Stacy v. Aetna Casualty & Surety Company

• Decision Date: 10 November 1971
• Docket Number: No. EC 7161-S.,EC 7161-S.
• Citation: 334 F. Supp. 1216
• Parties: Lester STACY, Plaintiff, v. The AETNA CASUALTY & SURETY COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Mississippi

334 F. Supp. 1216

Lester STACY, Plaintiff, v. The AETNA CASUALTY & SURETY COMPANY, Defendant.

No. EC 7161-S.

United States District Court, N. D. Mississippi, E. D.

November 10, 1971.

William S. Lawson, Tupelo, Miss., for plaintiff.

W. P. Mitchell, of Mitchell, Rogers & Eskridge, Tupelo, Miss., for defendant.

MEMORANDUM OF DECISION

ORMA R. SMITH, District Judge.

Plaintiff Lester Stacy on March 24, 1971 instituted this third-party-liability action against The Aetna Casualty and Surety Company (Aetna), the Workmen's Compensation Insurance carrier of his employer, Purnell's Pride, Inc. (Purnell), alleging that Aetna's negligence in failing to properly inspect Purnell's premises resulted in injury to him.

The action is presently before the court on Aetna's motion for summary judgment. Aetna contends that plaintiff's sole and exclusive remedy is under the Mississippi Workmen's Compensation Law.¹

Plaintiff was severely injured on December 3, 1970, while employed by Purnell, at its processing plant in Tupelo, Mississippi. Aetna had maintained the Workmen's Compensation liability insurance coverage for Purnell, and prior to plaintiff's accident had made safety inspections of the plant on a monthly basis. Plaintiff filed his claim against Aetna and Purnell for compensation benefits under the Workmen's Compensation Law. Aetna has paid and is continuing to pay plaintiff benefits available to him under such law.

On the motion for summary judgment, pursuant to Rule 56 F.R.Civ.P., the court must determine whether there exists a genuine issue as to any material fact and whether the moving party is entitled to judgment as a matter of law.

The question presented is whether the Mississippi Workmen's Compensation Law deprives plaintiff of his right to proceed at common law against a third party for alleged negligent acts resulting in his injury, when the third party is his employer's Workmen's Compensation insurance carrier.

The court in this diversity action is bound to follow Mississippi law.² This question, however, has not been submitted to and decided by the Supreme Court of Mississippi. The court must therefore decide the question as the court may determine that the Mississippi Supreme Court would decide the question should that court have the opportunity to do so.

Courts from several other state jurisdictions have passed upon the question involved here; however, many of those decisions are of little significance to this court since the interpretation of that particular state's Workmen's Compensation Law was in issue. The problem is wholly one of statutory construction and therefore the court must examine and construe the provisions of the Mississippi Act.

The pertinent statutes involved are Miss.Code Ann., Section 6998-02, dealing with "definitions", Section 6998-36, dealing with "third-party liability", and Section 6998-05, the "exclusiveness of liability" provision. Section 6998-36 provides in part:

"The acceptance of compensation benefits from or the making of a claim for compensation against an employer or insurer for the injury or death of an employee shall not affect the right of the employee or his dependents to sue any other party at law for such injury or death, but the employer or his insurer shall be entitled to reasonable notice and opportunity to join in any such action or may intervene therein. If such employer or insurer join in such action they shall be entitled to repayment of the amount paid by them as compensation and medical expenses from the net proceeds of such action (after deducting the reasonable costs of collection) as hereinafter provided."

Section 6998-05 provides in part:

"The liability of an employer to pay compensation shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next-of-kin, and anyone otherwise entitled to recover damages at common law or otherwise from such employer on account of such injury or death. . . ."

Section 6998-02 contains the definitions of "employer" and "carrier".

"(5) `Employer' except when otherwise expressly stated, includes a person, partnership, association, corporation, and the legal representatives of a deceased employer, or the receiver or trustee of a person, partnership, association or corporation".

"(6) `Carrier' means any person authorized in accordance with the provisions of this act to insure under this act and includes self-insurers".

Aetna contends that Section 6998-36 precludes plaintiff from bringing this action. It contends that the words "employer or insurer" used in the same sentence with the words "any other party" mean that the compensation insurer cannot be "any other party" and therefore a third-party liability suit cannot be brought against a compensation insurer. Aetna further contends that the legislative intent was to merge the identities of employer and carrier and that the term "employer" in Section 6998-05 includes "carrier".

