Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

McQueer v. Perfect Fence Co.

Supreme Court of Michigan

July 10, 2018

DAVID J. McQUEER, Plaintiff-Appellee,
v.
PERFECT FENCE COMPANY, Defendant-Appellant.

          Argued on application for leave to appeal April 12, 2018

          Brian K. Zahra Bridget M. McCormack David F. Viviano Richard H. Bernstein Kurtis T. Wilder Elizabeth T. Clement Stephen J. Markman Chief Justice.

         Syllabus

         David J. McQueer brought a negligence action in the Grand Traverse Circuit Court against his employer, Perfect Fence Company, to recover damages after he was injured on the job. Defendant moved for summary disposition on the ground that the exclusive-remedy provision of the Worker's Disability Compensation Act (WDCA), MCL 418.101 et seq., barred plaintiff's action. Plaintiff responded that his action was not barred because defendant had violated MCL 418.611 by failing to procure workers' compensation coverage for him and had violated MCL 418.171 by encouraging him to pose as a nonemployee. Plaintiff additionally moved to amend his complaint to add claims of intentional tort and breach of an employment contract. Plaintiff argued that the evidence raised a question of fact about whether defendant intended to injure him in a way that brought plaintiff's claim within the scope of the intentionaltort exception to the exclusive-remedy provision of the WDCA. The trial court granted defendant's motion for summary disposition under MCR 2.116(C)(10), concluding that defendant had not violated MCL 418.611 because defendant had provided workers' compensation coverage. The court also ruled that MCL 418.171 was not applicable to plaintiff's claims. The court denied plaintiff's motion to amend his complaint, concluding that amendment would be futile because the undisputed facts did not demonstrate that defendant intended to injure plaintiff. Plaintiff appealed. The Court of Appeals, HOEKSTRA and SHAPIRO, JJ. (TALBOT, C.J., concurring), reversed the trial court's grant of summary disposition and denial of plaintiff's motion to amend his complaint in an unpublished per curiam opinion issued April 19, 2016 (Docket No. 325619). The panel agreed with the trial court that defendant had not violated MCL 418.611, but it concluded that plaintiff had established a question of fact regarding whether defendant had improperly encouraged him to pose as a contractor for the purpose of evading liability under WDCA in violation of MCL 418.171(4). The panel also concluded that because plaintiff had presented sufficient evidence to create a question of fact regarding whether an intentional tort had occurred, the trial court abused its discretion by not allowing plaintiff to amend his complaint. Defendant sought leave to appeal. The Supreme Court ordered and heard oral argument on whether to grant the application or take other peremptory action. 501 Mich. 954 (2018).

         In an opinion by Justice ZAHRA, joined by Chief Justice MARKMAN and Justices VIVIANO and WILDER, the Supreme Court, in lieu of granting leave to appeal, held:

         In limited circumstances, MCL 418.171(4) provides a civil remedy to an employee of a contractor engaged by a principal. Because plaintiff was not the employee of a contractor engaged by defendant, he had no cause of action under MCL 418.171. The part of the Court of Appeals judgment pertaining to MCL 418.171 was reversed.

         1. MCL 418.131(1) provides that the right to recover workers' compensation benefits under the WDCA is an employee's exclusive remedy against the employer for a personal injury. However, MCL 418.641(2) provides an exception to MCL 418.131(1) for cases in which an employer violates MCL 418.171. MCL 418.171(1) provides that if “any employer subject to the provisions of this act, in this section referred to as the principal, contracts with any other person, in this section referred to as the contractor, who is not subject to this act . . . and who does not become subject to this act . . . prior to the date of the injury or death for which claim is made for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal shall be liable to pay to any person employed in the execution of the work any compensation under this act which he or she would have been liable to pay if that person had been immediately employed by the principal.” MCL 418.171(3) provides that MCL 418.171 applies to a principal and contractor only if the contractor engages persons to work other than persons who would not be considered employees under MCL 418.161(1)(d). MCL 418.171(4) provides that principals willfully acting to circumvent the provisions of MCL 418.171 or MCL 418.611 by using coercion, intimidation, deceit, or other means to encourage persons who would otherwise be considered employees within the meaning of the WDCA to pose as contractors for the purpose of evading MCL 418.171 or the requirements of MCL 418.611 shall be liable subject to the provisions of MCL 418.641.

