Brady v. Ralph Parsons Co.

COUCH, Judge. I On January 28, 1981, Donald C. Brady, Jr. sustained serious injury in a fall from a scaffold erected during construction at the Cold Spring Lane Station of the Baltimore Region Rapid Transit System (Baltimore Subway or BRRTS). He died several hours later. At the time of his ⁴⁸⁹ death, Brady (the decedent) was an employee of the Rocky Mountain Skylight Company (Rocky Mountain), one of several companies hired to assist in the construction of the Cold Spring Lane Station.

The Cold Spring construction was part of a large project, partially funded by the federal government, to construct approximately twenty eight miles of track and twenty stations along the northwest and south corridors of a specified region. 1 The Mass Transit Administration (MTA), an instrumentality of the Maryland Department of Transportation, 2 is the owner of the Baltimore Subway and its subsidiary stations. 3 The MTA entered into three main contracts for the construction of the Cold Spring Lane Station. First, MTA contracted with the Baltimore Regional Insurance Transit Services (BRITS) to develop and recommend, inter alia, a coordinated safety program “to protect the MTA, its contractors, invitees and the public during the construction and testing of the PHASE I BRRTS.” To this end, BRITS produced a safety and reporting procedure manual (Construction Safety Manual or Manual) which, the document suggested, outlined a “practical, sound and effective program for the prevention of accidents,” and assigned “specific responsibilities to contractors for program compliance.” 4 ⁴⁹⁰ All contractors were required to insure that all émployees, subcontractors and suppliers, while on the job site and in the conduct of MTA contracts, would comply with the provisions of the Manual. Secondly, MTA contracted with the appellee, The Ralph Parsons Company (Parsons), to be the Construction Manager (CM) of the project site. In this role, Parsons was to provide construction management, supervisory, inspection and safety services for MTA.

Finally, MTA contracted with Hensel-Phelps Construction Company (Hensel-Phelps) to be the principal contractor on the project. Under the Construction Safety Manual, Hensel-Phelps had specific safety duties, including the appointment of a Safety Superintendent who would be in charge of performing safety inspection services. Construction Safety Manual § 1.4.2b. 5 HenselPhelps subcontracted a portion of the construction work to the decedent’s employer, Rocky Mountain, a sheet metal contractor. Schematically, the contractual relationship among the various parties is the following: ⁴⁹¹ [[Image here]] In April of 1982, the decedent’s surviving family, the appellants, 6 filed (and later amended) the present tort action in the Circuit Court for Baltimore City against the appellee 7 for the latter’s negligent performance of its contractual safety responsibilities at the construction site.

As construction manager of the project, the appellee had specific contractual safety duties and responsibilities. According to its contract with MTA: The CM shall provide safety engineering services, coordinated with BRITS, necessary to develop and ensure the application of a uniform system of safety and accident prevention and reporting procedures. The CM shall also provide safety engineering services as required to ensure compliance with the provisions of the MTA Construction Safety Manual; the contractual obligations of MTA contractors, other applicable guidance. The CM shall also direct contractors to correct any unsafe acts or conditions that may be detected. ⁴⁹² Parsons Contract § 2.02.2HH.

See id at § 1.05.2B (“The CM shall enforce compliance with the safety program.”) 8 During the construction phase of the project, the appellee was required to Provide a qualified, full-time, on-site supervisory staff for the management and inspection of all construction work being performed on the Project. Responsibilities assigned the staff shall include, but not necessarily be limited to, the following: (1) Coordinate the activities of contractors. (2) Continuously monitor contractor schedules and manpower usage to insure compliance with contract terms. (4) Coordinate the movement of equipment and material through job sites.

(5) Recommend construction techniques to expedite the Project and assure job safety. Id. at § 2.02.2G. The contract further specified that the appellee was to prepare a monthly report on the individual construction contracts and on the construction program in the aggregate, including the status of safety programs. Id. at § 2.02.2H(l)(a). ⁴⁹³ Both parties agree that, at a minimum, the appellee had to oversee all safety programs developed for the project, to report any violations of federal, state and local laws or of the Construction Safety Manual, and to direct contractors to correct unsafe acts that may have been detected. 9 On November 12, 1985, the appellants moved for summary judgment on the issue of liability.

