Demetres v. East West Construction, Inc.

Filing 28

OPINION AND ORDER that the 6 Defendant's Motion to Dismiss is GRANTED, and the case is DISMISSED for lack of subject matter jurisdiction in this federal court in the Eastern District of Virginia. Signed by Chief District Judge Rebecca Beach Smith and filed on 1/28/2014. (rsim, )

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA Norfolk Division JAMES THOMAS DEMETRES, Plaintiff, CIVIL ACTION NO. EAST WEST CONSTRUCTION, 2:13cvl55 INC., Defendant. OPINION AND ORDER This Dismiss matter comes ("Motion") before and the court accompanying on the Memorandum Motion in to Support, filed by the Defendant, East West Construction, Inc., pursuant to Federal Therein, Rule the of Civil Defendant Procedure alleges 12(b)(1). that this ECF No. court 6. lacks jurisdiction over the dispute because the Plaintiff's claims are preempted ("VWCA"). For by the the reasons the Defendant's Motion, subject matter Virginia set Workers' forth below, Compensation the court Act GRANTS and the case is DISMISSED for lack of jurisdiction in this federal court in the Eastern District of Virginia.1 1 In so doing, this court makes no decision on the subject matter jurisdiction or merits of this matter in any other state or federal court, namely in North Carolina, given that North Carolina law appears to allow this suit. See infra I. This suit construction FACTUAL AND arises site in March 28, 2011. Am. discovery, ("SOF"). the out of an the BACKGROUND accident City of Compl. 1 1. ECF No. parties ECF No. PROCEDURAL 24. filed an that occurred Virginia on Beach a on 4. After a period of Agreed Statement The following facts, of Facts which are relevant to the jurisdictional analysis, are undisputed. At the time of Demetres the accident, ("Plaintiff"), a the Plaintiff, citizen of North James Thomas Carolina, was an employee of Ashland Construction Company ("Ashland"), a North Carolina corporation. Am. Compl. 11 1, 3; SOF 11 1, 3. Ashland, a general contractor, assigned the Plaintiff "to work as superintendent the pharmacy" for in Virginia Beach. East West Construction, subcontractor property and for bulldozer, extensive Inc. Am. Compl. Virginia a new CVS Ashland hired a site and utility corporation, Am. of 1 10. ("Defendant"), construction. March 28, 2011, a a construction the to Compl. 11 prepare 7, 11. the On one of the Defendant's employees was operating which injuries. he Am. backed over the Compl. 11 11, Plaintiff, 13. causing Following the note 4 and accompanying text. Moreover, whether the Defendant has the requisite contacts for personal jurisdiction in North Carolina is not in any way addressed herein. accident, the Plaintiff received North Carolina workers' compensation benefits on behalf of his employer, Ashland. Am. Compl. 1 4; SOF 1 6. On March 27, 2013, the Plaintiff filed this diversity action against the Defendant in federal court, alleging that the negligence caused the accident, of the Defendant's employee and seeking $100,000,000 in damages. Am. Compl. 11 19-20. II. STANDARD OF REVIEW The plaintiff bears the burden of proving that subject matter jurisdiction exists by a preponderance of the evidence. See, e.g. , United States ex rel. 337, 347-48 1213, 1219 subject (4th Cir. (4th matter 12(b)(1), Cir. 2009) jurisdiction pleadings without When is (4th Cir. 1999) Potomac R.R. Co. 1991)). district The v. converting motion to dismiss (quoting United States, court Bain, defendant to Fed. 555 F.3d 697 F.2d challenges R. Civ. P. to regard the pleadings as and may consider evidence outside summary judgment.'" Evans v. B.F. 647 a pursuant court mere evidence on the issue, the (citing Adams v. 1982)). "'the district Vuyyuru v. Jadhav, the proceeding Perkins Co., Richmond, grant one the for 166 F.3d 642, Fredericksburg 945 F.2d 765, should to & 768 (4th Cir. Rule 12(b)(1) "xonly if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.'" Id. (quoting Richmond, Fredericksburg & Potomac R.R. Co., 945 F.2d at 768).2 III. ANALYSIS A. Applicable Law A federal district diversity jurisdiction, court hearing a case such as the instant case, the law of the state in which the court sits. E.g., 2 Because the United States Court of Appeals Circuit has affirmed a 12(b)(1) based on must apply Klaxon Co. for the Fourth dismissal for lack of subject matter jurisdiction in a similar case involving the VWCA, this court conducts a Rule 12(b) (1) analysis. See Evans, 166 F.3d at 647-50. However, this court acknowledges that, subsequent to Evans, some district courts have questioned the classification of cases like the instant dispute as "jurisdictional." See, e.g., Harvard v. Perdue Farms, Inc. , 403 F. Supp. 2d. 462, 464-65 (D. Md. 2005) (explaining that although Virginia courts treat dismissal of cases pursuant to the VWCA's exclusivity provision as jurisdictional, federal jurisdictional rules do not "import such Virginia procedural law"). One rationale, however, for the motion to be considered as jurisdictional is that, if the cause of action is barred under Virginia law, then there can be no claim for damages to meet the threshold federal diversity jurisdictional amount of $75,000. In any event, this court does not need to reach the question of whether conversion into a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, or conversion into one for summary judgment under Federal Rule of Civil Procedure 56, is required. The material facts before the court are undisputed, and all parties have had ample opportunity to conduct discovery on jurisdiction and to submit relevant materials to the court. Consequently, were the court to convert the pending motion into either a Rule 12(b)(6) motion to dismiss or a Rule 56 motion for summary judgment, the result would be same—judgment termination of this action. for the Defendant and v. Stentor Elec. America Online, 89, 92 Mfg. Inc. Co., v. St. 313 Paul U.S. 487, Mercury 496-97 Ins. Co., (1941); 347 F.3d (4th Cir. 2003) . Virginia applies the lex loci delecti rule for determining the applicable law in tort actions. Jones v. R.S. Garcia Jones v. and Assoc, Pittsylvania (4th Cir. 1988) Inc., Cnty. 246 Serv. (stating that "the Va. 3, 845 Auth., 5 F.2d law of (1993) ; see 467 State of the 465, the accident controls the remedy sought in that particular forum") (citing McCann v. Newport News 177 913 F. Supp. 909, (E.D. Va. Shipbuilding & Dry Dock Co. , 1959)). Moreover, the United States Court of Appeals for the Fourth Circuit has determined that Virginia law applies to a diversity tort action brought in a Virginia federal court regarding whether the exclusivity provision of the VWCA bars the claim. See Garcia, 466-68. In Garcia, as in the instant case, North Carolina residents, that was 84 5 F.2d at the plaintiffs were working for a North Carolina company performing work in Virginia for a Virginia entity. Id. at 466-68. The plaintiffs were injured in an accident that occurred in Virginia. Id. The Fourth Circuit held that the VWCA applied and that it provided the exclusive remedy for the plaintiffs under Virginia law. bears the provision burden does of not proving preclude Id. at 468. Thus, that the VWCA's this court's the plaintiff exclusivity subject matter jurisdiction.3 See Jadhav, 555 F.3d at 347-48 (citing Adams, 697 F.2d at 1219). B. The VWCA's Exclusivity Provision The VWCA bars actions against both an employee's "direct" employer and his or her "statutory employer," an injured employee's exclusive remedy providing that lies under the VWCA. The exclusivity provision of the VWCA provides as follows: The rights and remedies herein granted to an employee when his employer and he have accepted the provisions of this title respectively to pay and accept compensation on account of injury or death by accident shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents or next of kin, at common law or otherwise, on account of such injury, loss of service or death. Va. Code § 65.2-307(A) (emphasis added). 3 The Plaintiff cites Richardson v. L'Eggs Brands Inc., Div. of Sara Lee Corp., No. 95-2020, slip op. (4th Cir. June 20, 1996) , for the proposition that Virginia law would defer to North Carolina's workers' compensation laws in these circumstances. Pi.'s Reply and Opp'n to Def.'s Mot. Dismiss 16-17. ECF No. 13. In relying on this case, the Plaintiff ignores Fourth Circuit Local Rule 32.1, which provides that citation of Fourth Circuit unpublished opinions issued prior to January 1, 2007 "is disfavored," unless the party believes that the opinion "has precedential value in relation to a material issue in a case and that there is no published opinion that would serve as well." Here, however, Garcia provides a published opinion that expressly rejects the Richardson court's interpretation of the key case on which it relies to assert that Virginia law would defer to North Carolina law, Solomon v. Call, 159 Va. 625 (1932). See Garcia, 845 F.2d at 466-67 (discussing the Solomon case). First, Ashland, the Plaintiff argues that he and his did not accept the VWCA because Ashland compensated the Plaintiff under the North Carolina Workers' Act, not the VWCA. Dismiss 9-10. Defendant Carolina See PL's ECF made no No. 13. He financial workers' Def.'s Mot. 2. also emphasizes contribution compensation Dismiss ECF No. to insurance Pi.'s Supp. under received workers' North Carolina's that Ashland's policy, the North under which Reply and Opp'n to 26. The Plaintiff's argument is unavailing. he Compensation Reply and Opp'n to Def. 