DUARTE v. McKENZIE CONSTRUCTION COMPANY (1979)

Court of Appeal, First District, Division 4, California.

Lupe DUARTE, Crisselda L. Duarte, Plaintiffs and Appellants, v. McKENZIE CONSTRUCTION COMPANY, Defendant and Respondent.

Civ. 44300.

Decided: February 02, 1979

Belli & Choulos, Melvin M. Belli, Robert B. Ingram, Deborah B. Honig, San Francisco, for plaintiffs and appellants. Martin, Ryan & Martin, J. Randall Andrada, Oakland, for defendant and respondent.

Lupe Duarte and Crisselda L. Duarte (hereinafter appellant)¹ filed suit in the Alameda County Superior Court against McKenzie Construction Company (hereinafter respondent) for damages for personal injuries. The complaint alleges that appellant, an employee of a subcontractor, was struck by a crane while working within the course and scope of his employment on a construction project located in Sparks, Nevada. The complaint further alleges that respondent is a California corporation and is the general contractor on the construction site.

Respondent demurred to the complaint on the ground that respondent is a Nevada corporation and Nevada law applies to the present action, thus appellant's third party claim against respondent is barred by the “exclusive remedy” provisions of Nevada Revised Statutes sections 616.085 and 616.370. In addition, respondent claims the complaint is defective in that it does not allege appellant's residence, the name of appellant's employer and the relationship, if any, between appellant and respondent.

I

Respondent contends the complaint is defective on its face for it neglects to mention the residency of appellant, the name of appellant's employer and the relationship between appellant and respondent. Although respondent concedes these facts are set forth in various affidavits and declarations in the record, respondent contends these facts cannot be considered on appeal.

The general rule in a demurrer hearing is “whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action” (Griffith v. Department of Public Works (1956) 141 Cal.App.2d 376, 381, 296 P.2d 838, 842). There are, however, exceptions, one of which is found in Code of Civil Procedure section 430.30, subdivision (a). “When any ground for objection to a complaint, cross-complaint, or answer appears on the face thereof, or from any matter of which the court is required to or may take judicial notice, the objection on that ground may be taken by a demurrer to the pleading.” (Emphasis added. See also 3 Witkin, California Procedure (2d ed. 1971) Pleading, § 798, p. 2412.) Thus, a demurrer may reach not only the contents of the pleading, but also such matters as may be considered under the doctrine of judicial notice. (Weil v. Barthel (1955) 45 Cal.2d 835, 837, 291 P.2d 30; Eldridge v. City of Palo Alto (1976) 57 Cal.App.3d 613, 621, 129 Cal.Rptr. 376; Saltares v. Kristovich (1970) 6 Cal.App.3d 504, 510, 85 Cal.Rptr. 866; Agostini v. Strycula (1965) 231 Cal.App.2d 804, 806, 42 Cal.Rptr. 314.)

According to Evidence Code section 459, subdivision (a), the reviewing court may take judicial notice of any matter specified in Evidence Code section 452. Section 452, subdivision (d) provides that judicial notice may be taken of records of any court of this state.

Thus, a reviewing court may consider not only the facts alleged in the complaint, but also the contents of the other documents contained in the record. (Saltares v. Kristovich, supra, 6 Cal.App.3d 504 at p. 511, 85 Cal.Rptr. 866.)

In determining whether the court correctly ruled in applying Nevada law we may take into account not only the facts set forth in appellant's complaint but also those facts set forth in the affidavit of Mr. E. W. McKenzie, and the declarations of Mr. Arthur B. Nielsen and Lupe and Crisselda Duarte. The Duartes' declaration stated their residence to be California. The declaration of Mr. Arthur B. Nielsen states that he had entered into a contract with respondent to be the subcontractor on a construction project in Nevada and that appellant is his employee.

We are satisfied the complaint is not defective since the facts it neglects to mention are supplied by the other documents contained in the record.

II

We are confronted with a fact situation in which a California resident, an employee of a California subcontractor, is suing a Nevada general contractor for injuries suffered while working on the construction site in Nevada. Under California law, pursuant to Labor Code section 3852,² the filing of a workers' compensation claim by an employee does not affect his claim or right of action for all damages proximately resulting from such injury or death against any person other than the employer. A plaintiff who is doing work under the supervisory power of a general contractor does not, on that fact alone, make him an employee of the general contractor as a matter of law so as to bar his right to recover for the negligence of the general contractor. (Morehouse v. Wanzo (1968) 266 Cal.App.2d 846, 851, 72 Cal.Rptr. 607.) Thus, under California law, appellant is allowed to maintain a third party action against respondent.

