Schmidt v. Trademark, Inc.
| Decision Date | 18 March 2022 |
| Docket Number | 122,078 |
| Citation | 315 Kan. 196,506 P.3d 267 |
| Parties | Vicki SCHMIDT, Kansas Insurance Commissioner, Appellee/Cross-appellant, v. TRADEMARK, INC., Appellant/Cross-appellee, v. Doroteo Ballin and Ballin Company, LLC, Appellees. |
| Court | Kansas Supreme Court |
William L. Townsley III, of Fleeson, Gooing, Coulson & Kitch, LLC, of Wichita, argued the cause, and Brian E. Vanorsby, of the same firm, was with him on the briefs for appellant/cross-appellee.
John C. Nodgaard, of Arn, Mullins, Unruh, Kuhn & Wilson, LLP, of Wichita, argued the cause and was on the brief for appellee/cross-appellant.
This appeal asks us to consider a question of statutory interpretation: specifically, what did the Legislature mean when it granted the Kansas Workers Compensation Fund a cause of action against "the employer" to recover amounts paid by the Fund for the benefit of an injured worker under K.S.A. 2020 Supp. 44-532a ? After answering this question, we must further consider whether this same statute authorizes the Fund to recover attorney fees from an "employer" along with any amounts paid on an injured worker's behalf.
The lengthy procedural journey that precipitated this question began when Juan Medina was injured on the job and sought compensation from his direct employer, Doroteo Ballin and Ballin Company, LLC (collectively, Ballin), under the Kansas Workers Compensation Act (KWCA), K.S.A. 44-501 et seq. Because Ballin carried no workers compensation insurance, Medina impleaded the Kansas Workers Compensation Fund to obtain benefits. After an administrative law judge awarded compensation to Medina and the Fund had paid Medina benefits, the Fund filed the current collateral action under K.S.A. 2020 Supp. 44-532a against Trademark, Inc., the general contractor for whom Ballin was acting as a subcontractor at the time of Medina's injury. After the district court granted summary judgment to the Fund, Trademark appealed. The Fund also cross-appealed the district court's denial of attorney fees.
A panel of the Kansas Court of Appeals first heard the appeal. The panel affirmed the district court on both issues, holding that the Fund could pursue an action against Trademark but that it could not recover attorney fees under K.S.A. 2020 Supp. 44-532a. Schmidt v. Trademark, Inc., 60 Kan. App. 2d 206, 221, 493 P.3d 958 (2021). On review, we consider both issues and affirm.
In December of 2016, Medina was injured in the course and scope of his employment with Ballin. Ballin was a subcontractor of Trademark, the general contractor on the project. Thus, Ballin was performing a part of the work Trademark was obligated under separate contract to perform. After his injury, Medina brought a workers compensation proceeding against Ballin for payment of medical treatment and other benefits; Trademark was not a party in this administrative proceeding.
Because Ballin lacked workers compensation insurance, the Fund was added as a party under K.S.A. 2016 Supp. 44-532a. The Fund attempted to implead Trademark but the administrative law judge (ALJ) rejected this effort. The ALJ ultimately ordered the Fund to pay benefits to Medina, which included $17,432.87 in compensation. The Fund also paid $5,022.37 in medical benefits and $1,804.73 in administrative costs, and expended thousands of dollars in attorney fees.
The Fund filed the instant case for reimbursement against Trademark on December 27, 2018. The Fund filed a motion for summary judgment on March 7, 2019. Trademark responded to the Fund's motion and simultaneously moved for summary judgment on March 21, 2019.
In a Memorandum Decision filed June 17, 2019, the district court concluded that, because Medina was an employee of Ballin, and Ballin was a subcontractor of Trademark, the Fund was permitted to seek recovery from Trademark under K.S.A. 2016 Supp. 44-532a(b). But the district court concluded that the Fund could not recover its claimed $8,053.95 in attorney fees from Trademark, citing the absence of any contractual or statutory provision permitting such recovery. The district court subsequently granted summary judgment in the Fund's favor as to everything except attorney fees.
