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Docket Number

Docket No. 60508.

Attorney(S)

Benson, Bloomquist, Wegner Hunter (by Terrence H. Bloomquist), for plaintiff. Franklin, Petrulis Lichty, P.C. (by Steve J. Weiss and James T. Mellon), for defendant.

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Burgess v. Holloway Construction Company

Michigan Court of Appeals, Docket No. 60508. Decided February 25, 1983. Leave to appeal denied, 417 Mich 1100.14.

Factual and Procedural Background

On June 16, 1978, Tom Burgess and co-worker Hoppy Stepp, both employed by defendant Holloway Construction Company, argued about union rules and regulations. During that confrontation, Stepp shot and killed Burgess. Burgess's survivors (his wife and children) sued the employer. Prior to filing suit in circuit court, Marjory Burgess filed a workers' compensation claim with the Bureau of Workers' Disability Compensation and redeemed that claim for $4,500.

On October 7, 1981, the trial judge granted defendant's motion for accelerated judgment under GCR 1963, 116.1(2), and denied plaintiffs' petition for leave to file a second amended complaint. Plaintiffs appealed as of right. The Court of Appeals issued a per curiam opinion affirming the trial court's rulings.

Legal Issues Presented

Whether the plaintiffs' tort suit is barred by the exclusive-remedy provision of the Worker's Disability Compensation Act given the prior redemption of the workers' compensation claim.
Whether alleging an intentional tort (the fatal shooting) by a co-employee permits plaintiffs to avoid the exclusive-remedy bar.
Whether plaintiffs adequately pled that the co-employee (Stepp) was acting as defendant's agent or alter ego such that the intentional act could be attributed to the employer.
Whether plaintiffs' proposed second amended complaint should have been permitted (whether denial constituted an abuse of discretion).
Whether the deceased's survivors retain an independent action for loss of society and companionship despite the exclusive remedy.
Whether the trial judge abused discretion in denying plaintiffs' motion to add Stepp as a party defendant (and whether that issue is properly before the Court of Appeals).

Arguments of the Parties

Plaintiffs' Arguments

Plaintiffs alleged that Stepp was acting within the course of his employment when he shot Burgess, thereby supporting a tort claim against the employer.
Plaintiffs contended the injury was outside the Worker's Disability Compensation Act because it involved an intentional tort (thus attempting to avoid the exclusive remedy).
Plaintiffs asserted that Stepp was the employer's alter ego, such that Stepp's intentional act should be imputed to the defendant-employer.
Plaintiffs argued that the survivors retain an independent action for loss of society and companionship.
Plaintiffs claimed the trial judge abused his discretion by denying leave to file a second amended complaint; they sought to set aside the redemption agreement based on mistake, relying on Solo v. Chrysler Corp. (on rehearing).
Plaintiffs also contended the trial judge erred in denying their motion to add Stepp as a party defendant.

