Williams v. State Compensation Ins. Fund

• Decision Date: 23 July 1975
• Citation: 50 Cal.App.3d 116,123 Cal.Rptr. 812
• Court: California Court of Appeals Court of Appeals
• Parties: Thurman S. WILLIAMS and Natividad C. Williams, Plaintiffs and Appellants, v. STATE COMPENSATION INSURANCE FUND, and Wallace Brothers, et al., Defendants and Respondents. Civ. 14446.

Page 812

123 Cal.Rptr. 812

50 Cal.App.3d 116

Thurman S. WILLIAMS and Natividad C. Williams, Plaintiffs and Appellants, v. STATE COMPENSATION INSURANCE FUND, and Wallace Brothers, et al., Defendants and Respondents.

Civ. 14446.

Court of Appeal, Third District, California.

July 23, 1975.

Hearing Denied Sept. 17, 1975.

Joseph S. Samuel and Jerry M. Duncan by Joseph S. Samuel, Sacramento, for plaintiffs and appellants.

George S. Bjornsen, State Compensation Ins. Fund, San Francisco, for State Compensation Ins.

McDonald & Donahue by Richard H. Caulfield, Sacramento, for defendant and respondent Wallace Bros FRIEDMAN, Acting Presiding Justice.

Plaintiffs Thurman Williams and Natividad Williams are husband and wife. They appeal from a judgment after the trial court sustained general and special demurrers to their damage complaint without leave to amend. In the complaint's first seven counts, Thurman Williams seeks damages on various theories from Wallace Brothers, his employer, and State Compensation Insurance Fund, the employer's compensation carrier, alleging that he suffered injury to his genital organs, groin and thighs while operating a spraying machine in the course of his employment. In seven additional counts, Natividad Williams seeks damages on the same theories for loss of her husband's services and loss of consortium.

The order sustaining the demurrer was premised on the provisions of the Labor Code making workers' compensation proceedings the exclusive remedy for work-connected injuries. ¹

I.

Count 1 of the complaint alleges that State Compensation Insurance Fund, as compensation carrier for Wallace Brothers, negligently inspected the premises and failed to inform the employer of the dangerous and defective condition of the spraying machine; that Thurman Williams was injured as a proximate result of this negligent inspection. Count 2 alleges the carrier's negligent failure to inspect. Count 3 charges the carrier with breach of its contract to inspect, a contract of which the employee was beneficiary. In Counts 8, 9, and 10 Mrs. Williams seeks recovery from State Compensation Insurance Fund on the same theory.

Where recovery for injury of an employee comes within the Workers' Compensation Act, the compensation agency has exclusive jurisdiction, and the superior court may not entertain an action for damages against the employer or his insurance carrier. (Fitzpatrick v. Fidelity & Casualty Co., 7 Cal.2d 230, 233, 60 P.2d 276.) In State Comp. Ins. Fund v. Superior Court (Breceda), 237 Cal.App.2d 416, 46 Cal.Rptr. 891, this court held that a compensation carrier was not subject to a common law damage suit for its negligence in making safety inspections of the insured employer's plant since its inspection activity was part of its normal role as insurer; while acting within that role, the carrier did not become 'any person other than the employer' within the compass of section 3852. (See fn. 1, supra.) The Breceda decision was followed in Burns v. State Compensation Ins. Fund, 265 Cal.App.2d 98, 71 Cal.Rptr. 326. In Unruh v. Truck Insurance Exchange, 7 Cal.3d 616, 626--627, 102 Cal.Rptr. 815, 823, 498 P.2d 1063, 1071, the court cited these decisions as the basis for the following declaration: '. . . it is settled in California that an insurer is still acting within its proper role in the compensation scheme, and thus may not be sued at law as a 'person other than the employer' under section 3852, when it provides negligent medical treatment for a compensable injury or when it negligently inspects the employer's premises.'

Plaintiffs urge this court to examine its holding in Breceda, supra. At this point plaintiffs do not come to grips with the Supreme Court's adoption of the Breceda holding. The settled law described in Unruh bars plaintiffs from pursuing the six counts in question.

