MARQUEZ v. BURSCH TRUCKING COMPANY (1988)

A jury in a personal injury action found that defendant Bursch Trucking Company, doing business as Roadrunner Trucking Company (Roadrunner), a New Mexico corporation, was liable to plaintiff Cruz Marquez and that plaintiff suffered damages in the sum of $2,798,562.   The jury, however, apportioned fault at 50 percent to each party and consequently awarded plaintiff $1,399,281.

Defendant noticed motions for a new trial, vacation of judgment, and judgment notwithstanding the verdict.   After hearing argument the trial court denied defendant's motion for a new trial but, instead entered a judgment notwithstanding the verdict after determining that plaintiff's proportionate share of fault was at least 75 percent thereby reducing the amount of the judgment to $699,640.50.

Plaintiff appealed contending that the trial court lacked the power to reduce the award in this manner.   Defendant cross-appealed arguing that, for a number of reasons, a judgment in favor of plaintiff in any amount could not stand.

On November 6, 1986, we filed our original opinion in this case in which we concluded that plaintiff's claim against defendant was exclusively within the purview of the workers' compensation law.   We thus ordered the judgment vacated and remanded the matter to the trial court with instructions to enter judgment in favor of defendant.

Subsequently, a petition for hearing in the State Supreme Court was granted to be followed some five months later with an order retransferring the matter to this court for resolution.

The order of retransfer directed us to consider a number of cited cases which we will discuss, infra.   After carefully examining these authorities, we have concluded that our original decision in the matter was correct.

FACTUAL BACKGROUND

Defendant Roadrunner, an interstate trucking company located in Albuquerque, New Mexico, leased a 1964 International Harvester truck (tractor only) from one Ed Hinderks, doing business as H & H Enterprises, an independent lessor whose base of operation was Alamogordo, New Mexico.   Such leasing arrangements have long been common practice in the industry because of the seasonal variance in the demand for truck transportation in goods.

Under the terms of the agreement between Roadrunner and Hinderks, the latter relinquished control of the truck to Roadrunner who determined the routes and assignments for the use of the vehicle.   Hinderks was permitted, however, to select the driver subject to Roadrunner's approval of his competency.   Hinderks also agreed to provide for the maintenance of the truck.

Roadrunner, for its part, paid the driver's salary and provided workers' compensation insurance.   It was, however, permitted to deduct these costs from the payments due to Hinderks under the lease.   Those payments were based on a percentage of the revenue Roadrunner derived from the use of the truck.

Hinderks selected plaintiff as the driver of the truck and sent him to Roadrunner's terminal in Albuquerque.   There, Roadrunner administered to Marquez a portion of a written commercial driver's examination, had him briefly drive a truck, and sent him on an overnight run with an experienced driver.   Satisfied with his ability, Roadrunner then began to assign him long distance hauling trips.

In mid-May 1978, Roadrunner instructed Marquez to transport a load of sheet rock from Albuquerque to Denver.   Outside of Denver, plaintiff began to experience difficulty with the vehicle's engine.   Upon completing his delivery, plaintiff contacted his supervisor at Roadrunner, Virgil Heath, and informed him that the truck was not operating properly.   Heath told plaintiff to take the tractor to Denver Diesel, a repair shop in the city.   A mechanic for the garage inspected the truck and, among other problems, found that there was 10–to–12 inches of play in the steering wheel.

Heath informed plaintiff that after consulting with Hinderks, it had been decided that while the engine should be fixed in Denver and made “drivable”, Marquez need only “worry about getting the truck back home and we will fix [the steering there].”  Heath instructed plaintiff that on his return trip he should pick up a load of lumber near the New Mexico–Colorado border and deliver it to Roadrunner's Albuquerque facility.