Section 6998-39³ requires that a carrier shall be substituted for the employer in matters pertaining to Workmen's Compensation claims regarding such things as notice of claims, jurisdiction, and enforcement of judgments. Section 6998-23⁴ entitles a compensation claimant to a lien against the assets of the carrier as well as those of an employer for compensation benefits. Aetna contends that the merging of identities of employer and carrier by the imposition of such duties likewise creates the right of the compensation carrier to be afforded similar rights to that of the employer and to be immune from suits such as the one now before the court.

In interpreting the Mississippi Workmen's Compensation Law the court must consider the well recognized principle of law that such statutes are enacted in derogation of the common law and are to be strictly construed. They are not to be understood as effecting any change in the common law beyond that which is clearly indicated and cannot be extended by implication.⁵

Further the Mississippi Supreme Court has held that the Workmen's Compensation Law must be liberally construed.⁶

Therefore it appears to the court that plaintiff is entitled to any common-law right which the Mississippi Compensation Law does not expressly take away. If the plaintiff's common-law remedy against Aetna has been legislated away, it is because the term "employer" as used in Section 6998-05 includes "insurer".

Aetna cites Index Drilling Co. v. Williams, 242 Miss. 775, 137 So.2d 525 (1962), as supporting its contention that the identities of employer and insurer are merged. The Mississippi Supreme Court, while finding a corporation related to the employer liable as a third-party tort-feasor, discussed the limitation of liability under Sections 6998-36 and 6998-05.

"In short, under Sec. 30 Code Sec. 6998-36 acceptance of compensation benefits from an employer does not affect the employee's right `to sue any other party at law for such injury or death'. The immunity from all liability except compensation benefits applies only to the employer and insurer. Tort liability remains as to `any other party'. Section 5 of the Act (Code Sec. 6998-05) states that the liability `of an employer to pay compensation shall be exclusive'. The limitation of liability and immunity from tort liability applies only to an employer."⁷ (Emphasis supplied).

"Section 30 of the Workmen's Compensation Act preserves a Compensation claimant's right of action against `any other party at law' except the employer or insurer. Immunity from tort liability is confined by Sec. 5 to the employer. . . . The Mississippi Workmen's Compensation Act limits the immunity from tort liability to the employer and carrier. . . . The present statutes confine immunity from tort liability to the claimant's employer."⁸ (Emphasis supplied).

The Mississippi Supreme Court merely restated the wording of the Mississippi Workmen's Compensation Law which in some instances mentions "employer or insurer" and in other instances only "employer". The court did not have before it for consideration the question presented in the action sub judice, and used the term "employer or insurer" almost interchangeably with the term "employer". The question of whether an insurer is insulated under the provisions of the Act from the claim of an employee of its insured for damages resulting from the insurer's own negligence, was not at issue in Index, and the court gave no consideration to what effect its decision might have on such an issue. It is evident that Index is not controlling on the issue here.

In order for Aetna to sustain its claim of immunity under the Act, it appears that the conclusion must be reached that the term "employer" includes the insurer.

In Robertson v. Stroup, 254 Miss. 118, 180 So.2d 617 (1965) the Mississippi Supreme Court after citing Sections 6998-05 and 6998-36 stated:

"The words `employer' and `employee' as used in the Mississippi Workmen's Compensation Act are synonymous with the words `master' and `servant', and the rules for the determination of the existence of the relation of employer and employee are the same rules as at common law for determination of the relationship of master and servant."⁹

This interpretation leads the court to the conclusion that for Aetna to be immune from tort liability under the Act, it must be shown that Aetna is to be considered as the employer of plaintiff.

As stated previously, there are cases from other jurisdictions which have decided the issue involved here. However, in many of these cases the statutory backgrounds vary so widely that no meaningful comparison can be made. The following cases did involve compensation acts which are similar to the Mississippi Act.

In one of the first of these cases, Smith v. American Employers Insurance Company, 102 N.H. 530, 163 A.2d 564 (1960), plaintiff sued defendant insurer, who had conducted monthly inspection of the employer's plant including the...