They argued, inter alia, By contractually assuming responsibility for safety on the construction project, Parsons is liable for the failure to properly implement the applicable safety regulations, including those promulgated and executed by contractors and subcontractors. Parsons had a duty to take reasonable precautionary steps to protect the employees on the subway, such as Donald Brady, from ... clearly foreseeable dangers. Since the Construction Manager, Parsons took no precautions to prevent the fatal fall, it is liable for the negligence which caused Donald Brady’s death. Nine days later, the appellee answered the appellants’ motion and filed a cross motion for summary judgment. 10 Among its various arguments, the appellee contended that it was entitled to statutory immunity under the Workmen’s Compensation Act for the injuries and death of the decedent.

The gist of the appellee’s argument was as follows: Pursuant to Annotated Code of Maryland, Article 101, Section 62, ... Hensel-Phelps was the statutory employer ⁴⁹⁴ of all employees of its subcontractors, and as such had the duty to provide them with a safe place to work. As such statutory employer, it is immune from tort suit by such statutory employees. The Ralph M. Parsons Company, as exercising the duty of Hensel-Phelps to provide a safe place to work, not only shares that duty but shares also the immunity accorded to Hensel-Phelps by the Workmen’s Compensation Act. [citing Athas v. Hill, 300 Md. 133, 148-9 , 476 A.2d 710, 718 (1984)].

The reasoning of [Athas v. Hill ] is as fully applicable to an independent contractor who “performs the nondelegable duty” as it is to an employee who performs the same. The independent contractor likewise “does not thereby assume a personal duty toward” the employees of the employer whose nondelegable duty it has assumed. The Ralph M. Parsons Company, therefore, is immune from tort suit by these [appellants]. After hearing arguments, the circuit court (Pines, J.) granted the appellee’s motion for summary judgment.

The court concluded sua sponte that MTA was the decedent’s “statutory employer,” and that the appellee shared the MTA’s statutory immunity under the Workmen’s Compensation Act. 11 Accordingly, the present tort action was barred, and the appellants’ exclusive remedy was under the Act. The court reasoned: Though the massive court file generated by this case is difficult to handle physically, the central issue can be precisely identified and reduced to a narrow inquiry: “Can suit be maintained by plaintiffs against a third party (Parsons) based on Parsons’ alleged failure to perform the statutory employer’s (MTA) nondelegable duty to provide a safe workplace?” We think not — Parsons, who contracted with MTA to assist the statutory employer in performing the employer’s non-delegable safe work ⁴⁹⁵ place duty, is entitled to the same immunity as the employer. Defendant Parsons is being sued for its alleged assumption and breach of MTA’s duty to provide a safe workplace. The Court finds that the plaintiffs’ cause of action against Parsons is barred because the remedy afforded the plaintiffs is contained within the Maryland Workmen’s Act. 12 Judgment was entered on December 12, 1985.

The appellants filed a Motion to Alter Judgment, 13 arguing, inter alia, that MTA was not the statutory employer of the decedent. On February 26, 1986, the motion was denied. Appellants appealed the lower court’s decision to the Court of Special Appeals, and concurrently filed a petition for writ of certiorari with this Court. Before review by the intermediate appellate court, we granted the appellants’ petition.

We now reverse the judgment of the circuit court. II Scope of Review A word is needed about our role in reviewing the circuit court’s entry of summary judgment for the appellee. According to Md.Rule 2-501(e), summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, admissions, and affidavits show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” In determining whether any factual issues exist, the trial court must resolve all inferences against the moving party. Honaker v. W.C. & A.N. Miller ⁴⁹⁶ Development Co., 285 Md. 216, 231-32 , 401 A.2d 1013, 1020-21 (1979) (Honaker II).

Our job in reviewing the grant of summary judgment is identical. We must also decide whether there is a genuine dispute as to any material fact, with inferences drawn in favor of the non-moving party, and whether the moving party is entitled to judgment as a matter of law. Liscombe v. Potomac Edison Co., 303 Md. 619, 621 , 495 A.2d 838, 839 (1985). See King v. Bankerd, 303 Md. 98, 110-12 , 492 A.2d 608, 614-15 (1985); Lynx, Inc. v. Ordnance Products, Inc., 273 Md. 1, 8 , 327 A.2d 502, 508-9 (1974).