On the return trip to Albuquerque, according to plaintiff, the vehicle's steering continued to deteriorate.   The trip, however, was completed without incident.   Plaintiff arrived at Roadrunner's shipping yard on a Saturday night after the yard had closed.   There were no Roadrunner personnel present.   There was a telephone available and a 24–hour number which could be used to contact Roadrunner.   Plaintiff did not make use of the phone to contact any of the company's representatives.

Plaintiff unhooked the trailer and showered.   He next telephoned his girlfriend who told him she was not able to come to Albuquerque to give him a ride home.   Plaintiff then decided to drive the truck “bobtail”, an industry term meaning the tractor without the trailer, and began a four-hour trip to Alamogordo.   He neither sought nor obtained permission for this trip from Roadrunner.

During the trip, according to plaintiff, the steering wheel's play became progressively worse.   After an hour's drive, he stopped at a service station and slept until the following morning, then resumed his trip, still experiencing difficulty with the vehicle's steering.   At one point, a truck passing in the opposite direction almost “blew” him off the road.   Nevertheless, he continued on.

In his second hour of driving, while traveling southbound on a narrow desert road, a large refrigerator truck approached plaintiff from the opposite direction.   As it passed, it generated an airblast which forced his vehicle partially onto the shoulder of the highway.   Believing that hard braking would cause the vehicle to roll over, he took his foot off the accelerator, hoping to coast until the truck slowed enough for him to safely return to the road.   The tractor, however, struck a large drain pipe and flipped over.   The cab of the truck tore loose from its chassis.   The wreckage finally came to rest some 130 feet away from the initial point of impact.   Plaintiff was knocked unconscious and when he awoke, found that the cab had landed on his body, breaking his back.   Aside from plaintiff's in-court account of the accident, there was no eyewitness testimony presented by either party.

After the accident, Marquez filed a claim for workers' compensation with Roadrunner, a claim which the company rejected.   Plaintiff then moved to California and, on May 25, 1979, filed a complaint for negligence and declaratory relief, naming Hinderks ¹ and Roadrunner as defendants.

Plaintiff's theory of liability for negligence on the part of Roadrunner was that under Interstate Commerce Commission rules it was obligated to maintain the truck, specifically the steering mechanism, in a safe condition and that its failure to do so was the cause of the accident.²

In the count for declaratory relief, plaintiff asked for a judicial determination that his claim fell outside the purview of the workers' compensation act.   In particular, his second cause of action alleged:  “Plaintiff has attempted to present claims for [damages] to Defendants herein, but Defendants have failed and refused to acknowledge said claims, other than to deny that they are legally responsible to plaintiff by virtue of their contention that Plaintiff was an employee working in the course and scope of his employment at the time of the occurrence of the above related incidents․  Plaintiff contends that his status at all times material hereto was that of an independent contractor․  Defendants dispute these contentions and contend that plaintiff was an employee of defendants at all times material hereto and is thereby barred from relief outside the jurisdiction of the Worker's Compensation Act.”  (Emphasis added.)

In its answer, Roadrunner specifically alleged that plaintiff was an employee and not an independent contractor but denied that the accident occurred within the course and scope of plaintiff's employment.   Admittedly, the answer failed to plead specifically the affirmative defense that Marquez was subject to the exclusive remedy of the workers' compensation law, but it did allege that the trial court was without “jurisdiction over the subject matter or parties to this action.”

Although the issue was discussed prior to trial among counsel and the court,³ neither counsel pressed for a determination until the hearing on Roadrunner's motion for a new trial.   The trial court did not render a judgment in the declaratory relief action nor were any issues involved in that action submitted to the jury.

PLAINTIFF WAS AN EMPLOYEE OF ROADRUNNER

As we have previously pointed out, plaintiff's claim against Roadrunner rests upon his assertion that, because of the above-cited federal law and regulations, Roadrunner had a non-delegable duty to maintain the truck in a safe condition.   Those laws and regulations make an interstate carrier, such as Roadrunner, liable to the public for the torts of the drivers of leased vehicles when operating the truck for the benefit of the carrier.   The purpose of the federal law is to protect the public and to prevent the carrier from shifting liability to the lessor under the theory that the lessor was an independent contractor.   In order to achieve that protection, it is not necessary that the driver be considered a member of the public.

