Peterson v. Trailways, Inc.

• Decision Date: 24 January 1983
• Docket Number: Civ. A. No. 82-JM-291.
• Citation: 555 F. Supp. 827
• Parties: Eldor PETERSON and Elaine Peterson, Plaintiffs, v. TRAILWAYS, INC., Defendant.
• Court: U.S. District Court — District of Colorado

555 F. Supp. 827

Eldor PETERSON and Elaine Peterson, Plaintiffs, v. TRAILWAYS, INC., Defendant.

Civ. A. No. 82-JM-291.

United States District Court, D. Colorado.

January 24, 1983.

John Perrott, Johnstown, Colo., Warren L. Taylor, Loveland, Colo., for plaintiffs.

J. Bayard Young, Montgomery, Little, Young, Campbell & McGrew, Englewood, Colo., Albert E. Zarlengo, Jr., Denver, Colo., for defendant.

MEMORANDUM OPINION AND ORDER

JOHN P. MOORE, District Judge.

This matter comes before the Court upon Defendant's Motion for Summary Judgment. This motion is grounded upon the proposition, novel to Colorado law, that the immunity from liability in tort granted employers under the Colorado Workmen's Compensation Act¹ (WCA) extends to a parent corporation sued by an employee of its wholly-owned subsidiary. I disagree, and, accordingly, conclude that the motion should be denied.

The finality inherent in summary judgment requires that the court be convinced beyond a reasonable doubt that there exists no genuine issue of material fact. Norton v. Liddel, 620 F.2d 1375 (10th Cir.1980); Becker v. Marketing and Research Consultants, Inc., 526 F.Supp. 166 (D.Colo.1981). Consequently, pleadings, affidavits and other matters of record must be construed in favor of the party against whom the motion is made. Otteson v. United States, 622 F.2d 516 (10th Cir.1980); Becker, supra. So considered, the facts of this matter appear as follows.

Defendant Trailways, Inc., (Trailways) is a resident of Texas engaged in the business of intrastate and interstate busing. A portion of its equipment is serviced at a garage located in the City and County of Denver, Colorado. The garage property is owned by Four States Realty Co., Inc., (Four States) and leased to Denver-Colorado Springs-Pueblo Motorways, Inc., (DCSP), the operating company. Four States is a wholly-owned subsidiary of America Bus Lines, Inc., which, in turn, is wholly owned by Trailways. DCSP is a Colorado corporation wholly owned by Trailways.

In keeping with this close ownership relation, Trailways and DCSP follow a close organizational and working relationship. Thus, all the officers of DCSP are employees of Trailways; most of these persons are also officers of Trailways. Account and payroll records of the corporations are kept "at the same location by the same personnel and are consolidated for income tax purposes."² Moreover, both corporations are insured for purposes of workmen's compensation under a single policy with Liberty Mutual Insurance Company. While DCSP and Trailways "have common supervision as to policies and procedures,"³ Trailways exercises ultimate control over operations through its vice president of maintenance.⁴

This authority naturally includes the right to hire and fire "and to make policies to see procedures are followed by the management and personnel"⁵ of DCSP. It is asserted by the Plaintiffs and (at least by implication) conceded by the Defendant that Trailways is responsible for security at the garage facility.

Albeit close, the relationship between DCSP and Trailways does not appear to have been one of functional identity. As noted, DCSP management has more than nominal responsibility for garage operations. Moreover, there is no indication that the records of the corporations are consolidated for purposes other than income taxation or that DCSP does not pay its share of the premiums due Liberty Mutual for Workmen's Compensation coverage. On the other hand, it is admitted that DCSP maintains a payroll account for garage personnel⁶ and is initially responsible for the costs of garage operations.⁷ Thus, in the words of R.W. Mayfield, secretary of Trailways and DCSP, "the companies are separate corporations." Mayfield affidavit at 6.

In his complaint and supporting affidavit, Mr. Peterson states that he was employed by DCSP as a maintenance supervisor assigned to the night shift at the Denver garage. On numerous occasions prior to the events complained of, he and other members of the night shift experienced problems with thieves and other assailants who at times carried exposed weapons. As a result, Peterson consistently requested that measures be taken to upgrade security. In particular, he urged the installation of locks and the reinstatement of a formal guard service which had been terminated by Trailways in the Spring of 1980. Peterson's immediate superior concurred in these requests and forwarded them to Trailways. Trailways refused to take action.

