Inner Harbor Warehouse and Distribution, Inc. v. Myers

GARRITY, Judge. In this appeal, a principal contractor contends that the lower court erred in holding it responsible under Section 62 of Art. 101 of the Code for obtaining workers’ compensation coverage for the owner of an uninsured subcontracting company. The owner was injured while transporting goods . on behalf of the principal contractor. In resolving the issue of coverage we shall determine the following: whether the failure of a controlling shareholder and officer of a subcontracting close corporation to purchase workers’ compensation insurance for the corporation’s employees acts as an election not to be covered by Maryland’s workers’ compensation provisions; 1 whether a controlling shareholder and officer of a close corporation ⁴ may be a “statutory employee” within the meaning of the “statutory employer” provision of the workers’ compensation laws; and, whether the limitations period applicable to workers’ compensation claims is tolled when a “statutory employer,” with actual notice of serious injuries sustained by an individual acting as its “statutory employee,” does not file a report of injury with the Workmen’s Compensation Commission. 2 The action giving rise to the foregoing questions had its genesis on or about December 22, 1986, the date the appellee, Gordon L. Myers, filed a claim with the Commission alleging that he had sustained compensable injuries while acting as an employee of the appellant, Inner Harbor Warehouse and Distribution, Inc. 3 After hearing, the Commission disallowed Myers’ claim because it determined that he was an independent contractor at the time his injuries were incurred.

Upon the denial of his motion for rehearing, Myers appealed the Commission’s decision to the Circuit Court for Baltimore City. By order dated August 9, 1988, that court (Arabian, J.) granted Myers’ motion for partial summary judgment, ruling, inter alia, that Myers was the “statutory employee” of Inner Harbor pursuant to Md.Ann. Code art. 101, § 62 (1957, 1985 Repl.Vol., 1988 Cum.Supp.), as a matter of law. 4 Before addressing the propriety of the trial court’s ruling, we shall recount the undisputed facts. ⁵ FACTS Commencing during July 1984, Inner Harbor was retained by Eluma International, U.S.A., a/k/a Eluma of North America (Eluma), to transport engine blocks manufactured by a Brazilian company, Cofap Cia Fabricadora de Pecas, a/k/a Cofap S.A. (Cofap), on an ongoing basis upon the products’ arrival in the Port of Baltimore. Inner Harbor was hired to haul the engine blocks in their containers from the Port of Baltimore to Inner Harbor’s warehouse facility — where the containers were to be temporarily stored.

Inner Harbor received compensation per container hauled from the Port of Baltimore to the warehouse facility. As Inner Harbor did not own trucks capable of hauling the containers, it retained the services of truck owners and truck operators who hauled the containers on its behalf. Representatives of Inner Harbor admitted that performing truck transportation services was part of the regular business of Inner Harbor during the time period relevant to this case. During the relevant time period, G.K. Myers & Sons, Inc., a Maryland Close Corporation, was in the business of retaining truck operators for truck transportation companies such as Inner Harbor.

Myers was the President and Chief Executive Officer of G.K. Myers & Sons and, along with his wife, held joint title to all of the corporation’s outstanding shares of common stock. Between April 1984 and October 18, 1984, Myers and other drivers of G.K. Myers & Sons operated trucks which hauled containers of the Brazilian engine blocks on behalf of Inner Harbor. During April 1984, Myers met with Reese Beane, the President and Chief Operating Officer of Inner Harbor, and requested that Inner Harbor provide workers’ compensation insurance for the drivers of G.J. Myers & Sons’ trucks while they were hauling on behalf of Inner ⁶ Harbor. 5 On October 18, 1984, Myers was hauling a container of the engine blocks from a pier in the Port of Baltimore to Inner Harbor’s warehouse facility. While Myers was travelling along the Russell Street ramp at or near Monroe Street in the City of Baltimore, the engine blocks sprung free, upsetting the container.

As a result, the container and the truck — with Myers inside — fell over the side of the ramp and eventually landed upon a line of train tracks. 6 Representatives of Inner Harbor were notified of the accident shortly after it occurred. At the time of the accident, G.K. Myers & Sons did not carry workers’ compensation insurance. 7 DISCUSSION I. Scope of Review As a threshold matter, we shall discuss our role in reviewing the trial court’s entry of summary judgment for Myers. 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 dispute exists, even if the underlying facts are undisputed, the trial court must resolve all inferences against the moving party. See Honaker v. W.C. & A.N. Miller Dev.