         2. The Court of Appeals erred by considering the civil-remedy provision of MCL 418.171(4) in isolation rather than reading MCL 418.171 as a whole. MCL 418.171(1) sets forth a statutorily imposed employment relationship under which an employer assumes the role of a principal by contracting with a contractor for the performance of any work. The principal becomes liable for the payment of workers' compensation benefits to any person employed by the contractor for injuries sustained while performing any work on behalf of the principal, provided that the contractor is either not subject to the WDCA or has failed to obtain adequate insurance as required by the WDCA. MCL 418.171(1) thus creates a tripartite employment relationship among the principal, the contractor, and the contractor's employees. MCL 418.171(3) provides that MCL 418.171 applies to a principal and contractor only if the contractor engages employees, as defined elsewhere in the WDCA. The qualifying language “only if” limits the applicability of the entire section, including Subsection (4). In this case, plaintiff was a direct employee of defendant, not an employee of a contractor, and therefore no tripartite employment relationship existed. Accordingly, the requirements of Subsection (3) were not met, and plaintiff could not seek the civil remedy under Subsection (4).

         3. The Court of Appeals failed to give proper meaning to the term “principal, ” which has a specialized meaning under MCL 418.171 and is not interchangeable with the term “employer.” MCL 418.171(1) designates the “principal” as an employer who contracts with a contractor that does not have adequate workers' compensation coverage for its employees. Accordingly, not all employers are principals under the statutory-employer provision. Further, MCL 418.171(1) states that a principal can be liable to pay the compensation that it would have been liable to pay if that person, the contractor's employee, had been immediately employed by the principal. In other words, the principal is not the employee's actual employer; the principal is merely deemed to be the employer for certain purposes. To read “principal” as being equivalent with “employer” would render the statutory requirements under Subsection (1) superfluous. The principal may have its own employees, but those employees are not the protected parties under MCL 418.171. Under MCL 418.171, the principal may become the statutory employer only for purposes of providing workers' compensation benefits to the contractor's employees. The civil-remedy provision in MCL 418.171(4) only applies to principals willfully acting to circumvent MCL 418.171 or MCL 418.611 by encouraging employees to pose as contractors. Because defendant had not contracted with a contractor with inadequate workers' compensation coverage for its own employees, defendant was not a “principal” for purposes of the statutory-employer provision, and the civil-remedy provision under MCL 418.171(4) did not apply.

         Court of Appeals judgment reversed in part; application for leave to appeal denied in part.

         Justice ZAHRA, joined by Chief Justice MARKMAN and Justice WILDER, concurred in full with the majority opinion but wrote separately to dissent from the Court's decision not to address defendant's claim regarding plaintiff's motion to amend his complaint. Defendant argued in his application for leave to appeal that the Court of Appeals erred by reversing the trial court's denial of plaintiff's motion to amend his complaint to allege that defendant had committed an intentional tort, which is an express exception to the exclusive-remedy provision of the WDCA. The WDCA provides that an intentional tort exists only when an employee is injured as a result of a deliberate act of the employer and the employer specifically intended an injury, and plaintiff failed to present evidence that defendant either had a specific intent to injure him or had actual knowledge that an injury was certain to occur and willfully disregarded that knowledge. Therefore, Justice ZAHRA would have held that the trial court's decision to reject plaintiff's motion to amend his complaint was not an abuse of discretion. Justice ZAHRA would have fully reversed the Court of Appeals' judgment and reinstated the trial court's orders granting summary disposition in favor of defendant and denying plaintiff's motion to amend his complaint.

         Justice CLEMENT, joined by Justices MCCORMACK and BERNSTEIN, concurring in part and dissenting in part, agreed with the majority's decision to deny leave to appeal regarding the remaining issues, but disagreed with its conclusion that MCL 418.171(4) provides a civil remedy only to an employee of a contractor engaged to a principal. She stated that because MCL 418.171(4) refers to “principals, ” who are defined in MCL 418.171(1) as “any employer subject to the provisions of this act, ” the plain language of the statute supported an interpretation of a “principal” as any employer subject to the WDCA, and defendant fit that definition. She also noted that MCL 418.171(4) refers to “employees within the meaning of this act” rather than to persons engaged to work by a contractor, which further indicated that a tripartite relationship was not required for the imposition of liability under MCL 418.171(4). Accordingly, Justice CLEMENT dissented from the reversal of the Court of Appeals' decision as to MCL 418.171(4), and she would have affirmed the Court of Appeals' holding that the trial court erred by granting summary disposition to defendant because plaintiff raised a genuine issue of material fact as to whether defendant willfully acted to circumvent the provisions of MCL 418.171 or MCL 418.611 by encouraging plaintiff, who acted as a full-time employee, to pose as an independent contractor.

         BEFORE THE ENTIRE BENCH

          OPINION

          ZAHRA, J.