Defendant's Arguments

Defendant moved for accelerated judgment, invoking the Worker's Disability Compensation Act's exclusive-remedy provision and the preclusive effect of the redemption order of the compensation claim.
Implicit in the successful motion was the position that plaintiffs' acceptance of the redemption barred relitigation of whether the injury was employment-related and thus barred the tort suit.
Defendant opposed allowing the proposed amendment as futile because the underlying redemption and exclusive-remedy rules would preclude recovery on the tort claims.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Johnson v. Harper-Grace Hospital, 92 Mich. App. 202, 284 N.W.2d 520 (1979)	Redemption of a workers' compensation claim serves as a final adjudication and bars subsequent tort suit relitigating bureau jurisdiction.	Used to support the proposition that plaintiffs' redemption for $4,500 estops their civil tort suit seeking to relitigate whether the injury was employment-related.
Sewell v. Bathey Mfg Co, 103 Mich. App. 732, 303 N.W.2d 876 (1981)	The exclusive-remedy provision bars common-law tort actions by an employee against his employer when the injury is compensable under the Worker's Disability Compensation Act.	Cited to establish that compensable injuries fall within the Act's exclusive remedy and thus bar a tort claim against the employer.
Kissinger v. Mannor, 92 Mich. App. 572, 285 N.W.2d 214 (1979)	Intentional torts are outside the Worker's Disability Compensation Act.	Noted as authority for the proposition that intentional torts may fall outside the Act, but the Court emphasized that alleging an intentional tort by a third party does not automatically avoid the exclusive remedy.
Broaddus v. Ferndale Fastener Div., Ring Screw Works, 84 Mich. App. 593, 269 N.W.2d 689 (1978)	Support for the principle that intentional torts can be outside the Act.	Referenced together with Kissinger to acknowledge the intentional-tort exception to the Act.
McKinley v. Holiday Inn, 115 Mich. App. 160, 320 N.W.2d 329 (1982)	Focus must be on the nature of the tort alleged to determine legislative intent regarding the Act's exclusivity; negligence claims fall within the Act.	Applied to distinguish intentional-misconduct claims from negligence claims and to emphasize that mere allegation of intentional tort does not necessarily avoid the Act when the employer is not the actor.
Chester v. World Football League, 75 Mich. App. 455, 255 N.W.2d 643 (1977)	General guidance on pleading and attribution issues (cited generally).	Used to support the statement that plaintiffs' complaint merely pleads a conclusion (alter ego) without factual allegations showing Stepp acted as the employer when he shot Burgess.
Crilly v. Ballou, 353 Mich. 303, 91 N.W.2d 493 (1958)	An injury is compensable if it results from the work itself or from the stresses and associations of the working environment.	Characterized the fatal shooting as falling within the compensable spectrum if it arose from the working environment, supporting the application of the Act.
Fidelity Casualty Co. of New York v. DeShone, 384 Mich. 686, 187 N.W.2d 215 (1971)	Related authority on compensability under the Act (cited with Crilly).	Referenced to reinforce the compensability analysis under Crilly.
Andrews v. General Motors Corp., 98 Mich. App. 556, 296 N.W.2d 309 (1980)	To bar compensation for claimant's own misconduct, the misconduct must involve "moral turpitude" (act of baseness, vileness, or depravity).	Applied to reject plaintiffs' argument that Burgess's alleged initiation of the altercation would bar compensation; plaintiffs did not allege facts showing moral turpitude.
Moran v. Nafi Corp., 370 Mich. 536, 122 N.W.2d 800 (1963)	Survivors' derivative claims for loss arising from the chief claim may be barred by the Act.	Used to hold that claimed loss of society and companionship, deriving from the chief claim, is barred by the exclusive remedy.
Bourassa v. ATO Corp., 113 Mich. App. 517, 317 N.W.2d 669 (1982)	Further authority that survivor claims deriving from the chief claim are barred by the Act.	Cited to support barring the survivors' derivative claims.
Cole v. Dow Chemical Co., 112 Mich. App. 198, 315 N.W.2d 565 (1982)	Additional precedent on survivors' claims being barred when derivative of the compensable injury.	Referenced to reinforce the conclusion that derivative survivors' claims are precluded by the Act.
Ben P. Fyke Sons v. Gunter Co., 390 Mich. 649, 213 N.W.2d 134 (1973)	Motions to amend are within the trial court's discretion and should be freely granted when justice requires.	Cited as the general standard for amendments; court then held denial here was not an abuse because the amendment would be futile.
Solo v. Chrysler Corp. (On Rehearing), 408 Mich. 345, 292 N.W.2d 438 (1980)	Setting aside a redemption may be appropriate for a mutual mistake of fact concerning the claimant's injury.	Distinguished: plaintiffs sought relief for a claimed mistake of law (not fact), and Solo concerned mistake of fact; thus Solo did not justify setting aside the redemption here.
Schmalzriedt v. Titsworth, 305 Mich. 109, 9 N.W.2d 24 (1943); Sinka v. McKinnon, 301 Mich. 617, 4 N.W.2d 32 (1942); Theisen v. Kroger Co., 107 Mich. App. 580, 309 N.W.2d 676 (1981)	General rule that mistake of law is ordinarily not a ground for equitable relief.	Applied to reject plaintiffs' attempt to set aside the redemption based on an asserted mistake of law.
Leahy v. Henry Ford Hospital, 84 Mich. App. 719, 271 N.W.2d 34 (1978)	A finding similar to the one at issue was found insufficient; when denying an amendment the trial judge must make findings that justice will not be served if granted.	Used to note the type of findings a judge should make when denying leave to amend; the opinion discusses trial judge's statement and cites the requirement for adequate findings.
Hanon v. Barber, 99 Mich. App. 851, 298 N.W.2d 866 (1980)	When denying a motion to file an amended complaint, the trial judge must make findings that justice will not be served if the motion is granted.	Cited to emphasize the procedural requirement regarding findings when an amendment is denied.
Smith v. O'Harrow Construction Co., 95 Mich. App. 341, 290 N.W.2d 141 (1980)	An issue is not properly before an appellate court if the party failed to timely appeal the relevant trial-court order.	Applied to hold that plaintiffs' challenge to denial of their motion to add Stepp is not properly before the Court because they did not appeal the August 19, 1981 order.

