READY TRANSPORTATION INC v. WORKERS COMPENSATION APPEALS BOARD (1997)

Petitioner Ready Transportation, Inc. (Ready) seeks review of a decision by the respondent Workers' Compensation Appeals Board (Board) denying his motion to dismiss a workers' compensation case brought against Ready by Vincent Duran.   Ready asserts the dispositive issue in the case, whether it employed Duran, has already been decided against Duran because he filed a civil case based on the same events and allegations against Ready in superior court and then dismissed it with prejudice.   We agree and grant the requested relief.

PROCEDURAL HISTORY

Duran, while driving a truck, was injured in an accident on December 19, 1991.   He filed a workers' compensation claim on February 14, 1994.   In his claim, he alleged Ready was his employer.   Ready answered the claim by asserting it was not Duran's employer.

On July 12, 1994, Duran filed a first amended complaint in the San Joaquin Superior Court alleging Ready was his employer but did not have workers' compensation insurance and negligently supplied Duran with a defective truck, which caused the accident.   Ready moved for summary judgment.   It again asserted it was not Duran's employer.   On January 9, 1995, the day before the hearing on the motion, Duran dismissed the complaint.   In doing so, he used a judicial council form on which he indicated the dismissal was “with prejudice.”   He added the following language:  “Dismiss as to all causes of action alleged against Defendant Ready Transportation ONLY.   Dismissal does not apply to other defendants.   Dismissal does not apply to a case pending before the California Workers' Compensation Appeals Board.”

On July 19, 1995, Ready petitioned the Board to dismiss Duran's workers' compensation claim.   It asserted the dismissal with prejudice of the superior court action was a decision on the merits and, therefore, Duran's claim was barred by res judicata.

A workers' compensation judge found res judicata did not apply and denied Ready's petition.   Ready petitioned the Board for reconsideration, but the Board denied the petition.

We issued a writ of review.

DISCUSSION

The main authority cited by the workers' compensation judge and adopted by the Board in denying Ready's petition to dismiss the workers' compensation claim and petition for reconsideration is Labor Code section 3706:  “If any employer fails to secure the payment of compensation, any injured employee or his dependents may bring an action at law against such employer for damages, as if this division did not apply.”  (Further statutory references are to the Labor Code.) It is undisputed Ready did not have workers' compensation insurance to cover Duran's injuries.

“Section 3706 is one of the principal exceptions to the [Workers' Compensation] Act's exclusive remedy rule․  [It] provides an alternative remedy to an injured worker where the employer has failed to secure the payment of compensation required by section 3700.   Jurisdiction of the superior court to try claims of an employee against his employer for damages under section 3706 arises only when payment of compensation is not secured.”  (Rymer v. Hagler (1989) 211 Cal.App.3d 1171, 1177, 260 Cal.Rptr. 76, citations and fns. omitted.)

 Res judicata and related doctrines such as collateral estoppel apply to workers' compensation proceedings.  (See Rymer v. Hagler, supra, 211 Cal.App.3d at p. 1179, 260 Cal.Rptr. 76.)   Thus, while section 3706 may provide an alternative to initiating a workers' compensation proceeding when the employer is uninsured, it does not prevent an action in one forum from having an effect on the action in the other forum.  (See Scott v. Industrial Acc. Com. (1956) 46 Cal.2d 76, 83, 293 P.2d 18.)

 “[A] dismissal with prejudice [is] a retraxit constituting a decision on the merits invoking the principles of res judicata.”  (Torrey Pines Bank v. Superior Court (1989) 216 Cal.App.3d 813, 822, 265 Cal.Rptr. 217.)  “Under traditional rules of res judicata, a party may be barred (collaterally estopped) from relitigating issues that were previously adjudicated in an earlier proceeding.   The rule of res judicata is to prevent vexatious litigation and to require the parties to rest upon one decision in their controversy.  [A] final judgment on the merits in a prior action is conclusive between the same parties in a subsequent action involving the same subject matter.   Res judicata bars not only the reopening of the original controversy, but also subsequent litigation of all issues which were or could have been raised in the original suit.”  (Id. at p. 821, 265 Cal.Rptr. 217, citations and quotation marks omitted.)   Even though the issue of whether Ready was Duran's employer was not fully litigated in the superior court, of necessity, it would have been litigated and, indeed, was raised by Ready as a defense.   Thus, res judicata bars subsequent litigation of that issue and, thereby, dooms Duran's workers' compensation claim because it prevents Duran from establishing Ready was his employer.

Duran could have avoided the harsh effect of res judicata by simply dismissing the superior court action without prejudice.  (Torrey Pines Bank v. Superior Court, supra, 216 Cal.App.3d at p. 823, 265 Cal.Rptr. 217.)   He chose, instead, to voluntarily dismiss with prejudice.

The workers' compensation order denying Ready's petition to dismiss discussed the effect of section 3706 on Duran's ability to bring different actions in the superior court and before the Board.   It stated:  “The injured employee has two separate causes of action in two separate forums.   Neither affects the other.  [Duran] in the Workers' Compensation forum can pursue his case against the uninsured employer, and [he] can pursue his case in Civil Court against the defendant uninsured employer.”  (Emphasis in original.)   This statement is incorrect to the extent it does not account for the effect a final adjudication in one forum on the proceedings in the other forum.

 The surplus verbiage Duran included when he filled in the judicial council form does not prevent the application of res judicata.   He wrote:  “Dismissal does not apply to a case pending before the California Workers' Compensation Appeals Board.”   Apparently, Duran intended to continue his litigation before the Board and wanted to make that clear.   If he wanted to prevent the application of res judicata, however, he had to dismiss without prejudice.  (Torrey Pines Bank v. Superior Court, supra, 216 Cal.App.3d at p. 823, 265 Cal.Rptr. 217.)   Instead, he dismissed with prejudice and the legal consequence of that dismissal follows.   He may not relitigate the controversy.  “Res judicata bars not only the reopening of the original controversy, but also subsequent litigation of all issues which were or could have been raised in the original suit.”  (Id. at p. 821, 265 Cal.Rptr. 217, citations and quotation marks omitted.)

DISPOSITION

The Board's order denying Ready's petition for reconsideration is annulled.   The matter is remanded to the Board with directions to enter an order dismissing Duran's claim against Ready.   Ready shall recover its costs in pursuing this petition.

NICHOLSON, Associate Justice.

SPARKS, Acting, P.J., MORRISON, J., concur.