Louis Fox, Et Ux. v. the Shaw Group

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

12-329

LOUIS FOX, ET AL.

VERSUS

THE SHAW GROUP, ET AL.

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APPEAL FROM THE
NINTH JUDICIAL DISTRICT COURT
PARISH OF RAPIDES, DOCKET NO. 235,492-G
HONORABLE HARRY F. RANDOW, DISTRICT JUDGE
**********

SYLVIA R. COOKS
JUDGE

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Court composed of Sylvia R. Cooks, Marc T. Amy and Phyllis M. Keaty, Judges.

AFFIRMED.

Kenneth W. DeJean
Law Offices of Kenneth W. DeJean
417 West University Avenue
Lafayette, LA 70506
(337) 235-5294
ATTORNEY FOR PLAINTIFFS/APPELLANTS
Louis Fox and Jo Ann Fox

James A. Bolen, Jr.
Patricia K. Penny
Bolen, Parker, Brenner, Lee & Engelsman, Ltd., APLC
709 Versailles Boulevard
P.O. Box 11590
Alexandria, LA 71315-1590
(318) 445-8236
ATTORNEY FOR DEFENDANTS/APPELLEES
CLECO Power, LLC and Shaw Constructors, Inc.

COOKS, Judge.

Plaintiffs appeal the judgment of the trial court granting the Defendants’

motion for summary judgment declaring that Louis Fox was the statutory

employee of Defendants, Shaw Constructors, Inc. and CLECO Power, L.L.C. For

the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

On August 12, 2008, Louis Fox, while working inside a cyclone tower at the

Rodemacher Power Station, allegedly sustained an injury when an object fell from

above, striking him in the head and neck area. On the date of the accident, Mr. Fox

was employed by Foster Wheeler Constructors, Inc. as a refractory gunner.

CLECO Power, L.L.C. is the owner of the Rodemacher Power Station.

On August 1, 2005, CLECO Power entered into a written contract with Shaw

Constructors, Inc. (Shaw), wherein Shaw would act as the general contractor in the

construction of Rodemacher Unit 3, which included the cyclone tower where Mr.

Fox alleged he suffered his injuries. On October 1, 2005, Shaw and Stone &

Webster, Inc. (Stone), entered into an agreement whereby Stone would provide all

of the engineering and procurement services required by the August 1, 2005

contract between Shaw and CLECO Power. In February 2006, Stone, described in

the general contract between CLECO Power and Shaw as an “affiliate” of Shaw,

entered into a purchase order agreement with Foster Wheeler North America Corp.

(Foster Wheeler) for the sale of boiler units and the installation of said units at the

Rodemacher Unit 3 project. Mr. Fox was employed directly by Foster Wheeler as

a refractory gunner and was working in the cyclone tower at the Rodemacher

Power Station when the alleged injury occurred.

Fox and his wife, Jo Ann, filed a petition for personal injuries against several

defendants: Shaw, CLECO Power, L.L.C., CLECO Corporation, Rodemacher

Power Station, Louisiana Energy Production, LLC, Lafayette Consolidated

Government d/b/a Lafayette Utilities Systems, and Turner Industries (who

Plaintiffs alleged had the duty to inspect the cyclone tower). On September 2,

2009, the CLECO defendants and Shaw filed an answer asserting the affirmative

defense that they were statutory employers of Mr. Fox. They also filed a dilatory

exception of vagueness and a motion to strike. On November 4, 2009, a joint

motion was filed to dismiss specific paragraphs of Plaintiffs’ petition and withdraw

the exception of vagueness and motion to strike. The joint motion was granted.

On November 20, 2009, the CLECO defendants and Rodemacher Power

Station filed a Motion for Summary Judgment alleging there was no factual or

legal basis on which to assert liability against them. The trial court denied

summary judgment as to CLECO Power L.L.C., but summary judgment was

granted as to CLECO Corporation and Rodemacher Power Station.

On July 12, 2010, CLECO Power, L.L.C. filed a second motion for summary

judgment contending it bore no responsibility for the injuries sustained by Mr. Fox,

as any and all ownership responsibilities for the construction site were delegated to

Shaw. That motion for summary judgment was denied.

