Robert Raymond Reed v. Judith Shackelford Hodge ( 2021 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
ROBERT RAYMOND REED, UNPUBLISHED
November 4, 2021
Plaintiff-Appellant,
v No. 353245
Wayne Circuit Court
JUDITH SHACKELFORD HODGE, STATE FARM LC No. 19-017359-NI
MUTUAL AUTOMOBILE INSURANCE
COMPANY, MARC LOUIS ABDILLA,
AMERICAN ALTERNATIVE INSURANCE
CORPORATION, and CHARTER TOWNSHIP OF
VAN BUREN,
Defendants,
and
HURON VALLEY AMBULANCE, INC.,
Defendant-Appellee.
EMILY SCHENK,
Plaintiff-Appellant,
v No. 354038
Wayne Circuit Court
JUDITH HODGE, also known as JUDITH HODGES LC No. 19-009820-NI
and JUDITH SHACKELFORD-HODGE,
Defendant/Cross-Plaintiff,
and
MARC ABDILLA,
Defendant/Cross-Defendant,
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and
CHARTER TOWNSHIP OF VAN BUREN and
AMERICAN ALTERNATIVE INSURANCE
CORPORATION,
Defendants,
and
HURON VALLEY AMBULANCE, INC.,
Defendant/Cross-Defendant-Appellee.
Before: RICK, P.J., and RONAYNE KRAUSE and LETICA, JJ.
PER CURIAM.
In these consolidated appeals,1 in Docket No. 353245, plaintiff, Robert Raymond Reed,
appeals by leave granted2 the trial court’s order granting summary disposition in favor of
defendant, Huron Valley Ambulance (HVA). In Docket No. 354038, plaintiff, Emily Schenk, also
appeals by leave granted3 the trial court’s order granting summary disposition in HVA’s favor. At
issue in these appeals is whether HVA is considered Reed’s and Schenk’s employer for purposes
of the exclusive remedy provision of the Worker’s Disability Compensation Act of 1969 (WDCA),
MCL 418.101 et seq.
On appeal, Reed and Schenk argue the trial court erred when it granted HVA’s motions for
summary disposition because there were questions of fact as to whether HVA was Reed’s and
Schenk’s employer. For the following reasons, we reverse the orders of the trial court and remand
for further proceedings.
I. BACKGROUND
The facts of these cases are largely not disputed. These appeals arise from a single motor
vehicle accident that occurred on January 4, 2019. Schenk and Reed were working as emergency
1
Reed v Hodge, unpublished order of the Court of Appeals, entered October 2, 2020 (Docket Nos.
353245 and 354038).
2
Reed v Hodge, unpublished order of the Court of Appeals, entered October 2, 2020 (Docket
No. 353245).
3
Schenk v Hodge, unpublished order of the Court of Appeals, entered October 2, 2020 (Docket
No. 354038).
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medical technicians (EMT) in the back of an ambulance driven by defendant, Marc Abdilla.4 As
the ambulance was traveling northbound on Haggerty Road, it entered the intersection at Ecorse
Road in the Charter Township of Van Buren, where it was struck by a vehicle driven by defendant
Judith Hodge. Hodge was traveling westbound on Ecorse. Schenk and Reed were attending to a
patient in the rear of the ambulance at the time of the motor vehicle accident. Schenk and Reed
claimed to have suffered injuries as a result of the accident and brought these lawsuits against
HVA, among other defendants. Although asserted in separate complaints, both Reed and Schenk’s
theories of liability against HVA sound in negligence.
In the trial court, HVA moved for summary disposition in both cases, asserting the trial
court lacked subject-matter jurisdiction because the WDCA provided the exclusive remedy for
injured workers. For their parts, Schenk and Reed argued they were not employed by HVA, but
instead by HVA’s parent company, Emergent Health Partners (EHP). The trial court agreed with
HVA and granted its motions in both cases. These appeals followed.
II. STANDARD OF REVIEW
In Docket Nos. 353245 and 354038, HVA moved for summary disposition under
MCR 2.116(C)(4) and MCR 2.116(C)(8).5 This Court reviews de novo a trial court’s decision
whether to grant or deny a motion for summary disposition. Ingham Co v Mich Co Rd Comm Self-
Ins Pool, 321 Mich App 574, 579; 909 NW2d 533 (2017), remanded on other grounds by 503
Mich 917 (2018). “When viewing a motion under MCR 2.116(C)(4), this Court must determine
whether the pleadings demonstrate that the defendant was entitled to judgment as a matter of law,
or whether the affidavits and other proofs show that there was no genuine issue of material fact.”
