COLDWELL BANKER REALTY v. WORKERS COMPENSATION APPEALS BOARD OF STATE

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Court of Appeal, First District, Division 5, California.

COLDWELL BANKER REALTY and Zurich Insurance Company, Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD OF the STATE of California and Joan Daniel, Respondents.

AO36345.

Decided: October 26, 1987

Laughlin, Falbo, Levy & Moresi, Michael W. Laughlin, San Francisco, for petitioners. Law Offices of William L. Veen, A Professional Corp., William L. Veen, San Francisco, for respondent Joan Daniel. William B. Donohoe, Asst. Secretary, WCAB Legal Unit, San Francisco, for respondent WCAB.

Petitioners Coldwell Banker Realty and Zurich Insurance Company seek review of an order of the Workers' Compensation Appeals Board (hereafter Board), contending that the Board has erred in determining the amount of credit to be applied against their liability for compensation by reason of respondent Joan Daniel's recovery in a civil action against a coemployee for the same injury.   We have concluded that in the absence of a showing by petitioners that the recovery in the civil action was obtained under one of the exceptions contained in Labor Code section 3601, subdivision (a)(1) and (2),1 petitioners are prohibited by the provisions of section 3601, subdivision (c), from obtaining any credit against their workers' compensation liability.

Respondent Joan Daniel, a real estate broker employed by petitioner Coldwell Banker Realty, was injured on January 24, 1984, when she asked George Karsant, a real estate broker also employed by Coldwell Banker Realty, to help her release a stuck gearshift on her automobile.   Karsant, who was in a group of brokers inspecting houses, stepped into applicant's automobile and gripped the gearshift with both hands, releasing the shift and causing the car, which was parked on an incline, to lurch backward.   Respondent, standing beside the open door next to Karsant, was struck by the door, lost her balance and fell, sustaining multiple injuries.

Zurich Insurance Company afforded respondent workers' compensation benefits under its policy of insurance with Coldwell Banker Realty.   Respondent and her husband, Robert Daniel, also filed a civil action against Karsant, alleging that his negligence was the cause of respondent's injuries and of Robert's alleged loss of consortium.   Aside from Does, the only named defendant in the complaint was Karsant, who was described as a permissive user of the Daniels' automobile.   No answer was filed by Karsant, and respondent's own automobile liability insurance carrier, St. Paul Fire & Marine Insurance Company, afforded coverage to Karsant as a permissive user and settled the matter for the sum of $150,000, of which respondent received approximately $90,000.   Zurich Insurance Company had paid workers' compensation benefits totaling $11,153 when it learned of the settlement, and Zurich thereupon claimed a credit for the remainder of its compensation liability.

In a subsequent proceeding initiated pursuant to section 3861 2 and conducted in accordance with procedures set forth in Roe v. Workmen's Comp. Appeals Bd. (1974) 12 Cal.3d 884, 117 Cal.Rptr. 683, 528 P.2d 771, Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 829, 150 Cal.Rptr. 888, 587 P.2d 684, and the Board's in bank decision in Martinez v. Associated Engineering & Construction Company (1979) 44 Cal.Comp.Cases 1012, it was stipulated that the third party recovery was from respondent's own liability insurance carrier which afforded coverage to Karsant as a permissive user.   The workers' compensation judge found (1) that the negligence of Karsant, a coemployee acting within the course and scope of his employment, contributed 50 percent to the occurrence of the injury;  (2) that the value of the civil action was $250,000;  and (3) that respondent was entitled to receive $125,000 in workers' compensation benefits before petitioners were entitled to a credit for the civil recovery.   In denying reconsideration, the Board adopted the report and recommendation of the judge.   On remand from the Supreme Court, we now consider the effect of the 1982 amendments to section 3601 on the employer's claim for credit.

Section 3601, subdivision (a), as amended in 1982, provides that where the conditions of compensation set forth in section 3600 concur, workers' compensation is the “exclusive remedy for injury or death of an employee against any other employee of the employer acting within the scope of his or her employment,” except that an employee may bring an action at law for damages against the other employee when the injury or death is proximately caused by (1) the willful and unprovoked physical act of aggression of the other employee, or (2) the intoxication of the other employee.   Injuries occurring after January 1, 1983, are governed by the amendment.  (Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, 153, 233 Cal.Rptr. 308, 729 P.2d 743.)

Under the new legislation, former section 3601 was divided into two sections.  Section 3601, subdivision (a), continues to address suits against coemployees;  new section 3602 applies to suits against employers.   New section 3601, subdivision (a), states the bar against actions against coemployees in substantially the same language as formerly stated.3  New section 3602, as applied to bar suits against employers, differs from the corresponding provision of new section 3601.4  (Hisel v. County of Los Angeles (1987) 193 Cal.App.3d 969, 972–973, 238 Cal.Rptr. 678.)

