Opinion
No. CX-02-810.
Filed February 25, 2003.
Appeal from the Anoka County District Court, File No. C8987292.
Fred M. Soucie, Christopher J. Hoffer, Soucie, Buchman Bolt, P.A., (for respondent Hokkala)
Owen L. Sorenson, Suzanne Wolbeck Kvas, Stringer Rohleder, Ltd., (for appellants)
R.N.W. Associates, Inc., (respondent)
M. Chapin Hall, Lynn, Scharfenberg Associates, (for respondent Soil-Con, Inc.)
Considered and decided by Peterson, Presiding Judge, Anderson, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Respondent Vicki Hokkala prevailed in a wrongful-death action arising out of decedent's electrocution in an accident at a worksite. In this appeal from an order resolving posttrial motions, appellants contend that (a) appellant Beck's Valley Farm and respondent Soil-Con, Inc., decedent's employer, were engaged in a common enterprise under the workers'-compensation law; (b) the district court made numerous errors requiring a new trial; (c) the district court abused its discretion in the special-verdict form used; and (d) the district court erred in allowing respondent Soil-Con to assert a claim for increased premiums under Minn. Stat. § 176.061, subd. 5(b) (2000). We affirm.
FACTS
A property owner hired appellant Beck's Valley Farm to regravel his 325-foot driveway. Beck's subcontracted with respondent Soil-Con to level the sand and gravel. Appellant Steven Gallus, Beck's employee, was to haul sand and gravel in his truck and dump it on the driveway, and decedent, Soil-Con's employee, would then spread and level the sand and gravel with his bobcat.
During a walk-through inspection with his boss before beginning work on the driveway, decedent identified overhead power lines and explained to his boss that he had already talked to Gallus, the gravel truck driver, about this hazard. Although Gallus had wanted to spread the gravel with his truck, decedent told him that this plan would not work because of the power lines.
In the first part of the project, the holes in the driveway had to be filled with sand. Decedent used his bobcat to load Beck's truck with sand at a nearby development where both Beck's and Soil-Con were working on an unrelated project. Gallus drove the truck to the driveway and dumped it, and decedent leveled the sand. After two loads of sand were dumped and leveled, this part of the project was completed uneventfully.
In the second part of the project, gravel was dumped and leveled on the driveway. Gallus drove Beck's truck to a gravel pit, which was about 30 minutes away, loaded the truck, returned to the driveway, and dumped it. While waiting, decedent worked on a leveling project at the nearby development. He returned to the driveway to spread and level the gravel as it was dumped.
The accident occurred when Gallus was dumping the fifth load of gravel in an area on the driveway directly beneath the power lines. The box of the truck that Gallus was operating came directly into contact with the power lines. Decedent came into contact with the truck and was electrocuted. After being hospitalized for about a week, he died.
This lawsuit ensued, and a jury trial was held. After the close of the evidence, appellants moved for a directed verdict on the ground that the district court did not have subject-matter jurisdiction under the common-enterprise doctrine of the workers'-compensation law. The district court submitted the case to the jury, which found Gallus 100% negligent and awarded damages to Hokkala. The district court then held that there was no common enterprise and ordered judgment in favor of Hokkala. Appellants made posttrial motions for JNOV and a new trial. Respondent Soil-Con moved to intervene to pursue a separate claim for increased insurance premiums under Minn. Stat. § 176.061, subd. 5(b) (2000). The district court denied appellants' posttrial motions and allowed Soil-Con to bring its claim for increased premiums.
DECISION
1. Appellants challenge the district court's conclusion that no common enterprise existed between Beck's and Soil-Con. The issue of whether a common enterprise exists as applied to undisputed facts is a question of law. O'Malley v. Ulland Bros., 549 N.W.2d 889, 897 (Minn. 1996). Findings of fact are reviewed under a clearly erroneous standard. Higgins v. N.W. Bell Tel. Co., 400 N.W.2d 192, 194 (Minn.App. 1987), review denied (Minn. Mar. 25, 1987).
When an employee suffers a work-related death, the employee's dependents are eligible for workers'-compensation benefits "in exchange for forfeiting the right to sue the employer in tort." Minn. Brewing Co. v. Egan Sons Co., 574 N.W.2d 54, 58 (Minn. 1998); see also Minn. Stat. § 176.021, subd. 1 (1994) (employer liable to pay compensation for exmployee's personal injury or death). Generally, the employee's dependents retain their "common law right to recover from a negligent third party." Minn. Brewing, 574 N.W.2d at 58.
