Wagner v. Continental Cas. Co., a Div. of CNA Ins. Companies

• Decision Date: 14 April 1988
• Docket Number: No. 86-0791,86-0791
• Citation: 143 Wis.2d 379,421 N.W.2d 835
• Parties: Robert J. WAGNER, Plaintiff-Respondent, v. CONTINENTAL CASUALTY COMPANY, A DIVISION OF CNA INSURANCE COMPANIES, Klein Land Company, Harold H. Klein and Randy Klein, Defendants-Appellants, United States Fidelity and Guaranty Company, Ben'O Salvage & Supply Company, Incorporated and Klein Industrial Company, Incorporated, Defendants.
• Court: Wisconsin Supreme Court

Page 835

421 N.W.2d 835

143 Wis.2d 379

Robert J. WAGNER, Plaintiff-Respondent, v.CONTINENTAL CASUALTY COMPANY, A DIVISION OF CNA INSURANCE COMPANIES, Klein Land Company, Harold H. Klein and Randy Klein, Defendants-AppellantsUnited States Fidelity and Guaranty Company, Ben'O Salvage &amp Supply Company, Incorporated and Klein Industrial Company, Incorporated, Defendants.

No. 86-0791.

Supreme Court of Wisconsin.

Argued Sept. 8, 1987.

Decided April 14, 1988.

William W. Ehrke, argued, Dorothy H. Dey and Prosser, Wiedabach & Quale, S.C. on brief, Milwaukee, for defendants-appellants.

Charles W. Oppitz, argued, and Charles W. Oppitz, S.C., on brief, Milwaukee, for plaintiff-respondent.

STEINMETZ, Justice.

The circuit court awarded Robert J. Wagner, the plaintiff, damages for injuries sustained when he fell through the roof of a building owned by Harold H. Klein and Randy Klein, the defendants.We reverse the judgment.

This case comes to us on certification by the court of appeals pursuant to sec. 808.05(2), Stats.We granted certification to determine under what circumstances an employee who has received worker's compensation benefits from his employer, an independent contractor, may maintain a tort action against the independent contractor's employer.

We conclude that an employee of an independent contractor is precluded from receiving worker's compensation benefits from the independent contractor and also maintaining a tort action against the person who employs the independent contractor, the principal employer or general contractor, unless the principal employer is affirmatively negligent with respect to the employee.

The material facts in this case are undisputed.The defendants, Harold H. and Randy Klein, hired Vince Kobida(Kobida), an independent contractor, to demolish a dilapidated factory on their land.Defendants are partners in the Klein Land Company, which is a holding company involved in real estate development.The defendants also are shareholders in Klein Industrial Company, Incorporated, a salvage company specializing in scrap iron.

Once the defendants decided to demolish the building, Randy Klein searched the yellow pages for a contractor to perform the work.Kobida heard the defendants were taking bids and so he submitted one.Randy Klein received three oral bids and awarded the contract to Kobida, the lowest bidder.The defendants did not supervise the demolition nor exercise any control over the activities.

The one-page contract stated simply that Kobida would abide by all government regulations, would hold the defendants harmless for injuries and damages arising from the project, and would provide the necessary insurance, including worker's compensation.

Kobida started in the wrecking business in 1936 but had not demolished a building in more than 25 years.For the past 20 years, he acted as an unpaid consultant to various wrecking firms.When Kobida was hired, he had no equipment or employees with which to perform the demolition.He did, however, acquire equipment and hire personnel after the job was undertaken.

Randy Klein did not investigate Kobida's qualifications.He did not inquire whether Kobida was a member of the National Association of Demolition Contractors, an organization of persons involved in demolition which compiles a safety manual for demolition and provides safety information to those in the field.He did not inquire whether Kobida had the proper equipment, nor did he call any references.

Among the several workers hired by Kobida to undertake the demolition project was the plaintiff, Robert J. Wagner, a 20-year old with no experience in demolition.At the time of the injury, Wagner and a co-worker were working on the roof of the factory at least 40 feet above the ground.The roof was riddled with holes.As the plaintiff and his co-worker rolled a heavy steel tripod off the roof, the plaintiff caught his glove on the tripod.Wagner was thrown into the air and fell through the roof to the ground sustaining permanent injury to his left foot.

The plaintiff received worker's compensation benefits from Kobida, his employer.Wagner then filed this tort action, seeking additional recovery from the defendants who employed Kobida under the theories that the demolition work was nondelegable because it was inherently dangerous and that defendants negligently hired the independent contractor.

