Hudson v. Jarrett

Present: All the Justices

JAMES HUDSON

v. Record No. 040433 OPINION BY JUSTICE ELIZABETH B. LACY
January 14, 2005
OTHA JARRETT, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF PORTSMOUTH
Dean W. Sword, Jr., Judge

James Hudson, Jr. filed a tort action against Otha

Jarrett for injuries Hudson received while he was unloading

cargo from a barge docked at a terminal operated by Virginia

International Terminals, Inc. (VIT). At the time of the

accident Jarrett was unloading cargo from another vessel. The

trial court dismissed Hudson's motion for judgment holding

that VIT was the statutory employer of both Hudson and Jarrett

and therefore the exclusivity provision of the Virginia

Workers' Compensation Act, Code § 65.2-307, barred Hudson's

tort action. Because VIT was not a party to any contract that

required Hudson or his employer to load or unload the barge,

VIT cannot be Hudson's statutory employer and we will reverse

the judgment of the trial court and remand the case for

further proceedings.

FACTS

On July 5, 2001, Hudson was engaged in the loading and

unloading of cargo from a barge owned by Columbia Coastal

Transport LLC (Columbia). Hudson was an employee of Universal
Maritime Services Corporation (Universal), a stevedoring

company. The work was being performed pursuant to a contract

between Universal and Columbia. At the same time, Otha

Jarrett was unloading a cargo container from another vessel,

the M/V Ingrid Oldendorf, pursuant to a contract between

Jarrett's employer, Cooper/T. Smith Stevedoring Company, Inc.

(Cooper) and the owner of the vessel. Hudson was injured when

the vehicle he was driving collided with a similar vehicle

driven by Jarrett.

The accident occurred at Norfolk International Terminal,

a terminal managed and operated by Virginia International

Terminals, Inc. pursuant to a contract with the terminal's

owner, Virginia Port Authority (VPA). Hudson collected

workers' compensation benefits from his employer under the

Longshore and Harbor Workers' Compensation Act, 33 U.S.C.

§§ 901–950 (2000) (the Longshore Act). He subsequently filed

a motion for judgment against Jarrett and his employer,

Cooper, alleging that Jarrett's negligence was the proximate

cause of the injuries Hudson sustained.

Prior to trial, Universal and its workers' compensation

insurance carrier, Signal Mutual Indemnity Association, Ltd.

(Signal), filed a motion to intervene, which the trial court

granted over Hudson's objections. Cooper and Jarrett filed a

plea in bar asserting that Hudson's tort action was barred by

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the exclusivity provision of the Virginia Workers'

Compensation Act, Code § 65.2-307, because under Code § 65.2-

302, VIT was the statutory employer of both Hudson and Jarrett

and, therefore, the two workers were "fellow employees." The

trial court agreed with Cooper and Jarrett, finding that

"Cooper and Universal perform work pursuant to an agreement

with VIT that is a part of the trade, business or occupation

of VIT." Hudson's motion for judgment was dismissed with

prejudice. We awarded Hudson an appeal.

I.

An employee subject to the provisions of the Workers'

Compensation Act cannot file an independent tort action

against his employer or any fellow employee for injuries

received in the course of employment. Code § 65.2-307;

Pfeifer v. Krauss Const. Co., 262 Va. 262, 266, 546 S.E.2d

717, 719 (2001). Under certain circumstances, Code § 65.2-302

extends this immunity from tort liability arising from

workplace accidents to qualifying employers, even though no

direct common law contract of employment exists between such

employers and employees. An employer qualifies for this

immunity if the employer, acting as a general contractor,

contracts with another to perform all or part of the

employer's trade, business or occupation. Under these

circumstances, the employer is deemed the statutory employer

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of the employees of such other subcontractor and the remedies

under the Act are the statutory employees' exclusive remedy

against the statutory employer. See id.; Evans v. Hook, 239

Va. 127, 131, 387 S.E.2d 777, 779 (1990); Smith v. Horn, 232

Va. 302, 306, 351 S.E.2d 14, 16 (1986). Similarly, employees

of different subcontractors who are working on the same

project and are also engaged in the general contractor's

trade, business, or occupation are considered statutory fellow

employees and are entitled to protection from an independent

tort action for injuries allegedly caused by either of them.

Pfeiffer, 262 Va. at 266-67, 546 S.E.2d at 719; Evans, 239 Va.

at 131, 387 S.E.2d at 779.