However, where an employer and a third party are engaged in a "common enterprise" during which the employee suffers the work-related death, the employee's dependents must elect "between receiving workers' compensation benefits from the employer and a common-law negligence action against [the] third party." O'Malley, 549 N.W.2d at 894 (citing Minn. Stat. § 176.061, subds. 1, 4. Beck's contends that it was engaged in a common enterprise with Soil-Con, which precluded Hokkala's third-party negligence action against it.
The common-enterprise defense is set out in Minn. Stat. § 176.061, subd. 4. O'Malley, 549 N.W.2d at 893. For a common enterprise to exist:
(1) The employers must be engaged on the same project;
(2) The employees must be working together (common activity); and
(3) In such fashion that they are subject to the same or similar hazards.
McCourtie v. U.S. Steel Corp., 253 Minn. 501, 506, 93 N.W.2d 552, 556 (1958); see Olson v. Lyrek, 582 N.W.2d 582, 584-85 (Minn.App. 1998) (stating that there is no distinction between statutory test and McCourtie test), review denied (Minn. Oct. 20, 1998). In applying this law, courts must use an even-handed approach. O'Malley, 549 N.W.2d at 894.
The first factor, whether the employers were engaged in the same project, requires a showing of "work in which both sets of employees participate." McCourtie, 253 Minn. at 510, 93 N.W.2d at 559. One who merely delivers merchandise is not engaged in a common project with one who receives it, even if they join in unloading the merchandise from the truck. Urbanski v. Merchs. Motor Freight, Inc., 239 Minn. 63, 71, 57 N.W.2d 686, 691 (1953). In contrast, where the parties "had a long-standing, continuous, and close commercial relationship," in which "[b]oth companies installed, maintained, and modified N.W. Bell's telephone switching equipment," where the employee had worked for ten years, a common project existed. Higgins, 400 N.W.2d at 193-94.
The district court concluded that Beck's and Soil-Con were not engaged in the same project because Beck's and Gallus were merely delivering materials to the site, while Soil-Con and decedent were engaged in refinishing the driveway.
Appellants cite the facts that there were only two employees at the same physical site, Gallus and decedent; that the companies had a longstanding relationship and had worked together in the past; that they had worked on the nearby development together; and that Beck's had subcontracted with Soil-Con, which had billed Beck's rather than the property owner. Appellants, however, do not provide any details about the length of their relationship on past projects, and, like the driveway project, their work at the nearby development involved delivery by a Beck's employee and finishing work by decedent. This is a different situation than the 10-year working relationship described in Higgins. And the mere fact of a contractor-subcontractor relationship does not lead to the conclusion that the parties were engaged in the same project for purposes of the workers'-compensation law. The district court did not err in determining that there is no showing that the companies were engaged on the same project.
The next factor is whether the employees were working together on a common activity. To meet this standard, the employees' activities must not merely overlap but must be "interdependent." Schleicher v. Lunda Constr. Co., 406 N.W.2d 311, 313-14 (Minn. 1987). "[M]erely performing work at the same time and in the same place" does not mean the employees were working interdependently. Carstens v. Mayers, Inc., 574 N.W.2d 733, 736 (Minn.App. 1998), review denied (Minn. Mar. 26, 1998). Nor does working toward a common goal in itself meet the standard. O'Malley, 549 N.W.2d at 895.
The district court found that decedent and Gallus were engaged in independent functions. Gallus drove his truck from a gravel pit to the driveway, maneuvered the truck in a limited space, and dumped sand and gravel. Decedent operated a bobcat, spreading the sand and gravel. When decedent broke for lunch, Gallus delivered sand. While the decedent waited for Gallus to deliver more loads of fill, he worked on an unrelated project at the nearby development. Also, the district court specifically found that Gallus's testimony that decedent directed him where to back up the dump truck and where to dump the gravel was inconsistent with the physical evidence and not credible. The court also determined that even if it credited Gallus's testimony, the actions that appellants alleged decedent took were insufficient to intertwine Beck's and Soil-Con in a joint enterprise.
Appellants argue that there was more than a mere delivery relationship between the parties, contending the evidence showed that decedent directed and guided Gallus where to dump the fifth load. They also cite Soil-Con's employee manual that requires one individual to act as an observer when a dump truck was backing up and contend that decedent would have had no reason to leave his bobcat except to guide Gallus. But the district court did not credit appellants' version of events. The district court's determination of the credibility of witnesses must be given due regard and its findings may not be reversed unless clearly erroneous. Minn.R.Civ.P. 52.01. The district court's findings are not clearly erroneous. Furthermore, as the district court determined, even if Gallus's testimony that decedent guided his truck had been credited, merely assisting in a delivery does not create a common activity. Urbanski, 239 Minn. at 71, 57 N.W.2d at 691.
