Stan v. Vences, CV-17-984
| Decision Date | 30 January 2019 |
| Docket Number | No. CV-17-984,CV-17-984 |
| Parties | Vasile STAN d/b/a Renaissance Plaster & Design, Appellant v. Jose Juan VENCES, Appellee |
| Court | Arkansas Court of Appeals |
Frye Law Firm, P.A., Little Rock, by: William C. Frye, for appellant.
Trammell Law Firm, by: William D. Shelton, Jr., and Robert D. Trammell, Little Rock, for appellee.
Vasile Stan d/b/a Renaissance Plaster & Design (Stan) appeals the order entered by the Pulaski County Circuit Court (1) finding that it had subject-matter jurisdiction over a complaint filed by Jose Juan Vences and (2) denying Stan's motion to set aside the default judgment that the court had entered against him in favor of Vences. We reverse and dismiss for lack of subject-matter jurisdiction.
On December 12, 2013, Vences filed a complaint for damages in the circuit court alleging that on November 21, 2013, he was Stan's employee and was working in the course and scope of his employment when he sustained a significant injury to his finger. Vences further alleged that his injury was proximately caused by Stan's negligence. Vences also alleged that Stan violated Arkansas law "in failing to provide workers' compensation benefits for his employees ... therefore, [he lost] his immunity from suit." Vences requested damages for past and future medical expenses, past and future lost wages, conscious pain and suffering, and for the permanency of his injury. Stan was served with the complaint on January 23, 2013. No answer was filed.1
On May 15, 2014, Vences moved for default judgment, and an order of default was entered on June 19, 2014. A hearing on damages was held on December 10, 2014. Stan did not attend the hearing. Vences, who was a construction worker, testified about his injury, the medical treatment he received, the medical treatment he needed, his pain and suffering, his inability to work in heavy construction, and the effect the injury has had on his work and marriage.
At the conclusion of the hearing, the circuit court orally found that an employment relationship existed between Vences and Stan, that Vences was working within the course and scope of his employment at the time of his injury, and that the injury was proximately caused by Stan's negligence. The circuit court also found that Stan failed to provide workers'-compensation benefits for his employees and therefore lost his exclusive-remedy immunity from suit in tort. The court awarded Vences $ 252,209 plus a "penalty" of $ 25,221 for a total award of $ 277,430. On January 20, 2014, the circuit court entered a judgment finding that Stan was "ineligible for and has waived immunity provided under the [Workers' Compensation] Act" and awarding damages in the amount of $ 252,209.2
On August 27, 2015, Stan moved to set aside the default judgment for lack of subject-matter jurisdiction. He argued that he was covered under a policy of workers'-compensation insurance on November 21, 2013,3 the date of Vences's accident, and that the Arkansas Workers' Compensation Commission ("Commission") website also verified that he had workers'-compensation coverage on November 21, 2013.4 Accordingly, Stan argued that pursuant to Arkansas Code Annotated section 11-9-105(a) (Repl. 2012), the Commission had exclusive, original jurisdiction of the case and that the exception to the exclusive-remedy rule found in section 11-9-105(b) was not triggered.
After a hearing on Stan's motion to set aside the default judgment, the circuit court took the matter under advisement. On August 2, 2017, the circuit court entered an order concluding that it had subject-matter jurisdiction over the case and denying Stan's motion to set aside the default judgment. In reaching these conclusions, the court found that subject-matter jurisdiction is determined on the pleadings, and Vences's complaint "stated that [Stan] affirmatively denied having workers' compensation coverage." The court therefore found that the section 11-9-105(b)(1) exception to the exclusive-remedy provision was triggered and gave the circuit court jurisdiction to hear the case. The court also found that Stan failed to present the mandatory affirmative defense of exclusive remedy; therefore, he waived the defense. Stan appeals this order, raising three points: (1) the circuit court lacked subject-matter jurisdiction; (2) the default judgment is void for lack of subject-matter jurisdiction; and (3) Stan did not and could not waive his challenge to the lack of subject-matter jurisdiction by failing to answer the complaint.
Default judgments are governed by Rule 55 of the Arkansas Rules of Civil Procedure. Rule 55(c) provides that a court may set aside a default judgment if the judgment is void. Ark. R. Civ. P. 55(c) (2018). Taken together, Stan's first two arguments on appeal are that the default judgment was void for lack of subject-matter jurisdiction. In cases where the appellant claims that the judgment is void under Rule 55(c)(2), the appellate courts will review a circuit court's denial of a motion to set aside default judgment using a de novo standard. Morgan v. Big Creek Farms of Hickory Flat, Inc. , 2016 Ark. App. 121, at 3, 488 S.W.3d 535, 538 (citing Nucor Corp. v. Kilman , 358 Ark. 107, 118, 186 S.W.3d 720, 727 (2004) ).