The uncontroverted evidence was that Roadrunner paid plaintiff's wages, covered him under their workers' compensation insurance, and directed his activities.   Plaintiff was injured while doing the very thing for which he was employed, i.e., driving a truck.

 Had plaintiff been driving a truck purchased and owned by Roadrunner there could have been no question of the existence of the employer-employee relationship.   The fact that Roadrunner leased rather than purchased the truck should not alter the situation or place the plaintiff in a different position than the other drivers employed by Roadrunner.

“Because the carrier now has both a legal right and duty to control vehicles operated for its benefit, the employees of the vehicle-lessor are deemed statutory employees of the lessee-carrier ․ just as if the lessee-carrier were the owner of the vehicles.  [Citation.]”  (White v. Excalibur Ins. Co. (5th Cir.1979) 599 F.2d 50, 52–53.)  “Congress wished to impose on lessee-carriers responsibility for the operation of leased vehicles ‘as if they were the owners of such vehicles.’  [Citation.]  To make them assume the burden of liability for the harm caused by their leased vehicles without according them the protection given employers under state substantive law would broaden their exposure to suit beyond that to which employers in fact are subject.   We find no warrant for such strict liability in the federal law.”  (Id. at p. 53;  accord, Heaton v. Home Transp. Co., Inc. (N.D.Ga.1986) 659 F.Supp. 27;  Farmer v. Ryder Truck Lines, Inc. (1980) 245 Ga. 734, 266 S.E.2d 922;  Garrett v. Superior Trucking Co. (1982) 162 Ga.App. 558, 290 S.E.2d 528;  Hartford Accident and Indemnity Co. v. Major (1967) 81 Ill.App.2d 251, 226 N.E.2d 74;  American Red Ball Transit Co. v. Industrial Com'n (1961) 145 Colo. 509, 359 P.2d 1018;  Watkins v. Murrow (1961), 253 N.C. 652, 118 S.E.2d 5;  Brown v. L.H. Bottom Truck Lines (1947) 227 N.C. 299, 42 S.E.2d 71.)

We are aware that there is a split of authority among those courts which have considered the issue and that the rationale of the above-cited cases is not universally applied.  (Toomer v. United Resin Adhesives, Inc. (N.D.Ill.1986) 652 F.Supp. 219;  Wilkerson v. Allied Van Lines, Inc. (1987) 360 Pa.Super. 523, 521 A.2d 25;  Bryant v. Refrigerated Transport Co., Inc. (Fla.App.1982) 418 So.2d 281;  Newland v. Overland Exp., Inc. (Minn.1980) 295 N.W.2d 615;  N.L.R.B. v. A. Duie Pyle, Inc. (3rd Cir.1979) 606 F.2d 379;  Schindele v. Ulrich (Minn.1978) 268 N.W.2d 547.)   In our opinion, however, White v. Excalibur, supra, and its progeny state the better rule and appeal more to logic and fairness than does the contrary line of cases.

Here, plaintiff, not being the owner of the truck was of necessity an employee of either Roadrunner or Hinderks, or both.   If he was employed solely by Hinderks, as he contends, the result would be that he would have a judgment for common law tort damages against his direct employer by the circuitous route of obtaining a judgment against Roadrunner who in turn can seek indemnification from Hinderks pursuant to a provision in the lease.   This does violence to the very concept of the workers' compensation law.   It denies to either possible employer the protection of that law.

