Tony Draper v. American Rice, Inc.

Opinion issued July 29, 2010. In The Court of Appeals For The First District of Texas ———————————— NO. 01-09-00239-CV ——————————— Tony Draper, Appellant V. American Rice, Inc., Appellee On Appeal from the 412th District Court Brazoria County, Texas Trial Court Case No. 46393 MEMORANDUM OPINION Appellant, Tony Draper, sued American Rice, Inc. for negligence for injuries sustained while working in the Domestic Packaging Department of its Freeport, Texas warehouse. American Rice filed a traditional motion for summary judgment. After a hearing, the trial court granted the summary judgment and entered a take nothing judgment. Draper appealed, arguing in three issues that the trial court erred in granting the summary judgment because: (1) he presented evidence of a genuine issue of material fact pertaining to whether American Rice was an “employer” under the Worker’s Compensation Act; (2) American Rice was not his employer under the Worker’s Compensation Act; and (3) American Rice should be equitably estopped from arguing that he is its employee because its contracts indicate that he was not its employee. We affirm. BACKGROUND On July 10, 2007, appellant, Tony Draper, was working in the Domestic Packing Department of American Rice, Inc. Draper obtained the job through Recana Solutions, a temporary employment agency, which provided temporary employees, including Draper, to American Rice. On that day, Draper was lifting and moving boxes. Around 2:00 p.m., he collapsed from overheating and was taken by ambulance to a hospital. According to his original petition, he spent 23 days in the hospital. Draper filed for workers’ compensation. As of December 29, 2008, Texas Mutual Insurance Company had paid $126,375.42 in Draper’s medical bills under a worker’s compensation policy taken out by Recana. On February 19, 2008, Draper sued American Rice, claiming that it was negligent for failing to provide him with a safe working environment. At the time of Draper’s injury, American Rice likewise had a worker’s compensation insurance policy, issued to it by American Home Assurance Company. On December 24, 2008, American Rice filed a motion for summary judgment, arguing that Draper’s suit was barred by the exclusive remedy provision of the Texas Workers’ Compensation Act (TWCA) and the borrowed servant doctrine. On March 3, 2009, the trial court held a hearing on American Rice’s motion, and it granted the motion seven days later. Draper appealed. STANDARD OF REVIEW In reviewing a traditional summary judgment, an appellate court must consider whether the successful movant at the trial level carried its burden of showing that there was no genuine issue of material fact and that judgment should be rendered as a matter of law. Tex. R. Civ. P. 166a(c); KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). We assume all of the non-movant’s evidence is true and indulge every reasonable inference in favor of the non-movant. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). If the movant can show it is entitled to judgment as a matter of law, the burden shifts to the non-movant to present evidence raising a fact issue to defeat the motion for summary judgment. Haight v. Savoy Apts., 814 S.W.2d 849, 851 (Tex. App.—Houston [1st Dist.] 1991, writ denied). When the trial court’s order does not specify the grounds on which a motion for summary judgment was granted, we will affirm the summary judgment if any of the theories advanced in the motion is meritorious. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996). ANALYSIS A. Status of American Rice as Draper’s Employer In his first and second points of error, Draper argues that the trial court erred in granting American Rice’s motion for summary judgment because American Rice was not Draper’s employer as defined by the TWCA as a matter of law and Draper presented contractual evidence and testimony raising a fact issue as to whether American Rice was his employer so as to trigger the exclusive remedy provision of the TWCA. The relationship between Recana and American Rice was governed by a contract that provided, in relevant part: 1.1 Recana shall provide ARI with experienced and qualified employees of Recana (“Personnel”) to perform services as requested by ARI. ARI shall have the right to accept or reject Personnel referred by Recana for any reason, and ARI shall have the right to request replacement Personnel at any time. 1.4 Recana is an independent contractor, and not an employee, agent, partner, or joint venture partner of ARI. ARI does not undertake by this Agreement or otherwise to perform any obligation of Recana, whether by regulation or contract. 2.1 Personnel shall at all times be and remain employees of Recana, and Personnel shall under no circumstances be considered employees, agents, or independent contractors of ARI. Recana shall be solely responsible for all salaries, benefits, taxes, social security, Medicare, and other withholding requirements applicable to Personnel. 2.2 Recana shall provide Personnel who are capable of performing the work for which they are submitted. . . . 6.1 ARI will provide Recana with adequate space within the Freeport Plant facility for use as a Management and Coordination area. The space shall be readily accessible for new Personnel. Recana agrees to staff the Management and Coordination area with an On-Site Manager/Coordinator. 