Thomas by City Nat. Bank of Fort Smith v. Valmac Industries, Inc.

• Decision Date: 01 July 1991
• Docket Number: No. 91-30,91-30
• Citation: 306 Ark. 228,812 S.W.2d 673
• Parties: Guy THOMAS, by His Guardian, the CITY NATIONAL BANK OF FORT SMITH, et al., Appellants, v. VALMAC INDUSTRIES, INC. and Tyson Foods, Inc., Appellees.
• Court: Arkansas Supreme Court

Page 673

812 S.W.2d 673

306 Ark. 228

Guy THOMAS, by His Guardian, the CITY NATIONAL BANK OF FORT SMITH, et al., Appellants, v. VALMAC INDUSTRIES, INC. and Tyson Foods, Inc., Appellees.

No. 91-30.

Supreme Court of Arkansas.

July 1, 1991.

Nicholas H. Patton, Gregory A. Hoover, Texarkana, for appellants.

Douglas M. Carson, Fort Smith, Woody Bassett, Gary V. Weeks, Fayetteville, James M. Dunn, Fort Smith, for appellees.

CONSTANCE G. CLARK, Special Justice.

Guy Thomas, a truck driver for Tyson Foods, Inc., was injured on May 13, 1987, while working on a trailer in the course and scope of his employment with Tyson. On March 23, 1990, Mr. Thomas's guardian, the City National Bank of Fort Smith, and his wife, Mary Thomas, filed suit in Johnson County Circuit Court to recover damages for personal injuries sustained as a result of the accident. The plaintiffs named as defendants in the action Valmac Industries, Inc., Tyson Foods, Inc. and four other persons not parties to this appeal. Mr. Thomas claimed that his injuries were the proximate result of the defendants' negligence and the unreasonably dangerous condition of the trailer, which he alleged was owned by and had been defectively modified pursuant to instructions from Valmac. The complaint also alleged that on May 25, 1988, Valmac merged with Tyson and that Tyson thereby succeeded to the liabilities of the predecessor corporation.

Valmac and Tyson filed a motion to dismiss the complaint pursuant to Rule 12(b)(1) and (b)(6) of the Arkansas Rules of Civil Procedure. They contended that the plaintiffs' exclusive rights and remedies were those provided under the Arkansas Workers' Compensation Act and, therefore, the circuit court lacked jurisdiction over the subject matter of the action and the complaint failed to state facts upon which relief could be granted. The trial court granted the motion and dismissed the complaint as against Valmac and Tyson. Pursuant to the joint motion of the parties, the court then entered a final judgment under Ark.R.Civ.P. 54(b), paving the way for this appeal by the Thomases. We conclude that the trial court did have jurisdiction of the subject matter of the action and that the complaint stated facts upon which relief could be granted and, therefore, reverse.

The issue presented by this appeal is one of first impression in this state--does the exclusivity provision of our Workers' Compensation Act bar an injured worker from pursuing a tort claim against his employer as the successor to the liabilities of the alleged tortfeasor? We find that an injured employee who would otherwise have a valid third-party claim against the alleged tortfeasor should not be barred from pursuing his action simply because the tortfeasor merged with the injured worker's employer.

It has long been settled that, as a general rule, an employer who carries workers' compensation insurance is immune from liability for damages in a tort action brought by an injured employee. Fore v. Circuit Court of Izard County, 292 Ark. 13, 727 S.W.2d 840 (1987); Brown v. Patterson Constr. Co., 235 Ark. 433, 361 S.W.2d 14 (1962). This so-called exclusivity doctrine arises out of Ark.Code Ann. § 11-9-105 (1987), which 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...." Certain narrow exceptions to the general rule have been carved out by the courts. For instance, an employer who wilfully and intentionally injures his employee is not immune from a common law tort action. Heskett v. Fisher Laundry & Cleaners Co., 217 Ark. 350, 230 S.W.2d 28 (1950).

Litigants in some states attempted to circumvent the exclusive remedy principle by professing to bring suit against their employers in some capacity other than as employers--for example, as owners of property upon which a job-related injury occurred or as manufacturers or vendors of hazardous equipment causing injury on the job. Under this dual capacity doctrine, an employer who would ordinarily be protected from tort liability by the exclusivity rule could become liable in tort if, in addition to his relationship as employer, he occupied some other capacity that could be said to confer upon him obligations independent of those imposed upon him as an employer. Professor Larson explains in his treatise why the dual capacity doctrine formerly embraced by some courts has now fallen into disfavor:

When one considers how many such added relations an employer might have in the course of a day's work--as landowner, land occupier, products manufacturer, installer, modifier, vendor, bailor, repairman, vehicle owner, shipowner, doctor, hospital, health services provider, self-insurer, safety inspector--it is plain enough that this trend could go a long way toward demolishing the exclusive remedy principle. 2A A. Larson, The Law of Workmen's Compensation, § 72.81(a) (1990).