         Plaintiff, David J. McQueer, was injured in the scope of his employment and is now receiving benefits pursuant to the Worker's Disability Compensation Act (WDCA).[1]Plaintiff brought this action against Perfect Fence Company, his employer, to recover tort damages. Plaintiff maintains, among other things, that defendant is liable under MCL 418.171(4) because defendant used "coercion, intimidation, deceit, or other means to encourage [plaintiff] who would otherwise be considered [an] employee[] within the meaning of this act to pose as [a] contractor[] for the purpose of evading" liability under §§ 171 or 611 of the WDCA. The trial court dismissed plaintiff's action, concluding that MCL 418.171(4) was not applicable to plaintiff's claims. The Court of Appeals reversed, concluding that MCL 418.171(4) was applicable and that plaintiff had established a genuine question of material fact under that provision. We hold that MCL 418.171 does not apply in this case. In limited circumstances, § 171(4) provides a civil remedy to an employee of a contractor engaged by a principal. Because plaintiff is not the employee of a contractor engaged by defendant, he has no cause of action under MCL 418.171.

         For this reason, as more fully explained in this opinion, we reverse the Court of Appeals judgment as to whether MCL 418.171 applies.[2]

         I. FACTS AND PROCEEDINGS

         Plaintiff David McQueer worked intermittently as a laborer for defendant Perfect Fence Company.[3] On January 14, 2014, plaintiff was injured on the job when he was struck in the head by the bucket of a Bobcat front-loader. Plaintiff was installing fence posts with a coworker and Mike Peterson.[4] The proper method for installing fence posts is to use an auger or hand-digger to dig post holes to a depth of anywhere between 3 and 6 feet. Despite knowing this, Peterson decided to use the Bobcat bucket to hammer the fence posts into the frozen ground. Peterson and plaintiff had previously used the Bobcat bucket to hammer fence posts into the ground without injury.

         Sometime before this accident, Bob Krumm, part-owner of defendant, learned that Peterson had used the Bobcat to hammer fence posts. Krumm became upset over this misuse of the Bobcat and informed Peterson and other employees that this extremely dangerous misuse of the Bobcat must cease immediately. During pretrial discovery, Krumm offered deposition testimony that when someone misuses a Bobcat to install fence posts in this manner he or she is "guaranteed to get hurt." Although plaintiff knew that Krumm did not want the Bobcat used to install fence posts, plaintiff felt compelled to "go along" with Peterson's actions, presumably because he was a senior employee to plaintiff. At the time of the Bobcat accident, plaintiff sat underneath the bucket, was not wearing a hard hat, and was talking on his cell phone. Plaintiff explained that Peterson had "miscalculated" in lowering the bucket, resulting in the fence post going farther into the ground than anticipated. According to plaintiff, the fence post hit a water pocket, which caused the post to go into the ground deeper than anticipated, causing the bucket to lower with some degree of force onto his head. Plaintiff testified in a deposition that Peterson did not intentionally injure him with the Bobcat. Plaintiff further stated in the deposition that he did not foresee this injury occurring through the misuse of the Bobcat.

         The testimony diverges regarding what happened after the accident. According to plaintiff, as he was being transported to the hospital, Peterson told him not to tell anyone at the hospital that he was injured while working for defendant because he was "not on the books" and there were no workers' compensation benefits for him. After his release from the hospital, plaintiff claims that Krumm and defendant's accountant visited him at home and told him that he was not covered under defendant's workers' compensation plan. Krumm and defendant's accountant denied any such conversation. Regardless, it is undisputed that defendant had workers' compensation insurance that covered plaintiff's injuries. And, in fact, plaintiff is receiving ongoing workers' compensation benefits through defendant's workers' compensation insurer.

         Plaintiff brought suit against defendant, alleging multiple claims based on negligence. Defendant moved for summary disposition on the ground that the WDCA's exclusive-remedy provision barred plaintiff's civil action. Plaintiff responded in opposition that his civil action was not barred under the WDCA because defendant had violated MCL 418.611 by failing to procure workers' compensation coverage for him and had violated MCL 418.171 by encouraging him to pose as a nonemployee. Plaintiff additionally moved to amend his complaint to add claims of intentional tort and breach of an employment contract. Plaintiff argued that the evidence raised a question of fact about whether defendant intended to injure him in a way that brought plaintiff's claim within the scope of the intentional-tort exception to the exclusive-remedy provision of the WDCA.