6.2 The Recana On-Site Manager/Coordinator will coordinate staffing requirements and ensure that staffing schedules are filled; resolve contractor related problems; answer contractor questions; pick up time cards and deliver checks; act as a liaison between ARI and Recana personnel, and carry out any other duties required to ensure efficient contractor operations at the plant. The On-Site Manager/Coordinator will work closely with applicable plant supervisors to ensure no contractor related issues disrupt the work-flow and production of the plant. 7.1 Recana shall subscribe for and maintain in fill force and effect during the term of this Agreement all insurance described below, at a minimum. . . a. Comprehensive General Liability Insurance including contractual liability coverage, bodily injury and property damage coverage. . . b. Workers’ Compensation Insurance and Occupational Disease Instances as required by law, and Employer’s Liability Insurance with limits of no less than $1,000,000.00, or the amount required by law, whichever is higher, for accidents or occupational disease covering all work related to this Agreement. c. Basic Automotive Liability Insurance. . . . As summary judgment evidence, both parties presented depositions and affidavits regarding the control over Draper’s work at the time of his injury. Terry Wiley, the Recana employee who was responsible for providing and supervising workers, testified that he was Draper’s Recana supervisor on the day of Draper’s injury but that he did not specifically supervise Draper’s work. Rather, he supervised Recana employees “all over the plant.” However, if a worker provided by Recana encountered a problem, then the worker would “go to the foremen and the foreman would get in touch with [him].” He testified that the “American Rice guys, they supervise[d] [Draper].” He also testified that he would “give” Draper to American Rice and they would tell him where to work, but if he saw Draper doing something wrong he was permitted to “talk to” him about it. He did not, however, give Draper any instructions on the morning of Draper’s injury; instead the instructions would have come from a supervisor at American Rice. Wiley testified that his own office was “just down the road” from where Draper worked. Richard Schneider, the packaging manager for American Rice, also provided deposition and affidavit testimony. He testified that, based on the contract between Recana and American Rice, Draper was considered an employee of Recana. Schneider walked around the factory to make sure things were operating properly. If there was a problem with a Recana employee, he could talk with the employee’s supervisor or he could direct him as “need[ed] to make the business go.” On the morning of Draper’s injury, a person from American Rice would have told Draper where to work and what to do. American Rice assigned both American Rice employees and Recana Temps to work on particular machines in the Domestic Packaging Department. Schneider testified, “With respect to Recana Temps who work at [American Rice] in the Domestic Packaging Department, [American Rice] supervisors have the right to direct and control them with respect to the details of their particular work.” He further testified that American Rice “supervisors direct the Recana Temps where to work and what do when they come to work in the Domestic Packaging Department.” Moreover, “[w]hile Recana has a manager/coordinator person on-site at the [American Rice] facilities who helps coordinate staffing of the Recana Temps, [American Rice] Supervisors have the right to control the progress, details and method of operations of the Recana Temps while they are working in the Domestic Packaging Department.” Schneider also testified that an American Rice supervisor can dismiss a Recana Temp. He concluded by testifying that [American Rice] controls all the details of how the Domestic Packaging Department is run. All of the orders, directions, and instructions for doing the work in the Domestic Packaging Department come from [American Rice]. All employees, including Recana Temps, are required to follow [American Rice’s] rules, policies and procedures regarding working in the packaging department. Draper, by contrast, directs us to the contract between American Rice and Recana, which he contends established that he and the other Recana temporary workers were not employees of American Rice. He argues that because the contract required Recana to pay his salary, payroll taxes, social security, and other deductions he was a Recana employee rather than an employee of American Rice. He also argues that paragraph 7.1 of the contract between Recana and American Rice required Recana to have its own workers’ compensation policy and that this made him a Recana employee rather than an employee of American Rice. Section 408.001 of the Texas Labor Code provides that “[r]ecovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage . . . against an employer . . . for . . . a work-related injury sustained by an employee.” Tex. Lab. Code Ann. § 408.001(a) (Vernon 2006). Thus, the causes of action available to Draper against American Rice depend upon whether American Rice was (1) his employer and covered by workers compensation insurance, (2) his employer and not covered by workers compensation insurance, or (3) not his employer. Garza v. Exel Logistics, Inc., 161 S.W.3d 473, 475 (Tex. 2005). In the first instance, Draper’s exclusive remedy would be the recovery of workers’ compensation benefits. Id. In the second, he would be required to prove that his injuries were caused by American Rice or its “agent, servant or employee acting within the general scope of employment.” Id. In the third instance, he would have available all causes of action, and American Rice would have all available defenses. Id. Here, it is undisputed that American Rice was covered by workers’ compensation insurance at the time of Draper’s injury.