In Nevada, appellant's third party claim is barred by the Nevada Industrial Insurance Act. Nevada Revised Statutes sections 616.085 and 616.370, provide, respectively: “616.085. Subcontractors and their employees shall be deemed to be employees of the principal contractor.” “616.370. The rights and remedies provided in this chapter for an employee on account of an injury. by accident sustained arising out of and in the course of employment shall be exclusive.”

Nevada's exclusive remedy provision quoted above was construed in Stolte, Inc. v. District Court (1973) 89 Nev. 257, 510 P.2d 870. Subcontractors, as well as sub-subcontractors, are deemed employees of the principal contractor, and “the exclusive remedy of such employee[s] injured in the course of his employment is limited to benefits contained … [under the Industrial Insurance Act].” (89 Nev. 257, 260, 510 P.2d 870, 872.) “Our system of industrial insurance provides for single unit coverage.” (Id., at 89 Nev. 257, 259, 510 P.2d 870, 871.)

The leading case of Reich v. Purcell (1967) 67 Cal.2d 551, 63 Cal.Rptr. 31, 432 P.2d 727, renounced the well-established rule that the law of the place of the wrong is the controlling law in tort cases, regardless of the issue involved. (Id., at p. 555, 63 Cal.Rptr. 31, 432 P.2d 727.) The court established a new approach in determining which law to apply in a situation involving multi-state contacts. “The forum must search to find the proper law to apply based upon the interests of the litigants and the involved states.” (Id., at p. 553, 63 Cal.Rptr. at p. 33, 432 P.2d at p. 729.) Commonly known as the “governmental interest analysis,” this doctrine compels the forum to consider all of the foreign and domestic elements and interests involved in determining the applicable rule. (Id., at p. 555, 63 Cal.Rptr. 31, 432 P.2d 727.)

If the law of one state can be applied without violating the policy of the other state, there is a false conflict and the law of the interested state should be applied. (Hurtado v. Superior Court (1974) 11 Cal.3d 574, 580, 114 Cal.Rptr. 106, 522 P.2d 666.) However, if both states have a legitimate but conflicting interest in having its own law applied, a “true” conflict exists. (Bernhard v. Harrah's Club (1976) 16 Cal.3d 313, 320, 128 Cal.Rptr. 215, 546 P.2d 719, cert. den. 429 U.S. 859, 97 S.Ct. 159, 50 L.Ed.2d 136.) Once a true conflict of the governmental interests involved has been identified, “the ‘comparative impairment’ approach to the resolution of such conflict [must be applied. This approach] seeks to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state.” (Id., at p. 320, 128 Cal.Rptr. at p. 219, 546 P.2d at p. 723.)

The facts before us present a problem of a “true” conflict of laws since Nevada law precludes appellant's recovery and California law permits such recovery.

Determining which conflicting governmental interest would be more impaired if its law were not applied, the court should not consider which law manifests the “better” or the “worthier” social policy. (Bernhard v. Harrah's Club, supra, 16 Cal.3d 313, 320, 128 Cal.Rptr. 215, 546 P.2d 719.) Rather, the court must allocate respective spheres of lawmaking influence since the private interests are necessarily in balance. (Baxter, Choice of Law and the Federal System (1963) 16 Stan.L.Rev. 1, 5, 6, 22; see Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157, 148 Cal.Rptr. 867, 583 P.2d 721.)

In the case of Nevada's law, the effect of the exclusive remedy provision protects employers, including general contractors, from excessive financial burdens by providing only one remedy for injured workers, and by limiting the employer's source of liability. It appears that Nevada does not want to impair the financial security of its employers. The financial well-being and solvency of resident employers ultimately affects the economic well-being of Nevada. Furthermore, by granting a general contractor immunity from suit by a subcontractor's employee, the state is attempting to restrict the cost of industrial accidents and afford the general contractor a fair basis for predicting what these costs will be.

