Western Steel Company, Inc. v. Hank Altenburg ( 2005 )

                              NUMBER 13-02-450-CV

                         COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI - EDINBURG

WESTERN STEEL COMPANY, INC.,                                             Appellant,

                                                             v.

HANK ALTENBURG,                                                                       Appellee.

      On appeal from the 347th District Court of Nueces County, Texas.

                                          O P I N I O N

                          Before Justices Yañez, Castillo, and Garza

                                        Opinion by Justice Yañez

Appellee, Hank Altenburg, sued appellant, Western Steel Company, Inc. (AWestern@), for injuries sustained in a work-related accident.  Following a jury trial, the jury found (1) Western was negligent; (2) Altenburg was not Western=s borrowed employee; and (3) that Altenburg was entitled to $88,313.85 in damages.  By two issues, Western challenges the legal and factual sufficiency of the evidence supporting the jury=s finding that Altenburg was not its borrowed employee.  We affirm.   

                                                                  Background

On September 14, 1998, Altenburg suffered a work-related injury to his foot while heating steel beams at Western=s structural steel shop.  At the time of the accident, Altenburg was a temporary worker employed by Unique Employment Services (AUnique@) and had been sent by Unique to work in Western=s shop. Altenburg was covered by and received benefits under Unique=s worker=s compensation policy. 

Altenburg sued Western, asserting negligence and gross negligence related to the accident. Western asserted various defenses, including the affirmative defense that it was not liable because Altenburg=s claims were barred by the worker=s compensation bar under the borrowed servant doctrine. 

Western filed a motion for summary judgment asserting that it is not liable for negligence based on the exclusive remedy provision of the worker=s compensation statute.^[1]  Western=s motion asserted that ATexas courts have afforded the temporary employer the protection of the workers= compensation law, if the temporary employer is a subscriber to workers= compensation insurance, by applying the borrowed servant doctrine.@  Altenburg=s response to the motion is not included in the record.  The trial court denied Western=s motion.

As noted, the jury found Western negligent, determined that Altenburg was not Western=s borrowed employee, and awarded him $88,313.85 in damages. 

By two issues, Western appeals the legal and factual sufficiency of the jury=s finding that Altenburg was not its borrowed employee.  In its brief, Western asserts that because A[Altenburg] was [Western=s] borrowed employee, [Western] is immune from liability by the worker=s compensation bar and [Altenburg] should take nothing from [Western].@

                                                            Standard of Review

If, as here, an appellant is attacking the legal sufficiency of an adverse answer to an issue on which he had the burden of proof, the appellant must overcome two hurdles.^[2]  First, the record must be examined for evidence that supports the finding, while ignoring all evidence to the contrary.^[3]  Second, if there is no evidence to support the finding, then the entire record must be examined to see if the contrary proposition is established as a matter of law.^[4]  The issue should be sustained only if the contrary proposition is conclusively established.^[5]

When reviewing the factual sufficiency of evidence, we examine all of the evidence and set aside a finding only if it is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust.^[6]  A court of appeals must detail the evidence relevant to the issue in consideration, clearly state why the jury's finding is factually insufficient or so against the great weight and preponderance of the evidence as to be manifestly unjust, and state in what regard the contrary evidence greatly outweighs the evidence in support of the verdict.^[7] 

                                                                Applicable Law

Section 408.001 is the exclusive remedy provision of the TWCA.  Section 408.001(a) provides as follows: 

Recovery of workers' compensation benefits is the exclusive remedy of an employee covered by workers' compensation insurance coverage . . . against the employer . . . for . . . a work‑related injury sustained by the employee.^[8]

An employee is Acovered by worker's compensation insurance coverage@ if his employer possesses an approved insurance policy covering the payment of worker's compensation benefits to its employees.^[9]    

A temporary employee may have more than one employer for purposes of the TWCA=s exclusive remedy provision Awhen a provider of temporary workers furnishes a worker to a client that controlled the details of the work at the time the worker was injured and there was no agreement between the provider of temporary workers and the client regarding workers= compensation coverage.@^[10]

The exclusive remedy provision of the TWCA is an affirmative defense.^[11]  Because an employer=s status as a subscriber to worker=s compensation is an affirmative defense, the duty is on the employer/defendantCnot the employee/plaintiffCto plead and prove such facts.^[12]

In Garza v. Exel Logistics, Inc.,  the Texas Supreme Court recently held that under the TWCA, a temporary employment agency cannot obtain worker=s compensation insurance for a client company simply by obtaining coverage for itself.^[13]  The court held that Atwo employers cannot agree that one workers= compensation policy will name only one employer but cover both.@^[14]  The Garza court held that because there was no evidence of explicit insurance coverage for Exel (the client company) in the record, Exel had failed to establish that it was Acovered by workers= compensation insurance coverage@ for a Awork-related injury sustained by the employee,@ which is a prerequisite to the application of the exclusive remedy provision of the TWCA.^[15]