's Mot. the Plaintiff was compensated. that employer, It is compensation benefits workers' compensation irrelevant from Ashland laws. The VWCA provides that "[e]very employer and employee, except as herein stated, shall provisions of the VWCA be conclusively presumed this title." extends workers' Va. Code to have accepted § 65.2-300(A). compensation coverage state residents injured while working in Virginia. 845 F.2d received at 466-68. compensation compensation laws, the VWCA Indeed, to the Carolina's workers' even under though North the the Moreover, to out-of- See Garcia, Plaintiff Carolina's has workers' he may be eligible for compensation under extent that his recovery under North compensation laws has not compensated him to the same extent that the VWCA would have done. See Va. Code § 65.2-508(B). However, coverage under the VWCA constitutes an out-of-state resident's only remedy for injuries that occur in Virginia McCann, and 177 F. resident under that Supp. injured the are by at 913-14 in VWCA and caused was (explaining regarding the that eligible the VWCA against his statutory employer); 467 McCann applicability statutory employer. See (explaining that a New Jersey Virginia that a thus for barred his see also Garcia, states of compensation the the law VWCA tort 845 F.2d at of to claim Virginia out-of-state residents injured in Virginia). In Garcia, workers' as here, compensation Compensation Act. the out-of-state plaintiffs received under the North the claims. 1, the 4-5 VWCA's workmen's claim exclusivity for determines provision 1973) barred compensation benefits whether 177 Supp. at 913 F. their tort 353 F. Supp. ("[I]t is eligibility for benefits under was a bar laws Supp. 909 of actually to a (citing Home Indem. v. Poladian, McCann, the Fourth Circuit held Id. at 466-68; see also Wilson v. Fraser, (D. Md. Workers' 845 F.2d at 466. Because they were injured in Virginia by statutory co-employees, that Carolina (E.D. Virginia, made common or law not whether received, action 1959)); which exists.") 270 F.2d 156 (4th Cir. Va. a McCann, 1959); 177 F. (explaining that "Virginia intended to grant such 8 remedies upon, to, and impose such such non-residents to restrictions the same and extent limitations as though they were residents and employed by a Virginia employer."). because the Plaintiff's injury occurred in Virginia Thus, and was caused by a statutory co-employee, compensation under the VWCA is his only remedy under Virginia law, barred here. See infra at The Plaintiff and his tort suit is 10-16. further argues that Garcia does not apply to his case because Garcia considered the pre-1991 version of the VWCA's exclusivity provision. See PL's Reply and Opp'n to Def.'s Mot. Dismiss Opp'n to Def.'s 13-14. Mot. ECF No. Dismiss 13; 6-7. PL's Supp. ECF No. 26. Reply and However, the pre-1991 version of the VWCA's exclusivity provision on which Garcia is based is materially the same as the current version quoted above. Former Va. Code § 65.1-40 (recodified as Va. Code § 65.2-307(A)) provided as follows: The rights and remedies herein granted to an employee when he and his employer have accepted the provisions of this Act respectively to pay and accept compensation on account of personal injury or death by accident shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents or next of kin, at common law or otherwise, on account of such injury, loss of service, or death. Former 307(A)) Va. Code (emphasis § 65.1-4 0 added). (recodified The only as Va. differences Code in § 65.2- language between the pre-1991 version of the VWCA's exclusivity provision and the current version have been underlined in the quote above. The provisions are substantially the same; thus, the Plaintiff's argument on this point is without merit. Finally, the VWCA's provision exclusivity extends to "statutory employers," defined in relevant part as follows: When any "owner") person (referred undertakes to in this to perform or section execute as any work which is a part of his trade, business or occupation and contracts with any other person this section as "subcontractor") (referred to in for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him. When any person "contractor") (referred contracts to to in this perform or section execute as any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referred to in this section as "subcontractor") for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if that worker had been immediately employed by him. Va. Code. The defining § 65.2-302(A), purpose of "statutory (B). Va. Code employer," § 65.2-302, is "to the bring provision within the operation" of the VWCA "all persons engaged in work that is a 10 part of the trade, business, or occupation of the party who undertakes as owner or who contracts as contractor to perform the work," and to "make liable to every employee engaged in the work every such owner contractor, such employee." Inc. , 262 Va. 302, 305 Pfeifer 262, (1986)). 