[1] Therefore, to recover against American Rice in this suit, Draper had to prove that American Rice was not his employer under the TWCA,[2] so that Draper’s suit was not barred by the exclusive remedy provision in section 408.001 of the Labor Code. See id. Under the TWCA, an employer is defined as “a person who makes a contract of hire, employs one or more employees, and has workers’ compensation insurance coverage.” Tex. Lab. Code Ann. § 401.011(18) (Vernon Supp. 2009). A person may have more than one employer for workers’ compensation purposes under the TWCA. Wingfoot Enters. v. Alvarado, 111 S.W.3d 134, 139–40 (Tex. 2003). In particular, a temporary employee in Draper’s position may be working for a temporary staffing provider, the “general employer” (here, Recana) and “also be subjected to laboring in the workplace and under the general employer’s client company,” a “special employer” (here, American Rice). See Wingfoot Enters., 111 S.W.3d at 142–43. “An employee injured while working under the direct supervision of a client company is conducting the business of both the general employer and that employer’s client.” Id. at 143. Thus, “the employee should be able to pursue worker’s compensation from either.” Id. The “borrowed servant” doctrine applies in determining whether an entity was an injured worker’s “special employer.” See Flores v. N. Am. Tech. Group, Inc., 176 S.W.3d 442, 448 (Tex. App.—Houston [1st Dist.] 2004, pet. denied). “Texas has long recognized that a general employee of one employer may become the borrowed servant of another, special employer.” Id. “The borrowed servant doctrine is implicated when the general employer loans or supplies an employee to another, who is then termed the special or borrowing employer.” Id. “Whether a general employee of one employer has become the borrowed employee of another ‘employer’ hinges on whether the other special employer has the right to direct and control the employee with respect to the details of the particular work at issue.” Id. at 448–49. “The test is whether the borrowing employer has the right to control the progress, details, and methods of operations of the work.” Id. (citing Limestone Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308, 312 (Tex. 2002)). “The borrowing employer must control not merely the end sought to be accomplished, but also the means and details of its accomplishment.” Id. at 449 (citing Thompson v. Travelers Indem. Co., 789 S.W.2d 277, 278 (Tex. 1990)). Thus, “in determining if a general employee of a temporary employment agency is also an employee of a client company for purposes of the [TWCA], we consider traditional indicia, such as the exercise of actual control over the details of the work that gave rise to the injury.” Garza, 161 S.W.3d at 477; see also Flores, 176 S.W.3d at 446 (holding that employer status under TWCA can be determined by control). To prove that claims made against it by an injured temporary worker on loan from a general employer are barred by the exclusive remedy provision in section 401.011(18) of the Labor Code, an alleged special employer must prove as a matter of law that it had workers’ compensation insurance at the time of the employee’s injury and that it controlled the details of the employee’s work. See Garza, 161 S.W.3d at 475–77; see also Wingfoot Enters., 111 S.W.3d at 140, 145. “A contract between two employers providing that one shall have the right to control certain employees is a factor to be considered, but is not controlling, in the determination of whether [the] employee of one employer had become the borrowed servant of another employer.” Flores, 176 S.W3d at 449 (citing Exxon Corp. v. Perez, 842 S.W.2d 629, 630 (Tex.1992)). When a contract is ambiguous about which party will control the day-to-day activities of the employees, the right to control is “necessarily determined as an inference from such facts and circumstances as the nature of the general project, the nature of the work to be performed by the machinery and employees furnished . . . , acts representing an exercise of actual control.” Id. at 449–50 (quoting Producers Chem. Co. v. McKay, 366 S.W.2d 220, 226 (Tex. 1963)). Here, the contract between American Rice and Recana does not expressly establish who has the right to control workers assigned by Recana to American Rice. The contract states only, “Recana shall provide [American Rice] with experienced and qualified employees of Recana (“Personnel”) to perform services as requested by [American Rice]. . . .” Thus, we look to other “traditional indicia” to determine the exercise of control over the details of the work that caused the injury. Id. at 477. Deposition testimony by employees of American Rice and Recana indicates that employees of American Rice controlled Draper’s day-to-day activities. Terry Wiley, the Recana employee responsible for providing and supervising workers based on American Rice’s daily needs, testified by deposition that he had no authority to control Draper “in terms of taking Tony off the line of putting him in a certain place.” He testified that he was in his office, located in a different area of American Rice’s facility “just down the road from [the Domestic Packing Department],” when Draper was hurt. He also testified that, “I would give [Draper] to American Rice and they would tell him where to go” and that he did not give Draper any directions on