Lathroum v. Potomac Electric Power Co.

COUCH, Judge. I The Potomac Electric Power Company (PEPCO), the appellee, is a regulated public utility which furnishes electricity to consumers in Maryland and elsewhere. 1 PEPCO contracted with B. Frank Joy Company (Joy) to provide labor and miscellaneous services for several of PEPCO’s power facilities, including the Chalk Point power plant. 2 On December 29, 1980, Joseph Lathroum (the appellant), an employee of Joy, was working as a laborer in an underground coal hopper at the Chalk Point power plant when he sustained the injury which is the subject of the present lawsuit. ⁴⁴⁷ The record reveals the following facts. During normal operations at the Chalk Point power plant, railroad cars operating at ground level dump coal into the underground hopper for transport to the furnaces. In cold weather, however, some of the lumps of coal may freeze together and lodge up against the walls of the hopper room.

On the date in question, the appellant, stationed on a grate inside one of the hoppers, was instructed to clear the hopper by breaking apart the frozen lumps of coal. According to the appellant, each time a railroad car would appear, a PEPCO employee at ground level would sound an alarm and initiate a verbal warning signaling the appellant to move away from the fall area where the coal would be dumped from above. Appellant alleges that while he was performing his coal-breaking responsibilities, certain PEP-CO employees, as part of a joke, negligently dumped coal on appellant without sounding any warning causing serious injury. Subsequently, the appellant and his wife 3 filed the present tort action against PEPCO 4 in the Circuit Court for Montgomery County. 5 Thereafter, PEPCO moved for summary judgment, arguing inter alia that it was the appellant’s “statutory employer” and therefore the employee’s exclusive remedy was under the Workmen’s Compensation Act (“the Act”).

In response, the appellant denied PEPCO was his “statutory employer.” He also argued that PEPCO “contracted away or waived” any immunity afforded under the Act pursuant to its contract with Joy. ⁴⁴⁸ After hearing arguments, the trial court granted PEP-CO’s motion for summary judgment. According to the court, “[tjhere is nothing that has been filed in this case from which even an inference can be drawn that PEPCO was not the [appellant’s] statutory employer.” The court further concluded that PEPCO did not “contract[ ] away” its immunity under the Act. 6 Judgment was entered on December 5, 1985. In an unreported per curiam opinion (No. 110, September Term, 1986, filed September 29, 1986), the Court of Special Appeals affirmed. We granted appellant’s request for a writ of certiorari.

We now reverse the judgment of the intermediate appellate court. II We begin our analysis with Brady v. Ralph Parsons Co., 308 Md. 486 , 520 A.2d 717 (1987), which exhaustively reviewed the “statutory employer” provision of the Workmen’s Compensation Act. In Brady , we reiterated that a “statutory employer” under section 62 of the Act is immune from a suit at law. An injured worker’s exclusive remedy against this statutory creature is under the Act.

Brady, 308 Md. at 502 , 520 A.2d at 726 . See State v. City of Baltimore, 199 Md. 289 , 86 A.2d 618 (1952). Quoting from Honaker v. W.C. & A.N. Miller Development Co., 278 Md. 453 , 365 A.2d 287 (1976) (Honaker I), we outlined in Brady the requirements for qualifying as a “statutory employer.” There we stated that a “statutory employer” is: 1) a principal contractor 2) who has contracted to perform work 3) which is part of his trade, business or occupation; and ⁴⁴⁹ 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. Brady, 308 Md. at 503 , 520 A.2d at 726 (footnotes omitted); Honaker I, 278 Md. at 460 , 365 A.2d at 291 .

Accord, Honaker v. W.C. & A.N. Miller Development Co., 285 Md. 216, 225 , 401 A.2d 1013, 1017-18 (1979) (Honaker II); Coffey v. Derby Steel Co., 291 Md. 241, 251 , 434 A.2d 564, 569 (1981). Elaborating on this scheme, we 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.” Brady, 308 Md. at 504 , 520 A.2d at 727 (quoting Honaker I, 278 Md. at 460 , 365 A.2d at 291 ). This has been referred to as an “antecedent undertaking” or “principal contract.” Id., 520 A.2d at 727 .

See Warren v. Dorsey Enterprises, Inc., 234 Md. 574, 579 , 200 A.2d 76, 78 (1964). 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. Brady, 308 Md. at 504 , 520 A.2d at 727 (quoting Honaker I, 278 Md. at 460 , 365 A.2d at 291 ). The work covered by the second contract (i.e., the subcontract) must be work which is a part of the principal contractor’s trade, business or occupation.

Id., 520 A.2d at 727 . See Warren, 234 Md. at 578 , 200 A.2d at 78 ; 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 . Summarizing section 62 in State v. Bennett Building Co., 154 Md. 159, 166 , 140 A. 52, 54-5 (1928), we said: “Although acting independently of the other, the principal contractor and the subcontractor, with his worker 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].” ⁴⁵⁰ See Long Co. v. State Accident Fund, 156 Md. 639, 645 , 144 A. 775, 778 (1929) (“to create the principal contractor a statutory employer he must have contracted in the first instance to do the work himself, and subsequently sublet the whole or a portion of it to someone else”). Ill The appellant’s principal contention in this appeal is that PEPCO cannot be his “statutory employer” because there is no “principal contract” or “antecedent undertaking” between PEPCO and a third party.

In support of this argument, appellant focuses on the various contracts recognized by law and distinguishes between express and implied in fact contracts, and quasi-contracts (or contracts implied in law). According to appellant, the “statutory employer” provision only contemplates express contracts and implied in fact contracts, whereas the contractual relationship between PEPCO and the public is one implied in law. He states: “The [Honaker] contract must be express, or at least one implied in fact where there is a real agreement involving the essential elements of contract such as assent, bargain and a meeting of the minds. The quasi-contractual principal of unjust enrichment or remedy for restitution does not apply to agreements deliberately entered into as was intended in Honaker situations by this Court.” (citations omitted).

While we agree with the appellant’s contention that a principal contract between PEPCO and a third party is absent in this case, we reach our conclusion on somewhat different grounds. Where the appellant focuses on contract law, we prefer to focus on the intent of the legislature. In a long line of cases in this Court beginning with State v. Bennett Building Co. in 1927, we have never remotely recognized the type of relationship PEPCO contends is sufficient to give rise to an “antecedent undertaking” or “principal contract.” In our view, the legislature never intended a “principal contract” to arise where there is a ⁴⁵¹ statutory duty 7 on the part of a public utility to provide a regulated commodity to the public. Our cases make clear that the “principal contract” contemplated by the legislature is one in which a contractor agrees for stated consideration to perform some work or service according to plans, specifications or directions of a third party.

See, e.g., Long Co. v. State Accident Fund, 156 Md. at 643 , 144 A. at 777 ; State v. City of Baltimore, 199 Md. 289 , 86 A.2d 618 (1952); Kegley v. Vulcan Rail & Construction Co., 203 Md. 476, 478 , 101 A.2d 822 (1954); Dorsey Enterprises, 234 Md. at 579 , 200 A.2d at 78 ; Honaker I, 278 Md. at 460-61 , 365 A.2d at 291-92 ; Brady, 308 Md. at 505 n. 22, 520 A.2d at 727 n. 22. Clearly, PEPCO’s alleged contractual relationship with the public fails to meet this definition. PEPCO is not performing any work or service according to customer specifications or direction; it is merely providing a regulated commodity pursuant to statutorily mandated requirements. If indeed there is a contract in this case, it is more akin to a contract for the sale of a product, 8 which this Court has concluded is not within the contemplation of the “statutory employer” provision of the Act.

See Roland