Athas v. Hill

SMITH, Judge. In this case, we are faced with the question of whether Maryland Code (1957, 1979 Repl.Vol., 1983 Cum.Supp.) Article 101, § 58 authorizes an employee to sue a supervisory coemployee for negligently discharging the employer’s duty to provide a safe place to work. We conclude that supervisory coemployees may be subject to liability only for negligently breaching a duty of care which they personally owe to the employee. Therefore, we shall affirm the judgment of the Court of Special Appeals in Athas v. Hill, 54 Md.App. 293 , 458 A.2d 859 (1983).

Robert Lee Hill was employed as a chef at the Summit Country Club in Baltimore County. Appellant, Nicholas Athas, was employed as a bus boy. On October 13, 1974, Hill attacked Athas with a butcher knife. As a result, Athas suffered permanent disability and facial disfigure ¹³⁵ ment.

Athas filed for and was awarded compensation from Summit under the Workmen’s Compensation Act. He also proceeded against Hill in the Circuit Court for Baltimore County for assault. Athas obtained a judgment against Hill in the amount of $73,000 for compensatory damages and $5,000 for punitive damages. In the same action at law, Athas alleged that Jack Pollack, 1 Summit’s president and managing agent; Jerome Hurwitz, Summit’s vice president; and Mitchell Rosenfeld, Summit’s house chairman, were negligent in that each failed to exercise due care in providing Athas with a safe place to work.

Athas claimed in his declaration that Summit had delegated to Pollack, as president and managing agent, the supervisory and immediate duties of personnel management and direction. Pollack was responsible for hiring, discharging, and disciplining employees. Further, Athas alleged that Pollack performed the following duties which Summit owed its employees: providing employees with a reasonably safe place to work; warning and instructing employees concerning the dangers of the work place about which Summit knew or should have known and which the employees could not reasonably have discovered; and exercising reasonable care and caution in the selection and employment of competent, nonviolent employees. Both Hurwitz and Rosenfeld either shared or, alternatively, possessed the same duties and knowledge as Pollack.

Athas alleged that Pollack, Hurwitz, and Rosenfeld (the officers or supervisory coemployees) had notice of Hill’s violent disposition by virtue of both his record prior to employment with Summit and his involvement in various altercations on the club’s premises since employment. Athas claimed that he could not have known or had reason to know of Hill’s character; that Summit’s officers failed to warn Athas of Hill’s character; and that the officers failed to insure Athas’ safety by continuing to employ Hill. For ¹³⁶ purposes of the appeal, the officers have conceded that an employer owes a duty to his employees to exercise reasonable care in hiring and retaining competent, nonviolent employees. Further, they concede that Summit delegated the duty to them and that they affirmatively, albeit negligently, undertook to discharge this duty.

However, they allege that they are not subject to personal liability for this breach of the employer’s duty. On May 20, 1982, the Circuit Court for Baltimore County sustained the demurrer of Pollack, Hurwitz, and Rosenfeld without leave to amend. 2 Athas appealed the decision to the Court of Special Appeals, which affirmed the judgment of the circuit court and held that Athas could not maintain a cause of action against the officers of the club. We granted a writ of certiorari in order that we might address the important public issue here presented. In attempting to impose liability on Summit’s officers for their breach of the duty to provide a safe place to work, Athas relies on Art. 101, § 58.

It states in pertinent part: “Where injury or death for which compensation is payable under this article was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof, the employee ... may proceed either by law against that other ¹³⁷ person to recover damages or against the employer for compensation under this article, or in case of joint tortfeasors against both____” This Court has determined that § 58 authorizes an employee to bring a cause of action for damages against a coemployee whose negligence caused plaintiffs injury. In Hutzell v. Boyer, 252 Md. 227 , 249 A.2d 449 (1969), the Court stated that the Maryland workmen’s compensation law “excludes an action in tort by an employee against his employer, but does not exclude tort actions between co-employees.” 252 Md. at 232 , 249 A.2d at 452 . Judge Finan reasoned for the Court: “Although there are no decisions in this Court involving a tort action by an employee against a co-employee, we note the fact that for over 50 years the Workmen’s Compensation Law of this State has contained no express prohibition against such a suit.” 252 Md. at 233 , 249 A.2d at 452 . The Court held that because the principle of lex loci delicti applied, the plaintiff, an employee of a Virginia corporation and resident of Maryland who was injured in an accident arising out of the negligence of a coemployee in Maryland, could maintain a cause of action against that coemployee. 252 Md. at 233 , 249 A.2d at 452-53 .

Since the decision in Hutzell , this Court has recognized in two cases that negligent coemployees are subject to actions at law for damages. In Leonard v. Sav-A-Stop Services, 289 Md. 204 , 424 A.2d 336 (1981), we stated, “The Maryland Workmen’s Compensation Act does not give immunity to a worker against claims for damages based on injury or death tortiously caused to a co-worker in the course of their employment.” 289 Md. at 206 , 424 A.2d at 337 . Similarly, in Hauch v. Connor, 295 Md. 120 , 453 A.2d 1207 (1983), we noted that the rationale for precluding tort suits between employers and employees was not applicable to suits between coemployees. 295 Md. at 128 , 453 A.2d at 1211-12 . In Hauch we held that Maryland residents, who were injured in an automobile accident in Delaware while furthering the employer’s business (Maryland was the regular ¹³⁸ place of employment), could maintain a cause of action in Maryland against the negligent coemployee even though they had previously received benefits under the Maryland workmen’s compensation law. 295 Md. at 133-34 , 453 A.2d at 1214 .