During the early morning hours of August 6, 1980, Mr. Peterson was assaulted and severely injured by an unknown assailant while engaged in his employment as night shift supervisor. Naming DCSP as his employer, Peterson filed a claim for workmen's compensation benefits and received an award paid under the policy insuring DCSP and Trailways. The complaint in this action was filed on February 22, 1982, and, as amended, alleges that Trailways is answerable to Peterson and his spouse in compensatory and punitive damages for the described acts and omissions which are variously claimed to have been negligent, reckless, and "based upon a deliberate and subjective realization of the risk of bodily injury to the Plaintiff."⁸

Colo.Rev.Stat. § 8-42-102 (1973, 1980 Supp.) of the Colorado WCA provides that:

An employer who has complied with the provisions of articles 40 to 54 of this title, ... shall not be subject to ... any other liability for the death of or personal injury to any employee, except as provided in said articles; and all causes of action, actions at law, suits in equity, proceedings, and statutory and common law rights and remedies for and on account of such death of or personal injury to any such employee and accruing to any person are abolished except as provided in said articles.

The Act defines "employer" as:

A person, association of persons, firm, and private corporation, including any public service corporation, personal representative, assignee, trustee, or receiver, who has one or more persons engaged in the same business or employment, ... in service under any contract of hire, express or implied.

Colo.Rev.Stat. § 8-41-105(1)(b) (1973, 1980 Supp.).

An "employee" is:

A person in the service of any person, association of persons, firm, or private corporation, including any public service corporation, personal representative, assignee, trustee, or receiver, under any contract of hire, express or implied.... § 8-41-106(1)(b) C.R.S. 1973.

Colo.Rev.Stat. § 8-41-106(1)(b) (1973).

The obvious import of these provisions is that the bar of workmen's compensation is derived in the first instance from an employment relation premised upon a "contract of hire". See generally 1C Larson's Workmen's Compensation Law, § 47 at 8-231 (1980 Ed.). Although liberal interpretation of the WCA counsels against strict application of "each and every formality attending commercial contractual relationships, ..."⁹ the Colorado courts have consistently ruled that "a contract for hire is subject to the same rules as other contracts...." Denver Truck Exchange v. Perryman, 134 Colo. 586, 307 P.2d 805, 810 (1957); see also Hall v. State Compensation Insurance Fund, 154 Colo. 47, 387 P.2d 899 (1963). Where no such contract exists in fact or by operation of law,¹⁰ and the parties are not "in the same employ,"¹¹ the exclusive remedy rule is without effect. See, e.g., Frohlick Crane Service, Inc. v. Mack, 182 Colo. 34, 510 P.2d 891 (1973).

As stated in Denver Truck Exchange, supra, 307 P.2d at 810: "A contract is an agreement which creates an obligation. Its essentials are competent parties, subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation." The instant record is plainly lacking in facts from which it may be inferred as a matter of law that the parties were bound under a contract of hire at the time in question. Conclusory assertions made by way of pleading hardly negate equally conclusory assertions made by way of affidavit. The existence of a single, facially ambiguous check¹² does not upset this balance; nor does the fact that Trailways dominated DCSP as a matter of corporate structure imply an agreement by Peterson to be bound to it as his employer. On the contrary, the available facts indicate that Peterson never dealt directly with personnel at Trailways empowered to pass upon his status or performance as an employee. Peterson has consistently maintained both in this matter and in earlier workmen's compensation proceedings that DCSP was his employer at the Denver garage. The record affords no clear assurance of a contrary or supplemental agreement.¹³

Confronted with this obstacle, counsel for Trailways contends that "an employee cannot sue an employer's parent corporation ... the parent corporation is entitled to the same protection and immunity as a wholly owned subsidiary under applicable Workmen's Compensation Statutes." Brief at 4. Coco v. Winston Industries, Inc., 330 So.2d 649 (La.App.1976), rev'd on other grounds, 341 So.2d 332 (La.1977); Wells v. Firestone Tire and Rubber, 97 Mich.App. 790, 296 N.W.2d 174 (1980); Goldberg v. Context Industries, 362 So.2d 974 (Fla.App.1978); and Taylor v. Pfaudler Sybron Corp., 150 N.J.Super. 48, 374 A.2d 1222 (1977), cert. denied, 75 N.J. 20, 379 A.2d 251 (1977); are cited in support of this position and are said to represent the "substantial weight of authority in the United States." Brief at 4. These assertions are not supportable upon careful analysis.

The Taylor decision is not on point. In that instance, the plaintiff, an employee of Sybron Corporation's chemical manufacturing division, was injured as the result of defects in a vat constructed by Pfaudler Company, a separate division of Sybron. After receiving an award of workmen's compensation benefits, Taylor sued Pfaudler in tort, contending that the latter occupied the position of a third party since it was engaged in an enterprise distinct from the one in...