CLECO Power and Shaw filed a motion for summary judgment requesting the

court find (1) that there is no factual or legal basis on which to assert liability

against them, and (2) that CLECO Power and Shaw are the statutory employers of

Mr. Fox and thus immune from any tort claim brought by him. On September 19,

2011, a hearing on the motion was held and the matter taken under advisement.

The trial court rendered judgment finding there was no genuine issue of material

fact as to the classification of CLECO Power and Shaw as statutory employers of

Mr. Fox. Finding CLECO Power and Shaw were statutory employers of Mr. Fox,

it rendered the issue of liability moot as workers’ compensation was Mr. Fox’s
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exclusive remedy against those two defendants.1 This appeal followed, and

Plaintiffs now allege neither Shaw nor CLECO Power is entitled under the law to

classification as the statutory employer of Mr. Fox.

ANALYSIS

In Miller v. Martin, 02-670, p. 5 (La. 1/28/03), 838 So.2d 761, 764, our

supreme court reiterated the standard applicable to appellate review of cases

decided by summary judgment stating:

Appellate review of the granting of a motion for summary
judgment is de novo. Schroeder v. Bd. of Sup’rs of La. State Univ.,
591 So.2d 342 (La.1991). A motion for summary judgment will be
granted “if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to material fact, and that the mover is entitled to
judgment as a matter of law.” La.[Code Civ.P.] art. 966(B). A court
may grant summary judgment that is “dispositive of a particular issue,
theory of recovery, cause of action or defense, in favor of one or more
parties, even though the granting of the summary judgment does not
dispose of the entire case.” La.[Code Civ.P.] art. 966(E).

The motion for summary judgment is a procedural device to avoid a full-scale trial

when there is no genuine issue of material fact. Prime Income Asset Management,

Inc. v. Tauzin, 07-1380 (La.App. 3 Cir. 4/30/08), 981 So.2d 897. “[S]ummary

judgment procedure is designed to secure the just, speedy and inexpensive

determination of every action,” except certain domestic actions. La.Code Civ.P.

art. 966(A)(2). “The procedure is favored and shall be construed to accomplish

these ends.” Id.

Louisiana Revised Statutes 23:1031 provides for workers’ compensation

benefits to an employee who is injured by an accident “arising out of” and “in the

course of” his employment. Smith v. Continental Casualty Company, 98-2896

(La.App. 1 Cir. 2/18/00), 752 So.2d 381, writ denied, 00-0789 (La. 4/28/00), 760

So.2d 1183. Under certain circumstances, an owner or principal can be held to be
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The Plaintiffs’ personal injury claims and lawsuit continue against Turner Industries, Inc., who Plaintiffs allege had
the responsibility of inspecting the cyclone tower where Mr. Fox was injured.
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a statutory employer, and thus liable to pay workers’ compensation to an employee

of a contractor he engages. Under such circumstances, workers’ compensation is

the exclusive remedy of the contractor’s employee held to be a statutory employee

of the principal, and the principal is immune from tort liability. La.R.S. 23:1032.

These circumstances are set forth in La.R.S. 23:1061.

“The issue of statutory employment status is a mixed question of law and

fact.” Dominio v. Folger Coffee Co., 09-1278, p. 10 (La.App. 4 Cir. 2/10/10), 32

So.3d 955, 961, writ denied, 10-570 (La. 5/21/10), 36 So.3d 232. The doctrine of

“statutory employer” is codified in La.R.S. 23:1061, amended in 1997, to provide

that when a valid written contract recognizes the existence of a statutory employer

relationship, a rebuttable presumption of a statutory relationship is created. St.