Stan's first argument is that the circuit court lacks subject-matter jurisdiction of Vences's action because he is immune from suit in tort under the exclusive-remedy provision of the Workers' Compensation Act ("Act"), which he claims gives the Commission exclusive jurisdiction. He argues that when the Act applies, the circuit court is wholly without jurisdiction. He further argues that the Commission has exclusive, original jurisdiction to determine the facts that establish subject-matter jurisdiction.
Generally, an employer who carries workers'-compensation insurance is immune from liability for damages in a tort action brought by an injured employee. Entergy Ark., Inc. v. Pope Cty. Circuit Court , 2014 Ark. 506, at 6, 452 S.W.3d 81, 84. This rule, known as the exclusivity doctrine, provides that "[t]he rights and remedies granted to an employee subject to the provisions of this chapter, on account of injury or death, shall be exclusive of all other rights and remedies of the employee ... from the employer ... on account of the injury or death...." Entergy Ark. , 2014 Ark. 506, at 6, 452 S.W.3d at 84 (citing Ark. Code Ann. § 11-9-105(a) ).
In Reynolds Metal Company v. Circuit Court of Clark County , our supreme court explained the exclusivity doctrine as follows:
Beginning with the decision in VanWagoner v. Beverly Enterprises , 334 Ark. 12, 16, 970 S.W.2d 810, 812 (1998), this court has consistently followed the rule that the Arkansas Workers' Compensation Commission "has exclusive, original jurisdiction to determine the facts that establish jurisdiction, unless the facts are so one-sided that the issue is no longer one of fact but one of law, such as an intentional tort." Thus, when a party to a lawsuit raises a question of whether a person enjoys immunity as an employer under the Arkansas Workers' Compensation Act, the Commission must first decide the issue. In adopting this rule, we have explained that the Commission has vast expertise in this area and that the goals of uniformity, speed, and simplicity would best be achieved by granting the Commission the exclusive, original jurisdiction to determine the applicability of the Workers' Compensation Act.
2013 Ark. 287, at 4, 428 S.W.3d 506, 508–09 (internal citations omitted). There is an exception within the exclusive-remedy provision:
[I]f an employer fails to secure the payment of compensation as required by this chapter, an injured employee, or his or her legal representative in case death results from the injury, may, at his option, elect to claim compensation under this chapter or to maintain a legal action in court for damages on account of the injury or death.
Ark. Code Ann. § 11-9-105(b)(1). Arkansas Code Annotated section 11-9-404(a)(1) defines how an employer meets its obligation to "secure the payment of compensation under this chapter"; one such means is "[b]y insuring and keeping insured the payment of the compensation with any carrier authorized to write workers' compensation insurance[.]" Wilhelm v. Parsons , 2016 Ark. App. 56, at 11, 481 S.W.3d 767, 774. In Rankin v. Farmers Tractor& Equipment Co. , our supreme court interpreted that statute to mean that if there was an employer/employee relationship and the employer provided workers'-compensation coverage for its employees, then this satisfied the "secure the payment of compensation" wording in the statute. 319 Ark. 26, 32, 888 S.W.2d 657, 660 (1994). In order to prove the payment of compensation to effect the exclusive remedy, an employer is required to prove insurance coverage—not that an employee is in fact covered or in fact paid. Wilhelm , 2016 Ark. App. 56, at 11–12, 481 S.W.3d at 774.
With these principles in mind, we hold that the circuit court erred in concluding that it had subject-matter jurisdiction over Vences's complaint. Our supreme court made it clear in VanWagoner that the Commission has exclusive, original jurisdiction to determine the facts that establish subject-matter jurisdiction. VanWagoner , 334 Ark. at 16, 970 S.W.2d at 811. "We believe that the better rule is to recognize the administrative law rule of primary jurisdiction and to allow the Workers' Compensation Commission to decide whether an employee's injuries are covered by the Workers' Compensation Act." Id. at 15, 970 S.W.2d at 812. When a party to a lawsuit raises a question of whether a person enjoys immunity as an employer under the Act, the Commission must first decide the issue. Reynolds , 2013 Ark. 287, at 4, 428 S.W.3d at 509 ; Pineda v. Manpower Int'l, Inc. , 2017 Ark. App. 350, at 6, 523 S.W.3d 384, 389. Vences raised the issue of immunity in his complaint, alleging that...
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