Court's Reasoning and Analysis

The Court's analysis proceeded from the threshold question whether the plaintiffs' tort suit was barred by the exclusive-remedy provision of the Worker's Disability Compensation Act (MCL 418.131; MSA 17.237(131)). The Court relied on precedents holding that when an injury is compensable under the Act the exclusive-remedy provision bars common-law tort causes of action by an employee against his employer (citing Sewell).

Because Marjory Burgess had filed and redeemed a workers' compensation claim for the injury at issue, the Court invoked Johnson v. Harper-Grace Hospital to treat the redemption order as a final adjudication that estops plaintiffs from relitigating the bureau's jurisdiction and pursuing a civil tort claim claiming the injury was not employment-related.

Plaintiffs sought to avoid the exclusive remedy by characterizing the fatal shooting as an intentional tort (an exception sometimes recognized). The Court acknowledged that intentional torts may be outside the Act (citing Kissinger and Broaddus), but observed that here the intentional actor was Stepp, not the employer. The Court explained that merely labeling the act "intentional" is insufficient where the employer is not alleged to have committed the intentional act or where the complaint does not plead facts showing that the actor was acting as the employer (i.e., as alter ego or agent).

The Court noted plaintiffs' pleadings merely asserted the legal conclusion that Stepp was the defendant's alter ego without factual allegations demonstrating that Stepp acted as the defendant when he shot Burgess (citing Chester). Given that deficiency, the Court concluded the intentional-tort exception did not apply to defeat the exclusive remedy.

The Court also applied Crilly's principle that injuries resulting from the work itself or from the stresses and associations of the working environment are compensable; this reinforced the conclusion that the shooting could be compensable under the Act. The Court further rejected plaintiffs' contention that Burgess's own alleged initiation of the altercation would bar compensation, explaining that to bar recovery the misconduct must involve moral turpitude (as defined in Andrews), and plaintiffs did not allege such facts.

Regarding the survivors' claim for loss of society and companionship, the Court concluded that because this alleged loss derives from the chief claim it too is barred by the Act (citing Moran, Bourassa, and Cole).

On the motion to amend, the Court acknowledged that trial courts should freely grant amendments when justice requires (Ben P. Fyke), but held that the trial judge did not abuse discretion in denying the second amended complaint because allowing the amendment would have been futile. The Court distinguished Solo (which involved a mistake of fact) from the present case where plaintiffs articulated a mistake of law — and the Court observed that mistake of law is generally not a ground for equitable relief (citing Schmalzriedt, Sinka, Theisen).

The Court additionally commented (sua sponte) on the requirement that a trial judge denying leave to amend make findings that justice will not be served by granting the motion (citing Leahy and Hanon), observing the trial judge's statement and the need for adequate findings in such circumstances.

Finally, the Court held that plaintiffs' complaint that the trial judge abused his discretion in denying their motion to add Stepp as a defendant was not properly before the Court because plaintiffs failed to appeal the August 19, 1981 order denying that motion (citing Smith).

Holding and Implications

Affirmed.