The third factor requires that employees be subject to the same or similar hazards. O'Malley, 549 N.W.2d at 896. In deciding this issue, courts will examine the specific risks to which the employees are exposed. Sorenson v. Visser, 558 N.W.2d 773, 776 (Minn.App. 1997).
The district court found that the nature and extent of hazards encountered by Gallus and decedent were markedly different. Gallus encountered hazards while driving to and from the gravel pit as well as in the gravel pit. There was no evidence that Gallus got out of his truck except after decedent was injured, while decedent occasionally left his bobcat.
Appellants contend that testimony showed that although the chance of electrocution might have varied, both Gallus and decedent faced a danger of electrocution if there was contact between the dump truck and a power line. But Gallus and decedent were exposed to different risks. Gallus could survive if he was sitting in the truck when it hit a charged power line while decedent, who was standing on the ground, could be electrocuted if he touched the truck.
The district court's findings were not clearly erroneous and it did not err as a matter of law in holding that the parties were not engaged in a common enterprise. Respondent Hokkala properly proceeded with her negligence action against appellants. In light of this decision, appellants' argument that Hokkala's mere receipt of workers' compensation benefits constituted an election of remedies need not be addressed.
2. Appellants next contend that the district court made numerous errors in admitting evidence, and that the cumulative effect of these errors was a verdict that was inconsistent with the evidence and reflected damages inflated by passion and prejudice.
Whether to admit evidence is a decision within the discretion of the district court. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990). Its decision will be reversed only if based on an error of law or an abuse of discretion. Id. Even errors in rulings will not warrant a new trial unless the error is prejudicial. Id. "An evidentiary error is prejudicial if the error might reasonably have changed the result of the trial." Cloverdale Foods of Minn., Inc. v. Pioneer Snacks, 580 N.W.2d 46, 51 (Minn.App. 1998).
a. Appellants contend that the district court erred in failing to allow them to cross-examine respondent Hokkala's expert as to the effect of taxation on his opinion about the damages suffered by decedent's next-of-kin. The district court sustained respondent Hokkala's objection to the cross-examination, concluding that allowing the questioning would force the witness and then the jury to speculate about future tax consequences.
The Minnesota Supreme Court has held that a jury may not be instructed that damages are exempt from taxation. Briggs v. Chicago Great W. Ry. Co., 248 Minn. 418, 432, 80 N.W.2d 625, 636 (1957) (addressing Federal Employers Liability Act (FELA)). The United States Supreme Court has subsequently held that the jury should be instructed that damages are exempt from taxation in FELA cases, overruling Briggs as to that federal act. Norfolk W. Ry. Co. v. Liepelt, 444 U.S. 490, 498, 100 S.Ct. 755, 759 (1990). This court has concluded that where there was no clear authority mandating a nontaxability instruction under Minnesota law, and where there was no evidence suggesting that the jury had inflated the damages on the improper assumption that the award would be taxable, failure to give a nontaxability instruction did not constitute reversible error. Hahn v. Tri-Line Farmers Co-op, 478 N.W.2d 515, 524 (Minn.App. 1991), review denied (Minn. Jan. 27, 1992); see 4A Minnesota Practice, CIVJIG 90.30 (1999) (recommending no instruction as to the taxability of damages absent a clear ruling from the Minnesota Supreme Court requiring a Liepelt instruction in cases other than FELA cases). Based on the law in Minnesota, as well as the fact that appellants have made no showing that the jury verdict was inflated due to jury speculation as to tax consequences, the district court did not abuse its discretion in not allowing the cross examination.
b. Appellants brought a motion in limine to exclude evidence of appellant Gallus's two prior contacts with power lines. The first contact occurred in 1995 when Gallus was being guided while he backed up a trailer carrying a backhoe, and the arm of the backhoe hit an overhead power line. The other contact occurred in June 1996, the month before decedent was electrocuted, when Gallus, while being guided as he backed a dump truck up to a paver machine, hit an overhead power line with the truck.
The district court ruled under Minn.R.Evid. 404(b) that it would allow limited use of the prior accidents to establish knowledge on the part of appellants, but warned the attorneys not to exceed these limits. In its order denying the motion for a new trial and JNOV, the court reiterated that the evidence of the prior acts showed appellant Gallus's prior knowledge of "the hazards associated with relying on another for directional guidance around high voltage power lines." It noted that to the extent that respondents attempted to use this evidence for purposes beyond knowledge, appellants "were protected by their own counsel's freedom to object."
Minn.R.Evid. 404(b) states:
Evidence of another crime, wrong, or act is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident.
