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06/28/90 PAUL T. MOORE v. RONALD HSU CONSTRUCTION

June 28, 1990

PAUL T. MOORE, ET UX., APPELLANTS
v.
RONALD HSU CONSTRUCTION COMPANY, INC., APPELLEE



Appeal from the Superior Court of the District of Columbia; Hon. Herbert B. Dixon, Jr., Motions Judge

Rogers, Chief Judge, and Newman and Farrell, Associate Judges.

The opinion of the court was delivered by: Farrell

This case presents a choice of law question arising from an accident on a construction site in the District of Columbia and a subsequent lawsuit by the plaintiff-victim and his wife, residents of Maryland and officers of a Maryland close corporation, against another Maryland corporation which had hired plaintiffs to perform work on the District of Columbia site. The parties agreed below that the Maryland Workers' Compensation Act governed whether plaintiffs could file this suit for personal injury or instead were confined to remedies under the compensation laws. We agree with the parties' evaluation of the choice of law question and reverse the trial court's apparent contrary determination. We further hold, as a matter of law, that plaintiffs availed themselves of the exemption or "opt out" provision of the Maryland Workers' Compensation Act and hence were free to bring this suit in Superior Court, where jurisdiction concededly lies.

I.

Plaintiffs Paul T. and Nancy J. Moore filed suit in Superior Court against Hsu Construction Company and other defendants alleging negligence in their failure to provide for the safety, care and protection of the subcontractor and employees on a construction site in the District Of Columbia. The Moores claimed that Paul T. Moore had been injured when he fell from a ladder while painting an exterior roofcap and other surfaces of a building under renovation, and the roofcap gave way causing him to fall thirty feet to the ground. Hsu Construction had hired the Moores' company, Paul T. Moore, Inc., as a subcontractor to paint the building in question.

After discovery and preliminary proceedings, *fn1 Hsu Construction filed a motion for summary judgment citing as undisputed facts that at all relevant times, Hsu Construction was a Maryland corporation with its primary place of business in Maryland, possessing a workers' compensation insurance policy that covered its employees while at work in Maryland and the District of Columbia; that Paul T. Moore, Inc. was a Maryland close corporation with its primary place of business in Maryland, where Paul T. Moore also resided; and that any contract of employment between Paul T. Moore and Moore, Inc. was based in Maryland. Hsu Construction argued that, under the Maryland Workers' Compensation Act, Paul T. Moore was a "statutory employee of Hsu," see MD. CODE ANN. art. 101, §§ 21 (b)(2) & 62 (1957, 1985 Repl. Vol.), and that therefore Moore's exclusive remedy against Hsu Construction was for workers' compensation. Id., § 15. Hsu Construction conceded that an officer of a close corporation, as defined by Maryland law, may elect to become exempt from coverage as an employee under Maryland's Workers' Compensation Act, id., § 67 (4)(ii), and that Paul T. Moore, Inc. was such a corporation. Hsu contended, however, that Moore had failed to meet the statutory requirements for that election.

Specifically, an officer of a Maryland close corporation may avoid coverage as an employee provided "the employer shall serve upon the employer's insurance carrier and upon [the Maryland Workers' Compensation] Commission written notice naming the persons electing not to be covered. . . ." Id. Hsu Construction asserted that neither Paul T. Moore nor any officer of Paul T. Moore, Inc. had notified the Commission of an election to be exempted from coverage. In support of this assertion, Hsu Construction attached an affidavit of counsel representing that he had spoken with an official of the Insurance Section of the Maryland Workers' Compensation Commission, who informed him that "no officers of Paul T. Moore, Inc. had ever exempted themselves, pursuant to [§ 21 (b)(2)(i)], from having to obtain worker's compensation insurance." Accordingly, Hsu Construction's motion concluded:

Paul T. Moore is a statutory employee of Hsu. Since Hsu provided worker's compensation insurance for Paul T. Moore's injuries, Paul T. Moore's sole remedy against Hsu is a worker's compensation claim. Nancy Moore's claim relies solely on Paul Moore's claim. Therefore, summary judgment against the Moores is appropriate. . . .

In opposing the motion, plaintiffs agreed that under choice of law principles applied by the District of Columbia courts, the Maryland Workers' Compensation Act and not the District's corresponding statute would determine whether plaintiffs could bring suit for personal injury or were limited to a claim for workers' compensation. They further agreed that "the only material issue is whether or not . . . Paul T. Moore, as an Officer of a Close Corporation in the State of Maryland[,] elected to reject Workmens' Compensation Coverage, and served appropriate notice upon his Insurance Carrier and the Workmens' Compensation Commission." Plaintiffs countered Hsu Construction's affidavit with sworn affidavits of their own stating that, upon investigation, it had been learned that on or about January 26, 1981, Paul T. and Nancy J. Moore had filed with the State Farm Insurance Company a written election to reject workers' compensation coverage for themselves; and further that an index card system maintained by the Maryland Workers' Compensation Commission confirmed that a rejection letter signed by Paul T. and Nancy J. Moore had been received by the Commission on June 26, 1981. Plaintiffs contend, therefore, that by operation of Maryland law they were entitled to bring suit against Hsu Construction for negligence.

On August 9, 1988, the trial court entered a brief order granting summary judgment in favor of Hsu Construction, without Discussion and citing only this court's then-recent decision in Meiggs v. Associated Builders, 545 A.2d 631 (D.C. 1988).

II.

We begin by considering the trial court's reliance on Meiggs. With all due respect, we do not see that as a choice of law case. Rather, it involved an issue of construction of District of Columbia law: "Who is an employer immune from tort liability under the provisions of the District of Columbia Workers' Compensation Act of 1979?" Id. at 633. In Meiggs, certain general contractors sued for negligence by employees of subcontractors defended on the ground that the workers' compensation statute grants immunity to general contractors from tort liability in suits brought by injured employees of subcontractors, even where the subcontractors have secured payment of workers' compensation to the employees. In rejecting this argument, this court observed that, by the terms of the statute, the general contractors and the plaintiffs did not stand in an employer/employee relationship; the latter rendered services for and were paid by the subcontractor. Id. at 634-35. The court noted that other provisions of the statute imposed a secondary liability on a general contractor to secure payment of workers' compensation when a subcontractor has not secured payment, and that in such circumstances -- to prevent double recovery by an employee -- it made sense to deem the general contractor constructively an "employer" of the subcontractor's employees for purposes of the immunity provision. Id. at 634. The court held, however, that resort to this "legal fiction" is appropriate "only when the actual employer -- the subcontractor defaults on its statutory obligation, and the general contractor steps in to secure payment," id. (emphasis in Meiggs) -- an eventuality not present in Meiggs.

Although Meiggs affirmed that in particular circumstances (not present there) a general contractor providing workers' compensation for an employee of a subcontractor may be immune from tort liability, that principle has no relevance to whether Maryland or District of Columbia law applies in this case in determining whether Hsu Construction Company was shielded from suit by maintaining workers' compensation coverage for subcontractors like Paul T. Moore. We therefore turn to that choice of law question. We readily conclude ...


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