the morning of his heat stroke. Richard Schneider, the American Rice supervisor of the area in which Draper was working on the morning of his injury, testified that American Rice employees would have told Draper where to go and what tasks were assigned to him. He further testified: [American Rice] controls all of the details of how the Domestic Packaging Department is run. All of the orders, directions, and instructions for doing the work in the Domestic Packaging Department come from [American Rice]. All employees, including Recana Temps, are required to follow [American Rice’s] rules, policies, and procedures regarding working in the packaging department. His affidavit also stated, With respect to Recana Temps who work at [American Rice] in the Domestic Packaging Department, [American Rice] supervisors have the right to direct and control them with respect to the details of their particular work. [American Rice] supervisors direct the Recana Temps where to work and what to do when they come to work in the Domestic Packaging Department. [American Rice] Supervisors assign the Recana Temps to work in specific areas of the Domestic Packaging Department. Draper argues, however, that the contract between Recana and American Rice provides that Recana was his sole employer. He points out that the contract required Recana to provide supervision, pay his salary and payroll taxes, and provide workers’ compensation insurance, and it provided that Recana “[p]ersonnel shall at all times be and remain employees of Recana, and Personnel shall under no circumstances be considered employees, agents, or independent contractors of [American Rice].” Draper also directs us to Schneider’s testimony that, based on his review of the contract between Recana and American Rice, Draper was not an employee of American Rice and Recana paid his “salary, benefits, taxes, Social Security, Medicare, and other withholding requirements. . . .” He also points to Schneider’s testimony that Recana had “on-site manager coordinators” at American Rice and that Terry Wiley, a Recana employee, was Draper’s supervisor at Recana. Draper contends that the contract and the deposition testimony create a fact issue about who employed him. Neither the contractual provisions cited by Draper nor the deposition excerpts he cites address the right of control of “the progress, details, and methods of operations” of Draper’s labor for American Rice. See Flores, 176 S.W.3d at 448–49. Instead, the contractual provisions concern duties owed by Recana to its client, American Rice. And the deposition testimony provided by Recana supervisors, including Wiley, indicates that they did not have the authority to determine how many employees to assign to the factory on a daily basis, to determine where to assign the employees, or to put them to work. Wiley testified that his office was “down the road” from Draper’s work place and that “American Rice guys, they supervise[d] Draper]. . . . I would give him to American Rice and they would tell him where to work.” He further testified that he did not give Draper any instructions on the morning of his injury; the instructions would have come from an American Rice supervisor. Lastly, employees from American Rice, including Schneider, testified that they directed Recana employees where to work and when to begin, that Recana employees had to follow the “orders, directions, and instructions” of American Rice supervisors, and that Recana employees must follow the “rules, polices, and procedures” established by American Rice for working in its factory. Thus, after indulging every reasonable inference in favor of Draper, we conclude that American Rice controlled the means and details of Draper’s labor at American Rice as a matter of law, and it, as well as Recana, was, therefore, Draper’s employer for purposes of triggering the exclusive remedy provision of the TWCA. See Garza, 161 S.W.3d at 477; Wingfoot Enters., 111 S.W.3d at 140, 145; Flores, 176 S.W.3d at 446. Because American Rice had workers’ compensation insurance coverage and was Draper’s employer under the TWCA, we hold that the trial court did not err in granting American Rice’s motion for summary judgment. We overrule Draper’s first and second issues. B. Estoppel In his third issue, Draper argues that the trial court erred in granting American Rice’s motion for summary judgment because American Rice should be equitably estopped from arguing that Draper is its employee after contracting that it was not. Having already held that Draper was an employee of American Rice for the purposes of the TWCA, we conclude that this issue is moot. American Rice’s position as Draper’s employer for purposes of the TWCA is not inconsistent with the terms of the contract between Recana and American Rice. We overrule Draper’s third issue. CONCLUSION We affirm the ruling of the trial court. Evelyn V. Keyes Justice Panel consists of Justices Keyes, Hanks, and Higley. [1] American Rice had a workers’ compensation insurance policy issued through the American Home Assurance Company. The policy was effective from February 1, 2007 until February 1, 2008. Draper was injured in July 2007. Draper does not dispute this issue. [2] Under the Texas Labor Code, “Workers’ Compensation Insurance Coverage” means “an approved insurance policy to secure the payment of compensation; coverage to secure the payment of compensation through self-insurance as provided by this subtitle; or coverage provided by a governmental entity to secure the payment of compensation.” Tex. Lab. Code Ann. § 401.011(44) (Vernon Supp. 2009).