Makris v. SPENSIERI PAINTING, LLC.

Citations: 669 F. Supp. 2d 201; 2009 U.S. Dist. LEXIS 107076; 2009 WL 3824368Docket: Civil No. 08-1718 (RLA)

Court: District Court, D. Puerto Rico; November 17, 2009; Federal District Court

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In the case of George Makris et al. v. Spensieri Painting, LLC et al., the United States District Court for the District of Puerto Rico denied a motion to dismiss filed by Cornell University and its National Astronomy and Ionosphere Center (NAIC). Cornell argued that the court lacked jurisdiction over the claims based on the Defense Base Act (DBA), asserting that the plaintiffs were covered employees under the DBA and that Cornell was entitled to immunity due to providing benefits for work-related injuries.

The plaintiffs, Makris, Simione-Filaretou, and Guevara, opposed the dismissal, claiming the DBA did not apply because the work was not related to public projects. They also contended that Cornell's motion improperly relied on materials outside of the complaint and requested the opportunity for discovery before the court made a decision.

The court emphasized the standards for motions to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), clarifying that challenges to subject-matter jurisdiction should be made under Rule 12(b)(1). It noted that in considering a Rule 12(b)(6) motion, all factual allegations in the complaint must be accepted as true, and the court's review is limited to determining if the plaintiffs have stated a valid claim for relief. The case involves a work-related accident at the Arecibo Observatory on July 8, 2007, and has also seen Spensieri Painting, LLC implead additional third-party defendants, TSA Construction, Inc. and Dimitros Tsalickis.

A complaint may be dismissed if the court determines that the plaintiff cannot succeed on any theory based on the facts presented. Under Rule 12(b)(6), the court can consider documents outside the pleadings if they are linked to the complaint and their authenticity is undisputed, allowing those documents to merge into the pleadings. The court may review facts 'fairly incorporated' within the complaint and those subject to judicial notice without converting the motion into a summary judgment motion. In contrast, when addressing motions to dismiss for lack of subject matter jurisdiction, the court is not limited to the allegations in the pleadings; these allegations do not receive presumptive weight, and the court must resolve factual disputes regarding jurisdiction. Extra-pleading material can be reviewed in these cases. If a movant challenges the factual basis for jurisdiction, the plaintiff must provide affidavits and relevant evidence. The court must construe the complaint liberally, treating all well-pleaded facts as true and considering submitted evidence like depositions and exhibits. Federal courts have a duty to examine their own subject matter jurisdiction and must ensure they have the authority to adjudicate cases.

A court cannot act without jurisdiction, and when jurisdiction is challenged, the burden lies with the party asserting it to demonstrate their right to litigate in that forum. This is established by case law, including McCulloch v. Velez and Garcia Perez v. Santaella, which indicate that the party invoking diversity jurisdiction must prove it by a preponderance of the evidence. In the current case, CORNELL has raised questions regarding jurisdiction related to DBA coverage, allowing consideration of additional pleadings in evaluating its dismissal request under Rule 12(b)(1).

The factual background involves plaintiffs employed by SPENSIERI for a painting job at the Arecibo Observatory who suffered severe injuries due to a scaffold cable snapping. CORNELL had a Cooperative Agreement with the National Science Foundation (NSF) to manage the National Astronomy and Ionosphere Center (NAIC), which operates the Arecibo Observatory. Although SPENSIERI's insurer initially provided a Certificate of Liability Insurance for workers' compensation, it later denied coverage for the incident based on geographical exclusions, stating that the policy only covered work in certain states and did not extend to Puerto Rico. Subsequently, another insurance company issued a Certificate of workers' compensation that referenced DBA coverage, and at the time of the accident, CORNELL maintained DBA insurance through ACE USA. The Defense Base Act extends workers' compensation coverage to employees engaged in public work overseas for U.S. government contractors.

The statute requires that U.S. contractors and subcontractors obtain workers' compensation for their employees, specifically under the Defense Base Act (DBA), which extends the Longshore and Harbor Workers' Compensation Act (LHWCA) to cover certain workers outside the continental U.S. Enacted in 1941, the DBA was initially aimed at civilians on military bases during World War II and has since expanded to include various contractual service workers. The DBA provides a framework for compensation claims for employees involved in public work, defined as construction or repair projects benefitting the U.S., under contracts with the government.

To qualify for DBA protection, the injured or deceased worker must be engaged in public work, which includes construction or national defense-related services. Exclusive remedy provisions under the DBA state that it supersedes other state workers' compensation laws for covered employees. Employers must obtain insurance coverage for their workers to benefit from the DBA's immunity from lawsuits. Courts have upheld this immunity, confirming that employers who secure the required insurance are protected from liability, as illustrated in relevant case law.

The DBA mandates that government contractors ensure insurance coverage for their employees. If a subcontractor fails to meet this requirement, the contractor must obtain the necessary insurance. Employers are responsible for securing compensation payments under the DBA, and a contractor is liable for a subcontractor's compensation only if the subcontractor fails to secure it. When a contractor arranges for compensation due to a subcontractor's neglect, the contractor gains statutory employer defense under 33 U.S.C. 905(a), which protects them from employee lawsuits for damages, leaving the subcontractor vulnerable to such claims.

CORNELL asserts that it lacks jurisdiction over plaintiffs' tort claims because it procured workers' compensation insurance as required by the DBA. Although the DBA provides exclusive remedies for work-related injuries when insurance is in place, courts can still assess whether DBA coverage exists when addressing a defendant's immunity defense. Therefore, the argument of lack of jurisdiction by CORNELL is dismissed.

Additionally, compensation proceedings for all plaintiffs have been initiated with the US Department of Labor under the DBA, and a state workers' compensation claim has been filed in New York for plaintiff MAKRIS. Relevant documents include a US-DOL letter confirming MAKRIS's entitlement to benefits, an application for review of this determination, a New York Workers' Compensation decision affirming DBA applicability to MAKRIS's claims, and an appeal to the Supreme Court of New York. 

The DBA incorporates LHWCA provisions, which underwent amendments in 1972 that established a Benefits Review Board for examining benefits determinations, allowing direct appeals to federal appellate courts rather than district courts. However, the amended statute does not address DBA cases, leading to disputes about the correct forum for judicial review of agency determinations.

Most courts have determined that because the Defense Base Act (DBA) allows for judicial review by district courts, the Longshore and Harbor Workers' Compensation Act (LHWCA) amendment does not apply in this context. A pending review in the New York Supreme Court regarding DBA coverage for a plaintiff creates a risk of conflicting findings between state and federal courts if the current issue is addressed now. Additionally, there is an ongoing U.S. Department of Labor (US-DOL) determination on coverage that is under administrative review. Addressing the coverage dispute at this stage could disrupt the established review process under the DBA.

Consequently, CORNELL's motion to dismiss based on immunity is denied to prevent duplicative proceedings and inconsistent outcomes. The court stays the DBA employer immunity controversy until all related proceedings regarding the plaintiffs' DBA workers' compensation coverage are resolved. The parties are required to submit a Joint Status Report by December 15, 2009, updating the court on the status of the US-DOL and New York proceedings regarding DBA coverage and providing suggestions for the case's direction. 

The court notes that the plaintiffs' claim of diversity jurisdiction is undisputed and references several docket numbers related to contracts and insurance certificates relevant to the case. It also highlights challenges to CORNELL's immunity claim based on alleged deficiencies in the contract and the issue of whether CORNELL secured compensation for the subcontractor as per LHWCA provisions. There is no information on the finality of the US-DOL coverage determination.