Applying these principles to this case, if at the time of

Hudson's injury, Hudson and Jarrett were working on the same

project and were also engaged in the trade, business, or

occupation of VIT, Hudson and Jarrett would be statutory

fellow employees and Hudson's third party tort action against

Jarrett and Cooper could not proceed. Whether a person is a

statutory employer presents a mixed question of law and fact

and must be decided on the facts and circumstances of each

case. See Bosley v. Shepherd, 262 Va. 641, 648, 554 S.E.2d

77, 81 (2001); Fowler v. International Cleaning Serv., 260 Va.

421, 425, 537 S.E.2d 312, 314 (2000).

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 At the time of the accident, Hudson was working on

loading and unloading cargo from Columbia's barge. The

decision to load or unload cargo at the terminal was the

decision of Columbia, the vessel owner.1 Columbia contracted

with Universal to perform the stevedoring services necessary

to implement this transfer of cargo. VIT was not a party to

the contract between Universal and the barge owner for the

transfer of the cargo. Furthermore, there is no contract in

this record between VIT and Columbia involving the loading or

unloading of this specific barge and cargo. In the absence of

such a contract between Columbia and VIT, to qualify as

Hudson's statutory employer, VIT had to have subcontracted

with Universal for the loading and unloading of Columbia's

barge.

The trial court concluded that Universal was VIT's

subcontractor because Universal was engaged in the execution

or performance of the trade or business of VIT. The trial

court found that a "principal function (trade or business) of

VIT is to move cargo from shore to ship or ship to shore."

The trial court found that Universal performed this function

1
Not all vessels berthed at the terminal discharged or
took on cargo. See Virginia International Terminals, Inc.,
Schedule of Rates No. 1, Section 200 (current version
available at http://www.vit.org/downloads.doc/tarrif.doc)
(hereinafter, "Schedule of Rates").

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for VIT as a subcontractor, or in other words, pursuant to

agreements with VIT.

The contracts identified by the trial court that required

Universal and Cooper to move cargo from ship to shore or shore

to ship, were (1) "arrangements" with Universal and Cooper

governed by VIT's Schedule of Rates; (2) VIT license

agreements with both Cooper and Universal "to provide labor at

NIT pursuant to the Schedule of Rate2;" and (3) contracts

between VIT and the stevedoring companies "to provide labor

pursuant to agreements" with the International Longshoremen's

Association (ILA). The trial court also relied on the fact

that VIT directly employed ILA members to perform work similar

to that done by the stevedoring companies and that the loading

and unloading of vessels "generally" involves persons employed

by VIT and a stevedoring company, including the operation of

cranes by VIT personnel. None of these contracts or

agreements, or Schedule of Rates, however, required Universal

to load or unload cargo for Columbia's barge or any other

vessel.

The Schedule of Rates prescribes certain conditions that

must be met by those doing business at any VIT facility. By

using the facility, Cooper and Universal agreed to those

conditions. However, the Schedule of Rates is not a contract

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to perform the actual loading and unloading of any particular

vessel. The contracts to perform those services are the

contracts between the ship owners and the stevedore companies.

According to this record, the license agreements between

VIT, Cooper, and Universal cited by the trial court are

agreements negotiated between VIT and the stevedore companies

for the use of designated space in the facility for such

things as gear and equipment storage and compliance with

environmental regulations and regulations promulgated by VIT

and VPA. These agreements are negotiated between VIT and each

stevedore company "for a rate agreed to by the parties." Thus

stevedore companies pay VIT for the right to operate using VIT

piers and wharves. These licensing agreements do not require

Universal or Cooper to move cargo from ship to shore or shore

to ship for VIT.

Finally, although this record delineating the collective

bargaining agreement with the ILA is very slight, VIT and the

stevedore companies are parties to such a contract. The

contract appears to require that VIT and the stevedores use

ILA members when they are operating at the terminal. This

agreement, like the Schedule of Rates and license agreements,

provides general conditions of operation when the stevedore

2
See footnote 1.

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companies operate; they do not require the stevedores to

actually load and unload any cargo.

In the absence of any contractual relationship between

VIT and Columbia for the loading and unloading of Columbia's

barge, or between VIT and Universal under which Universal

agreed to load or unload cargo from the barge or from any

vessel, VIT cannot qualify as Hudson's statutory employer.

Accordingly, Hudson and Jarrett are not statutory fellow

employees and the exclusivity provision of the Workers'

Compensation Act does not bar Hudson's tort action against

Jarrett and Jarrett's employer, Cooper.

II.

Because our conclusion requires that the case be remanded

for further proceedings, we must address Hudson's second

assignment of error in which he claims that the trial court

erred in granting Signal's and Universal's motion to

intervene.

