Brown v. Gaydos

Workers’ Compensation Act; Co-employee Immunity

Brown v. Gaydos, 306 A.3d 883 (Pa. Super. 2023) (en banc), allocatur granted July 23, 2024, appeal docket 16 WAP 2024

John Brown, an employee of American Concrete Solutions (ACS) was injured while operating a skid loader owned by George Gaydos, a sole proprietor of Gaydos Construction. The trial court summarized the factual background as follows:

In 2007 or 2008, … Gaydos began doing construction work as a sole proprietor using the name Gaydos Construction. [Gaydos], as a sole proprietor, did general construction work with a focus on heating, air conditioning, concrete and masonry. For [the] business, [Gaydos] purchased two dump trucks, a utility truck, a skid loader and an assortment of tools. On April 9, 2016[, Gaydos] and his cousin, Mark Raymond, signed a partnership agreement to operate a business under the name American Concrete Solutions[ (ACS)]. A few months later[, they] filed a Certificate of Organization Domestic Limited Liability Company with the Pennsylvania Department of State[.]

[Gaydos], on occasion, continued to bid on heating and air conditioning jobs as a sole proprietor. But, all concrete and masonry jobs were bid and performed by [ACS]. The construction equipment and tools owned by [Gaydos], including the skid loader, continued to be owned by him. [Gaydos] and [Raymond], who also owned construction equipment and tools, agreed that each of them would furnish any equipment or tools they owned individually that were needed to perform the work on [ACS’s] jobs. They agreed that [ACS] would not own those tools and equipment and would not compensate either of them for use of those tools and equipment.

[Brown] began working as an [ACS] employee on September 1, 2016. On that day, [ACS] was preparing to pour a flat slab of concrete inside a pole building located in the City of Pittsburgh. [Gaydos] was at the job site “first thing in the morning, and then … left to go pay a vendor for some stone.” The skid loader owned by [Gaydos] was at the site. At approximately 11:00 a.m., as [Brown] “attempted to enter the subject skid loader, the arm of the skid loader caught [Brown’s] body, crushing him between the top of the cab and the arm of the bucket and subsequently, dropped [him] to the ground.” [Brown] was seriously injured and thereafter made a claim for workers compensation benefits from [ACS]. The workers compensation claim was not disputed, and as of June of 2019, approximately $561,000 had been paid to [Brown] for lost wages and to medical providers for medical treatment.

Slip op. at 2, quoting trial court op. at 1-2. Brown sued Gaydos, as an individual and as proprietor of Gaydos Construction, alleging that Gaydos was negligent in improperly maintaining the skid loader and failing to supervise or train Brown on its use. Gaydos moved for summary judgment, arguing that Brown’s claims were barred by the WCA. Brown filed both a response to Gaydos’ motion, and a cross-motion for summary judgment, asserting that Gaydos was not Brown’s employer as defined in the WCA. Gaydos countered that he was immune from liability as Brown’s employer, or, alternatively, that he was immune as Brown’s co-employee pursuant to Section 72 of the WCA.

The trial court granted summary judgment in favor of Gaydos granted summary judgment on the alternative basis that Gaydos was Brown’s co-employee at the time of the accident, and, therefore, entitled to immunity under Section 72 of the WCA. Brown appealed to Superior Court. A divided three-judge panel held that the record supported the trial court’s grant of summary judgment in favor of Gaydos as Brown’s co-employee. Brown requested en banc review, which Superior Court granted, to consider whether the Majority erroneously concluded Gaydos was immune from third-party liability as Brown’s co-employee. Superior Court summarized the parties’ arguments as follows:

Relying on Bell v. Kater, 943 A.2d 293 (Pa. Super. 2008), Brown argues the record does not support a clear finding that he and Gaydos were “in the same employ at the time of the accident,” as opposed to merely employed by the same employer. See Brown’s Substitute Brief at 12-14, citing Bell, 943 A.2d at 297-98. Rather, he contends Gaydos is liable as “the owner/operator of a negligently maintained skid loader that he loaned to a separate business entity.” Id. at 14.

In support of his position, Brown emphasizes the following: (1) “there is no competent evidence that Gaydos/[Gaydos Construction] operated or supervised [the] use of the skid loader on the day in question[;]” (2) Gaydos “expressly advised ACS workers to refrain from using the skid loader because it was his personal equipment and he was the only person permitted to use it[;]” (3) “Gaydos[ or Gaydos Construction] insured the skid loader under a separate policy of insurance from ACS[;]” and (4) neither Gaydos nor Gaydos Construction “formed a contractual relationship with or between it and ACS to define the terms of use for the loaned equipment, or to identify the limits of liability and/or indemnification[.]” Brown’s Substitute Brief at 16-18, 20. Accordingly, Brown insists the record contains a genuine issue of material fact as to whether Gaydos was Brown’s co-employee “acting in the same employ” on the date of the accident. See id. at 19, 23.