Angelo v. United Scaffolding, Inc./X-Serv., Inc., 09-1420 (La.App. 4 Cir. 5/19/10),

40 So.3d 365, writ denied, 10-1412 (La. 9/24/10), 45 So.3d 1082. La.R.S. 23:1061

provides as follows:

A. (1) Subject to the provisions of Paragraphs (2) and (3) of this
Subsection, when any “principal” as defined in R.S. 23:1032(A)(2),
undertakes to execute any work, which is a part of his trade, business,
or occupation and contracts with any person, in this Section referred
to as the “contractor”, for the execution by or under the contractor of
the whole or any part of the work undertaken by the principal, the
principal, as a statutory employer, shall be granted the exclusive
remedy protections of R.S. 23:1032 and shall be liable to pay to any
employee employed in the execution of the work or to his dependent,
any compensation under this Chapter which he would have been liable
to pay if the employee had been immediately employed by him; and
where compensation is claimed from, or proceedings are taken
against, the principal, then, in the application of this Chapter reference
to the principal shall be substituted for reference to the employer,
except that the amount of compensation shall be calculated with
reference to the earnings of the employee under the employer by
whom he is immediately employed. For purposes of this Section,
work shall be considered part of the principal’s trade, business, or
occupation if it is an integral part of or essential to the ability of the
principal to generate that individual principal’s goods, products, or
services.

(2) A statutory employer relationship shall exist whenever the services
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or work provided by the immediate employer is contemplated by or
included in a contract between the principal and any person or entity
other than the employee’s immediate employer.

(3) Except in those instances covered by Paragraph (2) of this
Subsection, a statutory employer relationship shall not exist between
the principal and the contractor’s employees, whether they are direct
employees or statutory employees, unless there is a written contract
between the principal and a contractor which is the employee’s
immediate employer or his statutory employer, which recognizes the
principal as a statutory employer. When the contract recognizes a
statutory employer relationship, there shall be a rebuttable
presumption of a statutory employer relationship between the
principal and the contractor’s employees, whether direct or statutory
employees. This presumption may be overcome only by showing that
the work is not an integral part of or essential to the ability of the
principal to generate that individual principal’s goods, products, or
services.

B. When the principal is liable to pay compensation under this
Section, he shall be entitled to indemnity from any person who
independently of this Section would have been liable to pay
compensation to the employee or his dependent, and shall have a
cause of action therefor.

There are two instances in which a statutory relationship will be found, thus

holding the statutory employer only liable for workers’ compensation benefits: (1)

being a principal in the middle of two contracts, referred to as the “two-contract”

theory, and (2) the existence of a written contract recognizing the principal as the

statutory employer. Prejean v. Maint. Enters., Inc., 08-364 (La.App. 4 Cir.

3/25/09), 8 So.3d 766, writ denied, 09-892 (La. 6/26/09), 11 So.3d 496. In its brief

before this Court, appellees, noting the lack of any provision in the Purchase Order

between Stone and Foster Wheeler, the direct employer in this case, stated:

The absence of such an explicit contractual provision merely indicates
the inapplicability of La.R.S. 23:1061(A)(3) to the Foster Wheeler
situation, and does not affect the applicability of (A)(2). (Emphasis in
the original.)

This would seem to indicate Shaw is basing its claim of statutory employer

immunity solely on the “two-contract” theory set forth in La.R.S. 23:1061(A)(2),

which was the basis the trial court found for finding Shaw was the statutory
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employer of Mr. Fox. The “two-contract” theory “applies when: (1) the principal

enters into a contract with a third party; (2) pursuant to that contract, work must be

performed; and (3) in order for the principal to fulfill its contractual obligation to

perform the work, the principal enters into a subcontract for all or part of the work

performed.” Daigle v. McGee Backhoe & Dozer Serv., 08-1183, p. 6 (La.App. 5

Cir. 4/28/09), 16 So.3d 4, 7, writ denied, 09-1372 (La.10/2/09), 18 So.3d 113

(citing Beddingfield v. Standard Constr. Co., 560 So.2d 490 (La.App. 1 Cir.1990)).

Initially, we note CLECO Power’s classification as a statutory employer of

Mr. Fox is dependent upon whether Shaw is classified as a statutory employer of

Mr. Fox. If Shaw is determined to be the statutory employer of Mr. Fox at the time

of the accident, under the terms of the contract between CLECO Power and Shaw,

CLECO Power is also recognized as a statutory employer of Mr. Fox under

La.R.S. 23:1061(A)(3).

