Ore-Ida Foods, Inc. v. Indian Head Cattle Co.

• Citation: 290 Or. 909,627 P.2d 469
• Decision Date: 28 April 1981
• Docket Number: No. 15,129-L,ORE-IDA,15,129-L
• Parties: FOODS, INC., a corporation, and Drake Insurance Company of New York, a corporation, Petitioners, v. INDIAN HEAD CATTLE COMPANY, an Oregon corporation, Respondent. ; CA 13805; SC 26839. *
• Court: Supreme Court of Oregon

Page 469

627 P.2d 469

290 Or. 909

ORE-IDA FOODS, INC., a corporation, and Drake Insurance

Company of New York, a corporation, Petitioners, v. INDIAN HEAD CATTLE COMPANY, an Oregon corporation, Respondent.

No. 15,129-L; CA 13805; SC 26839.

Supreme Court of Oregon, In Banc ^*.

Argued and Submitted June 26, 1980.

Decided April 28, 1981.

Carl Burnham, Jr., Ontario, argued the cause for petitioners. With him on the briefs were Cliff S. Bentz and Yturri, Rose, Burnham & Ebert, Ontario

William A. McCurdy, Boise, Idaho, argued the cause for respondent. With him on the briefs were Jeremiah A. Quane of Quane, Smith, Howard & Hull, Boise, Idaho, and J. Burdette Pratt of Henigson, Stunz, Fonda & Pratt, Nyssa.

PETERSON, Justice.

In this case an employer (Ore-Ida) of a deceased employee (Gonzalez) paid workers' compensation survivors benefits to Donna Burzota, an unmarried cohabitant of the decedent. Gonzalez was killed on the employer's premises when struck by a truck operated by the defendant, with whom the employer had a contract to remove waste products from the employer's premises. The employer sued the defendant, asserting that the sole cause of the death, and the sole reason why the employer was required to pay the death benefits, was the fault of the defendant. The defendant defended along these lines: (1) Burzota had no cause of action against defendant for wrongful death of Gonzalez; therefore, nothing was assigned to Ore-Ida by operation of law, or otherwise; (2) Ore-Ida had no independent cause of action for the death of the employee; and (3) Ore-Ida had no cause of action under the Workers' Compensation Law. The trial court agreed and sustained the defendant's demurrer to the complaint. The Court of Appeals, 602 P.2d 1133, 43 Or.App. 397 affirmed.

The issue in this case is: When an employer is required to pay workers' compensation benefits to the unmarried cohabitant of a deceased employee whose on-premises death was caused by the negligence of a third person, can the employer recover from the negligent third person, absent express provision for subrogation or assignment in the Workers' Compensation Law, and where the beneficiary herself has no cause of action for wrongful death.

THE FACTS

These facts appear from the plaintiff's complaint: Hilario Gonzalez and Donna Lee Burzota had two children and lived together, but they were not legally married. Gonzalez was employed by plaintiff Ore-Ida. Defendant had contracted with Ore-Ida for the removal of potato and corn waste products from Ore-Ida's premises. On April 29, 1977, the defendant, while operating its truck and trailer on Ore-Ida's premises, backed into Gonzalez, killing him. Ore-Ida ¹ was required to pay survivor's benefits to Donna Lee Burzota under Oregon Workers' Compensation Law, ORS 656.226.

Ore-Ida sued defendant to recover the amounts paid to Donna Lee Burzota. The defendant demurred to the complaint, asserting:

1. No right of contribution or indemnity arose by reason of the contract between defendant and Ore-Ida.

2. Although a cause of action against a negligent third party is given to the decedent's widow, children or dependents, no cause of action is provided to the employer 3. ORS 656.576 through 656.595 provide an employer with the only means of recovering compensation paid to the beneficiaries of a deceased workman under the Workers' Compensation Act. The statutory remedy is the exclusive method whereby the employer or its insurer can recover reimbursement for compensation paid to the injured worker's beneficiary.

or his insurer, and they are not the proper parties to bring such an action.

4. Plaintiff's complaint alleges only negligence on the part of the defendant. An employer cannot recover damages from a third party for injuries to an employee caused by the third party's negligence.

RELEVANT STATUTES AND COURT OF APPEALS HOLDING

The resolution of this case involves, first of all, an understanding of the relevant statutes. The Workers' Compensation Law, ORS chapter 656, is a comprehensive set of statutes containing provisions for, among other things, (1) benefits for the support of injured workers and their dependents, and (2) the employer's or compensation carrier's recovery, from responsible third persons, of benefits paid to injured workers and their dependents.