Conversely, Gaydos argues “[t]here can be no serious debate that [he], as the part owner of ACS, who managed ACS employees and worked alongside them on the job site at issue[,] was a ‘co-employee’ of Brown.” Gaydos’ Supplemental Brief at 11. He postulates:

To hold otherwise would expose thousands of small business owners, who choose to organize their businesses into a corporation or limited liability company, personally liable to employees for work-related injuries, even though those employees were eligible for and received workers compensation benefits. …

Id.

Moreover, Gaydos insists Brown misconstrues the holding in Bell, which, he asserts, was based on the defendant’s waiver of the co-employee immunity defense, and not a determination of whether the defendant was “in the same employ” as the injured plaintiff at the time of the accident. See Gaydos Supplemental Brief at 11-12. He contends “the facts are unrefuted … that Brown and Gaydos were ‘in the same employ’ at the time of the accident[,]” summarizing:

Brown and Gaydos were both working for ACS at all relevant times. Gaydos was working on the jobsite on the day of the accident. The [skid loader] was needed to complete the job for ACS. [Gaydos Deposition at 136-37]. Brown was employed by ACS and was in the course and scope of his employment when he attempted to use that machine and was injured. …

Id. at 14. Gaydos argues Brown’s assertion that “he is not suing Gaydos as the co-employee/member of ACS, but as the individual owner of the skid loader and the operator of a separate business[,]” is merely an attempt to assert the dual capacity doctrine without explicitly referring to it. See id. at 14-15.

Slip op. at 13-15.

Superior Court concluded a genuine issue of material fact existed “as to whether Gaydos was acting within ‘the same employ’ as Brown — that is, acting in furtherance of his duties as an employee/co-owner of ACS and in a manner approved by ACS — at the time of Brown’s injury.” Slip op at 18-19, citing 77 P.S. § 72. Addressing the court’s decision in Bell, Superior Court explained:

In that case, the defendant was injured during a work shift for the employer and transported off-site to a health clinic. See Bell, 943 A.2d at 295. Because they were discharged from the clinic after their shift ended, the defendant proceeded directly to the employee parking lot to retrieve their car. Id. The defendant was driving with one arm in a sling when they struck the plaintiff, who was a security supervisor also working for the employer. Id. at 295-96. Although the plaintiff received workers’ compensation benefits from the employer, they subsequently filed a personal injury action against the defendant, alleging the defendant was negligent by driving too fast. Id. at 296. A jury returned a verdict in favor of the plaintiff. Id.

After several procedural missteps, the defendant filed a petition to strike the judgment, which the trial court denied. See Bell, 943 A.2d at 296. The defendant then appealed to this Court, arguing that they were entitled to co-employee immunity under the WCA. See Bell, 943 A.2d at 296-97. A panel of this Court, however, determined that the defendant had waived the affirmative defense of Section 72 co-employee immunity because they did not raise it in a responsive pleading — instead they asserted it for the first time in a petition to strike the judgment filed several years after judgment was entered in favor of the plaintiff. See Bell, 943 A.2d at 298.

Despite the fact the Bell Court determined the defendant had waived the ultimate factual issue, it framed the relevant factors in a co-employee immunity case as follows:

[T]he mere fact that both parties held positions of employment with the same employer at the time of the accident is not sufficient to show that they were in the same employ at the time of the accident. Rather, the act or omission must occur while both employees are in the performance of their duties as employees. In order to establish immunity under the [WCA], the defendant is required to establish that [their] act or omission occurred while [they were] in the same employ as the plaintiff, that is, in the course of [their] performance of duties for the employer.

Id. at 297–98 (quotation marks omitted; some emphases added), citing Fern v. Ussler, 428 Pa.Super. 210, 630 A.2d 896 (1993), appeal granted, 652 A.2d 1326 (Pa. 1994). We note that the Bell Court cited the decision in Fern for the language at issue, and the precedential value of that case is debatable — Fern was decided by a three-judge panel, with one judge concurring in the result and one judge dissenting. See Fern, 630 A.2d at 899. Nonetheless, both the Bell and the Fern Courts relied upon the factual circumstances presented in the Supreme Court’s decision in Apple, supra, to support their conclusion that, to establish co-employee immunity under Section 72, more evidence is required than simply the fact that both the plaintiff and the defendant worked for the same employer. Indeed, in Apple, the Court found significant the fact that the parties were “acting in furtherance of their duties at the time [of the negligent act], and in a manner approved by their employer.” Apple, 278 A.2d at 484.

By way of background, in Apple, the plaintiff and defendant taught at the same school at the time the plaintiff was injured while a passenger in the defendant’s car. See Apple, 278 A.2d at 483.