         The trial court granted defendant's motion for summary disposition under MCR 2.116(C)(10), concluding that defendant had not violated MCL 418.611 because defendant had provided workers' compensation coverage. The court also ruled that MCL 418.171 was not applicable to plaintiff's claims. The court denied plaintiff's motion to amend his complaint, concluding that amendment would be futile because the undisputed facts did not demonstrate that defendant intended to injure plaintiff.[5] Plaintiff appealed.

         The Court of Appeals reversed the trial court's grant of summary disposition and denial of plaintiff's motion to amend his complaint.[6] The panel agreed with the trial court that defendant had not violated MCL 418.611.[7] The panel, however, concluded that plaintiff established a question of fact regarding whether defendant under MCL 418.171(4) used" 'coercion, intimidation, deceit, or other means to encourage persons who would otherwise be considered employees within the meaning of this act to pose as contractors for the purpose of evading' liability under sections 171 or 611 of the WDCA."[8] The panel also concluded that plaintiff had presented sufficient evidence to create a question of fact regarding whether an intentional tort had occurred under the judicially created "continuously operative dangerous condition" exception to the WDCA's exclusive-remedy provision.[9] Thus, the panel determined that the trial court abused its discretion by not allowing plaintiff to amend his complaint.[10]

         Defendant sought leave to appeal in this Court. We directed the Clerk of this Court to schedule oral argument on whether to grant the application or take other action, ordering the parties to address the following issues:

(1) whether the statutory employer provision of MCL 418.171 is applicable to the plaintiff's claims; and (2) if so, whether the plaintiff has established a genuine issue of material fact sufficient to avoid summary disposition; and (3) whether the Court of Appeals erred by reversing the Grand Traverse Circuit Court's order denying, on the basis of futility, the plaintiff's motion to amend his complaint to add an intentional tort claim.[11]

         II. STANDARD OF REVIEW

         We review de novo questions of law in a workers' compensation case.[12] Questions of statutory interpretation are likewise reviewed de novo.[13] We also review de novo a trial court's grant of summary disposition under MCR 2.116(C)(10).[14]

         III. ANALYSIS

         The dispositive question before this Court is whether the statutory-employer provision under MCL 418.171 is applicable to the facts developed in this case.[15] All matters of statutory interpretation begin with an examination of the language of the statute.[16] "The primary rule of statutory construction is that, where the statutory language is clear and unambiguous, the statute must be applied as written."[17] "A necessary corollary of these principles is that a court may read nothing into an unambiguous statute that is not within the manifest intent of the Legislature as derived from the words of the statute itself."[18] A statutory term or phrase "cannot be viewed in isolation, but must be construed in accordance with the surrounding text and the statutory scheme."[19]

         The exclusive-remedy provision in MCL 418.131(1) provides that the right to recover workers' compensation benefits under the WDCA "shall be the employee's exclusive remedy against the employer for a personal injury or occupational disease." But MCL 418.641(2) provides that if an employer violates MCL 418.171, the employee "shall be entitled to recover damages from the employer in a civil action because of an injury that arose out of and in the course of employment notwithstanding the provisions of [MCL 418.131]." Thus, the question turns on whether defendant violated § 171. MCL 418.171 reads, in pertinent part:

(1) If any employer subject to the provisions of this act, in this section referred to as the principal, contracts with any other person, in this section referred to as the contractor, who is not subject to this act . . . and who does not become subject to this act . . . prior to the date of the injury or death for which claim is made for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal shall be liable to pay to any person employed in the execution of the work any compensation under this act which he or she would have been liable to pay if that person had been immediately employed by the principal. . . .
* * *
(3) This section shall apply to a principal and contractor only if the contractor engages persons to work other than persons who would not be considered employees under section 161(1)(d).
(4) Principals willfully acting to circumvent the provisions of this section or section 611 by using coercion, intimidation, deceit, or other means to encourage persons who would otherwise be considered employees within the meaning of this act to pose as contractors for the purpose of evading this section or the requirements of section 611 shall be liable subject to the provisions of section 641.

         Subsection (1) sets forth a statutorily imposed employment relationship, under which an employer assumes the role of a "principal" by contracting with an independent contractor, referred to as the "contractor," for the performance of any work. The principal becomes liable for the payment of workers' compensation benefits to "any person employed" by the contractor for injuries sustained while performing any work on behalf of the principal, provided that the contractor is either not subject to the WDCA or has failed to obtain adequate insurance as required by the WDCA. Subsection (1) thus creates a tripartite employment relationship among the principal, the contractor, and the contractor's employees.[20] Subsection (3), worded in the affirmative, provides that § 171 applies to a principal and contractor only if the contractor engages employees, as defined elsewhere in the WDCA.[21] Subsection (4), particularly relevant here, provides a civil remedy when the principal uses "coercion, intimidation, deceit, or other means to encourage persons who would otherwise be considered employees within the meaning of this act to pose as contractors for the purpose of evading" liability under §§ 171 or 611 of the WDCA.[22]