                                                                      Analysis

In the present case, Western was therefore required to plead and prove: (1) Altenburg was a borrowed servant; (2) he was entitled to worker=s compensation benefits; and (3) Western had worker=s compensation insurance that covered claims asserted by borrowed servants.^[16]  Thus, one of Western=s essential elements of proof is that it was Acovered by workers= compensation insurance coverage.@^[17]                     

As noted, Western adequately pled the affirmative defense that Altenburg=s claims were barred by the worker=s compensation bar under the borrowed servant doctrine.  However, Western presented no evidence to the trial court that it was Acovered by workers= compensation insurance coverage@ under the TWCA and that such coverage would have covered a claim made by Altenburg.

The record reflects that immediately prior to the beginning of trial, outside the presence of the jury, Western objected to its Aworker=s compensation@ insurance policy Acoming into evidence to the jury.@  Western=s counsel argued that admitting the policy to the jury would be Aduplicious@ [sic] because the parties had stipulated that AWestern Steel has a policy of insurance, but that policy did not provide benefits to the plaintiff.@  Secondly, Western argued that admission of the policy to the jury was irrelevant because:

[Western=s counsel]: . . . The only relevance to the insurance compB worker=s comp insurance issue under the Borrowed Servant Doctrine is that both the general employer must have comp and the special employer, or the borrowing employer, must have worker=s comp.  Who paid the comp is really not an issue.

                                                              * * * *

The only relevance it would have would be to the Court on determining the legal issue of whether or not we have met, at least, the superficial or the preliminary elements of Borrowed Servant, number one, being that both the client company and general employer has [sic] comp; two, being there was some exercise of control.

The trial court overruled Western=s objection and APlaintiff=s Exhibit 14b,@ Western=s insurance policy, was admitted.  We have carefully examined the policy.  We conclude it does not establish that Western was Acovered by workers= compensation insurance@ as required under the exclusive remedy provision of the TWCA.^[18]   

At trial, Michael Yankee, president of Western, testified on cross-examination as follows:

Q [Altenburg=s counsel]: Come on, Mr. Yankee, you know what I=m asking.  You give himC you give your straight employees W-2s.  You don=t give him [Altenburg] a W-2.

A [Yankee]: I don=t give him a W-2.  No.

Q: You don=t keep him on your medical insurance.  Mr. Altenburg, isn=t, is he, correct?

A: No.

Q: He=s not on your 401-K plan.

A: That=s true.

Q: He=s not on your worker=s compensation policy for this injury.

A: That=s correct.

Q: He wasn=t paid benefits by your worker=s compensation policy.

A: Not that I know of.

                                                              * * * *

Q: All right, sir.  Well, you could certainly agree with me that all those benefits your regular employees get, that we just went through, have not been provided, were not provided and were certainly never intended to be provided to this man, Mr. Altenburg, correct?

A: Those benefits are available to him through the temporary company. 

Q: Through Unique?

A: That=s correct.

Western also offered the video deposition testimony of Ray Robles, Western=s industrial division manager.  On cross-examination, Robles testified as follows:

Q [Altenburg=s counsel]: To go specifically to Mr. Altenburg, for the day he got hurt back on September 14th, 1998, he was paid wages for that day=s work by Unique?

A [Robles]: Correct.

Q: Not by Western Steel, correct?

A: Correct.

Q: He was covered by workers= compensation as an employee, an employee of Unique, correct?

A: Correct.

Q: He was actually paid benefits under that workers= compensation policy of Unique by Unique=s compensation carrier, correct?

A: Correct.

Q: And he was not paid or claimed to be an employee under the workers= compensation policy of Western Steel, was he?

A: Correct.

Q: We would be in agreement, he was not?

A: Correct.

Q: Because he was an employeeB considered an employee under the compensation claim and policy of Unique?

A: Correct. 

We conclude that the record contains no evidence that Western was Acovered by workers= compensation insurance coverage@ as required under the exclusive remedy provision of the TWCA^[19] and that such coverage would have covered a claim made by Altenburg.   