This Court’s construction of § 58 in connection with the facts of this case must be viewed in light of both the common law and the Maryland workmen’s compensation law. Prior to the enactment of workmen’s compensation legislation, the liability of an employer for injuries sustained by an employee in the course of his employment was limited. The limitations on the employer’s liability stemmed primarily from what Dean Prosser called the “unholy trinity” of common law defenses: contributory negligence, assumption of risk, and the fellow servant rule. See W. Prosser, Law of Torts § 80, at 526-27 (4th ed. 1971).

Courts in Maryland recognized these defenses. See, e.g., Norfolk & West. R.R. v. Hoover, 79 Md. 253, 261-62 , 29 A. 994, 995 (1894) (for employee to succeed in bringing cause of action alleging negligence of fellow servant, he must establish not only causation between fellow servant’s negligence and his injuries but also master’s negligence in the selection of the fellow servant in the first instance); State ex rel. Hamelin v. Malster, 57 Md. 287, 306 (1881) (when employee accepted employment, it was presumed he understood the risks and perils incumbent in a particular job; one such risk was the negligence of his fellow servants).

To hold the fellow servant liable for negligence at common law, the injured employee was required to establish that the fellow servant occupied the role of a vice principal. Generally, an employer was held liable for the negligence of an employee only if the employee exercised responsibility, control, direction, and authority with respect to the work place. In other words, the employer was liable if the discharge of the employer’s nondelegable duty was entrusted to the judgment and discretion of the negligent employee. See, e.g., Chesapeake Stevedoring Co. v. Hufnagel, 120 Md. 53, 61-62 , 87 A. 4, 7 (1913); Frizzell v. Sullivan, ¹³⁹ 117 Md. 388, 390-91 , 83 A. 651, 652-53 (1912); Hoover, 79 Md. at 266-67 , 29 A. at 997 ; Malster, 57 Md. at 307-08 .

Among the nondelegable duties which the employer owed his employees was the duty to provide a safe place to work, see Sullivan, 117 Md. at 390 , 83 A. at 652 ; Pennsylvania Steel Co. v. Nace, 113 Md. 460, 483 , 77 A. 1121, 1131-32 (1910); and the duty to select and retain competent employees, see Hufnagel, 120 Md. at 60 , 87 A. at 6 ; Hoover, 79 Md. at 262 , 29 A. at 995 ; Malster, 57 Md. at 306 . The Maryland workmen’s compensation statute was enacted in 1914. This Court has held consistently that the Act provides the employee or his dependents with an exclusive right for recovery as against the employer. See, e.g., Hauch, 295 Md. at 127 , 453 A.2d at 1211 ; Wood v. Aetna Cas. & Sur.

Co., 260 Md. 651, 660-61 , 273 A.2d 125, 131 (1971); American Rad. Corp. v. Mark Co., 230 Md. 584, 590 , 187 A.2d 864, 867 (1963); Barrett v. Indemnity Ins. Co., 152 Md. 253, 259 , 136 A. 542, 544 (1927); Hagerstown v. Schreiner, 135 Md. 650, 653 , 109 A. 464, 465 (1920). “There is no doubt that the Workmen’s Compensation Act substituted for the common law liability of an employer for negligence, subject to the corresponding common law defenses, an absolute, but limited, liability regardless of fault, and made that liability exclusive, in the case of a conforming employer.” Baltimore Transit Co. v. State, 183 Md. 674, 677 , 39 A.2d 858, 859 (1944). Accord Cox v. Sandler’s, Inc., 209 Md. 193, 198-99 , 120 A.2d 674, 677 (1956).

Notwithstanding the substitution of limited strict liability for tort liability with regard to conforming employers, we have continued, to recognize that, at least in cases not covered by the workmen’s compensation statute, an employer owes his employees a common law duty to provide a safe place to work. See, e.g., Leonard, 289 Md. at 218-19 , 424 A.2d at 343 ; Harrison v. Harrison, 264 Md. 184, 188 , 285 A.2d 590, 592 (1972); Bauman v. Woodfield, 244 Md. 207, 216 , 223 A.2d 364, 368 (1966); McVey v. Gerrald, 172 Md. ¹⁴⁰ 595, 599, 192 A. 789, 790-91 (1937). 3 Moreover, the General Assembly has codified the employer’s duty to provide employees with a safe place to work in Code (1957, 1979 Repl.Vol.) Art. 89, § 32(a): “Each employer shall ... furnish to.each of his employees employment and a place of employment which are safe and healthful as well as free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees----” No Maryland case has confronted the issue raised in this case: whether supervisory employees or corporate officers may be held liable for negligently performing a duty which the employer owes to his employee where the employer conforms to the Workmen’s Compensation Act. It is stated in 2A A. Larson, The Law of Workmen’s Compensation § 72.11, at 14-54 to 14-55 & n. 131 (1983), that as of 1983, only eleven states, including Maryland, extended immunity from liability for negligence to the employer alone and thus permitted suit against coemployees. It is interesting to note that, as Larson puts it, “A strong tide toward coemployee immunity has been running.