Trademark appealed the district court's entry of summary judgment, while the Fund cross-appealed the district court's conclusion that it could not recover attorney fees. On appeal, the panel phrased the core question of Trademark's appeal this way: "Can the Fund only sue the employers mentioned in K.S.A. 2020 Supp. 44-532a(a) —that is, only the uninsured, insolvent, or vanished employers?" Schmidt, 60 Kan. App. 2d at 212, 493 P.3d 958. Relying largely on the reasoning of Workers Comp. Fund v. Silicone Distrib., Inc ., 248 Kan. 551, 809 P.2d 1199 (1991) ( Silicone ), the panel said, "No." Schmidt, 60 Kan. App. 2d at 218, 493 P.3d 958. In concluding that the Fund could seek to recover from Trademark, the panel found K.S.A. 44-503 ambiguous as to whether—as Trademark claimed— "ALL references to ‘employer’ in the Act must be substituted with the term ‘principal’ [i.e. Trademark] or none can be." 60 Kan. App. 2d at 218, 493 P.3d 958. The panel also rejected the Fund's argument that it could recover attorney fees from Trademark, concluding instead that there was no statutory authorization for such recovery. 60 Kan. App. 2d at 220-21, 493 P.3d 958.
Trademark petitioned this court for review, while the Fund conditionally cross-petitioned. This court granted review of both petitions on August 27, 2021. We have jurisdiction under K.S.A. 20-3018(b) () and K.S.A. 60-2101(b) ().
The lower courts correctly interpreted K.S.A. 2020 Supp. 44-532a.
Trademark raises a bifurcated challenge to the panel's determination that K.S.A. 2020 Supp. 44-532a authorizes the Fund to bring a cause of action against it to recover benefits paid to the employee of its subcontractor, Ballin. First, Trademark argues that the plain language of K.S.A. 2020 Supp. 44-532a does not grant the Fund a cause of action against principals for the recovery of workers compensation benefits paid for the employees of subcontractors when the principals were not a party to the underlying workers compensation action. Second, it claims that even if K.S.A. 2020 Supp. 44-532a is interpreted to allow such a recovery, Trademark itself cannot be liable because the ALJ made no finding that Trademark was uninsured and insolvent. We address both arguments together.
Trademark's challenge involves questions of statutory interpretation, which are subject to unlimited appellate review. Redd v. Kansas Truck Ctr. , 291 Kan. 176, 199, 239 P.3d 66 (2010).
If, on the other hand, "a statute's language is ambiguous, we will consult our canons of construction to resolve the ambiguity." Johnson v. U.S. Food Serv. , 312 Kan. 597, 601, 478 P.3d 776 (2021). Even statutory language that appears clear may be ambiguous when considered in the context of particular facts or another applicable statute. E.g., State v. Scheuerman, 314 Kan. 583, 587, 502 P.3d 502 (2022) ; McCullough v. Wilson , 308 Kan. 1025, 1035, 426 P.3d 494 (2018).
Finally, the Legislature has also expressed its intent "that the workers compensation act shall be liberally construed only for the purpose of bringing employers and employees within the provisions of the act." K.S.A. 2020 Supp. 44-501b(a).
Trademark argues K.S.A. 2020 Supp. 44-532a(a) and (b), read together, grant the Fund a cause of action to recoup amounts paid only against the "employer" that either lacked adequate workers compensation insurance or was otherwise unable to pay benefits to an injured worker under the KWCA—in this case, Ballin. Trademark acknowledges that the Kansas Supreme Court previously reached the opposite conclusion in Silicone but asserts that this was dicta and should be disregarded based on the plain language of K.S.A. 44-503 and K.S.A. 2020 Supp. 44-532a.
We begin with the language of both statutes. K.S.A. 44-503 addresses subcontractor and contractor responsibility for workers compensation benefits. In relevant part, it provides:
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