Smith v. Marathon Ashland Petroleum LLC

Citations: 887 So. 2d 613; 2004 WL 2387747Docket: 04-CA-517

Court: Louisiana Court of Appeal; October 26, 2004; Louisiana; State Appellate Court

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Robert Smith appeals a summary judgment favoring Marathon Ashland Petroleum LLC and Larry Echelberger, who were found to be statutory employers in relation to Smith’s injury while working for Basic Industries on a project for Marathon. Smith was injured on September 25, 2000, and filed suit against Marathon, Echelberger, and others on September 25, 2001. Marathon and Echelberger moved for summary judgment on March 7, 2003, arguing that Smith's exclusive remedy was under Workers' Compensation. Harmony Corporation also filed a similar motion. After a hearing on January 23, 2004, and Smith’s voluntary dismissal of Harmony on February 5, 2004, the trial court ruled in favor of Marathon and Echelberger on February 12, 2004.

On appeal, Smith contends the trial court incorrectly considered the contract between Harmony and Basic because it was not formally introduced as evidence. Marathon counters that the documents were part of the motion for summary judgment and referenced during arguments without objection from Smith. The court found that the contracts were appropriately considered, as they were filed together with the motion and discussed during the hearing, with Smith's counsel also referencing them. The appellate court affirmed the trial court's decision.

Both parties utilized exhibits during the motion argument, which the trial court considered without objection, making them part of the record. Smith's challenge regarding the exhibits was raised for the first time on appeal and was deemed without merit. The exhibits included contracts among Marathon, Koch, Harmony, and Basic, which the trial court properly evaluated. 

Smith contended that the trial court incorrectly granted summary judgment based on a statutory employer/employee relationship between him and Marathon, arguing that this relationship did not align with the definitions outlined in either the 'two-contract' theory or the relevant contracts. Appellate courts review summary judgments de novo, assessing whether there are genuine issues of material fact and if the mover is entitled to judgment as a matter of law. 

The summary judgment process is intended to facilitate a just, speedy, and economical resolution of cases. Louisiana law (La. R.S. 23:1061) stipulates that when a principal engages a contractor for work integral to the principal's business, the principal is considered a statutory employer. The law provides exclusive remedy protections to the principal and outlines that a statutory employer relationship arises when the services of the immediate employer are included in a contract with the principal. Furthermore, such a relationship is presumed if a written contract acknowledges the principal as a statutory employer.

A presumption exists that a contractor's work is integral and essential to the principal's ability to generate goods, products, or services, which can only be overcome by demonstrating otherwise. When a principal is liable for compensation, they can seek indemnity from any party who would have been liable independently. The statutory framework allows a principal to establish a statutory relationship and achieve tort immunity through either the 'two-contract' theory or a contract that explicitly establishes such a relationship, creating a rebuttable presumption. The contracts among Marathon, Koch, Harmony, and Basic contain statutory employer language satisfying Louisiana Revised Statutes (La. R.S.) 23:1061(A)(3). Specifically, the Marathon-Koch contract states that the work performed is essential to generating the company's goods and services, affirming the contractor's responsibility for workers’ compensation benefits without entitlement to seek contribution from the principal. The review reveals that the language in these contracts is clear and unambiguous, establishing a statutory employer/employee relationship between Marathon and an employee of Basic. This relationship creates a rebuttable presumption that can only be challenged by proving the work is not essential to the principal's operations.

Smith contends that the construction project for a sulfur plant was not within Marathon's operational scope at the time of his injury. Marathon asserts that Smith's work was essential to its refinery operations, which required ongoing updates, including the construction of the sulfur plant for continued petroleum production. Smith argues that, although the sulfur plant may be crucial in the future, it was not operationally necessary at the time of the accident, categorizing the work as new construction outside the statutory coverage.

Prior to a 1997 amendment to La. R.S. 23:1061, new construction was not considered integral to a principal's business. However, subsequent case law, including Applegarth v. Transamerican Refining Corp. and Trent v. PPG Industries, has established that new construction is now recognized as essential for a principal’s production capabilities. Smith failed to counter the statutory employee presumption from the contractual clauses, leading to the conclusion that no material issues of fact existed. Consequently, the court affirmed the summary judgment in favor of Marathon and Echelberger against Smith, with the costs of appeal assigned to Smith. Additionally, Turner Industries, another defendant, was dismissed from the suit shortly after its initiation. Smith conceded that if the judgment against Marathon was upheld, the same would apply to Echelberger, thus the arguments relevant to Marathon also pertain to Echelberger. The court found it unnecessary to discuss Smith's two-contract theory due to the determination made regarding the contractual provisions and the lack of rebuttal.