Professor Larson goes on to state that while the dual capacity doctrine is unsound, the dual persona doctrine, which recognizes the duality of legal persons, is a legitimate concept. Thus, says Larson,

An employer may become a third person, vulnerable to tort suit by an employee, if--and only if--he possesses a second persona so completely independent from and unrelated to his status as employer that by established standards the law recognizes it as a separate legal person. 2A A. Larson, The Law of Workmen's Compensation, § 72.81 (1990).

It is the dual persona doctrine which the appellants urge us now to adopt.

We recently discussed the dual capacity and dual persona doctrines in Landers v. Energy Systems Management Co., 305 Ark. 267, 807 S.W.2d 33 (1991). The plaintiff in that case, Kenneth Landers, was employed by PSC Laboratory Management Services, which was participating in a joint venture with Energy Systems Management Co. (Ensco). Landers' suit against Ensco for negligence was barred by the trial court on the ground that the plaintiff's remedy was limited to workers' compensation benefits. The plaintiff argued that Ensco should not be immune from tort liability because, in addition to its role as a joint venturer and employer, it occupied a second, or dual, capacity that conferred upon it obligations independent of those imposed upon it as an employer. Specifically, Landers argued that Ensco owned the property on which the joint venture did business, it was required to but failed to provide a barrel tilter (an implement required by federal safety regulations), and its employee was responsible for safety within the entire Ensco premises.

While not rejecting the dual persona concept, we concluded in Landers that the doctrine did not apply to the facts of that case. In fact, it is apparent that in the Landers case, we were really dealing with a dual capacity argument and not one founded on the dual persona theory. The plaintiff merely alleged that Ensco occupied a capacity or relationship in addition to that of joint venturer and employer. He could not establish that Ensco possessed a second persona completely independent from and unrelated to its status as an employer.

In contrast to Landers, the appellants in this case bring their action against Tyson not as Guy Thomas's employer, but as the successor corporation to Valmac. The appellants look to the Arkansas Business Corporation Act to establish liability on the part of Tyson. Ark.Code Ann. § 4-26-1005(b) (1987) provides that when a merger has been effected:

(1) The several corporations parties to the plan of merger or consolidation shall be a single corporation which, in the case of a merger, shall be that corporation designated in the plan of merger as the surviving corporation....

(2) Subject to § 4-26-1008, the separate existence of all corporations parties to the plan of merger or consolidation, except the surviving or new corporation, shall cease.

* * * * * *

(6) Such surviving or new corporation shall henceforth be responsible and liable for all the liabilities and obligations of each of the corporations so merged or consolidated. Any claim existing or action or proceeding pending by or against any of such corporations may be prosecuted as if the merger or consolidation had not taken place, or such surviving or new corporation may be substituted in its place....

The appellants contend that under the language of this statute, Tyson, as the surviving corporation, is responsible for any liabilities of Valmac, the merged corporation. We find that this is precisely the type of situation which calls for the application of the dual persona doctrine.

One of the first cases to embrace the dual persona theory was the decision of the Court of Appeals of New York in Billy v. Consolidated Machine Tool Corp., 51 N.Y.2d 152, 412 N.E.2d 934, 432 N.Y.S.2d 879 (1980). In Billy, the plaintiff's decedent, an employee of USM Corporation, was killed when a 4,600 pound "ram" from a vertical boring mill broke loose and struck him. Although the decedent's widow applied for and received workers' compensation benefits, she also brought a tort action against USM Corporation, the parent corporation of USM and three other corporations which had been absorbed by USM through corporate mergers prior to the accident. USM moved for summary judgment on the basis of the exclusive remedy provision of New York's workers' compensation law. The lower courts agreed with USM that the exclusivity provision of the workers' compensation act barred the common law tort claim, but the Court of Appeals reversed.

After first rejecting the dual capacity doctrine, the Billy court adopted what is now known as the dual persona doctrine, reasoning that USM should not be permitted to avoid the obligations it inherited through corporate merger simply because of the "fortuity" that the injured party was its employee. The court went on to explain:

Conceptually, the deceased employee's...