Co., 285 Md. 216, 231 , 401 A.2d 1013 (1979) (Honaker II) and cases there cited. ⁷ In reviewing a grant of summary judgment, 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. See Liscombe v. Potomac Edison Co., 303 Md. 619, 621-22 , 495 A.2d 838 (1985); Washington Homes v. Interstate Land Dev. Co., 281 Md. 712, 717-18 , 382 A.2d 555 (1978) and cases there cited.

II

Election Inner Harbor posits that the trial court erred in failing to conclude that the decision by Myers not to purchase workers’ compensation insurance for the subcontracting close corporation of which he was a controlling shareholder and officer acted as an election to be exempted from the coverage of the workers’ compensation provisions as a matter of law. Art. 101, § 21(b) details the individuals who are subject to the provisions of the workers’ compensation laws. That section relates, in pertinent part, as follows: COVERAGE OF EMPLOYEES. — The following shall constitute employees subject to the provisions of this article, (2) Every officer of a corporation rendering services for the corporation for monetary remuneration except: (i) an officer of a close corporation, as defined in the Corporations and Associations Article, electing not to be covered under the provisions of Section 67(4) of this article---- Art. 101, § 67(4)(ii) sets forth the procedure whereby an officer of a close corporation may elect to become exempt from coverage as an “employee” under the workers’ compensation laws: Any officer of a close corporation, as defined in the Corporations and Associations Article, ... may elect to become exempt from coverage as an employee under the provisions of Section 21(b) of this article. In the event of such an election, the employer shall serve upon the employer’s insurance carrier and upon the Commission writ ⁸ ten notice naming the persons electing not to be covered, and every officer of a close corporation shall be an employee within this article until such notice has been served.

In the instant case, there is no factual dispute that Myers was an officer of a close corporation “rendering services for the corporation for monetary remuneration.” Furthermore, it is uncontroverted that written notice naming Myers as an officer of a close corporation electing to become exempt from coverage as an “employee” under the workers’ compensation laws was never served upon the Commission. The above facts notwithstanding, Inner Harbor presently urges us to interpret G.K. Myers & Sons’ uninsured status as, ipso facto, an election by Myers to exempt himself from coverage as an. “employee” under the workers’ compensation laws. Because this case reaches us in the context of a motion for summary judgment, we accept as true Inner Harbor’s contention that G.K. Myers & Sons’ lack of workers’ compensation insurance resulted directly from Myers’ decision not to procure such coverage for the close corporation. Inner Harbor’s averment raises an issue of first impression in this State.

The resolution of the question requires us to discern the meaning and scope of Section 67(4)(ii). In considering the provision, it is well settled that we must ascertain and carry out the real and actual intent of the legislature. See Scott v. State, 297 Md. 235, 245 , 465 A.2d 1126 (1983); State v. Loscomb, 291 Md. 424, 429 , 435 A.2d 764 (1981). The primary source for determining that intent is the language of the statute itself.

If it is clear, we need look no further. Ryder Truck Lines, Inc. v. Kennedy, 296 Md. 528, 535 , 463 A.2d 850 (1983); Vallario v. State Roads Comm’n, 290 Md. 2, 6 , 426 A.2d 1384 (1981). Thus, where statutory language is plain and free from ambiguity and expresses a definite and sensible meaning, no construction or clarification is needed or permitted. Hornbeck v. Somerset Co. Bd. of Educ., 295 Md. 597, 619 , 458 A.2d 758 ⁹ (1983); Blum v. Blum, 295 Md. 135, 140 , 453 A.2d 824 (1983); Koyce v. State, Cent.

Collection Unit, 289 Md. 134, 140 , 422 A.2d 1017 (1980). In other words, a plainly worded statute should be construed without forced or subtle interpretations designed to extend or limit the scope of its operation. State v. Intercontinental, Ltd., 302 Md. 132, 137 , 486 A.2d 174 (1985); Guy v. Director, 279 Md. 69, 72 , 367 A.2d 946 (1977). Furthermore, we are mindful that the Workers’ Compensation Article is to be construed as liberally in favor of injured employees as the article’s provisions will permit so as to effectuate its benevolent purpose as remedial social legislation.

