Snyder v. Celsius Energy Co.

• Decision Date: 10 January 1994
• Docket Number: No. 92-C-806J.,92-C-806J.
• Citation: 866 F. Supp. 1349
• Parties: Dennis SNYDER, Johnny Gonzales, Jose Borja and Steve Dobis, Plaintiffs, v. CELSIUS ENERGY COMPANY, a Nevada corporation, and Universal Resources Corporation, a Texas corporation, Defendants.
• Court: U.S. District Court — District of Utah

866 F. Supp. 1349

Dennis SNYDER, Johnny Gonzales, Jose Borja and Steve Dobis, Plaintiffs, v. CELSIUS ENERGY COMPANY, a Nevada corporation, and Universal Resources Corporation, a Texas corporation, Defendants.

No. 92-C-806J.

United States District Court, D. Utah, Central Division.

January 10, 1994.

COPYRIGHT MATERIAL OMITTED

W. Brent Wilcox, Wilcox, Dewsnup & King, Salt Lake City, UT, for plaintiffs.

Gordon L. Roberts, David W. Zimmerman, Parsons, Behle & Latimer, Salt Lake City, UT, for defendants.

MEMORANDUM OPINION AND ORDER

JENKINS, District Judge.

Plaintiffs, New Mexico residents, were employed by WellTech, Inc., a New Mexico well service company, to work on Cutthroat Unit No. 1, an oil well located in Montezuma County, Colorado. On September 1, 1991, while plaintiffs were in the process of removing production casing from the well, a fire erupted, injuring the plaintiffs. Plaintiffs brought the above-captioned action, alleging negligence on the part of Defendant Celsius Energy Company ("Celsius"), operator of the Cutthroat Unit.

Celsius has moved for summary judgment on the ground that plaintiffs' tort claims, arising out of injuries suffered at the Cutthroat Unit No. 1 well site in Colorado, are barred as a matter of law by the exclusive remedy provisions of the Colorado Workers' Compensation Act. Those provisions reflect a public policy renouncing common-law tort liability involving employees and employers. See Colo.Rev.Stat. § 8-40-102 (Supp.1992).¹

Plaintiffs argue that the Colorado statute does not operate to bar their claims because (1) the plaintiffs have filed for workers' compensation benefits in New Mexico, invoking the pertinent provisions of New Mexico law; (2) enforcement of Colorado's exclusive remedy provisions would run contrary to Utah public policy; and (3) that under the Restatement (Second)'s "most significant relationship" test, New Mexico has a greater interest in the ability of New Mexico domiciliaries to obtain full compensation for injuries than Colorado has in insulating those who contract for the services of others to be performed in Colorado against tort liability. See Memorandum in Opposition to Defendant's Motion for Summary Judgment, dated December 14, 1992 (dkt. no. 17) ("Pltfs' Opp. Mem.")

Celsius asserts that "the prevailing choice of law rule" would enforce the exclusive remedy provisions of the state workers' compensation statute which (1) requires the defendant (or the defendant's subcontractor) to insure against the particular risk involved and (2) under which the plaintiff may obtain an award. See Celsius' Memorandum of Points and Authorities in Support of Defendant's Motion for Summary Judgment (dkt. no. 6) ("Celsius Mem."), dated October 23, 1992, at 17 (citing RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 184 (1971)). Celsius suggests that the Colorado Workers' Compensation Act satisfies both of these particulars and moreover, that, because of Celsius' lack of contacts with New Mexico, application of New Mexico law to Celsius would deny due process of law.²See Reply Memorandum of Points and Authorities in Support of Defendant Celsius Energy Company's Motion for Summary Judgment, dated January 20, 1993 (dkt. no. 34) ("Celsius Reply Mem.") at 15-16.

Celsius' motion for summary judgment was heard before this Court on February 4, 1993.³ On February 17, 1993, plaintiffs filed a Supplemental Memorandum of Points and Authorities in Opposition to Defendant's Motion for Summary Judgment, and on March 17, 1993, the Court entered an Order granting Celsius' motion to strike Exhibit 9 to plaintiffs' opposition memorandum.⁴ Since then, the motion has remained under advisement.

I. APPLICABLE CHOICE OF LAW RULES

A federal court sitting in diversity must apply the conflicts of law rules of the state in which it sits. Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Tucker v. R.A. Hanson Co., Inc., 956 F.2d 215, 217 (10th Cir.1992); Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d 882, 888 (10th Cir. 1991). Thus Utah law would apply to determine the choice of law issues arising from Celsius' motion. As the court of appeals observed in the Mountain Fuel case, Utah has traditionally applied the rule of lex loci delictus (i.e., the law of the place of injury) in tort cases. More recently, however, the Utah Supreme Court in Forsman v. Forsman, 779 P.2d 218, 219-20 (Utah 1989), adopted the "most significant relationship" test from the Restatement (Second) of Conflicts of Laws in identifying the law governing inter-familial tort liability, which others have extrapolated into an adoption of that same test for all tort claims. See, e.g., Pacheco v. Hercules, Inc., 61 Fair Empl. Prac.Cas. (BNA) 825, 8 Indiv.Empl.Rights Cas. (BNA) 1146, 1993 WL 193200 (D.Utah 1993) (J. Greene). To date, no reported opinion of the Utah Supreme Court, the Utah Court of Appeals, the United States Court of Appeals for the Tenth Circuit or of any judge of this Court has addressed the question whether Utah follows, or is predicted to follow the approach to the application of workers' compensation statutes set forth in § 184 of the Restatement (Second) of Conflict of Laws.⁵