Cork v Applebee’s of Mich, Inc, 239 Mich App 311, 315; 608 NW2d 62 (2000). Additionally, “we
examine whether the pleadings, affidavits, depositions, admissions, and documents in the case
show that the trial court lacked subject-matter jurisdiction.” Mich Head & Spine Institute PC v
Auto-Owners Ins Co, ___ Mich App___; ___ NW2d ___ (2021) (Docket No. 354765); slip op at 2.
A motion under MCR 2.116(C)(8) tests the legal sufficiency of the
complaint. All well-pleaded factual allegations are accepted as true and construed
in a light most favorable to the nonmovant. A motion under MCR 2.116(C)(8) may
be granted only where the claims alleged are so clearly unenforceable as a matter
of law that no factual development could possibly justify recovery. When deciding
a motion brought under this section, a court considers only the pleadings. [Dell v
Citizens Ins Co of America, 312 Mich App 734, 739-740; 880 NW2d 280 (2015)
(cleaned up).]
4
In her complaint, Schenk also alleged that the ambulance was owned by HVA.
5
The trial court did not specify under which subrule it granted HVA’s motions for summary
disposition. In addition, the trial court’s scant reasoning in granting the motions does not reveal
whether the trial court considered the parties’ documentary evidence submitted with their summary
disposition briefings. Therefore, we address the parties’ arguments under each subrule.
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III. DISCUSSION
The issues raised by Reed and Schenk in their appeals are virtually identical. Both appeals
arise from a common set of facts and involve the same legal issue: whether HVA is considered
their employer for purposes of the WDCA. In addition, HVA’s arguments to the trial court and to
this Court are virtually identical in each case. Thus, we will consider the arguments in each appeal
collectively.
Without providing any reasoning, the trial court concluded that HVA was Reed’s and
Schenk’s employer. In doing so, the trial court eliminated any recovery they would have in tort as
a result of the exclusivity provision in the WDCA:
The right to the recovery of benefits as provided in this act shall be the
employee’s exclusive remedy against the employer for a personal injury or
occupational disease. The only exception to this exclusive remedy is an intentional
tort. An intentional tort shall exist only when an employee is injured as a result of
a deliberate act of the employer and the employer specifically intended an injury.
An employer shall be deemed to have intended to injure if the employer had actual
knowledge that an injury was certain to occur and willfully disregarded that
knowledge. The issue of whether an act was an intentional tort shall be a question
of law for the court. This subsection shall not enlarge or reduce rights under law.
[MCL 418.131(1).]
Under this provision, the WDCA provides the exclusive remedy for an injured worker against his
or her employer. McQueer v Perfect Fence Co, 502 Mich 276, 286-287; 917 NW2d 584 (2018).
The only exception to this provision is instances where the employer commits an intentional tort.
Johnson v Detroit Edison Co, 288 Mich App 688, 696; 795 NW2d 161 (2010). “[T]he exclusive
remedy provision of the WDCA limits the liability of the employer and provides statutory
compensation for employees regardless of fault.” Pro-Staffers, Inc v Premier Mfg Support Servs,
Inc, 252 Mich App 318, 323; 651 NW2d 811 (2002).
“This Court applies the economic-reality test to determine whether an employer-employee
relationship exists for purposes of the WDCA.” Chiles v Machine Shop, Inc, 238 Mich App 462,
467; 606 NW2d 398 (1999). The economic-reality test involves the following factors: “(1) control
of the worker’s duties, (2) payment of wages, (3) the right to hire, fire, and discipline, and (4)
performance of the duties toward the accomplishment of a common goal.” Id. “In applying these
factors, the totality of the circumstances must be examined, with no single factor controlling.” Id.Under MCR 2.116(C)(4), the trial court was not presented with sufficient evidence to
conclude there was no issue of material fact as to each of the factors in the economic-reality test.
For its part, HVA presented to the trial court Ron Slagell’s affidavit, which asserted that HVA was
a wholly-owned subsidiary of EHP. However, Slagell did not testify or attest to which entity
controlled Reed and Schenk’s work duties, paid their wages, hired, fired, or disciplined them, or
that their job duties were for the purpose of accomplishing a common goal.