At trial, the plaintiff's expert witness testified that without safety precautions the conditions on the roof were inherently dangerous.The expert stated that a competent contractor would have used a crane to remove the roof.He testified that a person who hires an independent contractor to perform demolition work should check the contractor's background and make sure the contractor has the proper equipment.

The trial judge, Honorable John F. Foley, denied defendants' motions to dismiss.The court concluded that the determination of whether an activity is "inherently dangerous" is a question of fact.Over defendants' objections, the court submitted the questions of inherent danger and negligent hiring to the jury for resolution.

The jury, by special verdict, concluded that the demolition work constituted an inherently dangerous activity and that the Kleins had negligently hired the independent contractor, Kobida.Additionally, the jury attributed 24 percent negligence to the Kleins, 71 percent to Kobida and 5 percent to Wagner and awarded Wagner $481,750.58 in damages.The Kleins were held liable for 95 percent of the damages.

On appeal, the plaintiff asserts that the judgment should be affirmed under either of two theories: (1)the defendants were negligent in hiring the independent contractor and should be liable for damages caused by their negligence; or (2)the defendants employed the independent contractor to perform work that was inherently dangerous and are therefore liable for injuries caused by negligent performance of such work.

The defendants contend that their liability to an employee of an independent contractor injured during employment on their property must be predicated on their affirmative act of negligence toward the employee.The defendants argue that because no such affirmative negligent act on their part has been alleged or proved, they are not liable to the plaintiff.

The issues in this case, i.e., the scope of duty owed by an owner or general contractor to a subcontractor's employees, present questions of law.SeeJohnson v. Misericordia Community Hosp., 99 Wis.2d 708, 723, 301 N.W.2d 156(1981).Accordingly, this court undertakes an independent review of the issues, without giving deference to the trial court.Lambert v. Wrensch, 135 Wis.2d 105, 115, 399 N.W.2d 369(1987).

Section 102.03(2), Stats., ¹ provides that the employee's right to recover worker's compensation benefits shall be the employee's exclusive remedy against the employer.This section does not, however, preclude an employee from suing a person who is not his or her employer.Section 102.29(1)² provides that an employee's claim for worker's compensation against the employer shall not affect the employee's right to bring an action in tort against "any other party."The defendants in this case are not the plaintiff's employer.

We recognize that sec. 102.06, Stats., ³ provides that where there is a failure of the direct employer to carry worker's compensation, the owner/general contractor may be liable for paying worker's compensation to the employee.While sec. 102.06 raises the question of whether a principal employer who is secondarily liable for payment of worker's compensation benefits to an injured employee of the independent contractor acquires the employer's statutory immunity from tort liability, it should be noted that the parties in this case have not briefed this issue.Apparently they assume that an independent contractor's employee is not precluded from bringing an action in tort against a general contractor who has not provided worker's compensation benefits.SeeCermak v. Milwaukee Air Power Pump Co., 192 Wis. 44, 211 N.W. 354(1927);Culbertson v. Kieckhefer Container Co., 197 Wis. 349, 222 N.W. 249(1928).

In Cermak, this court declared that an injured employee retains the right to maintain a tort action seeking damages from the principal employer for affirmative acts of negligence, even if the principal employer is the insurer of worker's compensation benefits under sec. 102.06, Stats.A year after Cermak was decided this court held in Culbertson that an injured employee could bring a common law tort action against a principal employer subject to sec. 102.06, irrespective of whether the principal employer actually paid worker's compensation benefits.Under Culbertson, any benefits paid under sec. 102.06 were merely offset against the amount awarded in the tort action.Under Cermak and Culbertson, the principal employer was considered an "insurer" of compensation benefits and not an "employer" under the act who would enjoy the statutory immunity from tort liability, even when worker's compensation benefits were paid.

While we do not necessarily continue to embrace all of the principles espoused in Cermak and Culbertson, we do not need to decide the issues surrounding the existence and scope of statutory immunity from tort liability of a general contractor who has provided worker's compensation pursuant to sec. 102.06, Stats.In the present case, Kobida, the independent contractor, in fact provided worker's compensation benefits to the plaintiff; Klein, the general contractor, was not required to provide, and did not provide, any worker's compensation benefits to Robert Wagner.Accordingly, sec. 102.06, and any statutory immunity arguably inuring to the general contractor under sec. 102.03(2), are not implicated in this case.

Having determined that the defendants do not enjoy statutory immunity from tort liability under the worker's compensation laws, ...