It was the practice in the school in which they taught to meet their respective classes at one school building, take the roll and lunch count, and thereupon the pupils were transported by school bus to another school building where school classes were held. These two teachers had no specific duties to perform on the school bus and were officially authorized to proceed to the classroom site, either by means supplied by themselves or on the school bus. When the accident occurred they were in transit from the first to the second school.

Id.

In addition to receiving workers’ compensation benefits from the school board, the plaintiff filed a trespass action against the defendant. Apple, 278 A.2d at 483. The trial court, however, granted a nonsuit at the close of the plaintiff’s case, concluding that both the plaintiff and defendant “were acting within the scope of their employment and in the course of their employer’s business; that the Act was applicable; [and] that [Section 72] did provide immunity from liability for [the defendant.]” Id. On appeal, the plaintiff attempted to distinguish between a defendant who commits a negligent act while acting withing the scope of their employment, from one who acts within the course of their employment. See id. at 484. The Supreme Court rejected that distinction, noting that Section 72 does not refer to either the course or scope of employment. See id. Rather, the Court emphasized:

[V]iewing the evidence here, we entertain no doubt whatsoever that the injuries in this case were caused while the [plaintiff] and [defendant] were ‘in the same employ’. Both parties were proceeding from one place of employment to another during their working day, acting in furtherance of their duties at the time, and in a manner approved by their employer….

Id. (emphases added).

Therefore, in Apple, the Court determined the defendant was the plaintiff’s co-employee for purposes of WCA immunity when, at the time of the defendant’s negligent act, both parties were not only working for the same employer/school, but also performing acts in furtherance of their duties — i.e., traveling from one school to another — in a manner approved by their employer/school.

Slip op. at 15-18. The court reasoned:

First, in his deposition, Gaydos admitted he owned the skid loader in question, and that Gaydos Construction “covered the [insurance] policy on it[.]” Gaydos Deposition at 43. In fact, when questioned whether ACS would insure the skid loader if it was used on an ACS job site, Gaydos admitted he did not know, although he appeared to characterize the skid loader as a covered “tool.” Id. at 42-43. Gaydos further acknowledged that “[t]he skid loader was loaned to [ACS] for contracting jobs[,]” and stated that he performed the maintenance on the skid loader himself. Id. at 44, 82 (emphasis added).

Moreover, although Gaydos and Raymond agreed to provide their own tools and equipment for ACS jobs, this purported agreement was not in writing, and Gaydos stated they did so because ACS had “no money in the bank account to purchase the equipment.” See Gaydos Deposition at 44. Gaydos further acknowledged that he “loaned” the skid loader to ACS for certain jobs but stated there was “no lease” or “transfer of money.” Id. at 44, 47. He also emphasized that the ACS employees understood he was to be “the sole operator of that piece of equipment.” Id. at 49 (emphasis added).

Furthermore, while Gaydos claims he brought the skid loader to the job site on the morning in question for use on that particular ACS job, that “fact” is not supported by the record. Rather, in his deposition, Gaydos testified, generally, that he had “loaned” the skid loader to ACS for concrete jobs on 15 occasions between April and September of 2016, and that on the morning of the incident, he arrived early, and then left to “go pay a vendor.” See Gaydos Deposition at 44-45, 60. He did not mention whether he brought the skid loader to the job site that morning for a particular purpose which related to that particular job. He also stated that ACS employees were not to use the skid loader when he was not there, and “there was other work that could have been done” in his absence. Id. at 60. Therefore, the record contains a genuine issue of material fact as to whether Gaydos actually intended to use the skid loader at the job site on the morning in question. See Risperdal Litigation, 223 A.3d at 639 (“The trial court must take all facts of record and reasonable inferences therefrom in a light most favorable to the non-moving party.”).

The facts presented in this case are significantly different from those in which a co-owner or manager has been found to be immune from civil liability as a co-employee under the WCA. See Jadosh, 275 A.2d at 59-60 (defendant manager was entitled to co-employee immunity pursuant to WCA where allegedly defective piece of equipment was property of employer, and plaintiff alleged manager was negligent in simply performing duties for employer); Adams v. U.S. Air, Inc., 438 Pa.Super. 190, 652 A.2d 329, 330-31 (1994) (defendant managers were entitled to co-employee immunity pursuant to WCA when plaintiff’s negligence claims were based on firing following managers’ internal investigation of plaintiff’s violation of company policy). Here, the co-owner — Gaydos — operated a separate sole proprietorship, that independently owned, maintained, and insured the allegedly defective skid loader which caused Brown’s injuries. Although Gaydos may have “loaned” the skid loader to ACS free of charge, he made it clear that none of ACS’s employees were to operate it.