In Proctor v. Colonial Refrigerated Transportation, Inc. (4th Cir.1974) 494 F.2d 89, one of the cases mentioned by the Supreme Court in its order of transfer, the owner of a truck leased it to a carrier comparable to Roadrunner and agreed to drive the truck himself.   He also hired Proctor as an assistant.   Proctor, as a passenger, was injured because of the owner's negligent driving.   In an action by Proctor against the lessee-carrier, the court held that by virtue of the federal regulations the lessee could not avoid liability by contending that the owner-driver was an independent contractor.   Implicit in that holding is that the owner-driver was an employee of the lessee.   The issue of whether Proctor was covered by the workers' compensation law was not raised or discussed.

Another case cited in the transfer order was Matkins v. Zero Refrigerated Lines, Inc. (1979) 93 N.M. 511, 602 P.2d 195.   There, the owner of a truck obtained workers' compensation coverage for his driver.   The truck was leased to a carrier which was subsequently sued for the death of the driver that occurred in an accident while the truck was in the service of the lessee.

The key to the New Mexico court's decision, affirming common law tort liability against the lessee, was that “by relieving itself of the burdens of meeting the statutory obligation to provide workmen's compensation coverage [lessee] relinquished to [lessor] the sole right to invoke the exclusionary provisions of New Mexico's Workmen's Compensation Act.”  (Id., 602 P.2d at p. 199.)   That, of course, is not the case here.

THE ACCIDENT OCCURRED DURING THE COURSE AND SCOPE OF EMPLOYMENT

The jury was instructed that if it found that plaintiff took the truck without permission, he could not recover.   In order to counter the claim that he was driving without permission, plaintiff testified that at the time of the accident he was taking the truck to Alamogordo for repairs in accordance with the instructions given to him by Heath and Hinderks.

 Implicit in the jury's verdict is the finding that plaintiff was driving the truck on a mission for his employer Roadrunner, i.e., taking the truck to Alamogordo for repairs.   Thus, plaintiff's own evidence, which was credited by the jury, established that he was, at the time of the accident, acting within the course and scope of his employment.

DID ROADRUNNER WAIVE AN EXCLUSIVE REMEDY DEFENSE UNDER THE WORKERS' COMPENSATION LAW?

We here address what appears to be the critical issue in this case.   As we have pointed out, the evidence, as it finally evolved at trial established, beyond peradventure, that plaintiff was a direct employee of Roadrunner covered by the latter's workers' compensation insurance and was at the time of the accident acting within the course and scope of that employment.   It was purely and simply an industrial accident regardless of who held paper title to the truck and the contractual relationship between Roadrunner and Hinderks.

Because of the mysterious circumstances of the accident and the fact that plaintiff was the only person who knew the actual facts surrounding the event, Roadrunner's focus necessarily centered on the question of just why plaintiff was driving the truck at the point where he and it were found.

While the issue of workers' compensation coverage lurked in the background from the time of the accident to the time of the presentation of plaintiff's evidence at trial, the only real evidence bearing on the issue of course and scope of employment was in possession of plaintiff.

Since an employer, in asserting the defense of the exclusive remedy of workers' compensation, must establish the existence of the “conditions of compensation”,⁴ it follows that the employer must prove not only the employer-employee relationship but that the injury arose out of the employment and occurred during the scope and course thereof.  (See Gates v. Trans Video Corp. (1979) 93 Cal.App.3d 196, 155 Cal.Rptr. 486;  Renteria v. County of Orange (1978) 82 Cal.App.3d 833, 147 Cal.Rptr. 447.)

Again, the order of transfer from the Supreme Court refers us to Doney v. Tambouratgis (1979) 23 Cal.3d 91, 151 Cal.Rptr. 347, 587 P.2d 1160.   In that case, the plaintiff was employed in defendant's cocktail lounge as a topless or nude dancer.   While at that lounge, defendant beat plaintiff and attempted to rape her.   In an action for assault and battery filed by the plaintiff against the defendant, neither the complaint nor the answer made any reference to the employment relationship.