Ill Statutory Background Our analysis begins with an examination of the Workmen’s Compensation Act, which will bring the present controversy into focus and help clarify the opposing contentions. The Maryland Workmen’s Compensation Act was enacted in 1914 to compensate employees who were injured in the course of their employment. The statute took the place of the common law tort system, which proved to be an inadequate means of compensating employees for their work-related injuries. 14 As we noted recently in Johnson v. Mountaire Farms, 305 Md. 246, 250 , 503 A.2d 708, 710 (1986), the statute struck a delicate balance between workers and employers: Workers lost their right to sue their employers for negligence but gained the right to quick and certain compensation for injuries sustained during the course of their employment, regardless of fault. See Wood v. Aetna Casualty & Surety Co., 260 Md. 651, 660-61 , 273 A.2d 125,131 (1971); Victory Sparkler Co. [v. Francks, ] 147 Md. [368, 376-77, 128 A. 635, 638 (1925).] In return, ⁴⁹⁷ employers lost their defenses of contributory negligence, assumption of risk, and fellow servant rule but gained the advantage of having their liability limited.

Wood, supra, 260 Md. at 660-61 , 273 A.2d at 131 ; Victory Sparkler Co., supra, 147 Md. at 376-77 , 128 A. at 638 ; see also 2k. A. Larson, The Law of Workmen’s Compensation § 65.11 (1983). Id., 503 A.2d at 710 . Maryland Code (1957, 1985 Repl.Vol.), Art. 101, § 15 sets forth the duties of employers under the Act.

It provides in pertinent part: Every employer subject to the provisions of this article, shall pay or provide as required herein compensation according to the schedules of this article for the disability or death of his employee resulting from an accidental personal injury sustained by the employee arising out of and in the course of his employment without regard to fault as a cause of such injury, except where the injury is occasioned by willful intention of the injured employee to bring about the injury or death of himself or of another, or where the injury results solely from the intoxication of the injured employee while on duty or solely from the effect upon him of any narcotic, depressant, stimulant, hallucinogenic or hypnotic drug or from the effect upon him of any other drug which renders him incapable of satisfactorily performing his job except when such drug has been administered or taken in accordance with a physician’s prescription. The liability prescribed by the last preceding paragraph shall be exclusive, except that if an employer fails to secure the payment of compensation for his injured employees and their dependents as provided in this article, an injured employee or his legal representative in case death results from the injury, may, at his option, elect to claim compensation under this article, or to maintain an ⁴⁹⁸ action in the courts for damages on account of such injury---- Apart from several statutory exceptions, the liability of the employer is exclusive. Id. See Lowery v. McCormick Asbestos Co., 300 Md. 28, 40-44 , 475 A.2d 1168, 1174-76 (1984).

That is, an injured employee may not maintain an action at law for damages against his employer. Since the worker’s sole remedy against the employer is a claim under the Act, the employer is considered to be “immune” from suit at law. Importantly, however, the injured employee may elect to proceed in an action at law against third parties. Md.Code (1957, 1985 Repl.Vol.), Art. 101, § 58 states in 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, or in the case of death, his personal representative or dependents as hereinbefore defined, may proceed either by law against that other person to recover damages or against the employer for compensation under this article, or in case of joint tort-feasors against both; and if compensation is claimed and awarded or paid under this article, any employer, if he is self-insured, insurance company, association, the State Accident Fund, the Subsequent Injury Fund, or the Uninsured Employers’ Fund, may enforce for their benefit, as the case may be, the liability of such other person; provided, however, if damages are recovered in excess of the compensation already paid or awarded to be paid under this article, and also any payments made for medical or surgical services, funeral expenses or for any of the other purposes enumerated in § 36 of this article, then any such excess shall be paid to the injured employee, or in case of death to his dependents less the expenses and costs of action incurred by the employer, insurance company, association, State Accident Fund, the Subsequent Injury Fund, or the Uninsured Employers’ Fund, as the case may be. ⁴⁹⁹ As the foregoing discussion suggests, the application of section 15 statutory immunity will depend greatly upon who is considered an “employer” under the Act.