Except in certain limited circumstances, an injured employee's claim for workers' compensation is his exclusive remedy against his employer.  (§ 3602.)   But the pertinent statutes do not preclude an injured employee from pursuing an ordinary civil action “ ‘against any person other than the employer’—e.g., a third party tortfeasor—who may be responsible for his injury.  (§ 3852.)”   (Rodgers v. Workers' Comp. Appeals Bd. (1984) 36 Cal.3d 330, 334, 204 Cal.Rptr. 403, 682 P.2d 1068.) 5

 The provisions of section 3852 do not preclude an action for damages against a coemployee.   In Saala v. McFarland (1965) 63 Cal.2d 124, 45 Cal.Rptr. 144, 403 P.2d 400, the Supreme Court, after noting that the Legislature had used in section 3601 the more restricted language “scope of employment,” rejected an argument that a coemployee's right of action preserved by section 3852 had been totally repealed by implication from the language of section 3601.  (Id., at p. 130, and fn. 4, 45 Cal.Rptr. 144, 403 P.2d 400.)   Under the rule developed in Saala, an injured worker may maintain a tort action against a coemployee who was in the course of his employment, but who was acting outside the scope of his employment when he caused the injury.   (Saala, supra, at pp. 128–129, 45 Cal.Rptr. 144, 403 P.2d 400;  Cal.Workers' Damages Practice (Cont.Ed.Bar 1985) § 3.35, p. 68;  2 Witkin, Summary of Cal.Law (9th ed. 1987) Workers' Compensation, § 63, p. 622;  1 Herlich, Cal.Workers' Compensation Law (3d ed. 1987) § 12.22.)   Both parties assume and in the absence of legislative history to the contrary, it appears that the 1982 amendments to section 3601 did not alter the foregoing judicially developed exception to the exclusive remedy rule as it applies to suits against coemployees.  (Cal.Workers' Damages Practice (Cont.Ed.Bar 1985) § 3.31, p. 66.)

 An examination of the complaint filed in the civil action reveals that it contains no allegation either directly or indirectly indicating an employment relationship between respondent and defendant Karsant.   When, as here, a complaint contains no allegations that the injuries arose out of or in the course of employment, it becomes the responsibility of the defendant to plead and prove that the conditions of compensation rendering him subject to the protection of the act existed.  (Doney v. Tambouratgis (1979) 23 Cal.3d 91, 96–98, 151 Cal.Rptr. 347, 587 P.2d 1160.)   Defendant Karsant neither claimed to be of that class of persons protected from an action at law by the provisions of the Workers' Compensation Act nor raised as an affirmative defense to the action the existence of the conditions of compensation set forth in the statute which are necessary to its application.   No such demonstration having been made, the court had subject matter jurisdiction to enforce the civil law remedy.  (Id., at pp. 98–99, 151 Cal.Rptr. 347, 587 P.2d 1160.) 6

In the course of the Roe proceeding held to determine petitioners' right to credit against the third party recovery, neither party disputed that Karsant was a coemployee at the time of the injury.   The workers' compensation judge resolved the question of whether Karsant was acting in the scope of his employment when he caused the injury by finding that “coemployee [Karsant] was furthering the employer's business as it was important for applicant's car to get in motion to transport applicant, and the other coemployees riding in her car, to the next of several houses which the employer wished the sales staff to inspect.”

While an employer may assert a claim for credit against a valid third party settlement, it may not do so under the circumstances shown to exist in this matter.   This is so because under the 1982 amendments to section 3601, “[a]n employer can obtain reimbursement from its own employee (the coemployee of the injured worker) only if the worker has obtained a recovery from the coemployee for injury caused by the coemployee's willful and unprovoked physical act of aggression or intoxication.  (Lab.Code, § 3601, subd. (a).)”  (Cal.Workers' Damages Practice (Cont.Ed.Bar 1985) § 4.3, pp. 76–77;  2 Witkin, Summary of Cal.Law (9th ed. 1987) Workers' Compensation, § 61, p. 621;  1 Herlich, Cal.Workers' Compensation Law (3d ed. 1987) § 12.22;  2 Hanna, Cal.Law of Employee Injuries and Workmen's Compensation (2d ed. 1987) § 23.02 [2][c].)

Petitioners made no showing that the injury to respondent was caused by coemployee Karsant's willful and unprovoked physical act of aggression or by coemployee Karsant's intoxication as required by section 3601, subdivision (a)(1) and (2).   To the contrary, the complaint alleged, and the workers' compensation judge found, that the injury to respondent was caused by the ordinary negligence of coemployee Karsant, negligence which is imputed to the employer.  Section 3601, subdivision (c), provides that “[n]o employee shall be held liable, directly or indirectly, to his or her employer, for injury or death of a coemployee except where the injured employee or his or her dependents obtain a recovery under subdivision (a).”  (Emphasis added.)   In the absence of a showing that the recovery of the injured employee in a civil action against a coemployee acting in the scope of his employment was obtained under one of the exceptions contained in section 3601, subdivision (a)(1) and (2), the employer is prohibited by the provisions of section 3601, subdivision (c), from obtaining any credit against its workers' compensation liability.