California, on the other hand, is interested in protecting its employees by providing two methods of recovery for injuries sustained while working in the course and scope of employment. Not only may the employee recover an award from his employer but he may also entertain a suit against a third party tortfeasor. In addition, Labor Code section 3852 permits the employer of an employee injured by a third person tortfeasor to recover damages which the employee sustained, i. e., at least the amount the employer was required to pay the employee by the workers' compensation award. (State Comp. Ins. Fund v. Williams (1974) 38 Cal.App.3d 218, 222, 112 Cal.Rptr. 226.) Appellant views Labor Code section 3852 as an indication of the state's interest in providing the full measure of compensation to its employees and relies upon two cases as substantiation.

In Travelers Ins. Co. v. Workmen's Comp.App. Bd. (1967) 68 Cal.2d 7, 64 Cal.Rptr. 440, 434 P.2d 992, the California Supreme Court held that a California resident injured while working in Utah was entitled to recover an award under the California Workmen's Compensation Act. Similarly, in Alaska Packers Assn. v. Indus. Acc. Com. (1934) 1 Cal.2d 250, 34 P.2d 716, affd. 294 U.S. 532, 55 S.Ct. 518, 79 L.Ed. 1044, the court held that the California Workmen's Compensation Act applied to a workman hired in California and injured while working in Alaska, even though the employment contract specified the Alaska compensation act would govern.

In both cases, the courts were concerned with which state should bear the responsibility of awarding the worker with workmens' compensation benefits, and in realizing that California has an interest in providing maximum statutory compensation. The courts allowed the worker to recover under California Workmen's Compensation Act. “Even if the employee may be able to obtain benefits under another state's compensation laws, California retains its interest in insuring the maximum application of this protection afforded by the California Legislature.” (Travelers Ins. Co. v. Workmen's Comp. App. Bd., supra, 68 Cal.2d 7 at p. 13, 64 Cal.Rptr. 440 at p. 443, 434 P.2d 992 at p. 995.)

Here we are faced with a different situation. Appellant has already received full statutory benefits under California's Workmen's Compensation Act. Appellant now wants additional compensation in the form of civil damages. Neither case upon which appellant relies was concerned with the application of California's permissive third party claim provision. The cases demonstrate that California's interest in providing full compensation to an injured employee relates only to the recovery of statutory benefits, not to the recovery of civil damages.

In contending that California's interest would be more impaired by the imposition of Nevada law to the facts before us, appellant cites Bernhard v. Harrah's Club, supra, 16 Cal.3d 313, 128 Cal.Rptr. 215, 546 P.2d 719. That case involved a California resident who sued a Nevada tavern keeper for injuries suffered when he was struck on a California highway by an automobile driven by another California resident who had been furnished alcoholic beverages by defendant tavern keeper. The trial court sustained the demurrer on the ground that, although California law imposes civil liability on tavern keepers who furnish liquor to intoxicated persons, Nevada's law of nonliability should be applied. The Supreme Court reversed, holding that California's interest would be significantly impaired if Nevada's nonliability policy were applied since California is interested in providing compensation to its injured residents whose business has been actively solicited by an out-of-state tavern keeper. Bernhard may be distinguished. The plaintiff in Bernhard would have been without any compensation for his injuries if the demurrer were sustained, whereas appellant in the present case has already received a sufficient award under the California Workmen's Compensation Act.

The Restatement takes the position that when an employer is declared immune from liability for tort or wrongful death by his state's workmens' compensation statute under which the employer is required to provide insurance, recovery for tort or wrongful death will not be permitted provided the employee has obtained or could obtain an award for the injury. (Rest.2d Conflict of Laws, § 184.)³ Although “Constitutional due process does not compel a state to deny an action for personal injuries or wrongful death because the employer is declared immune from tort liability by the workmen's compensation law of another state,” the recognized principles of conflict of laws call for rejection of such a suit. (2 Witkin, Summary of California Law (8th ed. 1973) Workmen's Compensation, § 53, p. 895; Rest.2d Conflict of Laws, §§ 183, 184.) The Supreme Court of Nevada is in accord. In Tab Constr. Co. v. District Court (1967) 83 Nev. 364, 432 P.2d 90, a third party claim was brought by an employee of an Arizona subcontractor injured while working in Nevada for the Nevada general contractor. The court applied the exclusive remedy provision under its Workmen's Compensation Act stating that “[w]e observe that the State of Nevada has a legitimate constitutional interest in the application of its own domestic law and policy to a work injury occurring within its borders.” (Id., at p. 366, 432 P.2d at p. 91.)

