Segura v. Molycorp, Inc.
| Decision Date | 09 November 1981 |
| Docket Number | No. 13314,13314 |
| Citation | 636 P.2d 284,97 N.M. 13,1981 NMSC 116 |
| Parties | Gilbert SEGURA, Plaintiff-Appellee, v. MOLYCORP, INC., Defendant-Appellant. |
| Court | New Mexico Supreme Court |
This appeal presents a question of first impression in New Mexico. May an employee privately contract with his employer for disability benefits in addition to those provided by the Workmen's Compensation Act? We hold that he can and affirm.
The evidence most favorable to the verdict is: In January 1974, appellee Segura, during the course of his employment by appellant Molycorp, suffered a back injury requiring an operation. Connecticut General Life Insurance Corporation ("CG"), Molycorp's disability insurer, paid the costs of the operation.
In April 1974, certain supervisory employees of Molycorp talked to Segura about returning to work in a supervisory capacity. Segura agreed, upon condition that he not be required to perform heavy manual labor involving heavy lifting or twisting and that in the event of disability, he would be eligible for long-term disability benefits of one-half his salary in addition to Social Security benefits. This arrangement was confirmed by the personnel manager for Molycorp, and ratified in writing by the President of Molycorp. Segura returned to work for Molycorp as a supervisor in reliance on these specified conditions.
In 1977, at the direction of his supervisor, Segura began to perform heavy manual labor and, by November 1977, experienced such pain that he was forced to leave work. He was certified by Molycorp to be totally and permanently disabled as a result of his work-related injury. At the time of the injury, Segura was earning $1,820.00 per month in salary.
Beginning in June 1978, Segura received benefits, paid by CG, of $132.07 for the period of April 30, 1978-June 30, 1978. Segura then engaged in discussions with representatives of Molycorp, who agreed that he should receive, as disability, 50% of his salary plus Social Security benefits. After further discussions, the disability payments were increased to $347.80 per month. Segura then made a demand upon Molycorp and CG for the full amount claimed ($910.00 per month), which demand was not honored. This suit followed.
Segura's amended complaint alleged breach of contract, tort and fraudulent misrepresentation. He claimed as damages $910.00 per month from April 30, 1978, until he reached sixty-five years of age, and punitive damages of $50,000.00.
Molycorp claimed: (1) no contract existed for payment of disability benefits; (2) the employees of Molycorp had no authority to enter into the alleged agreement; (3) Segura was entitled to workmen's compensation benefits only; and, (4) the sole and exclusive remedy of Segura was under the workmen's compensation laws.
Prior to trial, Molycorp's counterclaims based on Segura's refusal and failure to apply for workmen's compensation benefits as an offset, were dismissed. The court also denied Molycorp's motions to dismiss for failure to join as indispensable parties Molycorp's workmen's compensation insurance carriers.
The case was submitted to the jury on the form of general verdict with a special interrogatory to determine the sum equal to 50% of Segura's applicable monthly salary. The jury found for Segura, awarding $9,058.53 in damages plus $910.00 per month, as claimed.
On appeal, Molycorp claims error for the following reasons:
1. Segura's exclusive remedy was a workmen's compensation claim. Therefore, the court erred by allowing this case to go to a jury as either a common law tort or a contract claim.
2. Segura failed to meet the criteria for disability in CG's policy and, therefore, was not disabled under the terms of such policy.
3. There was mutual mistake of fact in the intentions of Segura and Molycorp with respect to the alleged April 1974 agreement and, therefore, no agreement was consummated.
4. There was no evidence of the April 1974 agreement.
5. Molycorp was denied the right to present its theory of the case.
6. The existence of a contract was a matter of law for the Court, and error was committed by submitting that issue to the jury.
7. There was no evidence to show that Molycorp's employees had authority to enter into the April 1974 agreement.
8. The court erred in denying summary judgment on Molycorp's counterclaim because such denial was based on bias by the court.
Molycorp asserts that the provisions of the Workmen's Compensation Act (the Act), §§ 52-1-1 to 52-3-59, N.M.S.A. 1978, make that statutory remedy the only cause of action available to Segura. If this argument has merit, the trial court was obligated to dismiss the complaint with prejudice. Security Insurance Co. of Hartford v. Chapman, 88 N.M. 292, 540 P.2d 222 (1975); Anaya v. City of Santa Fe, 80 N.M. 54, 451 P.2d 303 (1969).