Implications:

The Court affirmed the trial court's grant of accelerated judgment for the defendant and the denial of leave to file a second amended complaint.
The court held that the redemption of the workers' compensation claim served as a final adjudication and, combined with the exclusive-remedy provision of the Worker's Disability Compensation Act, barred the plaintiffs' subsequent tort action against the employer.
The Court concluded that plaintiffs' allegation of an intentional tort by a co-employee did not overcome the exclusive remedy because the complaint failed to plead facts showing the co-employee was acting as the employer (alter ego or agent) when committing the act.
The survivors' derivative claim for loss of society and companionship was also barred as it derived from the compensable injury.
The denial of leave to amend was not an abuse of discretion because amendment would have been futile under the established legal framework; plaintiffs' attempt to set aside redemption based on mistake of law was rejected and thus no equitable relief was warranted on that basis.
No new legal precedent was announced; the decision applied existing authorities to the facts presented and produced the direct effect of dismissal/affirmance as to these parties.

This summary is confined strictly to the content of the provided court opinion and does not add factual matter or legal conclusions beyond those expressly contained in the opinion.

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BURGESS v HOLLOWAY CONSTRUCTION COMPANY

PER CURIAM.

On October 7, 1981, the trial judge granted defendant's motion for accelerated judgment, GCR 1963, 116.1(2), and denied plaintiffs' petition for leave to file a second amended complaint. Plaintiffs appeal as of right.

Plaintiffs alleged that on June 16, 1978, Tom Burgess and Hoppy Stepp, both employed by defendant, argued about union rules and regulations. As a result, Stepp shot and killed Burgess. Plaintiffs, Burgess's wife and children, eventually sued defendant.

Plaintiffs alleged that Stepp was acting within the course of his employment when he shot Burgess. As a matter of law, plaintiffs cannot now argue that Burgess was outside the scope of employment. Before suing in circuit court, Marjory Burgess filed a workers' compensation claim with the Bureau of Workers' Disability Compensation. This claim was redeemed for $4,500. In Johnson v Harper-Grace Hospital, 92 Mich. App. 202, 207; 284 N.W.2d 520 (1979), this Court ruled:

"We hold that plaintiff's acceptance of disability benefits by way of settlement and redemption where she claimed that her injury was employment-related bars her subsequent tort suit where she seeks to relitigate the issue of the bureau's jurisdiction by alleging that her injury was not employment-related. The redemption order serves as a final adjudication of the rights of the parties in relation to this particular injury and estops plaintiff's civil suit."

Therefore, this case's threshold question is whether or not this suit is barred by the exclusive remedy provision. MCL 418.131; MSA 17.237(131). In Sewell v Bathey Mfg Co, 103 Mich. App. 732, 736; 303 N.W.2d 876 (1981), this Court stated:

"It is beyond question that, when an injury is sustained which is compensable under the Worker's Disability Compensation Act of 1969, the exclusive-remedy provision of the act bars any common-law tort cause of action by an employee against his employer arising therefrom." (Footnote omitted.)

Plaintiffs attempt to avoid this exclusive remedy provision by claiming that the injury was outside the Worker's Disability Compensation Act. As such, they allege an intentional tort. Intentional torts are in fact outside the act. Kissinger v Mannor, 92 Mich. App. 572; 285 N.W.2d 214 (1979); Broaddus v Ferndale Fastener Div, Ring Screw Works, 84 Mich. App. 593; 269 N.W.2d 689 (1978), lv den 403 Mich. 850 (1978). However, although an intentional tort has been alleged, defendant did not do it; Stepp did it. Merely alleging an intentional tort is not necessarily in and of itself sufficient to avoid the exclusive remedy provision. In McKinley v Holiday Inn, 115 Mich. App. 160; 320 N.W.2d 329 (1982), the plaintiff was raped by one of defendant's guests while she was working as a maid for defendant. In distinguishing Kissinger, this Court noted:

"[I]t is necessary to focus on the nature of the tort alleged by the injured employee and to determine if the Legislature intended the exclusive remedy of the act to preclude the employee's common-law recovery for injury suffered in such a tort.

* * *

"The instant plaintiff's complaint against defendant Holiday Inn is grounded solely in negligence. No intentional misconduct is alleged. There is no question that, if plaintiff's injuries have resulted in disability, as that term is understood for workers' compensation purposes, she will be eligible to receive compensation benefits." 115 Mich. App. 165-166.

