Smith v. Excel Fabrication, LLC

• Docket Number: Docket No. 48900
• Decision Date: 15 September 2023
• Citation: Smith v. Excel Fabrication, LLC, 172 Idaho 725, 535 P.3d 1098 (Idaho 2023)
• Parties: Mitchell SMITH, an individual, Plaintiff-Appellant, v. EXCEL FABRICATION, LLC, an Idaho limited liability company, Defendant-Respondent.
• Court: Idaho Supreme Court

172 Idaho 725

535 P.3d 1098

Mitchell SMITH, an individual, Plaintiff-Appellant,

v.EXCEL FABRICATION, LLC, an Idaho limited liability company, Defendant-Respondent.

Docket No. 48900

Supreme Court of Idaho, Boise, June 2022 Term.

Opinion Filed: September 15, 2023

Hepworth Holzer, LLP, Boise, for Appellant, Mitchell Smith. John W. Kluksdal argued.

Hawley Troxell Ennis & Hawley, LLP, Pocatello, for Respondent, Excel Fabrication. Austin T. Strobel, argued.

STEGNER, Justice.

This case involves the scope of the exclusive remedy rule and the countervailing third-party liability as set forth in the Idaho Worker's Compensation Law. Mitchell Smith was employed by Amalgamated Sugar Company ("Amalgamated") in Nampa, Idaho, when he was injured falling from a flight of stairs after the handrail gave out. Amalgamated had contracted with Excel Fabrication, LLC ("Excel"), to construct and install the flight of stairs and the handrail. Smith received worker's compensation benefits from Amalgamated.¹ Smith then sued Excel as a third-party tortfeasor, alleging that Excel had been negligent in its construction and installation of the staircase.

Excel moved for summary judgment, arguing that it was a "statutory co-employee" with Smith and, therefore, it was immune from liability as a result of the exclusive remedy rule. The district court agreed and granted Excel's motion for summary judgment. The district court then dismissed the case, with prejudice. Smith timely appealed. For the reasons discussed below, we reverse the district court's decision.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 2017, Smith was employed by Amalgamated in Nampa, Idaho, as a pipefitter's assistant laborer. Amalgamated entered into a contract with Excel to fabricate "steel mezzanines (including handrails)" as part of Amalgamated's installation of new tanks. The contract designated Excel as an independent contractor. Excel performed the work necessary to fabricate the steel mezzanines at its facility in Twin Falls, Idaho. In May 2017, while work on the project's installation was still ongoing in Nampa, Smith fell a substantial distance when the handrail fabricated by Excel gave out, causing him to injure his shoulder. As a result of his injury, Smith received worker's compensation benefits from Amalgamated.

In May 2019, Smith filed a complaint against Excel in district court, alleging that Excel had been negligent in its welding of the handrail to the stairs. Smith contended in his complaint that the handrail "was only attached by a single spot weld," causing it to fail when Smith attempted to use it. Excel answered, asserting several affirmative defenses, including that Smith's claims were barred by Idaho's worker's compensation statutes.

Excel later moved for summary judgment, relying primarily on Richardson v. Z & H Construction, LLC , 167 Idaho 345, 470 P.3d 1154 (2020). Excel argued that the exclusive remedy rule shielded it from liability because Excel is a "statutory co-employee" of Smith pursuant to Idaho Code section 72-209(3). Smith opposed Excel's motion, arguing that under the statutory employer analysis from Robison v. Bateman –Hall, Inc. , 139 Idaho 207, 76 P.3d 951 (2003), Amalgamated was not a statutory employer of Excel. As a result, Smith concluded that Excel was not immune from tort liability as a statutory co-employee of Smith.

In ruling on Excel's motion for summary judgment, the district court first concluded that Amalgamated was a statutory employer of Excel because it contracted for services with Excel. Next, the district court concluded that Amalgamated was a common employer of both Smith and Excel, such that Excel was shielded from tort liability by Idaho Code section 72-209(3). As a result of its decision, the district court granted Excel's motion and entered a judgment dismissing Smith's complaint with prejudice. Smith moved the district court to reconsider its decision, but the district court ultimately denied his request. Smith timely appealed.