In affirming a judgment in favor of the plaintiff, the Supreme Court held that defendant, having failed to affirmatively plead and prove the jurisdiction of the workers' compensation act, waived that defense and could not later raise it on a motion for nonsuit or by post-trial motions for new trial and judgment notwithstanding the verdict.   On the other hand, if the complaint “affirmatively alleges facts indicating coverage by the act”, then unless it states additional facts which negate application of the exclusive remedy provision, “no civil action will lie and the complaint is subject to a general demurrer.”  (Id. at p. 97, 151 Cal.Rptr. 347, 587 P.2d 1160.)

 There, of course, the facts bearing on the element of compensation and the applicability of the workers' compensation act were known to defendant from the beginning and nothing in any of the pleadings raised the issue.   Here, plaintiff's own complaint raised the issue and the essential facts were not initially known to Roadrunner.

It appears that at all times prior to trial the evidence available to Roadrunner indicated that at the time of the accident plaintiff, without Roadrunner's permission, was driving the truck for his own purposes and not for any reason connected to his employment.

Hinderks had consistently maintained that he did not direct plaintiff to drive the truck to Alamogordo and, of course, neither had Roadrunner.⁵  Plaintiff's counsel informed Roadrunner's counsel before trial that the evidence would be “undisputed” that plaintiff was not acting in the course and scope of his employment.   Implicit in such a statement was the assertion that plaintiff would not claim that he was taking the truck to Alamogordo for repairs.

In his opening statement to the jury, plaintiff's counsel reinforced that assertion where he described the situation as one in which plaintiff, as a “part of his compensation”, was permitted to drive the truck for his own purposes when it was not being used for business.

When plaintiff testified at trial, he, for the first time, asserted that the purpose of the trip from Albuquerque to Alamogordo was for the benefit of his employer, i.e., to have the truck repaired.   Also, much to the surprise of Roadrunner, Hinderks at trial corroborated this version by testifying that he had told Heath, Roadrunner's dispatcher, to instruct plaintiff to bring the truck to Alamogordo for repairs and that Heath had concurred in that decision.

Thus, the declaratory relief prayed for by the plaintiff in his complaint obviated the need for Roadrunner to specifically plead the defense.   Furthermore, Roadrunner lacked the knowledge necessary to affirmatively plead and prove the course and scope of employment, was in fact misled by plaintiff into believing that no such evidence existed and here could not have discovered such evidence prior to trial.   Under the circumstances, we hold that Roadrunner did not waive the defense of its immunity to common law tort liability, but could raise it, inter alia, on a motion for a new trial.

In view of our disposition of the matter, it becomes unnecessary to discuss the other issues raised by the appeal and the cross-appeal.⁶

The judgment on the negligence cause of action is vacated.   The matter is remanded to the trial court to enter judgment in favor of defendant on both causes of action.   Each side to bear the costs of its own appeal.

FOOTNOTES

1.   Prior to trial, Hinderks was successful in quashing service of process on him on the ground that California lacked personal jurisdiction over him.

2.   49 U.S.C. § 11107(a)(4) requires an authorized motor carrier to comply with requirements prescribed by the Secretary of Transportation.  49 C.F.R. § 1057.12, subd. (c)(1) commands that in connection with the leased vehicles:  “The lease shall provide that the authorized carrier lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease.   The lease shall further provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.”  (Emphasis added.)Of course, it is perfectly proper for the lease to provide that the lessor bear the cost of any required maintenance or repairs.