Plaintiffs, consequently, allege that Stepp was defendant's alter ego. However, plaintiffs have merely pled the conclusion that Stepp acted as defendant's alter ego. They have not alleged any facts that would show that Stepp acted as defendant when he shot and killed Burgess. See, generally, Chester v World Football League, 75 Mich. App. 455; 255 N.W.2d 643 (1977).

As such, this case is controlled by Crilly v Ballou, 353 Mich. 303, 326; 91 N.W.2d 493 (1958). There, the plaintiff was injured when he was hit by a shingle thrown by some boys working for the defendant. In ruling that that injury was compensable, under the Worker's Disability Compensation Act, the Supreme Court stated: "[I]f the injury results from the work itself, or from the stresses, the tensions, the associations, of the working environments, human as well as material, it is compensable." See also Fidelity Casualty Co of New York v DeShone, 384 Mich. 686; 187 N.W.2d 215 (1971).

Plaintiffs also argue that their pleadings did not foreclose the possibility that Burgess had initiated the altercation with Stepp. However, for a claimant to be barred from compensation due to his own misconduct, the conduct must involve a high degree of "moral turpitude", defined as "an act of baseness, vileness, or depravity". Andrews v General Motors Corp, 98 Mich. App. 556, 561; 296 N.W.2d 309 (1980), lv den 412 Mich. 926; 315 N.W.2d 127 (1982). Plaintiffs have not alleged any such facts.

Plaintiffs next argue that the deceased's survivors retain an independent action against defendant for loss of society and companionship. However, because this alleged loss derives from the chief claim itself, it is also barred by the Worker's Disability Compensation Act. Moran v Nafi Corp, 370 Mich. 536; 122 N.W.2d 800 (1963); Bourassa v ATO Corp, 113 Mich. App. 517; 317 N.W.2d 669 (1982), lv den 414 Mich. 966 (1982); Cole v Dow Chemical Co, 112 Mich. App. 198; 315 N.W.2d 565 (1982).

Plaintiffs next argue that the trial judge abused his discretion in denying their motion to file a second amended complaint. GCR 1963, 118.1. Although such motions are within the trial judge's discretion, they are to be freely granted whenever justice requires. Ben P Fyke Sons v Gunter Co, 390 Mich. 649; 213 N.W.2d 134 (1973). We do not believe that the trial judge abused his discretion in this case. Allowing the amendment would have been futile. Plaintiffs, relying on Solo v Chrysler Corp (On Rehearing), 408 Mich. 345; 292 N.W.2d 438 (1980), argue that the redemption agreement should have been set aside because of a mutual mistake of fact. However, Solo dealt with a mistake concerning the claimant's injury. Here, plaintiffs are not arguing a mistake of fact but a mistake of law; they are arguing that the parties mistakenly believed that intentional torts fit within the bureau's jurisdiction. A mistake of law is usually not a ground for equitable relief. Schmalzriedt v Titsworth, 305 Mich. 109; 9 N.W.2d 24 (1943); Sinka v McKinnon, 301 Mich. 617; 4 N.W.2d 32 (1942); Theisen v Kroger Co, 107 Mich. App. 580; 309 N.W.2d 676 (1981).

Although plaintiffs have not raised the following matter, we believe it should be addressed. The trial judge's findings of fact were contained in this statement. "I think you should go to the separate action route here. If you file here, I am sure it will be assigned to me." This finding is very similar to the finding found insufficient in Leahy v Henry Ford Hospital, 84 Mich. App. 719, 723; 271 N.W.2d 34 (1978), lv den 406 Mich. 861 (1979): "It seems to me you are in effect starting a whole new lawsuit, a whole new cause of action and these matters have to be resolved someplace". Whenever a trial judge denies a motion to file an amended complaint, he must make findings that justice will not be served if the motion is granted. Hanon v Barber, 99 Mich. App. 851; 298 N.W.2d 866 (1980).

Plaintiffs lastly argue that the trial judge abused his discretion in denying their motion to add Stepp as a party defendant. However, plaintiffs have failed to appeal the August 19, 1981, order which denied their motion. As such, this issue is not properly before this Court. Smith v O'Harrow Construction Co, 95 Mich. App. 341; 290 N.W.2d 141 (1980), lv den 409 Mich. 873 (1980).

Affirmed.

BURGESS v. HOLLOWAY CONST CO