Plaintiff relies upon Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133. There a shipowner, held liable for tort damages to an injured longshoreman, was permitted to maintain a cross-action versus the stevedoring company which employed the long-shoreman, on the theory that the latter had breached its contract to load cargo in a safe manner. By analogy to Ryan, plaintiffs urge that the 'conditions of compensation' described in Labor Code sections 3600 and 3601 do not exist here, for their claim is premised upon breach of an independent contract. The analogy fails. Here the damage suit is maintained by the injured worker, not a third party tort-feasor. Here the 'conditions of compensation' exist in terms of (a) the status of the claimant, (b) the status of the defendant and (c) the industrial character of the injury. (Lab.Code, § 3600, fn. 1, ante.)

II.

In Counts 4, 5, and 7, Thurman Williams seeks to impose products liability on Wallace Brothers, alleging that it designed, manufactured and supplied a spraying machine for use by its employees; that the machine was defective and dangerous. In Counts 11, 12 and 14, Mrs. Williams seeks recovery on the same theories. Plaintiffs argue that in designing and manufacturing the spraying machine, Wallace Brothers assumed a dual role as employer and manufacturer, incurring common law liability in the latter capacity. At this point plaintiffs rely on Duprey v. Shane, 39 Cal.2d 781, 249 P.2d 8.

The analogy to Duprey is faint and unpersuasive. There the doctor-employer stepped outside his role as employer, elected to treat the injured employee as a doctor and subjected himself to malpractice liability. The court, nevertheless, recognized the case as an unusual one, saying: 'It is true that the law is opposed to the creation of a dual personality, where to do so is unrealistic and purely legalistic.' (39 Cal.2d at p. 793, 249 P.2d at p. 15.)

Here there is no allegation that Wallace Brothers manufactured spraying machines as a business enterprise separate from that employing plaintiff Williams. Rather, the complaint shows that the firm created the machine for use by its own employees in its own production or service operations. Many entrepreneurs build and supply appliances and equipment exclusively for use in their own plants or premises. That sort of activity is integral and auxiliary to the firm's principal manufacturing or production operation. To conjure a nonemployer doppleganger out of such auxiliary activity represents an Ad hoc theory devised to avoid the statute. (Azevedo v. Abel, 264 Cal.App.2d 451, 459, 70 Cal.Rptr. 710.) Unlike the malpractice injury inflicted in Duprey v. Shane, Mr. Williams' injury arose out of and in the course of his employment. The trial court did not err in sustaining demurrers to Counts 4, 5, and 7 and Counts 11, 12, and 14 of the complaint.

III.

In Counts 5 and 6 and in Counts 12 and 13 plaintiffs seek recovery of damages for the negligence of Wallace Brothers, on the theory that all or a substantial portion of Williams' physical disability is not compensable under the Workers' Compensation Act. Plaintiffs point out that the permanent disability rating schedules promulgated under Labor Code section 4660 supply inadequate compensation for the handicaps resulting from the injury to Mr. Williams' genital organs. ² To this extent, plaintiffs argue, the 'conditions of compensation' postulated by sections 3600 and 3601 do not exist. Labor Code section 3600, subdivision (a), establishes as a condition of compensation that 'both the employer and the employee are subject to the compensation provisions of this division.' (See fn. 1, supra.) One of the compensation conditions of Davision 4 of the Labor Code is subdivision (a) of section 4660, which fixes loss of earning capacity as the major factor in permanent disability rating. In effect, plaintiffs argue that the rating schedule promulgated by the Division of Industrial Accidents supplies no scheduled rating for functional impairment of the genitalia; rather, that it relegates the impairment to a 'judgment rating;' this rating is and must be influenced by the mandate of section 4660(a), which views occupational handicap as the prime rating factor; thus, to the extent that recognition is withheld from Williams' handicap, he is outside the 'compensation provisions of this division.' (Lab.Code, § 3600(a).)

Plaintiff is correct in arguing that the statutory emphasis on occupational disability as a rating factor denigrates the compensability of nonoccupational handicaps. Decisions in other states hold that the workers' compensation law provides the exclusive remedy for industrial injury even though the resulting disability--for example, sexual impotence--is noncompensable. (See cases cited, 2 Larson, Workmen's Compensation Law, § 65.20.) No California decision in point has been cited. The theory underlying the out-of-state decisions is that the workers' compensation plan imposes reciprocal concessions upon employer and employee alike, withdrawing from each certain rights and defenses available at common law; the employer assumes liability without...