         The Court of Appeals erred by considering the civil-remedy provision of MCL 418.171(4) in isolation. When engaging in statutory construction, courts must construe the text as a whole.[23] Read as a whole, it is clear that § 171 is not applicable in this matter. Subsection (1) statutorily imposes an employment relationship between the principal and the contractor's uninsured employees for purposes of providing workers' compensation benefits. In general, statutory-employer provisions generally prevent an employer from escaping workers' compensation liability by contracting with uninsured contractors to do work that is part of the employer's trade, business, or occupation.[24]Section 171 thus effectively works as a "safety net" to protect the employees of contractors who do not have adequate workers' compensation insurance. Subsection (3) explicitly sets forth when the statutory-employer provision is applicable, stating that "[t]his section shall apply to a principal and contractor only if the contractor engages persons to work other than persons who would not be considered employees . . . ."[25] The qualifying language-"only if"-limits the applicability of the entire section, including Subsection (4). In other words, if the requirements under Subsection (3) are not met, then an injured employee cannot seek the civil remedy under Subsection (4).[26]

         The requirements of Subsection (3) were not met in the instant case. Thus, the parties here were not under any statutory-employment relationship. It is undisputed that plaintiff was an employee of defendant-his direct employer. Plaintiff was not an employee of a contractor, and thus no tripartite employment relationship existed. As previously stated, if the requirements of Subsection (3) are not met, then an injured employee cannot seek the civil remedy under Subsection (4).

         The dissent-reading Subsection (4) in isolation-argues that the requirement for a tripartite relationship renders the reference in Subsection (4) to § 611 superfluous. The dissent suggests that Legislature's references to § 171 and § 611 under Subsection (4) are only relevant if the principal is trying to evade its obligations under § 611 by not maintaining workers' compensation coverage. Subsection (4), however, does not express that the principal must be trying to evade its own responsibilities. But the principal could be attempting to help the contractor evade § 611 by getting the contractor's employees to pose as independent contractors. Moreover, the principal would not escape liability if it coerced its direct employees to pose as independent contractors. Section 641(2) also applies if a direct employer violates § 611. Thus, if a direct employer coerced its employees to pose as contractors to evade workers' compensation coverage under § 611, then it is subject to civil liability under § 641(2).[27]

         The Court of Appeals also failed to give proper meaning to the term "principal," which has a specialized meaning under § 171 and is not interchangeable with the term "employer." Subsection (1) designates the "principal" as an employer who contracts with a contractor that does not have adequate workers' compensation coverage for its employees. Thus, not all employers are principals under the statutory-employer provision. This conclusion is further confirmed by another part of Subsection (1), which states that a principal can be liable to pay the compensation that it "would have been liable to pay if that person [i.e., the contractor's employee] had been immediately employed by the principal." In other words, the principal is not the employee's actual employer. Instead, as Subsection (1) goes on to provide, if "compensation is claimed from or proceedings are taken against the principal, then . . . reference to the principal shall be substituted for reference to the employer . . . ." Consequently, the principal is merely deemed to be the employer for certain purposes.

         To read "principal" as being equivalent with "employer" would render the statutory requirements under Subsection (1) superfluous. The principal may have its own employees, but those employees are not the protected parties under § 171. Under that section, the principal may become the statutory employer only for purposes of providing workers' compensation benefits to the contractor's employees.[28]

         The specialized meaning of "principal" is critical when employing the whole-text canon of construction to interpret § 171. The civil-remedy provision under Subsection (4) only applies to "[p]rincipals willfully acting to circumvent the provisions of this section or section 611" by encouraging employees to pose as contractors. The Legislature's use of the term "principal" under Subsection (4) is presumed to be intentional. There is no dispute that defendant was plaintiff's direct employer. Defendant had not contracted with a contractor with inadequate workers' compensation coverage for its own employees. Thus, defendant is not a "principal" for purposes of the statutory-employer provision. Because defendant is not a "principal," the civil-remedy provision under Subsection (4) does not apply. For these reasons, § 171 is not applicable in this case.[29]

         IV. CONCLUSION

         We hold that the statutory-employer provision under MCL 418.171 is not applicable in this case, and thus, plaintiff cannot seek a civil remedy under Subsection (4). We reverse the Court of Appeals judgment as to MCL 418.171 and deny leave as to any remaining issues presented in the application because ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.