Petitioners complain that respondent is receiving a double recovery.   The policy against double recovery primarily protects the third party tortfeasor, not the employer.  (Roe v. Workmen's Comp. Appeals Bd., supra, 12 Cal.3d 884, 889, 117 Cal.Rptr. 683, 528 P.2d 771.)   We do not speculate as to the motivations of respondent's own automobile liability insurance carrier in settling its obligation to respondent.   Nor do we grieve for petitioners, for “[i]f the employer's negligence contributed to the accident, the double recovery was gained not from him but from the third party, who did not claim a deduction for employer negligence.”  (Id., at p. 889, 117 Cal.Rptr. 683, 528 P.2d 771.)

That portion of the Board's order finding that petitioners are entitled to a credit is annulled, and the matter is remanded to the Board for further proceedings.   Respondent Daniel shall recover her costs.

FOOTNOTES

1.   All further statutory references are to the Labor Code.

2.   Section 3861 provides:  “The appeals board is empowered to and shall allow, as a credit to the employer to be applied against his liability for compensation, such amount of any recovery by the employee for his injury, either by settlement or after judgment, as has not theretofore been applied to the payment of expenses or attorneys' fees, pursuant to the provisions of Sections 3856, 3858, and 3860 of this code, or has not been applied to reimburse the employer.”

3.   Section 3601 provides:  “(a) Where the conditions of compensation set forth in Section 3600 concur, the right to recover such compensation, pursuant to the provisions of this division is, except as specifically provided in this section, the exclusive remedy for injury or death of an employee against any other employee of the employer acting within the scope of his or her employment, except that an employee, or his or her dependents in the event of his or her death, shall, in addition to the right to compensation against the employer, have a right to bring an action at law for damages against the other employee, as if this division did not apply, in either of the following cases:  [¶] (1) When the injury or death is proximately caused by the willful and unprovoked physical act of aggression of the other employee.  [¶] (2) When the injury or death is proximately caused by the intoxication of the other employee.  [¶] (b) In no event, either by legal action or by agreement whether entered into by the other employee or on his or her behalf, shall the employer be held liable, directly or indirectly, for damages awarded against, or for a liability incurred by the other employee under paragraph (1) or (2) of subdivision (a).  [¶] (c) No employee shall be held liable, directly or indirectly, to his or her employer, for injury or death of a coemployee except where the injured employee or his or her dependents obtain a recovery under subdivision (a).”

4.   Section 3602 provides:  “(a) Where the conditions of compensation set forth in Section 3600 concur, the right to recover such compensation is, except as specifically provided in this section and Sections 3706 and 4558, the sole and exclusive remedy of the employee or his or her dependents against the employer, and the fact that either the employee or the employer also occupied another or dual capacity prior to, or at the time of, the employee's industrial injury shall not permit the employee or his or her dependents to bring an action at law for damages against the employer.  [¶] (b) An employee, or his or her dependents in the event of his or her death, may bring an action at law for damages against the employer, as if this division did not apply, in the following instances:  [¶] (1) Where the employee's injury or death is proximately caused by a willful physical assault by the employer.  [¶] (2) Where the employee's injury is aggravated by the employer's fraudulent concealment of the existence of the injury and its connection with the employment, in which case the employer's liability shall be limited to those damages proximately caused by the aggravation.   The burden of proof respecting apportionment of damages between the injury and any subsequent aggravation thereof is upon the employer.  [¶] (3) Where the employee's injury or death is proximately caused by a defective product manufactured by the employer and sold, leased, or otherwise transferred for valuable consideration to an independent third person, and that product is thereafter provided for the employee's use by a third person.  [¶] (c) In all cases where the conditions of compensation set forth in Section 3600 do not concur, the liability of the employer shall be the same as if this division had not been enacted.”

5.   Section 3852 in relevant part provides:  “The claim of an employee ․ for compensation does not affect his or her claim or right of action for all damages proximately resulting from the injury or death against any person other than the employer․”

6.   Petitioners complain that respondent gave no notice of the filing of the third party action, as required by section 3853, or that a settlement had been achieved, as required by section 3860, “until the moment her lawsuit was dismissed with prejudice.”   Respondent disputes this;  in any event, section 3859, subdivision (b), specifically provides that “an employee may settle and release any claim he may have against a third party without the consent of the employer.”  (Cf. Board of Administration v. Glover (1983) 34 Cal.3d 906, 913, 196 Cal.Rptr. 330, 671 P.2d 834.)

LOW, Presiding Justice.

KING and HANING, JJ., concur.