On the other hand, Reed submitted an affidavit stating that EHP controlled his work duties
in that “EHP scheduled the dates and times that [he] was expected to work as an EMT.” In
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addition, Reed claimed he received payment for work from checks issued by EHP. He also stated
he was supervised by EHP staff and did not receive any benefits, such as healthcare or
transportation services, from HVA.
Although not presented to the trial court in connection with its motion, HVA has presented
evidence to this Court undercutting Reed’s and Schenk’s factual claims. For example, Reed
testified that he was initially hired by HVA in 2003, before EHP was even formed. Both Reed and
Schenk also admitted they were wearing uniforms and in an ambulance provided by HVA on the
date of the accident. However, because the touchstone is the application of the economic reality
test, those facts were not dispositive, and they were not before the trial court until after HVA was
dismissed from the suits.
Despite the relative lack of evidence submitted by HVA in its motion for summary
disposition, HVA claims, relying on Wells v Firestone Tire & Rubber Co, 421 Mich 641; 364
NW2d 670 (1984), that its status as a subsidiary of EHP qualifies it as Reed’s and Schenk’s
employer for purposes of the WDCA. HVA, however, misreads Wells in asserting that Wells
dispensed with the economic-reality test for the more general proposition that any subsidiary is
considered an employer under the WDCA. Rather, our Supreme Court expressly affirmed the use
of the test:
Following our departure from the common-law control test, this Court has
consistently utilized the economic reality test when questions have arisen relative
to the existence of an employment relationship. While this Court’s earlier
applications of the economic reality test dealt with the distinction between an
independent contractor and an employee or, as in Farrell v Dearborn Mfg Co, 416
Mich 267; 330 NW2d 397 (1982), with dual employers in a labor-broker situation,
we believe it to be appropriate and consistent to utilize the economic reality test in
determining in this case which of two separate corporations, parent or subsidiary,
was plaintiff’s actual employer for purposes of the Worker’s Disability
Compensation Act. [Id. at 647.]
HVA is correct that the Court in Wells also addressed the concept of reverse piercing of
the corporate veil when determining whether the defendant was an employer under the WDCA.
Id. at 650-651. However, it did so as a result of the inequity that would result “under the facts of
this case.” Id. at 651. The Court explained:
If the statute is to be construed liberally when an employee seeks benefits,
it should not be construed differently when the employer asserts it as a defense to a
tort action brought by the employee who claimed and accepted benefits arising from
that employment relationship. There is absolutely no evidence that defendant
maintained Muskegon Firestone for the purpose of insulating itself from its
workers’ compensation liabilities. Defendant supplied workers’ compensation
benefits through its insurance company and accepted responsibility for the work
related injuries of its Muskegon employees. Indeed, under the facts and
circumstances of this case, we would not have permitted Firestone to shield itself
behind its wholly owned subsidiary in order to avoid payment of workers’
compensation benefits to plaintiff. [Id. at 651-652.]
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Therefore, while our Supreme Court recognized, in certain instances, it is appropriate to
consider a subsidiary as an employer, the trial court must still engage in an analysis of the facts of
each case to determine whether such a result is equitable. HVA completely ignores this
requirement from Wells. And, even if the trial court had done such an analysis, it would be clear
this case is not similar to Wells. In that case, the plaintiff sued the parent company that paid the
worker’s compensation benefits. Id. at 651. That is unlike the case here, where Reed and Schenk
sued the subsidiary that did not pay their WDCA benefits.
HVA also relies on James v Commercial Carriers, Inc, 230 Mich App 533; 583 NW2d 913
(1998), in arguing that this Court treats subsidiaries as employers under the economic-reality test.
That case, however, is not as broad as HVA would suggest. In James, this Court held that the
defendant was considered the plaintiff’s employer for purposes of the WDCA. Id. at 542-544. As
in Wells, however, this Court did so on the basis of the specific evidence presented to the trial
court:
[W]e believe that under the totality of the circumstances of the present case, Fleet
and defendant must be considered components of the same employer, their parent
corporation Ryder, for purposes of the WDCA. In addition to sharing a filing for
worker’s compensation self-insurer status, these subsidiaries share numerous
financial functions through their connection to the parent corporation. Cash
management and treasury functions for all Ryder subsidiaries are performed by
Ryder’s central staff at its corporate headquarters in Miami. All Ryder customers
send their payments to depository accounts that are dispensed into concentration
accounts at the end of every day. The money in the concentration accounts is
transferred into disbursement accounts that process all Ryder’s subsidiaries’
disbursements. Moreover, there is a unity of management between the parent
corporation Ryder and each of its subsidiaries. Defendant and Fleet share the same
three directors, one who is also a director, president, and CEO of Ryder, and another
who is a senior executive vice president of Ryder. Defendant has twenty-seven
officers and Fleet has twenty-two officers, nineteen of which they share. [Id. at
542-543.]
