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Family Not Allowed to File Lawsuit Under CA Labor Code 3706

When people are seriously injured at work, they are generally limited to pursuing remedies under their employers’ workers’ compensation policies. However, when their employers fail to carry workers’ compensation insurance, they can file lawsuits against their employers in court. In the case of Hollingsworth v. Heavy Transport, Inc., Cal. Ct. App. Case No. B306127, the court considered whether the trial court had erred when it denied a jury trial to determine whether an employer had workers’ compensation insurance or not.

Factual and procedural background

Kirk Hollingsworth was employed by Heavy Transport, Inc. as a maintenance worker. On June 20, 2016, Hollingsworth was called to the scene where a truck hauling a crane had two tires that failed. He changed those two tires and was subsequently called back to the scene after a third tire failed. The third tire had blown out, and its tire treads were wrapped around the axle. When he tried to free the treads from the axle, the truck fell and crushed him, killing him.

While employees who are killed in industrial accidents, their surviving family members are normally limited to pursuing workers’ compensation claims through their loved ones’ former employers. In Hollingsworth’s case, his surviving spouse and son alleged that Heavy Transport did not have workers’ compensation insurance at the time of Hollingsworth’s accident and death and filed a wrongful death lawsuit against the company on Jan. 22, 2018.

Heavy Transport had purportedly been merged with Bragg in 1986, but the two companies continued to operate separately as different corporations. The plaintiffs alleged that Bragg had paid them workers’ compensation and pointed to that as evidence that Heavy Transport had failed to carry workers’ compensation coverage. They also alleged that Hollingsworth had been inadequately trained and that the equipment used by both corporations in the accident was in a dangerous condition.

Bragg and Heavy Transport filed a demurrer to the Hollingsworths’ complaint. They agreed that Hollingsworth was an employee of Heavy Transport. However, the companies argued that Heavy Transport was simply a fictitious name of Bragg Investment Company, Inc. and that Bragg Investment Company while doing business as Heavy Transport had an active workers’ compensation policy. The companies argued that the plaintiffs’ lawsuit was barred as a result. The trial court overruled the demurrer and found that the Hollingsworths had sufficiently established that an exception to the workers’ compensation rule had been met by the plaintiffs showing that Heavy Transport did not have workers’ compensation insurance. The Workers’ Compensation Appeals Board subsequently set a hearing to determine whether any workers’ compensation insurance covered the accident.

The plaintiffs filed a motion to stay the WCAB proceedings until the superior court made its findings while Bragg and Heavy Transport filed a motion to stay the proceedings in the superior court until the WCAB made its findings. The superior court then stayed its proceedings, and the Hollingsworths filed a writ of mandate to the Court of Appeal. The Court of Appeal then found that the Superior Court had already exercised its jurisdiction and should proceed and make its findings of whether it or the WCAB had exclusive jurisdiction over the case. The case was then remanded to the Superior Court.

The Superior Court asked both parties to submit briefs about jurisdiction. Braggs and Heavy Transport argued that whether the court had jurisdiction was a matter of law, and the court should make that decision. They also argued that Bragg had been issued a workers’ compensation policy from XL Insurance America, Inc. and that Heavy Transport was insured under that policy on the date of the accident. Bragg submitted declarations from the insurance company to support its argument and stated that the plaintiffs had not met the exception to the exclusive remedy rule of the state’s workers’ compensation law.

The plaintiffs argued that exclusive jurisdiction depends on whether or not the employee’s employer had workers’ compensation insurance and stated that no policy listed Heavy Transport as being insured. They also argued that Bragg and Heavy Transport had never merged under California law and that the determination of whether the companies had remained separate should be determined by a jury.

The court set a hearing. At the hearing, the court noted that the case had been remanded to the superior court to determine whether it or the WCAB had exclusive jurisdiction over the matter. The plaintiffs argued that there were material facts in dispute about whether the companies had merged and whether Heavy Transport was required to carry workers’ compensation insurance separate from Bragg’s policy. They requested a jury trial. However, the superior court ruled that they were not entitled to a jury trial on jurisdiction and instead set the case for a bench trial on Feb. 14, 2020.