Even if,  as Western urges, we were to determine that the evidence establishes as a matter of law that Altenburg was its borrowed employee, such a determination, without proof that Western was covered by worker=s compensation insurance, is immaterial.^[20] 

We briefly address the dissenting opinion.  The dissent would hold that the evidence established as a matter of law that Altenburg was Western=s borrowed employee. Thus, the dissent would sustain Western=s legal and factual sufficiency challenges and would reverse the trial court=s judgment. Rather than render judgment in Western=s favor, however, the dissent would remand to the trial court for it to consider, in light of Garza,^[21] whether Western established that it is Acovered by workers= compensation insurance coverage@ within the meaning of the exclusive remedy provision of the Texas Worker=s Compensation Act (ATWCA@).^[22] 

The dissent=s reliance on Garza, however, for its conclusion that remand is appropriate in this case, is misplaced.  In Garza, the trial court granted summary judgment in favor of the temporary employment agency and its client, and the court of appeals affirmed.^[23]  The supreme court affirmed as to the temporary employment agency, but reversed and remanded as to the client company because the court found the client company had not established it was Acovered by workers= compensation insurance coverage@ as required to assert the exclusive remedy provision of the TWCA.^[24]  In contrast, the present case is not before us on a summary judgment.  A jury has heard all the evidence presented by Altenburg and Western and has rendered judgment.  Accordingly, remand is inappropriate because Western failed to prove an essential element of its affirmative defenseCspecifically, that it was Acovered by workers= compensation insurance coverageC@ and is therefore not entitled to a second opportunity to prove its affirmative defense. The dissent simply does not address our holding that Western failed to prove that it is covered by workers= compensation insurance.              

We hold that Western failed to prove an essential element of its affirmative defense, specifically, that it is Acovered by workers= compensation insurance coverage.@  Accordingly, we affirm the trial court=s judgment. 

LINDA REYNA YAÑEZ

Justice

Dissenting Opinion by

Justice Errlinda Castillo.

Opinion delivered and filed this

the 23rd day of June, 2005.

---

^[1] See Tex. Lab. Code Ann. ' 408.001 (Vernon 1996).

^[2] Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 940 (Tex. 1991).

^[3] Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). 

^[4] Id.  

^[5] Id. at 241‑42.

^[6] Id. at 242. 

^[7] Id. at 241.

^[8] Tex. Lab. Code Ann. ' 408.001 (Vernon 1996). 

^[9] Id. ' 401.011(44)(A) (Vernon Supp. 2004-05).    

^[10] Wingfoot Enter. v. Alvarado, 111 S.W.3d 134, 144 (Tex. 2003). 

^[11] Pierce v. Holiday, 155 S.W.3d 676, 678 (Tex. App.BTexarkana 2005, no pet.); Brown Servs., Inc. v. Fairbrother, 776 S.W.2d 772, 775-76 (Tex. App.BCorpus Christi 1989, writ denied); see Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex. 1992) (Exxon entitled to question on its affirmative defense because it pled and proved its subscriber status and that Perez was its borrowed servant).

^[12] See Tex. R. Civ. P. 94; Pierce, 155 S.W.3d at 678; Brown Servs., 776 S.W.2d at 775-76.

^[13] Garza v. Exel Logistics, Inc., 48 Tex. Sup. Ct. J. 544, 2005 Tex. LEXIS 297, at *14 (Tex. Apr. 8, 2005).

^[14] Id. at *18.

^[15] Id. at *22.

^[16] See Univ. of Houston - Clear Lake v. Marsh, 981 S.W.2d 912, 914 (Tex. App.BHouston [1st Dist.] 1998, no pet.).

^[17] Johnston Testers v. Rangel, 435 S.W.2d 927, 930 (Tex. App.BSan Antonio 1968, writ ref=d n.r.e.) (defendant not entitled to issue on its defenses that plaintiff was borrowed servant whose sole remedy was under worker=s compensation act because defendant did not prove plaintiff was entitled to worker=s compensation benefits or that defendant had worker=s compensation insurance).

^[18] See Tex. Lab. Code Ann. ' 408.001 (Vernon 1996).  The only reference in Western=s insurance policy regarding worker=s compensation is a reference specifically excluding such coverage. The policy states, in pertinent part:

2. Exclusions.

This insurance does not apply to:

. . . .

d. Workers= Compensation and Similar Laws

Any obligation of the insured under a workers= compensation, disability benefits or unemployment compensation law or any similar law. 

^[19] See Tex. Lab. Code Ann. ' 408.001 (Vernon 1996). 

^[20] See Moore v. Cotter & Co., 726 S.W.2d 237, 240 (Tex. App.BWaco 1987, no writ) (stating that jury=s finding that plaintiff was borrowed employee, without proof of coverage by compensation was immaterial because proof that worker=s compensation insurance existed is essential element of proof in borrowed servant defense); Guerrero v. Standard Alloys Mfg. Co., 598 S.W.2d 656, 657 (Tex. App.BBeaumont 1980, writ ref=d n.r.e.) (holding that jury=s affirmative finding on borrowed servant issue, without proof of compensation coverage, was Aimmaterial,@ where defendant had neither plead nor proved that it had worker=s compensation insurance).

^[21] See Garza, 2005 Tex. LEXIS 297.  

^[22] See Tex. Lab. Code Ann. ' 408.001 (Vernon 1996). 

^[23] Garza, 2005 Tex. LEXIS 297 at *1.

^[24] Id.