Wright Associates, Inc. v. Rieder

• Decision Date: 21 April 1981
• Docket Number: No. 36948,36948
• Citation: 277 S.E.2d 41,247 Ga. 496
• Parties: WRIGHT ASSOCIATES, INC. v. Thomas RIEDER et al.
• Court: Georgia Supreme Court

Page 41

277 S.E.2d 41

247 Ga. 496

WRIGHT ASSOCIATES, INC. v. Thomas RIEDER et al.

No. 36948.

Supreme Court of Georgia.

April 21, 1981.

W. G. Scrantom, Jr., and Max R. McGlamry, Page, Scrantom, Harris, McGlamry & Chapman, P.C., Columbus, for Wright Associates, Inc.

Grogan, Jones, Layfield & Agnew, and Kelly, Denney, Pease & Assison, Columbus, for Thomas Rieder et al.

HILL, Presiding Justice.

The Georgia Education Authority contracted with Wright Associates, Inc., for the construction of an academic building at Macon Junior College. Wright Associates, as the general or prime contractor, then contracted with Eastern Steel Erectors, Inc. an independent subcontractor, for certain on-site work. Thomas Rieder, an Eastern employee, was injured in an on-site accident and recovered worker's compensation benefits from Eastern. He then sued Wright Associates in April, 1978, alleging that his injury was caused by the negligence of a Wright employee. Nearly two years after answering, Wright moved for summary judgment on the ground, raised for the first time in its motion, that Rieder's tort action was barred by Code Ann. §§ 114-103, 114-112. The trial court denied the motion for summary judgment but certified the question for immediate review. After the Court of Appeals denied the application for interlocutory review, Wright Associates petitioned for writ of certiorari, which was granted.

1. The first issue in this case is whether an employee of a subcontractor engaged upon the subject matter of the contract who is injured on, in or about the premises on which the principal contractor has undertaken to execute the work, can maintain an action in tort against the principal contractor where the subcontractor is an independent contractor and where worker's compensation benefits were paid by the subcontractor.

Code Ann. § 114-112 is applicable "... only in cases where the injury occurred on, in or about the premises on which the principal contractor has undertaken to execute work, or which are otherwise under his control or management." It provides that "A principal, intermediate, or subcontractor shall be liable for compensation to any employee injured while in the employ of any of his subcontractors engaged upon the subject-matter of the contract, to the same extent as the immediate employer. Any principal, intermediate, or subcontractor who shall pay compensation under the foregoing provisions may recover the amount paid, from any person who, independently of this section, would have been liable to pay compensation to the injured employee, or from any intermediate contractor. Every claim for compensation under this section shall be in the first instance presented to and instituted against the immediate employer, but such proceedings shall not constitute a waiver of the employee's right to recover compensation under this Title from the principal or intermediate contractor. * * * Provided, however, that the collection of full compensation from one employer shall bar recovery by the employee against any others, nor shall he collect from all a total compensation in excess of the amount for which any of the said contractors is liable." By this Code section the principal or intermediate contractor is made the "statutory employer" of the subcontractor's employee. ¹

Under the facts of this case this issue thus becomes whether an employee of an independent subcontractor (as opposed to a subcontractor who is a servant of the principal contractor) can recover in tort against the principal contractor.

In Blair v. Smith, 201 Ga. 747, 41 S.E.2d 133 (1947), this court cited Code Ann. § 114-112, supra, but held without discussion of it that the employee of an independent contractor who recovered worker's compensation benefits from his immediate employer could maintain an action in tort against the principal contractor. Subsequently the Court of Appeals reluctantly followed Blair. BLI Construction Co. v. Knowles, 123 Ga.App. 588, 181 S.E.2d 879 (1971). On the same day, in an opinion by the same judge, the same panel of the Court of Appeals held that under Code Ann. § 114-112, the employee of an independent subcontractor could recover worker's compensation benefits from the principal contractor. American Mutual Liability Ins. Co. v. Fuller, 123 Ga.App. 585, 181 S.E.2d 876 (1971). ² Thus, although a principal contractor was liable for worker's compensation benefits as a statutory employer under Code Ann. § 114-112 to the employee of a subcontractor who was an independent contractor, the principal contractor nonetheless did not have immunity from suit by such employee in tort under Code Ann. §§ 114-103, 114-112.

The result was this: An injured employee of a subcontractor not an independent contractor who could recover worker's compensation from his immediate employer or his statutory employer could not recover in tort from either. On the other hand, an injured employee of an independent subcontractor who could recover worker's compensation from his immediate employer or his statutory employer could recover in tort from his statutory employer although not from his immediate employer.

In 1979, this court decided Haygood v. Home Transportation Co., 244 Ga. 165, 259 S.E.2d 429 (1979), in which we held that a principal contractor is the statutory employer of the employee of a subcontractor who is an independent contractor, citing American Liability Ins. Co. v. Fuller, supra, 123 Ga.App. 585, 181 S.E.2d 876. Since Home Transportation Company was the statutory employer of Mrs. Haygood's deceased husband, Home was liable for worker's compensation benefits to Mrs. Haygood. In that case, Home did in fact pay benefits to Mrs. Haygood. This court held that as a statutory employer who had paid compensation benefits, Home was immune from suit in tort under Code Ann. § 114-103. In a concurring opinion, Justice Jordan (now Chief Justice) contended that Haygood overruled Blair v. Smith.

In the case before us, we have the same facts as in Haygood, supra, except that here the employee recovered worker's compensation benefits not from the statutory employer, Wright Associates, but from his immediate employer, Eastern Steel Erectors. Wright Associates argues that as a statutory employer liable to pay worker's compensation benefits under Code Ann. § 114-112, it should receive the correlative benefit of tort immunity under Code Ann. §§ 114-103, 114-112. We agree and so hold. ³ As one commentator has pointed out in his discussion of statutory employers, "Since the general contractor is thereby, in effect, made the employer for the purposes of the compensation statute, it is obvious that he should enjoy the regular immunity of an employer from third-party suit when the facts are such that he could be made liable for compensation; and the great majority of cases have so held." 2A Larson, The Law of Workmen's Compensation, § 72.31 at p. 14-47. ⁴

Rieder contends that even if a statutory employer is normally insulated from tort liability despite the fact that he has not paid worker's compensation benefits, he should not be where, as here, he has a contract with the subcontractor which provides that the subcontractor shall carry worker's compensation insurance and in the event that the statutory employer is held liable for worker's compensation benefits, he will be indemnified by the subcontractor. Because Code Ann. § 114-112 gives a right of indemnification absent a contract, this amounts to an argument that because of the statutory right of indemnification as to compensation benefits, a statutory employer should not be immune from tort liability. We cannot agree. The purpose of Code Ann. § 114-112 is to ensure that employees in construction and other industries are covered by worker's compensation. In order to do so, it places an increased burden, in the form of potential liability for worker's compensation benefits, on the statutory employer. This encourages the statutory employer to require subcontractors to carry worker's compensation insurance. The fact that the statutory employer reacts to the statute in the manner intended by the legislature should not result in a penalty on the statutory employer. Conversely, if the statutory employer does not require subcontractors to provide compensation benefits (as intended by the statute), the statutory employer may acquire tort immunity. See Haygood v. Home Transportation Co., supra. The quid pro quo for the statutory employer's potential liability is immunity from tort liability. The fact that the statutory employer has a right to indemnification, statutory or contractual, does not strip him of his tort immunity. See 2A Larson, The Law of Workmen's Compensation, § 72.31, p. 14-55, 56, § 72.32, p. 14-66 n. 72.

2. Appellee...