(Emphasis added.)
Appellants contend that in most civil cases addressing admissibility of evidence under rule 404(b), the evidence of knowledge is admitted to establish knowledge of such things as a design defect or a problem with a prior slippery floor. See, e.g., Colby v. Gibbons, 276 N.W.2d 170, 176 (Minn. 1979) (recognizing purpose of admitting evidence of similar accidents is to show dangerous character of place of injury, or defendant's notice or knowledge of dangers). Appellants contend that where Gallus readily testified that he knew about the danger of overhead power lines, there was no reason to allow evidence of prior contacts, and allowing such evidence was prejudicial.
Respondent Hokkala contends that evidence of Gallus's two prior contacts with overhead high-voltage power lines was properly admitted for the limited purpose of showing his knowledge that even while being guided, his equipment could come into contact with the overhead power lines, and that the two prior contacts were sufficiently similar to be properly admitted. Hokkala asserts that this knowledge was relevant to rebut appellants' defense that Gallus was not negligent because he acted reasonably in relying on Hokkala to guide him. The district court did not abuse its discretion in allowing limited evidence to show knowledge under rule 404(b).
Appellants contend that they were prejudiced by repeated references to the prior contacts. Appellants, however, did not object to the scope or number of questions. Failure to object during trial precludes appellate review. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (appellate court will consider only issues presented to and considered by the district court); Sauter v. Wasemiller, 389 N.W.2d 200, 202 (Minn. 1986) (to preserve for appellate review issues arising during trial, party must make timely objection). While appellants argue that they were not required to object after the district court ruled on their motion in limine, the district court's ruling permitted appellants to object if respondents attempted to use evidence of the contacts for purposes beyond knowledge. Consequently, appellants failed to preserve this issue for review.
c. Appellants contend that decedent's medical records should not have been admitted into evidence because they were irrelevant hearsay. These records showed that decedent had an entrance wound on his left thumb where the electricity entered his body and exit wounds on his feet where it left his body. The district court determined that the records, which were the type normally gathered and relied upon by medical examiners in discharging their duty, were properly admitted as relevant business records.
Under Minn.R.Evid. 803(6), evidence of regularly conducted business activity is admissible as an exception to hearsay. Hospital records may be admitted under this exception if germane to medical history, treatment, or diagnosis. Lindstrom v. Yellow Taxi Co. of Minneapolis, 298 Minn. 224, 233, 214 N.W.2d 672, 678 (1974). The locations of decedent's visible injuries were germane to his patient history, diagnosis, and care because they revealed what had happened to decedent.
Appellants contend that hospital records are inadmissible because of lack of foundation, unless separate evidence exists establishing the identity of the person who made the record and that person's source of information. Wadena v. Bush, 305 Minn. 134, 150, 232 N.W.2d 753, 763 (1975). But here, the medical records were independently verified through testimony from medical experts at trial.
The medical records were relevant because the locations of decedent's entrance and exit wounds went directly to proving the decedent's location at the time he was electrocuted and to challenging Gallus's credibility. Gallus claimed that Hokkala was holding onto the grab bar with his right hand when Gallus raised the dump box into the power line. Based on the medical records, however, the health care providers established that there was an entrance wound only on his left thumb tip. The district court did not abuse its discretion in admitting the medical records.
d. Appellants contend that the existence of liability insurance was improperly interjected into the trial on two occasions: first, in allowing the jury panel to be questioned as to their interest in the two insurance companies involved; and second, in allowing one of the insurance company's investigators to testify, even though the jury did not hear any reference to the fact that the investigator worked for an insurance company.
Minn.R.Gen.Pract. 123 provides in relevant part:
In all civil jury cases, in which an insurance company or companies are not parties, but are interested in the defense or outcome of the action, the presiding judge shall, upon the request of any party, be advised of the name of such company or companies, out of the hearing of the jury[.] * * *
During examination of the jurors by the court, the jurors shall, upon request of any party, be asked collectively whether any of them have any interest as policyholders, stockholders, officers, agents or otherwise in the insurance company or companies interested in the defense or outcome of the action.
At the request of respondent Hokkala's counsel, the district court asked the jury collectively whether any of them had any interest as policyholders, stockholders, officers, agents, or otherwise in the insurance companies interested in the outcome of this action.
Appellants argue that the court erred in asking this question, contending that rule 123 conflicts with Minn.R.Evid. 411, which provides that evidence of insurance is not admissible on the issue of whether the person acted negligently or wrongfully. Appellants assert that merely questioning whether a potential juror has an interest in two insurance companies interjects insurance into litigation. We disagree. The district court specifically followed rule 123 and did not allow any further reference to insurance during the trial. The district court proceeded properly under the rules.
