Roads West, Inc. v. Austin

• Decision Date: 19 December 2003
• Docket Number: No. 99,568.,99,568.
• Citation: Roads West, Inc. v. Austin, 91 P.3d 81, 2004 OK CIV APP 49 (Okla. Civ. App. 2003)
• Parties: ROADS WEST, INC., Petitioner, v. Neal AUSTIN; TTC Illinois, Inc.; Regency Insurance Company; CNA Insurance Companies; and The Workers' Compensation Court, Respondents.
• Court: United States State Court of Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

91 P.3d 81

2004 OK CIV APP 49

ROADS WEST, INC., Petitioner, v. Neal AUSTIN; TTC Illinois, Inc.; Regency Insurance Company; CNA Insurance Companies; and The Workers' Compensation Court, Respondents.

No. 99,568.

Court of Civil Appeals of Oklahoma, Division No. 1.

December 19, 2003.

Rehearing Denied March 12, 2004.

Certiorari Denied May 17, 2004.

Matthew J. Graves, Oldfield, Coker & Graves, Oklahoma City, OK, For Petitioner.

Michael James King, M. Jean Holmes, Winters, King & Associates, Inc., Tulsa, OK, For Respondent, Neal Austin.

J. David Terrell, Oklahoma City, OK, For Respondent, Regency Insurance Co.

Paul V. McGivern, Jr., J. Heath Lofton, McGivern, Gilliard & Curthoys, Tulsa, OK, For Respondent, CNA Insurance Companies.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 1.

Opinion by CAROL M. HANSEN, Judge.

¶ 1 Petitioner, Roads West, Inc. (Employer), seeks review of an order of a three-judge panel of the Workers' Compensation Court, affirming the decision of the trial court which found Respondent, Neal Austin (Claimant) was employed by Employer when he sustained an accidental personal injury to the left leg arising out of and in the course of Claimant's employment. The trial court found TTC Illinois, Inc. (TTC) was not Claimant's employer and dismissed it as a party. It also found neither CNA Insurance Companies (CNA) nor Regency Insurance Company (Regency) had issued policies providing coverage in this matter and dismissed both insurance companies as parties. We vacate as to the dismissal of TTC, CNA, and Regency as parties, and remand for further proceedings consistent with this opinion.

¶ 2 Claimant brought a workers' compensation claim against Employer to recover benefits for injuries he sustained on July 9, 2001, in a rollover accident while he was driving Employer's truck. Employer denied Claimant was its employee and moved to join TTC as an additional party. It later moved to join CNA, Regency, and TTC's officers, but then withdrew the motion as to the TTC officers.

¶ 3 TTC appeared, answered, moved to dismiss, and filed notice of its pending bankruptcy case and automatic stay of actions to recover claims against it. Regency specially appeared and moved to dismiss the claim against it, asserting it had not been served process and had not collected any premium related to any Oklahoma employee. CNA moved to dismiss, asserting it had not provided workers' compensation insurance coverage to TTC, or in the alternative, any coverage was excess coverage¹ only and not first-dollar coverage. Employer moved to strike CNA's defenses, asserting it had violated court orders regarding discovery.

¶ 4 At trial on December 18, 2002, all parties stipulated Claimant injured his left leg in a single-event injury falling under the Workers' Compensation Act, and that Claimant was temporarily totally disabled and in need of further medical treatment. The dispute among the parties related only to who was responsible for paying Claimant's benefits. ¶ 5 Employer's position was it transferred its employees to TTC, which was an employee leasing organization. It asserted Claimant was TTC's employee, and was covered by TTC's insurers, CNA and Regency. Employer argued its liability, if any, was secondary, and could not be determined until TTC's liability was determined. Because TTC was in bankruptcy and the automatic stay had not been lifted, Employer argued the trial court had no jurisdiction to determine any liability against Employer. Employer also argued it had been denied due process because it had not been able to obtain documents from TTC and because CNA had hindered its ability to defend by not timely providing discovery materials. The trial court denied Employer's motion to strike CNA's defenses and heard evidence on the remaining issues.

¶ 6 The trial court issued an order finding Employer and TTC had entered into a service agreement under which TTC agreed to provide payroll services and workers' compensation insurance coverage. It found that under the terms of the agreement, the employees for whom TTC provided services were to remain the employees of Employer and not become the employees of TTC. Therefore, the trial court found Employer was Claimant's employer. It sua sponte dismissed TTC with prejudice. The trial court found neither CNA nor Regency had ever entered an insurance contract to provide coverage for Oklahoma employees and dismissed both with prejudice. It awarded benefits to Claimant against Employer. Employer appeals from this order with twelve contentions of error.

