KEHOE v. TRI-STAR MARINE, 46752-2-I (Wash.App. 8-20-2001)

No. 46752-2-I.The Court of Appeals of Washington, Division One.
Filed: August 20, 2001. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION

Appeal from Superior Court of King County, No. 99-2-08508-6, Hon. Robert J. Wesley, May 12, 2000, Judgment or order under review.

Counsel for Appellant(s), David J. Smith, 135 Lake Street S. Ste100, P.O.BOX 616, Kirkland, WA 98083.

Counsel for Defendant(s), Dana A. Ferestien, 601 Union St #4100, P.O. Box 21926, Seattle, WA 98111-3926.

Counsel for Respondent(s), John P. Hayes, Forsberg Umlauf PS, 900 4th Ave Ste 1700, Seattle, WA 98164-1039.

MARLIN J. APPELWICK, J.

Frank Kehoe was injured while painting a fishing vessel in dry dock. The issue is whether the Longshore and Harbor Workers’ Compensation Act (LHWCA) provides the exclusive remedy for Kehoe’s injuries. Kehoe was a sole proprietor who was working as an independent contractor. He therefore had no employer. He was not a subcontractor’s employee for whom Tri-Star Marine, Inc. (Tri-Star), the owner of the marina, was compelled to provide coverage when his subcontractor employer failed to do so. Therefore, Tri-Star was not “deemed” to be Kehoe’s employer for LHWCA purposes. Since only employers are immune from suit under the Act, Kehoe was entitled to bring a lawsuit for damages against Tri-Star. The trial court’s decision dismissing the lawsuit is reversed.

FACTS
Tri-Star owns a marina in Seattle. A fishing vessel named the “Icy Bay” was in the marina’s dry dock in June 1998 to be painted. Tri-Star contacted Frank Kehoe, a sole proprietor, to paint a portion of the Icy Bay. Kehoe agreed to do the painting. It is not disputed between the parties that he was acting as an independent contractor during the course of the work.

Tri-Star set up 14-foot tall rolling scaffolding at the rear of the Icy Bay. As Kehoe began a descent from the top of the scaffolding, he claims he grabbed onto a “pad eye,” a piece of metal attached to the top of the top rail, which broke off in his hand. Kehoe fell from the scaffolding, suffering an injury to his tailbone and spine.

At the time of the accident, Tri-Star was the named insured on a maritime workers’ compensation insurance policy with Liberty Northwest Companies. The policy included coverage for work performed subject to the Longshore and Harbor Workers’ Compensation Act (LHWCA). Kehoe, by contrast, had purchased neither state Labor and Industries insurance nor Harbor Workers’ Compensation insurance for himself.

In April 1999, Kehoe brought a lawsuit against Tri-Star for damages, alleging that Tri-Star had been negligent in supplying dangerous scaffolding. Tri-Star brought a motion for summary judgment to dismiss Kehoe’s claim on the grounds that Kehoe’s exclusive remedy is under the LHWCA. The trial court granted the motion for summary judgment. Kehoe appeals.

ANALYSIS
Kehoe argues that the trial court erred in dismissing his lawsuit on summary judgment. Appellate review of a summary judgment dismissal is de novo. E.g., Ellwein v. Hartford Accident and Indemnity Co., 142 Wn.2d 766, 15 P.2d 640 (2001). Under that standard, we must determine whether, after reviewing all relevant pleadings and affidavits in favor of the nonmoving party, any genuine issue of material fact exists that prevents the moving party from being entitled to judgment as a matter of law. CR 56(c); Ellwein, 142 Wn.2d 766.

Kehoe argues that the court was in error to conclude that the LHWCA provided the exclusive remedy for his injuries. Kehoe relies on section 904 of the Act. That section provides that “employer[s]” are liable for securing payment to their employees of LHWCA workers’ compensation:

(a) Every employer shall be liable for and shall secure the payment to his employees of the compensation payable under sections 907, 908, and 909 of this title. In the case of an employer who is a subcontractor, only if such subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of compensation. A subcontractor shall not be deemed to have failed to secure the payment of compensation if the contractor has provided insurance for such compensation for the benefit of the subcontractor.

(b) Compensation shall be payable irrespective of fault as a cause for the injury.

33 U.S.C. § 904. Further, “[t]he liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer.” 33 U.S.C. § 905.

Kehoe asserts that Tri-Star was not his employer. “The term `employer’ means an employer any of whose employees are employed in maritime employment.” 33 U.S.C. § 902(4). Kehoe was a sole proprietor and an independent contractor. Therefore, he had no employer. According to Kehoe, because only employers are entitled to statutory immunity under the LHWCA, the trial court was in error to dismiss his civil lawsuit against Tri-Star.

As Kehoe asserts, courts interpreting the LHWCA have long held that the Act does not apply in the absence of an employer-employee relationship.

In Crowell v. Benson, the Supreme Court held that the LHWCA “applies only when the relation of master and servant exists.” 285 U.S. 22, 38, 52 S.Ct. 285, 76 L.Ed. 598 (1932). In a later case, the United States District Court for the Eastern District of Virginia reiterated this holding. See Noel v. Isbrandtsen Co., 179 F. Supp. 325 (E.D.Va. 1959), aff’d on other grounds, 287 F.2d 783 (4th Cir. 1961). The district court explained in Noel that the claimant was not the respondent’s employee, because the claimant “was clearly an independent contractor.” Noel, 179 F. Supp. at 327. Thus, the court concluded, the claimant was not limited to compensation under the Act. Noel, 179 F. Supp. at 327. See also United States Department of Labor, Judges’ Benchbook: Longshore and Harbor Workers’ Compensation Act, Topic 75 (1997) (“Self-employed independent contractors are not covered employees. It is well-settled that the basic feature of an independent contract is that it does not involve an employment relationship.”) (citations omitted).