Appellants contend that the testimony of an investigator hired by one of the insurance companies interjected the subject of insurance into the trial, even though the jury heard no evidence connecting the investigator to an insurance company. Appellants contend that the testimony was not factual and was not needed for foundation.
The investigator took a statement from Gallus, found and photographed the electrical contact marks on the dump truck, and photographed Gallus re-creating what Gallus claimed decedent was doing at the time he was electrocuted. In its order denying the motion for a new trial and JNOV, the district court found that nothing in the record supported the argument that the investigator's testimony had the effect of further interjecting insurance into the trial.
There is no evidence to support appellants' argument, and the district court committed no error.
3. Appellants challenge the special-verdict form because it had four damages questions: (a) past loss of earnings; (b) future loss of earnings; (c) past loss of comfort, assistance, companionship, counsel, guidance, advice, and protection; and (d) future loss of comfort, assistance, companionship, counsel, guidance, advice, and protection. Appellants contend that the form should have included only a single damages question.
The district court has discretion to decide whether to submit a special verdict to the jury and, if so, the form that it should take. Minn.R.Civ.P. 49.01(a); Hill v. Okay Constr. Co., 312 Minn. 324, 340, 252 N.W.2d 107, 118 (1977). The separate damages questions allowed the court to distinguish between past damages, for which prejudgment interest is allowed, and future damages, for which it is not. See Minn. Stat. § 549.09, subd. 1(b)(2) (2000) (addressing prejudgment interest). The special-verdict form also allowed the court to distinguish between economic and noneconomic damages, which was useful for calculating issues and claims under the worker's-compensation law. See Henning v. Wineman, 306 N.W.2d 550, 552 (Minn. 1981) (discussing amounts recoverable or not under workers'-compensation act); Naig v. Bloomington Sanitation, 258 N.W.2d 891, 895 (Minn. 1977) (listing types of damages recoverable under workers'-compensation law). Finally, appellants have not shown how they were prejudiced. The district court did not abuse its discretion in setting forth four separate damages questions.
Appellants contend that the special-verdict form allowed the workers'-compensation insurance carrier to do an "end run" and assert its subrogation claim without being a party to the action. But when workers'-compensation benefits are paid and judgment is rendered against a third party, as occurred here, the judgment "is subject to a lien of the employer for the amount to which it is entitled to be subrogated or indemnified" under the workers'-compensation act. Minn. Stat. § 176.061, subd. 8a (2000). The workers'-compensation statute specifically allows the workers'-compensation subrogation claim to "be maintained in the name of the employee or the names of the employee's dependents * * * against the other party for the recovery of damages." Minn. Stat. § 176.061, subd. 5(a) (2000). The district court's use of the special-verdict form was consistent with the workers'-compensation statute.
4. Appellants challenge the district court order allowing Soil-Con's motion, after the trial and verdict, to pursue a claim for increased premiums under Minn. Stat. § 176.061, subd. 5(b) (2000). Appellants contend that Soil-Con's claim was a compulsory counterclaim and that Soil-Con should have been estopped from making this claim at such a late date. Appellants contend that allowing the claim after trial is inequitable because had Soil-Con brought the claim as a compulsory counterclaim, the entire trial dynamics would have been changed. They contend further that there were factors outside the jury verdict, such as OSHA findings, that influenced the increase of premiums, and these factors may have been presented at trial.
The district court found that Soil-Con, as third-party defendant, had a statutory claim for increased premiums against appellants, and because the lawsuit arose out of the tortious conduct of appellants, it was not a compulsory counterclaim under Minn.R.Civ.P. 13.01. See House v. Hanson, 245 Minn. 466, 472-73, 72 N.W.2d 874, 878 (1955) (construing rule 13.01). The court noted that the wrongful-death action was the appropriate place to bring the claim, although it disagreed with Soil-Con's characterization of the claim as being one for intervention. The court also noted that the necessary parties were present, the facts supporting the nonemployer liability were presented, the determination of nonemployer liability was established, and the forum was convenient for the parties. Further, the interests of judicial economy would be served by resolving the issue in these proceedings.
Counterclaims in a tort action are not compulsory. House, 245 Minn. at 472-73, 72 N.W.2d at 878. The workers'-compensation statute specifically allows a claim for an increased premium to be brought either by joining in the personal-injury action or by a separate action. Minn. Stat. § 176.061, subd. 5(b). There is no showing that the district court erred in concluding that the claim for increased premiums should be resolved in these proceedings.