For its part, HVA did not present relevant evidence of the sort considered in James.
Instead, HVA relied only on the parent-subsidiary relationship between EHP and HVA, claiming
that the relationship was sufficient to establish it as Reed’s and Schenk’s employer. Therefore,
the trial court erred when it concluded that HVA was entitled to summary disposition under
MCR 2.116(C)(4). HVA simply did not present sufficient evidence to demonstrate there was no
issue of fact as to whether or not HVA was their employer.
This conclusion is consistent with Wodogaza v H & R Terminals, Inc, 161 Mich App 746;
411 NW2d 848 (1987),6 a case relied on by Reed and Schenk in the trial court. In Wodogaza, this
6
Cases from this Court published before November 1, 1990, are not binding but may be considered
for their persuasive authority. In re Stillwell Trust, 299 Mich App 289, 299 n 1; 829 NW2d 353
(2012).
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Court concluded that Wells did not control the outcome because in Wells, “the plaintiff sought
damages against the parent corporation, whereas in this case damages are sought against the
subsidiary corporations.” Id. at 751-752. Moreover, addressing the equities of the case, this Court
found the equities in favor of the defendant lacking:
[T]he equities involved in these two instances are not identical. Most significantly,
the subsidiaries in this case are seeking to shield themselves from tort liability
without having assumed any concomitant liability for the payment of workers’
compensation benefits. Defendants have never accepted any responsibility for the
work-related injuries of their parent’s employees. Second, as noted by the majority
in Wells, the general principle in Michigan is that separate corporate identities will
be respected, and thus corporate veils will be pierced only to prevent fraud or
injustice. In the present case, defendants point to no injustice resulting from our
recognition of their nonemployer status, as determined under an economic reality
test analysis. Liability alone constitutes no such injustice. Indeed, if negligence on
the part of one or both of the nonemployer subsidiaries in this case brought about
plaintiff’s injuries, injustice would result by failing to permit plaintiff to seek
compensation against the proper tortfeasor or tortfeasors. Third, we are not
unmindful that, as pointed out by Justice LEVIN in his dissent in Wells, the vast
majority of states do not extend the reach of the exclusive remedy provision of a
workers’ compensation act by treating parent and subsidiary corporations as a
single entity. [Id. at 756.]
For similar reasons, the trial court should not have granted HVA’s motion for summary
disposition under MCR 2.116(C)(8). Neither Reed’s nor Schenk’s complaint contains any
allegation that would result in failing to state a claim. In fact, assertions regarding EHP and its
relationship to HVA are not contained in their complaints. Similarly, nowhere in the complaints
do they allege that HVA was their employer or otherwise controlled their job duties.
HVA’s argument that Reed and Schenk were leased to HVA by EHP and, therefore,
employees of both plaintiffs is also unconvincing. Contrary to HVA’s contention, the mere fact
that one company leases an employee to another does not render both companies as employers
under the WDCA. In Kidder v Miller-Davis Co, 455 Mich 25, 40; 564 NW2d 872 (1997), our
Supreme Court determined that “a labor broker relationship existed between CLS and Miller–
Davis to such an extent that a dual or coemployer relationship was formed, precluding a separate
tort action against the customer of the labor broker.” Fatal to HVA’s argument, the Court
specifically noted that it “stop[ped] short of holding that a labor broker-customer relationship will
always establish dual employer status as a matter of law.” Id. at 40 n 7. Instead, the Court
addressed the “economic realities of the employment situation,” which dictated that “Miller–Davis
was the plaintiffs’ employer for purposes of the exclusive remedy provision of the worker’s
compensation statute.” Id. at 40-41. Therefore, HVA was not entitled to summary disposition
under MCR 2.116(C)(8).
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Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Michelle M. Rick
/s/ Amy Ronayne Krause
/s/ Anica Letica
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