Section 52-1-6(D) states:
(C)ompliance with the provisions of the Workmen's Compensation Act * * * shall be, and construed to be, a surrender by the employer and the employee of their rights to any other method, form or amount of compensation or determination thereof, or to any cause of action at law, suit in equity or statutory or common-law right to remedy or proceeding whatever for or on account of such personal injuries or death of such employee than as provided in the Workmen's Compensation Act, and shall bind the employee himself * * *.
We have previously held that once the Act provides a remedy, it is exclusive and the employee has no right to bring an action in common-law negligence against his employer. Galles Chevrolet Co. v. Chaney, 92 N.M. 618, 593 P.2d 59 (1979). However, Segura claims neither workmen's compensation benefits nor common-law negligence. He is claiming, under various theories, a breach by Molycorp of an agreement to pay certain benefits in the event of total disability, as a condition of returning to work as a supervisory employee of Molycorp.
Although there is no New Mexico authority directly on point, the authority from other jurisdictions may be summarized as follows. The exclusive remedy provisions in workmen's compensation laws, such as Section 52-1-6(D), supra, do not prevent an employer and an employee from entering into a private agreement for contractual disability benefits greater than those benefits provided under the legislative workmen's compensation scheme. The rule is set forth in 4 A. Larson, Workmen's Compensation Law, § 97.53 (1977) as follows:
It is possible to imagine a number of troublesome legal questions that might emerge from the type of contract in which the employer agrees to pay, say $90 a week benefits instead of the $70 specified by statute. One cardinal principle, however, should ordinarily settle most such questions. That principle is the simple proposition that the contractual excess is not Workmen's Compensation. It performs the same functions, and is payable under the same general conditions, but legally it is nothing more than the fruit of a private agreement to pay a sum of money on specified conditions. The provisions of a compensation act may be incorporated into the agreement by reference, but the operative force and the ultimate legal character of the arrangement remain that of private contract. (Emphasis added.)
Accord: Nelson v. Victory Electric Works, Inc., 227 F.Supp. 404 (D.C.Md.1964); City Council of Augusta v. Young, 218 Ga. 346, 127 S.E.2d 904 (1962); Board of Ed., etc. v. Chicago Teachers Union, 82 Ill.App.3d 354, 37 Ill.Dec. 639, 402 N.E.2d 641 (1980) and Heck v. Geo. A. Hormel Co., 260 N.W.2d 421 (Iowa, 1977). The Supreme Court of Iowa, in Heck, supra, was confronted with the same basic fact pattern presented here and, in concluding that such actions are not within the purview of the Workmen's Compensation Acts, said:
The fact that an employee's rights against an employer for industrial accidents lie exclusively within the provisions of Chapter 85 does not prevent the parties from agreeing by contract to augment the benefits there conferred. The present action is not a claim in derogation of the Workers' Compensation Act; it is a claim to enforce a contract similar to an insurance contract. (Emphasis added.)
Molycorp has cited New Mexico cases in support of its argument. These cases are not determinative. In Beal v. Southern Union Gas Company, 62 N.M. 38, 304 P.2d 566 (1956), the appellant asserted a third-party claim against the employer for contribution. The appellant's negligence had concurred with the employer's negligence to injure the employee. The trial court dismissed the third-party claim, and we affirmed, holding that the Workmen's Compensation Act immunized the employer from all claims arising from the injury except those covered by the Act.
The limitation of employer's liability for injuries sustained by an employee covered by the Workmen's Compensation Act covers all instances where that injury is sought to be made the basis for further and additional liability by the employee * * * and indirect liability for such injury is also foreclosed both by the terms of the act and because the employer's liability for such injury is not in tort.
Beal is not controlling here. Segura's claim is based on the alleged contract on representation regarding disability benefits, not on the disabling injury itself. In other words, the basis for Molycorp's liability is not Segura's injuries but its contractual obligation to pay disability benefits.
Molycorp cites Gulf Oil Corp. v. Rota-Cone Field Operating Co., 84 N.M. 483, 505 P.2d 78 (Ct.App.1972), cert. denied, 85 N.M. 636, 515 P.2d 640 (1973), for the proposition that an employer is not subject to liability in addition to workmen's compensation even where the employer voluntarily entered into an...
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...the agreement is found to be ambiguous, the meaning to be assigned the unclear terms is a question of fact. Segura v. Molycorp, Inc., 97 N.M. 13, 18, 636 P.2d 284, 289 (1981). However, in the event the parties do not offer evidence of the facts and circumstances surrounding execution of the......
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