266 v. Krauss (2001) or subcontractor above Const. Co. of Virginia, (quoting Smith v. Horn, 232 Va. The VWCA thus bars all actions by statutory employees against their statutory employers and statutory coemployees. See Nichols v. WKR, ("Contractors, in the subcontractors, trade, project are business, deemed to or be Inc., 241 Va. 516, 519 (1991) and all workers who are engaged occupation statutory of the fellow owner employees. of a The remedy for any injury suffered by one of them as a result of the alleged negligence of another, while engaged in the trade, business, or occupation of the owner, is limited available under the Workers' Compensation Act.") v. Hook, 239 Va. 127 (1990); Lucas v. Biller, 204 Va. 309 Smith v. (1963); Horn, Va. to that (citing Evans 232 Va. at 307-09; Code §§ 65.1-29, -31, -40) .4 4 In contrast to Virginia law, North Carolina law seems to permit an employee injured by a third-party subcontractor to bring a tort action against the third-party subcontractor, despite having received workers' compensation benefits from the employer, as the third-party subcontractor is not deemed to be a "statutory employer" of the plaintiff. See Braxton v. 11 An injured employee has a common law action against a third-party tortfeasor for an injury sustained while working for his employer, "stranger to that the Va. the of the plaintiff's v. Howell, third-party 282 Va. Dean Steel Erection Co., Slusher v. (W.D. if work" the White Crane Serv. Whalen v. only Paramount 1971)). Warrior, "The 323, 336 'stranger to the employer. is a David 327 (2011) (citing 164, 229 Va. Inc., tortfeaser 167-68 (1985); F. Supp. work' 1381, test 1383 requires 'the facts of each case be analyzed to determine whether defendant plaintiff's in a injury, plaintiff was a stranger engaged.'" Atl. , Inc. , 284 Va. 169). common-law action was, 55, to the at the time of work in which the the Napper v. ABM Janitorial Servs.-Mid 62 (2012) (quoting Whalen, 229 Va. at If the defendant was not a "stranger" to the plaintiff's work or that of the plaintiff's employer, then the VWCA bars the plaintiff's tort action against the defendant. Whalen, 229 Va. Va. at 167-69; 406, 418 (2000); 421, 428 see also Stone Fowler v. v. Door-Man Mfg. Int'1 Cleaning Serv., Co., 260 (2000). The Virginia Supreme Court applies the work" test to cases like the Anco Elec., Inc., 330 N.C. Barnhill, 267 N.C. 457, 464-67 instant 124, 125-29 (1966). 12 Inc., 260 Va. "stranger to case, in (1991) ; the which Lewis a v. subcontractor's employee has caused injury to an employee of the general contractor. Stone, Va. at 169. The Virginia 260 Va. at 418-19; Whalen, Supreme Court has stated 229 the "stranger to the work" test as follows: The test is not whether [a company] , by engaging an independent contractor to perform some part of his business, thereby engages in the business of the independent contractor. It is whether the independent contractor is performing work that is part of the trade, business or occupation of the [company] . If he is, and in doing the work injures an employee of the [company] , then the independent contractor, in the same fashion as any other employee of the [company] , is not a third party against whom the injured employee's right of action is preserved; but the employee so injured is limited to the compensation provided by the Work[ers'] Compensation law .... Napper, 284 Va. at 63-64 269, 274 (1962)) in case this Defendant trade, whether, when "'performing work Floyd, Chalkley, (emphasis added). Thus, is business (quoting In was (quoting Floyd v. Mitchell, 185 Va. applying or the that occupation.'" 203 Va. 96, this 102 at 274 203 Va. the dispositive issue accident is part Napper, occurred, of 284 the [Ashland's] Va. at (emphasis added); Feitig Virginia Supreme Court 64 v. (1946)). test, the has held that mere suppliers are strangers to the work of general construction contractors. 