See, e.g., Lovellette v. Mayor of Baltimore, 297 Md. 271, 282 , 465 A.2d 1141 (1983); Soper v. Montgomery County, 294 Md. 331, 335 , 449 A.2d 1158 (1982); Trotta v. County Car Center, 292 Md. 660, 663 , 441 A.2d 343 (1982); Howard County Ass’n for Retarded Citizens v. Walls, 288 Md. 526, 530 , 418 A.2d 1210 (1980); Wiley Mfg. v. Wilson, 280 Md. 200, 217 , 373 A.2d 613 (1977); Tavel v. Bechtel Corp., 242 Md. 299, 303 , 219 A.2d 43 (1965); Bethlehem-Fairfield Shipyard, Inc. v. Rosenthal, 185 Md. 416, 425 , 45 A.2d 79 (1945). See also Art. 101, § 63. We believe the language of Section 67(4)(ii) is plainly worded and unambiguous and expresses a sensible meaning in detailing the mechanism by which an officer of a close corporation may elect not to be covered by the workers’ compensation laws. The provision also clearly provides that until written notice is served according to its dictates, “every officer of a close corporation shall be an employee within this article.” In light of the foregoing, we hold that the trial court did not err in concluding that Myers did not elect io exempt himself from coverage.

III

Myers as “Statutory Employee” Inner Harbor further contends that the trial court erred as a matter of law in finding Myers, a controlling shareholder and officer of G.K. Myers & Sons, a “statutory employ ¹⁰ ee” of Inner Harbor within the meaning of the “statutory employer” provision of the workers’ compensation laws. As a means of introducing the law relevant to the present issue, we observe that the Maryland Workers’ Compensation Act was enacted by the General Assembly in 1914 to compensate employees who were injured in the course of their employment. Under the act, workers lost their right to bring suit against their employers for negligence, but gained the right to compensation for injuries sustained during the course of their employment, regardless of fault. Brady v. Ralph Parsons Co., 308 Md. 486, 496 , 520 A.2d 717 (1987).

Accord Johnson v. Mountaire Farms, 305 Md. 246, 250 , 503 A.2d 708 (1986); Wood v. Aetna Casualty & Surety Co., 260 Md. 651, 660-61 , 273 A.2d 125 (1971); Victory Sparkler Co. v. Francks, 147 Md. 368, 376-77 , 128 A. 635 (1925); Anderson v. Bimblich, 67 Md.App. 612, 616-17 , 508 A.2d 1014 (1986). In return, employers lost their defenses of contributory negligence, assumption of risk, and fellow servant rule, but gained the advantage of having their liability limited. Brady, 308 Md. at 496-97 , 520 A.2d 717 . Accord Mountaire Farms, 305 Md. at 250 , 503 A.2d 708 ; Wood, 260 Md. at 660-61 , 273 A.2d 125 ; State v. Bennett Building Co., 154 Md. 159, 168 , 140 A. 52 (1928); Victory Sparkler, 147 Md. at 376-77 , 128 A. 635 .

First included in the Workers’ Compensation Act two years after its original passage in 1914, Art. 101, § 62, as presently enacted, 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 ¹¹ 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. 8 The purpose and scope of Section 62 has been addressed by the appellate courts of this State on numerous occasions. See, e.g., Lathroum v. Potomac Elec. Power Co., 309 Md. 445 , 524 A.2d 1228 (1987); Brady v. Ralph Parsons, supra; Honaker v. W.C. & A.N. Miller Dev. Co., 278 Md. 453 , 365 A.2d 287 (1976) (Honaker I); State v. Bennett Building, supra; Travelers Indem.

Co. v. Insurance Co. of North America, 69 Md.App. 664 , 519 A.2d 760 (1987); Anderson v. Bimblich, supra. In Bennett Building, the Court explained the legislative rationale of the provision. As its analysis is highly relevant to our resolution of the present issue, we shall repeat it 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 ¹² 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 discharge, to direct and control the workmen, and a variety of other circumstances.