Lastly, it merits emphasis that Brown sued Gaydos, as owner of the skid loader — not as his employer or co-employee — based upon Gaydos’s personal failure to “exercise reasonable care in the safe, proper and lawful maintenance of the subject skid loader[,]” including his failure to warn Brown that “the safety mechanism[s] were not working properly[.]” See Brown’s Complaint at ¶¶ 28-29. Contrary to Gaydos’ assertion, this argument is not merely a dual capacity claim in disguise. See Gaydos’ Supplemental Brief at 14-15. First, the dual capacity doctrine undermines employer immunity pursuant to Section 481(a), not co-employee immunity under Section 72. See Neidert, 143 A.3d at 388. Second, the doctrine is not applicable when, as here, the employee’s injury occurred “while he was actually engaged in the performance of his job.” Id. at 390 (citation & emphasis omitted).

Moreover, Brown does not argue that Gaydos was operating under two personas when the accident occurred — that is, as his employer and as the owner of the skid loader. See Gaydos’ Supplemental Brief at 17-18. Rather, he contends Gaydos is liable for his injuries solely “as the owner/operator of a negligently maintained skid loader that he loaned to a separate business entity, ACS.” Brown’s Substitute Brief at 14. Upon our review, we conclude that the determination of whether Gaydos was working “in the course of [his] performance of duties for the employer[,]” ACS, is a genuine issue of material fact since Gaydos admitted the following: (1) his sole proprietorship owned, maintained, and insured the skid loader, (2) he loaned the skid loader to ACS for use on job sites, although it is not clear if he intended to use the skid loader at the job site in question, and (3) he was the only person permitted to use the equipment, that he owned, maintained, and insured. Accordingly, the trial court erred in granting summary judgment on this basis.

Slip op. at 19-22 (emphasis in original).

Judge Stabile dissented on the basis that Gaydos and Brown were “in the same employ” at the time of the accident, thus Gaydos was entitled to co-employee immunity under the WCA. The dissent observed that “[c]onsistent with the Apple Court’s directive to avoid a restrictive construction of the phrase ‘in the same employ’, applicable precedents construe ‘co-employee” broadly,’” dissent op. at 3, concluding that:

These cases make clear that persons occupying different positions within a company’s hierarchy or performing different roles are nonetheless coemployees who are in the same employ for purposes of § 72.  Gaydos and Brown occupied different positions within the company and were performing different tasks at the time of Brown’s injury.  Gaydos had been on site earlier in the morning but left to pay a vendor.  Brown was on site and attempting to use the skid loader.  But both were acting in furtherance of their duties for ACS, as were the parties in Apple.  To repeat, the Apple Court held that § 72 protects all co-employes in all situations where the negligence of one causes a WCA-compensable injury to another.  Apple, 278 A.2d at 484.  The instant case falls squarely within § 72 under Apple.  That is, or should be, the end of the matter.

Slip op. at 5-6. Criticizing the majority’s application of Bell and Fern, Judge Stabile opined:

The Majority, after quoting from Bell, undertakes an analysis of the facts that places an unduly restrictive interpretation of “in the same employ” and thus runs afoul of Apple.  The Majority lists some admissions from Gaydos that it believes create a genuine issue of material fact.  Among these are that Gaydos owned and maintained the skid loader, that his sole proprietorship, Gaydos Construction, paid for the insurance policy on it, and that he occasionally loaned the skid loader to ACS for use in its work.  Majority Opinion at 22.  The Majority also notes that the agreement between Gaydos and Raymond to loan their personal tools to ACS was not in writing, and that there was no lease agreement or transfer of money between ACS and Raymond or Gaydos whenever one of them lent a tool or piece of equipment to ACS.  Majority Opinion at 19.  Common amongst all these facts is that they have no bearing on whether Gaydos and Brown were in the same employ under § 72 as construed by Apple.  Gaydos’ ownership, maintenance, and insurance of the skid loader, and the terms under which he lent his personal equipment to ACS for use in ACS jobs, is beside the point.  The point is that Brown’s WCA-compensable injury happened at an ACS jobsite when Brown and Gaydos were co-employees of ACS.  Section 72 protects all co-employees in all such situations.  Apple, 278 A.2d at 484.

Dissent op. at 7. The dissent concluded:

In summary, I believe the Majority’s analysis is unsupportable under Apple, both in its apparent reliance on the dicta in Bell and Fern to support an unduly restrictive interpretation of § 72, and in its reliance on a litany of facts not relevant to whether Brown and Gaydos were “in the same employ” under § 72.  I would conclude that Gaydos is immune from Brown’s negligence action under § 72 and affirm the judgment on that basis.

Dissent slip op. at 10.

The Pennsylvania Supreme Court will consider the following issue:

Where the record is clear that the plaintiff and defendant were employed by the same company and the plaintiff’s injury was compensable under the Worker’s Compensation Act, must the court consider whether the defendant was working in the course of his performance of duties for the employer to determine if the defendant is entitled to immunity as a co-employee?