98, 99-100 (1969). Burroughs v. In Burroughs, 13 the Walmont, Inc., 210 Va. Virginia Supreme Court permitted general the employee construction of a sheetrock contractor supplier where the to sue supplier the solely functioned as a deliverer of supplies and did not perform any construction work. Id. The court explained that merely supplying materials was not part of the general contractor's "trade, business or occupation." Id. By comparison, the Supreme Court of Virginia has found that a subcontractor spreading sand at a construction site was engaged in the occupation." In Bosher, sand as general Bosher v. an contractor's Jamerson, "trade, 207 Va. employee of a material 539, business 540-43 supplier was or (1966). spreading contractually required and as directed on the job by the general contractor, when his truck struck and injured the general employee. contractor's Id. at 540-41. Because spreading the sand was a part of the construction process, court held it was business "trade, that part or occupation" remedy provision of the VWCA, at the 541-43; see also Pfeifer, defendant's lines rendered building and work the of of and general applied contractor's the exclusive dismissing the tort claim. 262 Va. digging defendant developing the at trenches no 14 and stranger condominiums, plaintiff's suit under the VWCA). 267-69 to thus the Id. (holding that installing gas the work barring of the Applying the "stranger to the work" test in the instant case, the Defendant was engaged in the "trade, occupation or business" of the Plaintiff's employer, Ashland, at the time of the accident. The instant case is analogous to Bosher. Ashland was in the process of constructing a CVS pharmacy, company hired the Defendant to prepare the property the and for construction. Am. Compl. 11 10-13. As in Bosher, the Defendant here was no mere supplier, was only Rather, tangential the construction Ashland's to Ashland's Defendant site, and was not performing work that was grading fundamental construction construction work project. When that the the CVS. preparing and of the was central accident to occurred, the Defendant's employee operating the bulldozer was "engaged in grading and leveling a portion of the construction site." Am. Compl. 1 11. If a subcontractor spreading sand at the construction site constitutes work that is part of the general contractor's trade, business, Defendant's construction Bosher, Va. 207 at or occupation, site 541-43. preparation Moreover, Plaintiff was assigned by Ashland, supervise the construction of then for similar so is Ashland. See Bosher, the to the general contractor, the new the CVS pharmacy to on Ashland's behalf. See Am. Compl. 1 10. Thus, the Defendant was no stranger to Ashland's work. 15 Accordingly, the Plaintiff's sole remedy for his injury is under the VWCA, and his tort suit against the Defendant is barred.5 IV. For the to Dismiss reasons set is GRANTED, subject matter Eastern District CONCLUSION forth above, and the case jurisdiction forward a copy of of in Virginia.6 the Defendant's is DISMISSED this The federal Clerk Motion for lack of court in the is DIRECTED to this Opinion and Order to counsel for the parties. 5 Additionally, the Plaintiff argues that the Defendant has waived its "qualified immunity" under the VWCA because of indemnification provisions in the Defendant's contract with Ashland. PL's Supp. Reply and Opp'n to Def.'s Mot. Dismiss 27. ECF No. 26. Significantly, while the North Carolina indemnification provision requires the Defendant to indemnify both Ashland and its employees, the Virginia indemnification provision only requires the Defendant and not Ashland's employees. to Def.'s Mot. Dismiss 2-3. to indemnify Ashland, See PL's Supp. ECF No. 26. Reply and Opp'n Moreover, the case on which the Plaintiff relies to support his indemnification argument held that the exclusivity provision of the VWCA did not invalidate an express indemnification agreement between the plaintiff's employer and the tortfeasor, where the plaintiff's employer filed a suit seeking indemnification; the case did not involve suit by the injured employee against the tortfeasor. See Safeway, Inc. v. DPI Midatlantic, Inc., 270 Va. 285, 290 (2005) . Notably, like the Virginia indemnification provision in the instant case, the indemnification provision in Safeway required the defendant to indemnify only the plaintiff's employer, and not the plaintiff himself. See Safeway, 270 Va. at 287-88. G See supra notes 1 and 4 and accompanying text. 16 IT IS SO ORDERED JsL Rebecca Beach Smith TT . Chief United States District Judge.gg>L. REBECCA BEACH SMITH CHIEF UNITED STATES DISTRICT JUDGE Norfolk, Virginia January £^$ , 2014 17

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