An unreasonable burden would be created upon respondent, who is immune from liability for tort or wrongful death by Nevada's Workmen's Compensation Act, to now expose him to the laws of the other 49 states. In securing bids and hiring employees through subcontractors, respondent would have to take into account the residency of each worker since lawsuits could be brought against him in every state which has a law similar to California's. Furthermore, “[i]t is thought unfair that a person who is required to provide insurance against a risk under the workmen's compensation statute of one state which gives him immunity from liability for tort or wrongful death should not enjoy that immunity in a suit brought in other states.” (Rest.2d Conflict of Laws, § 184, com. (b).)

Appellant attempts to distinguish Offshore Rental Co. v. Continental Oil Co., supra, 22 Cal.3d 157, 148 Cal.Rptr. 867, 583 P.2d 721, on the grounds that the California's Labor Code section 3852 is neither archaic and isolated in the laws of the federal union, nor intended to remedy a problem no longer of pressing importance in California. Appellant's assertion is based upon the erroneous assumption that the governmental policy underlying Labor Code section 3852 is to provide maximum compensation, whether it be statutory benefits, civil damages, or both. The underlying policy of Labor Code section 3852 is to provide full statutory compensation to an injured employee. When confronted with a case of conflict of laws in which a foreign state's law provides less workers' compensation, California's interest in obtaining maximum benefits compels the application of California's law. (See Travelers Ins. Co. v. Workmen's Comp. App. Bd., supra, 68 Cal.2d 7, 64 Cal.Rptr. 440, 434 P.2d 992; Alaska Packers Assn. v. Indus. Acc. Com., supra, 1 Cal.2d 250, 34 P.2d 716.) Appellant has already received workers' compensation benefits under California laws. California's interest in insuring the maximum application of its protection has, therefore, been satisfied.

Offshore Rental Co. further held: “An examination of the function and purpose of the respective laws before us provides additional support for our limitation of the reach of California law in the present case. The accident in question occurred within Louisiana's borders; although the law of the place of the wrong is not necessarily the applicable law for all tort actions (Reich v. Purcell, supra, 67 Cal.2d 551, 555, 63 Cal.Rptr. 31, 432 P.2d 727), the situs of the injury remains a relevant consideration. At the heart of Louisiana's denial of liability lies the vital interest in promoting freedom of investment and enterprise within Louisiana's borders, among investors incorporated both in Louisiana and elsewhere. The imposition of liability on defendant, therefore, would strike at the essence of a compelling Louisiana law.” (Id., 22 Cal.3d at p. 168, 148 Cal.Rptr. at p. 874, 583 P.2d at p. 728.)

Nevada has also expressed its interest in protecting employers from excessive financial burdens as well as restricting the cost of industrial accidents by providing only one remedy for injured employees.

By applying the comparative impairment doctrine and considering which state's interest would be more impaired if its policy were subordinated to the policy of the other state, we find that Nevada's interest in restricting the cost of industrial accidents and in affording a basis for predicting such costs would be more substantially impaired if we applied California law to the facts before us. Therefore, we conclude the trial court did not err in sustaining the demurrer by applying Nevada law.

The judgment is affirmed.

FOOTNOTES

1.  Crisselda L. Duarte is suing for loss of consortium and medical expenses incurred as a result of Lupe's injuries. The word “appellant,” however, will only refer to Lupe Duarte.

2.  Labor Code section 3852 states in full:“The claim of an employee for compensation does not affect his claim or right of action for all damages proximately resulting from such injury or death against any person other than the employer. Any employer who pays, or becomes obligated to pay compensation, or who pays, or becomes obligated to pay salary in lieu of compensation, may likewise make a claim or bring an action against such third person. In the latter event the employer may recover in the same suit, in addition to the total amount of compensation, damages for which he was liable including all salary, wage, pension, or other emolument paid to the employee or to his dependents.”

3.  Section 184 states:“Recovery for tort or wrongful death will not be permitted in any state if the defendant is declared immune from such liability by the workmen's compensation statute of a state under which the defendant is required to provide insurance against the particular risk and under which“(a) the plaintiff has obtained an award for the injury, or“(b) the plaintiff could obtain an award for the injury, if this is the state (1) where the injury occurred, or (2) where employment is principally located, or (3) where the employer supervised the employee's activities from a place of business in the state, or (4) whose local law governs the contract of employment under the rules of §§ 187-188 and 196.”

CALDECOTT, Presiding Justice.

CHRISTIAN and BRUNN (Assigned by the Chairperson of the Judicial Council), JJ., concur.