I

¶ 7 Employer's first contention of error is the trial court lacked jurisdiction to proceed with trial because (1) TTC was in bankruptcy and the automatic stay had not been lifted, and (2) notice of trial was never provided to TTC. Pursuant to the Bankruptcy Code, 11 U.S.C. § 362(a)(6), the filing of a bankruptcy petition operates as a stay of any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case. However, nothing in the statute extends the stay to causes of action against non-bankrupt co-defendants of a debtor even if they are in a similar legal or factual nexus with the debtor. Ni Fuel Co., Inc. v. Jackson, 257 B.R. 600, 615 (N.D.Okla.,2000). Claimant's claim against Employer was not stayed by TTC's bankruptcy petition. The trial court did not violate the automatic stay by proceeding to trial on this claim.

¶ 8 Employer asserts it raised the issue of notice to TTC before the trial court. However, the portions of the record it cites relate only to TTC's bankruptcy and not to the issue of notice. We will not consider questions not presented to and passed upon by the trial court. Von Stilli v. Young, 1950 OK 137, 203 Okla. 86, 219 P.2d 224, 228.

II

¶ 9 Employer's second, third, fourth, and fifth contentions of error challenge the trial court's rulings relieving CNA of liability for insurance coverage for Claimant's claims. The trial court found,

THAT [CNA] did not issue a valid policy of workers' compensation insurance in the State of Oklahoma on behalf of [TTC]. The Court finds that the only [CNA] policy of insurance ever contemplated for [TTC] was for excess coverage only, contingent upon [TTC] obtaining self-insured status in each state for which coverage was to be provided. While there is evidence that premiums were paid on a nationwide policy, those premiums only applied to states where [TTC] had obtained self-insured status. [TTC] never sought or obtained an "own risk permit" under the laws of the State of Oklahoma to render itself a self-insured employer in this jurisdiction. Therefore, no contract of insurance between [CNA] and [TTC] ever existed with respect to the State of Oklahoma. The payment of premium on insurance coverage applicable to other states does not effect any estoppel within Oklahoma, when the condition precedent for such coverage—self insured status for [TTC]—was never secured or even sought by [TTC] within Oklahoma. Accordingly, [CNA] is DISMISSED, with prejudice, and without liability in the claim for compensation filed herein.

Employer contends (1) "[t]he binder issued by CNA provided coverage to the claimant," (2) "[t]he trial court lacks jurisdiction to rescind CNA's binder," (3) "[t]he trial court erred when it did not hold CNA was estopped to deny Claimant coverage," and (4) "[t]he trial court erred in its finding that CNA only provided excess coverage."

¶ 10 The service agreement between Employer and TTC provided TTC would "obtain and pay the costs of providing all necessary and legally required workers' compensation... insurance coverage" for enrolled employees. According to Gerald Caffrey, an underwriter for Wexford Underwriting Managers, Inc. (Wexford), TTC's insurance broker contacted him for a quotation for excess workers' compensation coverage for TTC. Caffrey said Wexford was the managing general agent for CNA and had a contract with CNA that allowed Wexford "to underwrite excess workers' compensation for qualified self-insureds." He said he did not have authority to underwrite first-dollar coverage.

¶ 11 Caffrey testified he submitted to the broker a quotation stating the terms and conditions under which Wexford would issue a policy to TTC. The quotation stated the type of insurance was "Excess Workers Compensation and Employers Liability," and the states of coverage were those where "the insured is a qualified self insurer for Workers Compensation." Caffrey said he issued a binder for the policy. The binder stated the type of insurance was "Excess Workers Compensation and Employers Liability," with the insured's retention set at $1,000,000.00 per occurrence for workers' compensation claims. It included Oklahoma in the listing of states of coverage, but stated, "Coverage provided under this policy will only apply to those states where the Insured is a qualified self-insured."

¶ 12 Caffrey sent certificates of insurance to the states listed on the binder, including Oklahoma. The certificate sent to the Oklahoma Workers' Compensation Court stated CNA had issued an excess insurance policy to TTC effective from May 24, 2001 to May 24, 2002.

¶ 13 Caffrey testified he later learned TTC was not a qualified self-insured in any state. Based on CNA's instructions, he sent letters to TTC and its broker notifying them the policy was being rescinded and the premium would be refunded. Wexford sent a check for the refunded premium to the broker. Caffrey sent a notice of rescission to the Oklahoma court on June 29, 2001, and the court received it on July 5, 2001.

¶ 14 The workers' compensation court has exclusive jurisdiction to determine and enforce a compensation risk carrier's liability to a claimant. Its jurisdiction necessarily "includes cognizance to decide the central issue-whether at the time of the claimant's injury a contractual relationship subsisted between the employer, qua...