II. STANDARD OF REVIEW

On appeal from an order of summary judgment, this Court exercises de novo review and utilizes the same standard of review used by the lower court in ruling on a motion for summary judgment. Manning v. Micron Tech., Inc. , 170 Idaho 8, 12, 506 P.3d 244, 248 (2022). A court must grant summary judgment "if the movant shows that there is no genuine dispute as to any material facts and the movant is entitled to judgment as a matter of law." I.R.C.P. 56(a). "All disputed facts are to be construed liberally in favor of the non-moving party, and all reasonable inferences that can be drawn from the record are to be drawn in favor of the non-moving party." Manning , 170 Idaho at 12, 506 P.3d at 248 (internal citation omitted). If no disputed issues of material fact exist, then there only remains a pure question of law. Id. This Court exercises free review of questions of law. Id. Statutory interpretation is also a question of law over which we exercise free review. Estate of Stahl v. Idaho State Tax Comm'n , 162 Idaho 558, 562, 401 P.3d 136, 140 (2017).

III. ANALYSIS

A. The district court erred in granting summary judgment to Excel.

In ruling on Excel's motion for summary judgment, the district court first concluded that Amalgamated was Excel's category one statutory employer because Amalgamated had hired Excel to perform services. Next, the district court concluded that Amalgamated was both Smith and Excel's "common employer." Additionally, because Idaho Code section 72-209(3) exempts an employer's employees from liability, and Excel was an "employee" of Amalgamated, the district court relied on Richardson to conclude that Excel was shielded from third-party tort liability. 167 Idaho 345, 470 P.3d 1154 (2020). Specifically, the district court stated: "For better or for worse, the Idaho Supreme Court recently ruled that contracted business entities, such as limited liability companies, qualify as employees under the statutory definition of ‘employee’ for purposes of worker's compensation immunity." As a result of its analysis, the district court granted Excel's motion for summary judgment.

On appeal, Smith argues that the district court erred in concluding that Amalgamated was Excel's statutory employer. Relying chiefly on this Court's statutory employer analysis in Robison , Smith argues that Amalgamated is neither Excel's "category one" nor its "category two" employer. Smith reasons that Amalgamated is not a category one statutory employer of Excel because Amalgamated is not a contractor or subcontractor. Smith contends that "a contractual relationship is only sufficient to create a statutory employer relationship in the context of subcontractors and contractors." Smith also argues that Amalgamated is not a category two statutory employer of Excel because Amalgamated's contract with Excel did not cover services that could have been performed by direct employees of Amalgamated in their sugar producing business. As a result, Smith contends that the district court erred in determining that Excel was Smith's statutory co-employee and exempting it from third-party liability.

In response, Excel contends that the district court correctly concluded that Excel was Smith's statutory co-employee, allowing it to "stand in the shoes of the parties’ common upstream employer, Amalgamated," and exempting it from liability pursuant to the exclusive remedy rule. Excel first asserts that the plain language of Idaho Code section 72-209(3) extends immunity from a civil suit to an employer's employees "working under the umbrella of a common upstream statutory employer." Excel relies primarily on Richardson for the propositions that (1) entities working under a statutory employer meet the definition of "employee" in Idaho Code section 72-102(11), and (2) "co-employees both working under a common upstream employer are entitled to immunity." 167 Idaho 345, 470 P.3d 1154 (2020).

This case provides us with the opportunity to explain the areas of statutory employer immunity and third-party tort liability. For the reasons that will be discussed, we now hold that "independent contractors" are separate and distinct from "contractors and subcontractors," as those terms are set out in Idaho Code section 72-223(1). As a result, independent contractors are not afforded immunity from tort liability in the way that contractors and subcontractors are as statutory employers under the statute. Under this framework, Excel is not entitled to immunity from tort liability as a statutory employer or statutory co-employee of Smith. We also take this opportunity to overrule Robison , which strayed from the plain language of Idaho Code section 72-223 and unnecessarily muddled the analysis regarding third-party tort liability for "owners or lessee[s] of premises[.]" Robison , 139 Idaho at 216, 76 P.3d at 960 (Kidwell, J., dissenting) (first alteration in original) (internal quotation marks omitted).

The Idaho Worker's Compensation Law is set forth in Title 72 of the Idaho Code. See generally I.C §§ 72-102 through 72-1717. Idaho Code sections 72-209(1) and 72-211 comprise what is colloquially referred to as the "exclusive remedy rule," which limits an injured worker's remedy to worker's compensation benefits when the worker sustains an injury that arises out of and is in the course of employment. The rule prohibits an injured worker from bringing a civil action for tort damages against his employer, whether that employer is his direct employer or his statutory employer. Id. This statutory scheme has historically been called the "grand bargain" due to the compromise each party (employer and employee) makes by engaging in the employment relationship. Taylor L. Mossman-Fletcher, Workers’ Compensation Trends Challenge the Original Grand Bargain , THE ADVOCATE 40 (May 2022).

Title 72, however, does not prevent an injured worker from recovering damages from third parties, with two notable exceptions:

The right to compensation under this law

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