There is no question the first two requirements for application of the “two-

contract” theory were met. Shaw entered into a contract with CLECO Power and,

pursuant to that general contract, work was performed. The question concerns the

third requirement, that in order for the principal (Shaw) to fulfill its contractual

obligation to perform the work, the principal enters into a subcontract for all or part

of the work performed. Shaw argues, in order to fulfill its contractual relationship

with CLECO Power, it entered into a subcontract directly with Foster Wheeler.

The trial court found this was the case, and gave the following written reasons for

finding Shaw was the statutory employer of Mr. Fox:

The court concludes, after reviewing the purchase order and the
Corporate Guaranty, that Foster Wheeler contracted with Shaw. The
court reaches this conclusion based on the section of the corporate
guaranty in which Foster Wheeler acknowledges Stone as Shaw’s
agent. That portion of the document reads: “Whereas, Purchaser
(Stone) as agent for contractor (Shaw) and FWNA (Foster Wheeler)
have entered into that certain purchase order for two CFB Boilers.”
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This provision is clear that Stone was acting on behalf and for the
benefit of Shaw, as the principal of Stone. In fact all the guaranties
and rights given by Foster Wheeler are specifically for the benefit of
the Contractor, which is Shaw.

The guaranty also provides that all rights, obligations and
remedies shall be interpreted and governed in accordance with
Louisiana laws. The court finds this provision relevant as the
Louisiana Civil Code governs actions taken by a [mandatary] acting
on behalf of the principal. The court opines that articles 3016, 3020
and 3022 of the Louisiana Civil Code control in this issue. Louisiana
Civil Code Article 3016 states that a [mandatary] who contracts in the
name of the principal within the limits of his authority does not bind
himself personally for the performance of the contract. Article 3020
states that when the [mandatary] is acting within the limits of his
authority the principal is bound to perform the contract the
[mandatary] makes with a third person. Article 3022 provides that a
third person with whom a [mandatary] contracts in the name of the
principal, or in his own name as [mandatary], is bound to the principal
for the performance of the contract. These articles clearly articulate
that when a [mandatary] enters into a contract with a third person in
the name of the principal and within the limits of his authority, the
contract binds the principal to the third person and the third person to
the principal, regardless of whether the contract is in the name of the
principal or the [mandatary]. Thus the purchase order executed
between Stone and Foster Wheeler obligated only Foster Wheeler and
Shaw. Therefore Shaw is the statutory employer of Mr. Fox, Foster
Wheeler’s direct employee.

Plaintiffs argued Shaw entered into a subcontract with Stone, who then

subcontracted part of its work to Foster Wheeler. According to Plaintiffs, this

breached the required contractual chain necessary for application of the “two-

contract” theory, and “Shaw has failed to establish that it, as the alleged principal,

stands in the middle of the two contracts.” Therefore, Plaintiffs contend Shaw

cannot be deemed to be the statutory employer of Mr. Fox.

Shaw counters that, even if it were determined it was Stone and not Shaw that

entered into the subcontract with Foster Wheeler, Shaw still is entitled under

La.R.S. 23:1061(A)(2) to classification as a statutory employer because it entered

into a subcontract pursuant to fulfilling its general contract with CLECO Power.

The contractual path of the parties begins with the general contract between

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CLECO Power and Shaw for the construction of the Rodemacher Unit 3.

Specifically, Article XXVI, section 26.2 in the Contract between CLECO Power

and Shaw for Engineering, Procurement and Construction of the Rodemacher Unit

3, dated August 1, 2005, states:

Contractor shall be an independent contractor with respect to the
Work to be performed hereunder. Contractor, its Subcontractors,
Vendors or the employees of any of them, shall not be deemed to be
servants, employees or agents of Owner. Owner is specifically
recognized as a statutory employer of all employees of Contractor,
whether direct employees or statutory employees, who are performing
work under this Contract, as contemplated by LSA-R.S. 23:1061 A.