As recently as 1974, a majority of states permitted suits against coemployees.” Id. at 14-55 n. 13.1. 4 Several of the courts which have determined that coemployees are subject to tort liability have extended this rationale to corporate officers and supervisory employees. Larson states that, ¹⁴¹ “The clearest case for such liability is that in which the corporate officer is acting in his capacity as an employee— even a managerial employee—and in which the conduct involved is merely the kind of negligence or other misconduct that would normally make any coemployee liable.” Id. § 72.13, at 14-64 (footnote omitted). Other cases turn on “the extent to which the defendant is in effect the alter ego of the corporation, or is at least acting as an agent or representative of the corporation, or being charged with violation of duties that are not his personal duties, but the nondelegable duties of the corporation.” Id. at 14-65. Further, Larson notes that, “Suit is also barred if the duty allegedly violated was a nondelegable duty of the corporation, such as the duty to provide a safe place to work—as distinguished from the duty of care owed by one employee to another.” Id. at 14-65 to 14-69 (citations omitted).

Courts in several states have held that coemployees are immune from suit because the workmen’s compensation statute provides the injured worker with his exclusive remedy. These courts, relying on either express statutory language or judicial interpretation, have based their determination on the fact that, given the statutory trade-off provided in the workmen’s compensation scheme (whereby the employee gives up his right to sue the employer in tort and the employer waives his common law defenses), the third party provision in the applicable workmen’s compensation act encompasses only those who are outsiders to the employment relationship. See, e.g., Beyers v. Roll, 476 P.2d 271, 272 (Colo.App.1970) (not selected for official publication) (statutory language “pursue his remedy against another not in the same employ” expressly limits an injured employee’s recovery to compensation under the Act where defendant is a coemployee); Mier v. Staley, 28 Ill.App.3d 373, 379 , 329 N.E.2d 1 (1975) (statute grants immunity from common law tort actions to corporate officers); Witherspoon v. Salm, 251 Ind. 575, 579 , 243 N.E.2d 876 (1969) (defendant, who was president, director, officer, and manager of employer-corporation, does not come within third party provi ¹⁴² sion and thus is immune); Miller v. Scott, 339 S.W.2d 941, 944 (Ky.1960) (term “some other person” in third party provision “refers to a third person having no connection with the general work being performed and whose act of negligence was wholly disconnected with that work.”); Brown v. Estess, 374 So.2d 241, 242-43 (Miss.1979) (corporate officer immune from common law action given purpose of workmen’s compensation act to make compensation employee’s exclusive remedy where injury sustained during the course of his employment); McCluskey v. Thompson, 363 So.2d 256, 261 (Miss. 1978) (statute includes bar to negligence cause of action by injured employee against coemployee); Madison v. Pierce, 156 Mont. 209, 215 , 478 P.2d 860 (1970) (to allow employee to bring cause of action for negligence against coemployee in addition to receiving compensation award would defeat the purpose of workmen’s compensation statute); Warner v. Leder, 234 N.C. 727, 732 , 69 S.E.2d 6 (1952) (employee’s acceptance of benefits under Workmen’s Compensation Act forecloses his right to maintain common law tort action against not only the employer, but also those conducting the employer’s business). In addition to these judicial decisions, the majority of states have enacted legislation which expressly grants coemployees and officers immunity if the employee and the employer are covered by the workmen’s compensation law.

See Larson § 72.21, at 14-73 & n. 23. Some state courts have held that their third party provisions, which are analogous to Maryland’s § 58, do not bar suit by the injured employee against his coemployees for negligence. These courts generally have interpreted the phrase “some person other than the employer” literally. Therefore, because a coemployee cannot be an employer, he is subject to liability.

See, e.g., Tully v. Estate of Gardner, 196 Kan. 137, 139 , 409 P.2d 782 (1966) (superseded by statutory amendment); Rehn v. Bingaman, 151 Neb. 196, 202 , 36 N.W.2d 856 , appeal dismissed, 338 U.S. 806 , 70 S.Ct. 79 , 94 L.Ed. 488 (1949); Gee v. Horvath, 169 Ohio St. 14 , 16-17, 157 N.E.2d 354 (1959) (superseded by statutory ¹⁴³ amendment); Colarusso v. Mills, 99 R.I. 409, 418 , 208 A.2d 381, 386 (1965). Before a statutory amendment in 1974 precluded an employee from bringing a negligence action against a coemployee for injury sustained in the course of employment, the courts of Georgia had held that coemployees could be subject to common law liability if they were not acting as the alter ego of the corporation. In other words, “where it is conclusively shown that an executive of a corporation acts in his representative capacity as the alter ego of the corporation an employee injured in the course of his employment may not recover workmen’s