Roberts v. Gray's Crane & Rigging, Inc.

• Decision Date: 10 May 1985
• Parties: Theodore ROBERTS, Personal Representative of the Estate of Sandy Roberts, deceased, Plaintiff, v. GRAY'S CRANE & RIGGING, INC., an Oregon corporation, and Earl Goll, Defendants and Third-Party Plaintiffs/Appellants, v. EMERICK CONSTRUCTION CO., and L.D. Mattson, Inc., dba Emerick/Mattson Construction Co., Third-Party Defendants and Fourth-Party Plaintiff v. DISDERO STRUCTURAL INCORPORATED, Fourth-Party Defendant/Respondent. A8206 03882; CA A31447.
• Court: Oregon Court of Appeals

Page 985

697 P.2d 985

73 Or.App. 29

Theodore ROBERTS, Personal Representative of the Estate of Sandy Roberts, deceased, Plaintiff, v. GRAY'S CRANE & RIGGING, INC., an Oregon corporation, and Earl Goll, Defendants and Third-Party Plaintiffs/Appellants, v. EMERICK CONSTRUCTION CO., and L.D. Mattson, Inc., dba

Emerick/Mattson Construction Co., Third-Party Defendants and Fourth-Party Plaintiff v. DISDERO STRUCTURAL INCORPORATED, Fourth-Party Defendant/Respondent.

A8206 03882; CA A31447.

Court of Appeals of Oregon.

Argued and Submitted Dec. 7, 1984.

Decided April 3, 1985.

Reconsideration Denied May 10, 1985.

J. Randolph Pickett, Portland, for defendants and third-party plaintiffs/appellants Gray's Crane & Rigging, Inc., and Earl Goll. With him on the briefs were Sandra Hansberger and Don G. Swink, Portland.

Jas. Jeffrey Adams, Portland, for fourth-party defendant/respondent Disdero Structural Inc. With him on the brief was Mitchell, Lang & Smith, Portland.

Before RICHARDSON, P.J., and WARDEN and NEWMAN, JJ.

RICHARDSON, Presiding Judge.

This is a wrongful death action involving the exclusive liability provision of the Workers' Compensation Act. ORS 656.018. The issue is whether that statute voids the indemnity agreements entered into between the parties to this appeal. Defendants/third party plaintiffs appeal a judgment entered on an order dismissing their amended third party complaint, which sought enforcement of the indemnity agreements against fourth party defendant, a subject employer under the Workers' Compensation Act. ¹ We hold that the agreements are void under ORS 656.018 and, therefore, we affirm.

For the sake of clarity, defendants/third party plaintiffs will be referred to as "Gray's Crane" and fourth party defendant will be referred to as "Disdero." The Emerick/Mattson Construction Co., a general contractor, "Emerick," subcontracted with Disdero to construct a new roof on Civic Stadium in Portland. Disdero is a subject employer under the Workers' Compensation Act. It leased a crane and crane operators from Gray's Crane. The lease agreements executed in January and February, 1982, provided that Disdero would indemnify Gray's Crane for all claims for death or injury to persons, including Disdero's employes, arising in any manner out of Disdero's use of the crane.

One of Disdero's employes was killed when the crane hit a beam, which struck another beam, which fell on the employe. Plaintiff, the personal representative of the employe's estate, brought this wrongful death action against Gray's Crane for negligence in operating the crane. Gray's Crane filed a third party complaint against Emerick, seeking contribution. Emerick then filed a fourth party complaint against Disdero for indemnity or contribution. Gray's Crane moved to amend its third party complaint to include a claim against Disdero based on the indemnity provisions of the lease agreements. Disdero opposed the motion on the ground that the indemnity agreements were void under ORS 656.018, which provides generally that an employer's duty to provide workers' compensation coverage shall be its exclusive liability for injuries to its workers and that all agreements to the contrary are void. The trial court allowed Gray's Crane's motion to amend its third party complaint and then, treating Disdero's motion as a motion to dismiss under ORCP 21 A, dismissed that third party complaint.

Gray's Crane appeals that dismissal. It argues that ORS 656.018 does not apply to express indemnity agreements. It further argues that, if the statute does apply, it unreasonably interferes with the freedom to contract protected by Article I, section 20, of the Oregon Constitution and the Fourteenth Amendment to the United States Constitution and denies Gray's Crane a remedy in violation of Article I, section 10, of the state constitution. ² We hold that the indemnity agreements are void under ORS 656.018(1)(c), that the statute suffers from none of the alleged constitutional infirmities and, therefore, that the trial court correctly dismissed the complaint.

Under the Workers' Compensation Act, a subject employer's duty to maintain coverage for its subject workers, ORS 656.017(1), is its exclusive liability for injuries to those workers. ORS 656.018. Before amendment in 1977, ORS 656.018(1) provided:

"Every employer who satisfies the duty required by subsection (1) of ORS 656.017 is relieved of all other liability for compensable injuries to his subject workmen, the workmen's beneficiaries and anyone otherwise entitled to recover damages from the employer on account of such injuries, except as specifically provided otherwise in ORS 656.001 to 656.794."