The term “employer” is defined broadly in the statute as “those persons who fall within the requirements of § 21(a) of this article including a person, partnership, association, corporation, and the legal representative of a deceased employee, or the receiver or trustee of a person, partnership, association or corporation employing workmen.” Md.Code (1957, 1985 Repl.Vol.), Art. 101, § 67(2). Section 21(a) provides that “employers” include “every person that has in the State one or more employees subject to this act” and “[t]he State, any agency thereof, and each county, city, town, township, incorporated village, school district, sewer district, drainage district, public or quasi-public institution, or any other political subdivision of the State that has one or more employees subject to this act.” The words “employer” and “employee” in the statute are equivalent to and synonymous with the words “master” and “servant.” Edith A. Anderson Nursing Homes, Inc. v. Walker, 232 Md. 442, 444 , 194 A.2d 85, 86 (1963). Therefore, the test for determining the existence of an employer and employee relationship under the Act is the same as the common law rules for ascertaining the relation of master and servant. Id., 194 A.2d at 86 .

That test inquires whether the employer has the right to control and direct the servant in the performance of his work and in the manner in which the work is to be done. Mackall v. Zayre Corp., 293 Md. 221, 230 , 443 A.2d 98, 103 (1982). In administering this test, we have established five criteria to consult for guidance. These include: (1) the power to select and hire the employee, (2) the payment of wages, (3) the power to discharge, (4) the power to control the employee’s conduct, and (5) whether the work is part of the regular business of the employer.

Id., 443 A.2d at 103 . Md.Code (1957, 1985 Repl.Vol.), Art. 101, § 62 significantly broadened the definition of “employer” under the Act. ⁵⁰⁰ Included two years after the Act’s passage in 1914, the provision states in pertinent part: When any person as a principal contractor, undertakes to execute any work which is a part of his trade, business or occupation which he has contracted to perform and contracts with any other person as subcontractor, for the execution by or under the subcontractor, of the whole or any part of the work undertaken by the principal contractor, the principal contractor shall be liable to pay to any workman employed in the execution of the work any compensation under this article which he would have been liable to pay if that workman had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal contractor, then, in the application of this article, reference to the principal contractor shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the workman under the employer by whom he is immediately employed. 15 In State v. Bennett Building Co., 154 Md. 159, 162 , 140 A. 52, 53 (1928), we summarized the impact of this provision: The effect of this provision, when brought into operation through the designated state of circumstances, is to impose the absolute liability of an employer upon the principal contractor, when he was not in law the employer of the injured workman. The result then is that where the ⁵⁰¹ prescribed conditions exist, the principal contractor becomes by the act the statutory employer of any workman employed in the execution of the work. It is common to speak of the principal contractor’s liability as that of the “statutory employer” to a “statutory employee.” Honaker v. W. C. & A.N. Miller Development Co., 278 Md. 458, 456 , 365 A.2d 287, 289 (1976) (Honaker I); 1C A. Larson, The Law of Workmen’s Compensation § 49.13 (1986). 16 Our predecessors in Bennett Building noted the purpose of section 62.

Despite the length of that analysis, it bears repeating in full: It is common practice in certain trades for one party to agree for a reward to complete a certain work or undertaking, and then to enter into subcontracts with various parties providing for the execution by them respectively of specified parts of the whole work or undertaking, so that the whole or part thereof would be done by such subcontractors and their assistants. In this manner the principal contractor would avoid in part the responsibility for accidents happening in the carrying out of the work or undertaking. If this responsibility were so shifted upon parties too weak financially to meet it, and who had not secured compensation to their employees in one of the ways required by the statute, an injured workman, proceeding at common law or under the Workmen’s Compensation Act, would obtain neither compensation nor damages. Furthermore, difficult questions arose with reference to whether the workman was the servant of the principal contractor rather than of his immediate employer, depending largely upon who had power to hire and ⁵⁰² discharge, to direct and control the workmen, and a variety of other circumstances.