On October 1, 2005, Shaw entered into a contract with Stone, wherein Stone

agreed to provide Shaw (the Contractor) with “all of the engineering and

procurement services (“Services”) described in the contract dated August 1, 2005

(the “Prime Contract”) between Contractor and CLECO Power, LLC (“Owner”) in

furtherance of the project known as Rodemacher Unit 3 (the “Project”).” Section 5

of the Shaw-Stone contract also provided that all terms and conditions of the

“Prime Contract” between Shaw and CLECO Power, are “directly applicable” to

the Shaw-Stone contract. Section 6 of the Shaw-Stone contract provides that “all

employees of Engineer [Stone] shall be deemed to be the statutory employees of

Contractor [Shaw] and Owner [CLECO Power] in accordance with applicable law,

and Contractor [Shaw] acknowledges that Engineer [Stone] is performing Services

which are integral to Contractor’s [Shaw’s] and Owner’s [CLECO Power’s]

business operations.”

Stone then entered into an agreement/purchase order with Foster Wheeler on

February 2, 2006 to supply two cyclones, including all associated materials and

labor, for Rodemacher Unit 3. By means of that purchase order, Shaw

subcontracted a portion of the work to Foster Wheeler. Made part of that

contract/purchase order is a document titled “Consent to Assignment”, which was
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signed by representatives of CLECO Power, Shaw, Stone and Foster Wheeler.

This “Consent to Assignment” lists CLECO Power as owner, Shaw as contractor,

and Foster Wheeler as subcontractor. Thus, the “Consent to Assignment” signed

by the parties clearly contemplates Foster Wheeler as a subcontractor of Shaw.

Appellees also argue that even if it were found Shaw did not subcontract

directly with Foster Wheeler, it is still entitled under the law to statutory employer

status. In support of this argument, Shaw cites the case of St. Angelo v. United

Scaffolding, Inc./X-Serv., Inc., 40 So.3d 365. In that case, the plaintiffs were

injured in a reactor explosion at the Chalmette Refinery. The plaintiffs were

employed directly by S.J. Owens Enterprises, Inc. Personal injury suits were filed

against ExxonMobil and Chalmette Refining, L.L.C., who both contended they

were statutory employers of the plaintiffs. ExxonMobil operated the Chalmette

Refinery under an operating agreement between it and Chalmette Refining, L.L.C.

The plaintiffs’ direct employer, S.J. Owens, had entered into a “Continuing

Services Agreement” with Procurement, which was a division of ExxonMobil

Global Services. ExxonMobil argued the contract between S.J. Owens and

Procurement was actually a contract between S.J. Owens and ExxonMobil,

because Procurement entered into the contract on behalf of ExxonMobil and

Chalmette Refining, L.L.C. The plaintiffs countered that Procurement was not

permitted to contract on behalf of ExxonMobil and Chalmette Refining, L.L.C.

The court in St. Angelo found Procurement was authorized by a Master

Services Agreement between it and ExxonMobil to engage in “procurement of

goods and services on behalf of ExxonMobil, including “arranging contracts,

agreements, or orders in the name of and for the account of Purchaser to acquire

selected goods, services, and construction works.” Id. at 373. In concluding that

Procurement could contract on ExxonMobil’s behalf, the fourth circuit stated:
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The fact that the Procurement division of ExxonMobil Global
Services signed the CSA does not deny statutory employer status to
ExxonMobil and CRLLC, who are clearly the principal parties in the
agreement. A clear reading of the applicable statutes and this Court’s
recent decisions shows that statutory employer status is more liberally
favored as a result of the 1997 amendment in the law.

Id. at 374.

In the instant case, Stone was authorized in the contract between it and Shaw

to provide “engineering and procurement services” as described in the general

contract between CLECO Power and Shaw. Despite Plaintiffs arguments that

“there is no provision in the Shaw-Stone Contract whereby Shaw affirmatively

grants unto Stone the legal authority to act in the name of Shaw by contracting

with Third Parties,” the above provision in the Shaw-Stone contract authorizing

Stone to be responsible for “procurement services” in furtherance of the

Rodemacher Unit 3 project does grant such authority. We agree that Stone was

acting on behalf and for the benefit of Shaw, as the principal of Stone, thus

entitling Shaw to classification as the statutory employer of Foster Wheeler’s direct

employee, Louis Fox. The trial court did not err in granting Shaw and CLECO

Power’s motion for summary judgment.

ANALYSIS

For the foregoing reasons, the judgment of the trial court is affirmed. Costs of

this appeal are assessed to Plaintiffs-Appellants.

AFFIRMED.

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