3.   The record reveals that less than one year before the commencement of trial, plaintiff served on defense counsel some 43 requests for admissions pursuant to former Code of Civil Procedure section 2033.   Two requests, in particular, Nos. 23 and 24, are relevant here.   No. 23 asked defendant to “[a]dmit that plaintiff, Cruz Marquez was the sole and exclusive employee of H & H Enterprises/Ed Hinderks at all times between October 25, 1977, through and including the time and date of the accident giving rise to the complaint herein.”   Similarly, No. 24 asked for an admission that “Cruz Marquez was not an employee working within the course and scope of his employment for Bursch/Roadrunner, at any time, between October 25, 1977, through and including the date and time of this accident.”When defendant's denials were submitted one day late as the result of a calendaring error, plaintiff served notice that each of the requests had been deemed admitted by operation of law (see former Code Civ.Proc., § 2033, subd. (a)).  Although the record is far from clear, it appears that defendant's subsequent motion to set aside the default was denied as untimely.   The issue was raised again shortly before trial when defendant moved to amend several of the admissions to conform with answers it earlier had provided in response to plaintiff's interrogatories.   The trial court granted the request with the proviso that counsel confer in an attempt to eliminate any inconsistencies as expeditiously as possible.   At or about the same time, defense counsel apparently agreed to withdraw his objections to the use of requests Nos. 23 and 24 based upon opposing counsel's representation that plaintiff was not driving the truck within the course and scope of his employment when injured.Approximately two months prior to trial, defendant filed notice of its “intent to request that affirmative defense be tried first.”   In so doing, defendant indicated that it would “request the court to try the issues relating to defendant's contention that plaintiff's exclusive remedy for his injuries lies under the applicable Workers' Compensation statutes prior to the trial of any other issues in this case.”   Although plaintiff filed a responsive pleading which opposed any such bifurcation on the ground that defendant had waived an exclusivity defense, the record contains no mention of a hearing on the motion nor any indication as to how the trial court resolved the issue.   It does appear, however, that the court granted defendant's motion in limine to prohibit either party from referring to workers' compensation insurance at trial.   During the hearing on the motion, plaintiff's counsel observed that while defendant had a contractual duty to procure workers' compensation coverage, any discussion of the issue was “irrelevant in this case.”

4.   Labor Code section 3600 provides in part:  “Liability for the compensation provided by this division ․ shall, without regard to negligence, exist against an employer for any injury sustained by his or her employees arising out of and in the course of the employment ․ in those cases where the following conditions of compensation concur:  (1) Where, at the time of the injury, both the employer and the employee are subject to the compensation provisions of this division.  (2) Where, at the time of the injury, the employee is performing service growing out of and incidental to his or her employment and is acting within the course of his or her employment.  (3) Where the injury is proximately caused by the employment, either with or without negligence․”Labor Code section 3601 states that where “the conditions of compensation” exist, an injured employee is limited to workers' compensation and is precluded from bringing a civil action for damages against his employer.

5.   Some four years before being called as a witness in the instant case, Hinderks had testified under oath in a separate proceeding that at the time of the accident Marquez was not returning to Alamogordo at his request or for any purpose related to his employment.   In 1979, Hinderks had filed suit in New Mexico against Roadrunner to recover damages for its alleged failure to insure the truck against property damage.   During the trial which followed, he testified in pertinent part:“Question:  Have you ever been able to ascertain from any of your investigations of this [accident] that [Marquez] was in fact on the business of Roadrunner Trucking?“Answer:  No sir.“Question:  To the best of your knowledge, he was not?“Answer:  No sir.   I don't know what he was doing or who sent him there.   I have no way of knowing.”

6.   The Supreme Court's order of transfer also directed that we reconsider our former disposition in light of Thomas v. Washington Gas Light Co. (1980) 448 U.S. 261, 100 S.Ct. 2647, 65 L.Ed.2d 757.   In that case, the United States Supreme Court held that under the Full Faith and Credit Clause, one state's administrative award of workers' compensation benefits could not preclude another state's supplemental award to a worker entitled to receive compensation in either jurisdiction.  (Id. at p. 286, 100 S.Ct. at 2663.)   Here, the record is unclear as to whether plaintiff pursued his claim for workers' compensation benefits to final determination in New Mexico.   In any event, plaintiff has made no claim that he is entitled to an award of such benefits in this state.   Our resolution of the instant case in no way precludes plaintiff from seeking his available remedies, if any, under New Mexico's workers' compensation law.

COMPTON, Associate Justice.

ROTH, P.J., and FUKUTO, J., concur.