Ore-Ida's compensation carrier was required to pay survivor's benefits to Donna Lee Burzota because of ORS 656.226, which provides:

"In case an unmarried man and an unmarried woman have cohabited in this state as husband and wife for over one year prior to the date of an accidental injury received by such man, and children are living as a result of that relation, the woman and the children are entitled to compensation under ORS 656.001 to 656.794 the same as if the man and woman had been legally married."

ORS 656.578 provides for claims against third persons by injured workers and their beneficiaries:

"If a worker * * * receives a compensable injury * * * due to the negligence or wrong of a third person (other than those exempt from liability under ORS 656.018), entitling him under ORS 656.154 to seek a remedy against such third person, such worker or, if death results from the injury, the other beneficiaries ( ^1a ) shall elect whether to recover damages from such employer or third person. * * *."

ORS 656.591 creates a form of statutory subrogation in the employer's favor:

"(1) An election made pursuant to ORS 656.578 not to proceed against the employer or third person operates as an assignment to the paying agency of the cause of action, if any, of the worker, the beneficiaries or legal representative of the deceased worker, against the employer or third person, and the paying agency may bring action against such employer or third person in the name of the injured worker or other beneficiaries." ² In denying recovery in the case at bar, the Court of Appeals reasoned (43 Or.App. at 397, 602 P.2d 1133):

In a related case, Ore-Ida Foods, Inc. v. Gonzalez, 43 Or.App. 393, 602 P.2d 1132 (1979), the Court of Appeals held that Burzota was not a "surviving spouse" under our wrongful death statute, ORS 30.020(1), ³ and that Burzota did not, by reason of her relationship with Gonzalez, have the rights of a surviving spouse under the law of intestate succession. 43 Or.App. at 395, 396, 602 P.2d 1132.

1. Ore-Ida cannot recover under ORS 656.591(1) for survivor's benefits paid to Burzota because she had no "cause of action" (as that term is used in the statute) against Indian Head. There is no common law cause of action for wrongful death, and Burzota was "not within the class of those who have a statutory cause of action for wrongful death." Therefore, ORS 656.591(1) created no cause of action in favor of Ore-Ida because Burzota possessed no cause of action for wrongful death which went to Ore-Ida by operation of law.

2. Ore-Ida had no common law cause of action for injury or death to its employee because of Snow v. West, 250 Or. 114, 440 P.2d 864 (1968), which held that an employer has no cause of action against a third person for loss of services of an employee whose injury or death was caused by the third person's negligence. 250 Or. at 115, 117, 118, 440 P.2d 864.

We affirm. In doing so, however, we should point out that this case has created a tangled thicket of thorny issues issues which are not susceptible of easy resolution and which involve significant public policy considerations, both pro and con.

DISCUSSION

We agree with the Court of Appeals that Ore-Ida has no rights by reason of ORS 656.591. Burzota had no cause of action against defendant for wrongful death under ORS 30.020. Ore-Ida Foods v. Gonzalez, supra. There is no claim that Burzota had any other cause of action against defendant. Therefore, no "cause of action," as that term is used in ORS 656.591(1), was transferred by operation of law to Ore-Ida. The employer's right to recover must therefore exist, if at all, on an existing negligence or indemnity theory apart from the statutory subrogation provisions of the Workers' Compensation Law.

The negligence count of the plaintiff's complaint alleges that Gonzalez's death was caused by the defendant's negligence and that as a result of Gonzalez's death Ore-Ida became liable to Burzota for Recovery on a negligence theory.

                the payment of compensation benefits.  4 The indemnity count alleges the same facts and seeks indemnity.  The third count also sounds in indemnity, realleging the same facts as the earlier counts, plus the [290 Or. 916] further assertion that by reason of a contract between the defendant and Ore-Ida, Ore-Ida is entitled to indemnity from the defendant.  The contract provides, inter alia, " * * * for the removal (by defendant) * * * of all waste products in a timely and expeditious manner * * *."
                

The plaintiff's claim in this case is to recover damages (Workers' Compensation benefits) which it was required to pay because of the negligent infliction of injury (death) to one of the plaintiff's employees.

Snow v. West, 250 Or. 114, 440 P.2d 864 (1968), involved a claim by an employer against a third person for loss of services of an employee whose injury or death was caused by the third person's negligence. We viewed the case as a claim for damages arising from a negligent interference with a contractual relationship and denied recovery, stating that such damages would only be recoverable for an intentional interference with a contractual relationship. 250 Or. at 115, 117, 118, 440 P.2d 864.

The prevailing rule in the United States and England is that a plaintiff may not recover for economic loss resulting from negligent infliction of bodily harm to a third person. ⁵ Whether the claim is characterized as one for economic loss, ⁶ interference with economic expectancy ⁷ or prospective economic advantage, ⁸ recovery is normally denied. Reasons for denial of recovery of damages arising from injury to third persons include...