1947) ("In the absence of a statutory provision to the contrary, an injured person who is not an employee, but an independent contractor for the work, is not within the scope of a compensation act."); McLeod v. Piggly Wiggly Carolina Co., 280 S.C. 466, 469, 313 S.E.2d 38, 39 (Ct.App.1984) ("No award under the Workers' Compensation Law is authorized unless the employer-employee or master-servant relationship existed at the time of the alleged injury for which claim is made."). There are, however, certain statutory exceptions to this general rule.

One of these exceptions is found in section 42-1-400 of the Act, which, under some circumstances, imposes liability on employer or business owner for the payment of compensation benefits to a worker not directly employed by the employer:

When any person, in this section and §§ 42-1-420 and 42-1-430 referred to as "owner," undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (in this section and §§ 42-1-420 to 42-1-450 referred to as "subcontractor") for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any workman employed in the work any compensation under this Title which he would have been liable to pay if the workman had been immediately employed by him.

S.C.Code.Ann. § 42-1-400 (1985). Thus, depending on the nature of the work performed by the subcontractor, an employee of a subcontractor may be considered to be a statutory employee of the owner or upstream employer. The statutory employee provisions of the Act are intended to

afford the benefits of compensation to the men who are exposed to the risks of its business, and to place the burden of paying compensation upon the organizer of the enterprise. In consequence, both the owner and the contractors whom he engages to do his work are subjected to the requirements of the Act, and the workers receive double protection.

Parker v. Williams & Madjanik, Inc., 275 S.C. 65, 73, 267 S.E.2d 524, 528 (1980).

If a worker is properly classified as a statutory employee, his sole remedy for work-related injuries is to seek relief under the Workers' Compensation Act; he may not maintain a negligence cause of action against his direct employer or his statutory employer. S.C.Code Ann. § 42-1-540 (1976 and Supp.1995); Carter v. Florentine Corp., 310 S.C. 228, 230-31, 423 S.E.2d 112, 113 (1992) (exclusivity provision of Workers' Compensation Act extends to direct and statutory employees), overruled on other grounds, Ballenger v. Bowen, 313 S.C. 476, 443 S.E.2d 379 (1994); Parker, 275 S.C. at 74, 267 S.E.2d at 527 (statutory employers are immune from a tort action brought by a statutory employee); Bell v. South Carolina Elec. & Gas Co., 234 S.C. 577, 582, 109 S.E.2d 441, 443 (1959) (where the plaintiff was an employee of contractor performing work that was part of the owner's business, trade or occupation, and collected compensation benefits from the contractor, the plaintiff's common law action against the owner, his statutory employer, was barred by the exclusivity provision of the Act).

Whether a worker is a statutory employee is a jurisdictional inquiry to be resolved by the court. Adams v. Davison-Paxon Co., 230 S.C. 532, 543, 96 S.E.2d 566, 571 (1957); Hairston v. Re: Leasing, Inc., 286 S.C. 493, 496, 334 S.E.2d 825, 826 (Ct.App.1985). To determine whether the work performed by a subcontractor is a part of the owner's business within the meaning of section 42-1-400, this Court must consider whether (1) the activity of the subcontractor is an important part of the owner's trade or business; (2) the activity performed by the subcontractor is a necessary, essential, and integral part of the owner's business; or (3) the identical activity performed by the subcontractor has been performed by employees of the owner. Smith v. T.H. Snipes & Sons, Inc., 306 S.C. 289, 292, 411 S.E.2d 439, 440 (1991). If any one of these tests is satisfied, the injured worker is considered the statutory employee of the owner. Riden v. Kemet Elecs. Corp., 313 S.C. 261, 263, 437 S.E.2d 156, 158 (Ct.App.1993). Any doubts as to a worker's status are to be resolved in favor of coverage under the Act. Id.

In this case, the evidence presented by the parties supports the trial court's conclusion that the work being performed by Vanguard was part of Michelin's business within the meaning of section 42-1-400. Michelin is in the business of manufacturing tires, and the Sandy Springs plant converts raw materials into semi-finished products used by Michelin in the manufacturing process. Clearly, the packaging and transportation of these semi-finished products to Michelin's manufacturing plant is an integral part of Michelin's business, given that the tires could not be manufactured without the use of the semi-finished products. Likewise, the transporting of packaging materials necessary for the transportation of the semi-finished products is an integral part of Michelin's business. Accordingly, this Court concludes that the activities performed by Vanguard are a part of Michelin's trade, business, or occupation.

Neese, however, argues that, regardless of the nature of the activities performed by Vanguard, he cannot be a statutory employee of Michelin, because he is an independent contractor of Michelin. We disagree.

Section 42-1-400 extends workers'...