In order to obviate these contingencies, and more certainly to assure the workman his contemplated compensation, the statute has imposed, under a certain state of circumstances, a liability to pay upon the principal contractor, although he might not have been held at common law the employer of the injured workman. Bennett Building, 154 Md. at 161-62 , 140 A. at 53 . See Roland v. Lloyd E. Mitchell, Inc., 221 Md. 11, 19 , 155 A.2d 691, 696 (1959). Like the employer under section 15, a “statutory employer” under section 62 is not amenable to suit at law under the third party provision of section 58.

Bennett Building, 154 Md. at 166 , 140 A. at 55 (statutory employer is not a “person other than the employer” within the meaning of section 58). The “statutory employer” is thus immune from suit and the injured worker’s exclusive remedy against this statutory creature is under the Workmen’s Compensation Act. .See State v. City of Baltimore, 199 Md. 289 , 86 A.2d 618 (1952). With this statutory scheme in mind, we now turn to the ruling of the circuit court that the appellee enjoys immunity from the present tort action under the Act. IV Ruling of the Circuit Court The circuit court advances a two step argument.

First, the court asserts that the MTA, the owner of the Cold Spring Lane Station, is the “statutory employer” of the decedent under section 62 and thus is immune from suit at law. The court then seeks to cloak the appellee in that blanket of immunity by invoking our recent decision in Athas v. Hill, 300 Md. 133 , 476 A.2d 710 (1984). In Athas , we held that an employee could not sue a supervisory co-employee under section 58 (third party liability) for failure to provide a safe workplace and for failure to retain ⁵⁰³ competent nonviolent employees. Since such responsibilities were non-delegable duties of the employer, the supervisory co-employee did not assume a personal duty toward the injured worker.

From this holding, the circuit court implicitly concluded that Athas’s discussion of a “supervisory employee” should be extended to an independent contractor performing the statutory employer’s (in this case, MTA’s) duty to provide a safe workplace. 17 All of the above discussion presupposes that the various conditions for establishing the status of a “statutory employer” have been met. As the following discussion indicates, this first hurdle has not been overcome. V Requirements for “Statutory Employer” Status We have had occasion to discuss in some detail the requirements for qualifying as a “statutory employer.” In Honaker I, we stated that a “statutory employer” is: 1) a principal contractor 18 2) who has contracted to perform work 3) which is part of his trade, business or occupation; and 4) who has contracted with another party as a subcontractor for the execution by or under the subcontractor of the whole or any part of such work. 19 ⁵⁰⁴ Honaker I, 278 Md. at 460 , 365 A.2d at 291 . Accord, Honaker II, 285 Md. at 225 , 401 A.2d at 1017-18 ; Coffey v. Derby Steel Co., 291 Md. 241, 251 , 434 A.2d 564, 569 (1981).

Elaborating on this scheme, we have noted that the statute requires two contracts. The first contract is between “the principal contractor and a third party whereby it is agreed that the principal contractor will execute certain work for a third party.” Honaker I, 278 Md. at 460 , 365 A.2d at 291 . This .has been referred to as an “antecedent undertaking” or “principal contract.” See Warren v. Dorsey Enterprises, Inc., 234 Md. 574, 579 , 200 A.2d 76, 78 (1964). 20 The second contract is between the “principal contractor and a person as subcontractor whereby the subcontractor agrees to do the whole or part of such work” that the principal contractor agreed to perform for the third party. Honaker I, 278 Md. at 460 , 365 A.2d at 291 .

The work covered by the second contract (i.e., subcontract) must be work which is a part of the principal contractor’s trade, business or occupation. See Warren, 234 Md. at 578 , 200 A.2d at 78 . See ⁵⁰⁵ also Coffey, 291 Md. at 251-56 , 434 A.2d at 570-72 ; Honaker II, 285 Md. at 229-32 , 401 A.2d at 1019-20 . 21 Summarizing section 62 in Bennett Building, we noted: Although acting independently of the other, the principal contractor and the subcontractor, with his workmen employed in the execution of the work, were each, in his own separate capacity, co-operating toward the execution of the whole of a particular work which the principal contractor had promised to perform [for a third party]. Bennett Building, 154 Md. at 166 , 140 A. at 54-5 .

See Long Co. v. State Accident Fund, 156 Md. 639, 645 , 144 A. 775, 778 (1929)