The current Utah approach to choice of law issues in contract cases is equally unclear.⁶ To the extent that any issue in this action may turn on a question of contract interpretation,⁷ the General Agreement between Celsius and WellTech includes a choice of law clause selecting Utah law as the law governing that contract. See General Agreement at 11, ¶ XII-3 (Exhibit 2, "Exhibits to Plaintiffs' Memorandum of Points and Authorities in Opposition to Defendant's Motion for Summary Judgment," dated December 11, 1992 (dkt. no. 18)). While the Utah courts apparently have not taken a definitive position concerning the enforceability of such clauses, the assumption made by the federal courts has been that Utah would apply general contract principles as expressed in Restatement (Second) of Conflict of Laws § 187 (1971, 1988), generally upholding their validity.⁸See, e.g., Shearson Lehman Brothers, Inc. v. M & L Investments, 10 F.3d 1510, 1514 (10th Cir.1993).

The September 1, 1991 incident having occurred at the Cutthroat Unit No. 1 wellsite in Colorado, the lex loci rule would embrace Colorado law as the law governing plaintiffs' tort claims. However, plaintiffs urge that under the "most significant relationship" test, New Mexico law should be applied to protect the interest of plaintiffs as New Mexico residents working for a New Mexico employer, who commuted to a Colorado workplace where they were injured. The initial step in resolving the choice of law question is to determine whether a conflict exists between the law of the interested states. See In re Air Crash Disaster Near Chicago, Illinois on May 25, 1979, 644 F.2d 594, 605 n. 2 (7th Cir.1981).⁹

II. NEW MEXICO LAW

To avail itself of the exclusive remedy provisions of the New Mexico Workers' Compensation Act, Celsius must establish "the existence of some form of an employer-employee relationship, either statutory or actual, ..." Quintana v. University of California, 808 P.2d 964, 966 (N.M.App.1991). To be considered a "statutory" employer under the New Mexico statute, N.M.Stat.Ann. § 52-1-22, "it is the relationship between the general contractor and the employer of the claimant that is dispositive ..." Quintana, 808 P.2d at 966.

To qualify as a statutory employer under Section 52-1-22, however, a contractor must meet two express conditions. First, the general contractor must procure work, wholly or in part, to be done by a contractor other than an independent contractor. See § 52-1-22. That is, the statute, by its own terms, provides that it is not applicable to work performed by independent contractors. Second, the work to be done must be part or process in the trade, business, or undertaking of the general contractor....

Id. (citations omitted). Celsius submits that the work being performed by plaintiffs as employees of its contractor, WellTech, viz., the removal of production casing from oil wells being converted to water wells, was "part of its regular business practice" as the operator of all wells in the Cutthroat Unit. Statement of Undisputed Material Facts, at ¶¶ 1, 3. This would appear to satisfy the second requirement under the New Mexico statute.

The more troublesome question is whether the work done by WellTech is work performed by other than an "independent contractor" within the meaning of § 52-1-22. New Mexico courts apply a "power to control" test in determining whether this condition has been satisfied. Quintana, 808 P.2d at 967 (citing Yerbich v. Heald, 89 N.M. 67, 547 P.2d 72 (Ct.App.1976)).¹⁰

Here, it appears, plaintiffs must tread a fine line. New Mexico law would appear to require the plaintiffs to prove some measure of control on the part of Celsius in order to establish the requisite duty of care underpinning the plaintiffs' negligence claims against Celsius, though apparently not as much control as would be required to negate WellTech's status as an independent contractor under the "power to control" test, which would automatically invoke "statutory employer" immunity. In DeArman v. Popps, 75 N.M. 39, 400 P.2d 215 (1965), the court reversed summary judgment entered by the trial court in favor of Sunset International Petroleum, an owner-operator of a gas well, as against DeArman, who was employed as a roughneck by Lawrence Drilling to perform well service work on Sunset's well under Lawrence's contract with Sunset. Plaintiff was injured when a circulating head assembly, used at the request of Sunset's supervisor and supplied to Lawrence by Sunset, fell and struck him. No safety chains had been installed at the time of the incident. The DeArman court rejected Sunset's argument that proof of the degree of control required to establish a duty of care on the part of Sunset for purposes of plaintiff's...