In U.S. Fidelity v. Kaiser Gypsum, 273 Or. 162, 539 P.2d 1065 (1975), the Supreme Court held tht the statute did not bar an action for common law indemnity by a third party against an employer, when the third party's liability to an injured worker had resulted from a breach of an express or implied independent duty owed by the employer to the third party. On the same day that Kaiser Gypsum was decided, the Supreme Court held that the statute did not bar an indemnity action by a third party against an employer under an express contract of indemnity. Gordon H. Ball v. Oregon Erect. Co., 273 Or. 179, 539 P.2d 1059 (1975). The court noted that "[t]here is no indication that the legislature in enacting ORS 656.018(1) intended to preclude an employer from voluntarily contracting with a third party to indemnify it for damages paid to an injured employee." 273 Or at 185. (Emphasis in original.)

In 1977, ORS 656.018 was amended. Or Laws 1977, ch 804, § 3a. The statute now provides:

"(1)(a) The liability of every employer who satisfies the duty required by ORS 656.017(1) is exclusive and in place of all other liability arising out of compensable injuries to his subject workers, the workers' beneficiaries and anyone otherwise entitled to recover damages from the employer on account of such injuries or claims resulting therefrom, specifically including claims for contribution or indemnity asserted by third persons from whom damages are sought on account of such injuries, except as specifically provided otherwise in ORS 656.001 to 656.794.

"(b) This subsection shall not apply to claims for indemnity or contribution asserted by a corporation, individual or association of individuals which is subject to regulation pursuant to ORS chapter 757 or 760.

"(c) Except as provided in paragraph (b) of this subsection, all agreements or warranties contrary to the provisions of paragraph (a) of this subsection entered into after July 19, 1977, are void." (Emphasis supplied.)

The statute was amended to overturn the holding of U.S. Fidelity v. Kaiser Gypsum, supra. Boldman v. Mt. Hood Chemical Corporation, 288 Or. 121, 124, n. 1, 602 P.2d 1072, n. 1 (1979). The legislative history of the amendment indicates that it was equally intended to abrogate the holding of Gordon H. Ball v. Oregon Erect. Co., supra.

Contrary to Gray's Crane's contention that "there is nothing on the face of the language of ORS 656.018(1)(a) which bars express indemnity agreements," the statute clearly bars such agreements. The best evidence of the purpose of a statute is its language. Whipple v. Howser, 291 Or. 475, 479-80, 632 P.2d 782 (1981). Subsection (1)(a) provides that the employer's duty to provide workers' compensation coverage shall be its exclusive liability for injuries to its workers and specifically protects the employer from third party claims for contribution or indemnity. Subsection (1)(c) provides that all agreements or warranties to the contrary entered into after July 19, 1977, are void. Under the plain, unambiguous language of the statute, the indemnity agreements in this case, executed in 1982, are void. In the light of the 1977 amendments to the statute, Gray's Crane's reliance on Kaiser Gypsum and Gordon H. Ball is misplaced.

Gray's Crane argues that, if the statute renders void the indemnity agreements, it unreasonably interferes with the right to contract guaranteed by Article I, section 20, of the Oregon Constitution:

"No law shall be passed granting to any citizen or class of citizens privileges, or immunities, which, upon the same terms, shall not equally belong to all citizens.--"

In support of its argument, Gray's Crane cites cases which state that the right to contract is both a property right and a liberty protected by Article I, section 20, with which the legislature cannot unreasonably interfere: General Electric Co. v. Wahle, 207 Or. 302, 319, 296 P.2d 635 (1956); Crouch v. Central Labor Council, 134 Or. 612, 618, 293 P. 729 (1930); George et al. v. City of Portland et al., 114 Or. 418, 424, 235 P. 681 (1925). In George, the court stated that the freedom to contract is not an absolute, but a qualified right, and is therefore subject to reasonable restraint in the interest of the public. In General Electric Co., 207 Or. at 326, 296 P.2d 635, the court stated that the Oregon Fair Trade Act, as it applied to nonsigners of contracts executed pursuant to it, constituted "an unnecessary and unreasonable interference with an individual's constitutional right of contract and of property in violation of Art I, § 20, of the Oregon Constitution, and of the due process clause of the federal constitution." The court discussed the state's power to impinge upon the right to contract:

"The enactment of the Fair Trade Act can be justified only upon the theory that it constitutes a reasonable and proper exercise of the inherent police power residing in the state. The police power is broad and far-reaching, and it is difficult, if not impossible, definitely to fix its bounds. Yet an exercise of the police power can never be justified unless it is reasonably necessary in the interests of the public order, health, safety, and welfare. The legislature is not the final judge of the limitations of the police power, and, because the...