The plaintiffs then filed a peremptory challenge to the judge, and the case was reassigned to a different judge. They filed an ex parte petition for a jury trial on all issues and that they had not waived the right to a jury trial. The court denied the ex parte request. It stated that while the previous judge had called it a nonjury trial, it was simply an evidentiary hearing to determine jurisdiction. Both parties were told to submit briefs before the evidentiary hearing.

The plaintiffs argued that Heavy Transport was Hollingsworth’s employer on the date of the incident. They pointed out that the truck was in Heavy Transport’s name, and all of Hollingsworth’s documents indicated that Heavy Transport was his employer and not Bragg. They also argued that during an investigation by the Occupational Safety and Health Administration following the accident, Heavy Transport told the investigators that Heavy Transport was Hollingsworth’s employer and that Bragg did not have anything to do with the accident. They then argued that Heavy Transport did not have a workers’ compensation policy in place at the time of the accident.

Bragg and Heavy Transport argued that Heavy Transport was simply a DBA of Bragg Investment Company. They argued that Bragg had a workers’ compensation policy in place and that Heavy Transport was a named insured. The companies also argued that they had merged in 1986 and submitted several insurance company declarations showing that Heavy Transport was a named insured on Bragg’s policy. They also argued that although the policy listed Heavy Transport with an Oregon address, it was simply a typo and the address was for a different Bragg company called Bragg Cattle Company.

The plaintiffs replied that there was no dispute that Hollingsworth was a Heavy Transport employee. They also argued that subsidiaries cannot piggyback on the workers’ compensation insurance held by parent companies to evade liability.

The court found that it was clearly the intent of both Bragg Investment Company and the workers’ compensation insurance company that Heavy Transport was covered. It then ruled that the WCAB had exclusive jurisdiction over the case. The plaintiffs filed an appeal.

Issues: Whether the court erred in denying the plaintiffs a jury trial on the insurance coverage issue? 2) Whether the court’s decision violated the parol evidence rule and contradicted Bragg’s insurance policy?

The plaintiffs asserted that the court erred when it denied the plaintiffs a jury trial on whether Heavy Transport had workers’ compensation insurance and whether it was required to have its own policy as a subsidiary company of Bragg. They also argued that the court’s decision contradicted Bragg’s insurance policy and violated the parol evidence rule.

Rule: Under the workers’ compensation exclusivity rule, workers’ compensation insurance is the sole and exclusive remedy for employees who have been injured at work or for the families of employees who are killed unless an exception applies.

The plaintiffs argued on appeal that the court committed reversible error when it denied their demand for a jury trial on the issue of insurance coverage. Bragg and Heavy Transport argued that jurisdiction is always a matter of law to be determined by the court and not a jury. The plaintiffs argued that the matter of jurisdiction rested solely on the dispute about insurance coverage, necessitating a jury trial to determine whether the coverage existed for Heavy Transport.

Analysis

The court began by considering whether the plaintiffs were entitled to a jury trial on the question of insurance coverage. The plaintiffs relied on several cases to argue that the court should have allowed them to go to a jury trial to determine whether or not Heavy Transport had workers’ compensation insurance so that it could then determine which tribunal had exclusive jurisdiction. However, the court pointed out that as a general rule, questions of subject matter jurisdiction and personal jurisdiction are normally the purview of the court and not a jury. Under Cal. Code Civ. Proc. § 591, issues of law must be decided by the court. The court then found that the plaintiffs were not entitled to a jury trial on the insurance issue since it involved jurisdiction. The court then found that the superior court properly considered parol evidence and that its decision did not contradict the insurance policy.

Conclusion

The Court of Appeal affirmed the trial court’s decision. Bragg and Heavy Transport were awarded their costs on appeal.

Get help from an experienced injury lawyer

If you have been injured at work or have lost a loved one in a workplace accident, an attorney can help to determine whether you might be limited to workers’ compensation or if there might be additional sources of recovery. If you believe that your employer did not have workers’ compensation insurance, you should consult with an experienced personal injury attorney to learn about your options. Call the Steven M. Sweat Personal Injury Lawyers today at 866.966.5240.

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