Tri-Star responds that even though Kehoe was a self-employed independent contractor, Tri-Star is nonetheless “deemed” to be his employer under the Act. Tri-Star cites section 905(a) of the Act, which provides:

Employer liability; failure of employer to secure payment of compensation

The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death, except that if an employer fails to secure payment of compensation as required by this chapter, an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under the chapter, or to maintain an action at law or in admiralty for damages on account of such injury or death. In such action the defendant may not plead as a defense that the injury was caused by the negligence of a fellow servant, or that the employee assumed the risk of his employment, or that the injury was due to the contributory negligence of the employee. For purposes of this subsection, a contractor shall be deemed the employer of a subcontractor’s employees only if the subcontractor fails to secure the payment of compensation as required by section 904 of this title. 33 U.S.C. § 905(a) (emphasis supplied). Tri-Star argues that, under the last sentence of this provision, Tri-Star, as the contractor, is “deemed” to be Kehoe’s employer, because Kehoe, as the subcontractor, failed to secure workers’ compensation coverage for himself. Thus, according to Tri- Star, Kehoe’s remedy is exclusive under the LHWCA, and the trial court was correct to dismiss the civil suit.

Tri-Star relies especially on the last sentence of section 905(a). Congress added this sentence as part of its 1984 amendments to the statute.

The legislative history of the statute provides insight into Congress’ intent behind section 905(a). Congress explained that the 1984 amendments achieved the following:

First, the obligation of the contractor to secure compensation for the employee of the subcontractor is a contingent one, which is triggered only upon the failure of the subcontractor to secure compensation for its own employees.

Second, the contractor remains amenable to suit by its subcontractors’ employees in those instances where the subcontractor-employer has fulfilled its statutory obligation to secure compensation for its own employees.

Third, however, where the subcontractor defaults in securing compensation, thus triggering the contractor’s obligation, and the latter fulfills that obligation, the contractor is deemed an `employer’ for purposes of section 5(a) and therefore entitled to immunity from suit by the subcontractor’s employees.

Fourth, if the contractor utilizes a `wrap-up’ insurance policy to provide insurance coverage for the benefit for satisfying the subcontractor’s primary obligation to secure compensation, the contractor still remains amendable to suit by employees of the subcontractor; the contractor does not enjoy the immunity afforded by section 5(a) of the Act.

House of Representatives’ Conference Report 98-1027. The 1984 amendments “provided that a contractor shall be considered the employer of a subcontractor’s employees and be entitled to immunity under section 905(a) only if the contractor is compelled by section 904(a) to secure worker’s compensation for those employees because the subcontractor fails to do so.” Louviere v. Marathon Oil Co., 755 F.2d 428, 429-30 (5th Cir. 1985). Thus, “the general contractor no longer has immunity to third party tort actions brought by a subcontractor’s employee merely because it guarantees compensation; the general contractor must actually pay compensation to gain immunity.” Thomas J. Schoenbaum, Admiralty and Maritime Law sec. 6-8, at 225-26 (1987).

The legislative materials do not support Tri-Star’s position. Tri-Star contends that the 1984 amendments overturned the Crowell line of cases, which held that an employer-employee relationship must exist before the Act will apply. To the contrary, the amendments address a different sort of situation. Congress explained that the purpose of the amendments was to address the situation where an employee of a subcontractor brings a third-party action against the contractor for a work-related injury. House of Representatives’ Conference Report 98-1027. In that situation, the contractor will be “deemed” to be the employer if the contractor is compelled to secure coverage due to the subcontractor’s failure to do so. Thus, the amendments merely specify who will be in the position of employer: the contractor or the subcontractor. The statute and the legislative materials do not indicate that Congress intended to create an employer-employee relationship where one had not previously existed, as in the case of a self-employed independent contractor.

Tri-Star further relies on the Ninth Circuit’s recent holding in Ghotra v. Bandila Shipping, Inc., 113 F.3d 1050 (9th Cir. 1997). In Ghotra, Ghotra was a self-employed marine surveyor who was killed while inspecting a cleanup operation aboard a motor vessel. The court held that Ghotra fell within the scope of the LHWCA, even though he was self-employed, and that state wrongful death remedies were therefore preempted. 113 F.3d at 1060. The court acknowledged that its holding was potentially in conflict with Crowell. But the court distinguished Crowell, explaining that “the requirement of a `master-servant’ relationship may be necessary to justify liability without fault against a putative employer.” Ghotra, 113 F.3d at 1059. The issue in Ghotra, by contrast, was whether the survivors’ potential claim under section 905(b)[1] against the vessel, premised on the vessel’s negligence, preempted state remedies.

The Ghotra court referred neither to section 905(a) of the Act, nor to the 1984 amendments. Thus, we do not accept Tri-Star’s argument that we must look to the Ghotra decision in interpreting section 905(a). We further reject Tri-Star’s contention that Congress overturned the Crowell line of cases with the 1984 amendments. Crowell still applies. Here, Kehoe was an independent contractor. Tri-Star was not his employer. Tri-Star is therefore not entitled to statutory immunity. The trial court ruled otherwise and dismissed Kehoe’s lawsuit. That decision was in error.

Reversed.

WE CONCUR: COX, J., ELLINGTON, J.