Universal and Signal filed a motion to intervene pursuant

to Rule 3:19. Rule 3:19 provides: "A new party may by leave

of court file a pleading to intervene as a plaintiff or

defendant to assert any claim or defense germane to the

subject matter of the proceeding." Prior to 2000, there was

no rule regarding intervention in a law action, but, on the

chancery side, a court could allow a "new party" to file a

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petition asserting "any claim or defense germane to the

subject matter" of the litigation. Former Rule 2:15. In

2000, identical rules were adopted for intervention in both

law and chancery proceedings. Significantly, the new rules

required that an intervenor intervene specifically as a

plaintiff or as a defendant. This addition reinforced the

interpretation of former Rule 2:15 that an intervenor must be

asserting an interest that is part of the subject matter of

the litigation.

Even though leave to amend should be granted
liberally by the trial court in furtherance of the
ends of justice, Rule 1:8, a new party may not
intervene and assert a claim in a pending suit
unless the claim is 'germane to the subject matter
of the suit.' Rule 2:15. In order for a stranger
to become a party by intervention, he must 'assert
some right involved in the suit.' Lile's Equity
Pleading and Practice at 91 (3rd ed. 1952).

Layton v. Seawall Enterprises, Inc., 231 Va. 402, 406, 344

S.E.2d 896, 899 (1986).

The claim of the intervenors in this case is limited to

the protection of their right to reimbursement from the

employee's third-party recovery for the amounts paid in

compensation benefits. 33 U.S.C. § 933(f)(2000); Bloomer v.

Liberty Mutual Ins. Co., 445 U.S. 74, 79-88(1980); Peters v.

North River Ins. Co., 764 F.2d 306, 313 (5th Cir. 1985);

Nacirema Operating Co. v. Oosting, 456 F.2d 956, 958 n.3 (4th

Cir. 1972); The Etna, 138 F.2d 37, 40 (3rd Cir. 1943). In

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other words, Signal and Universal have a lien on any proceeds

Hudson may recover in his action against Jarrett and Cooper,

but Signal and Universal do not have a cause of action against

Jarrett and Cooper based on Hudson's injuries. 33 U.S.C.

§ 933(b) (2000); Peters, 764 F.2d at 317.

Under federal law, the intervenors' lien attached

automatically to amounts Hudson might recover by judgment or

settlement as a result of his action against Jarrett and

Cooper. The intervenors can recover without independently

proving Jarrett's liability to Hudson. Id. at 320. No issue

to be resolved in Hudson's action is affected by the

intervenors' lien claim, and no issue resolved in the action

will affect the lien claim.

In their motion to intervene and motion for judgment in

this case, Signal and Universal did not raise a claim against

Hudson, Jarrett, or Cooper. The only relief sought was entry

of a judgment against any proceeds awarded to Hudson for the

amount of the workers' compensation paid Hudson. Furthermore,

on brief and at oral argument, the intervenors stated that

they "do not want to participate in the trial." They seek

only to "follow" the trial and "be assured" their lien is

protected.

While intervention under Rule 3:19 is within the

discretion of the trial court, the intervention must meet the

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requirements of the Rule.3 The allegations of the intervenors

here fall far short of showing any claim that they could

assert as a plaintiff or defendant that is germane to the

issues in the tort case.

We also reject the intervenors' suggestion that because

the General Assembly has provided a specific mechanism for the

courts to protect the compensation liens of employers and

workers' compensation insurance carriers who have paid

benefits under the Virginia Workers' Compensation Act, Code

§ 65.2-309 and -310, it is "reasonable to assume" that the

General Assembly "envisioned liens under the Longshore Act as

being 'claims' under Rule 3:19." Rule 3:19 is a specific Rule

enacted by this Court to govern the orderliness of

proceedings. As discussed, the Rule's history includes a

strong adherence to limiting intervention to those parties who

are legitimately plaintiffs or defendants in litigation

because the nature of their claim includes some right that is

involved in the litigation. The claims of the intervenors

3
Some federal courts have allowed intervention to protect
the compensation lien under Federal Rules of Civil Procedure
24 and some have denied such intervention. See Lewis v.
United States, 812 F. Supp. 629, 631 (E.D.Va. 1993)(allowing
intervention under Fed.R.Civ.P. 24(a)(2); The Etna, 138 F.2d
at 41 (allowing intervention under Admiralty Rule 34). Cf.
Harris v. Westfal-Larsen & Co., 1964 A.M.C. 21 (N.D. Cal.
1963) (disallowing intervention against third party while
recognizing an insurer's right to intervene against
longshoreman).

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here fail to meet these conditions, and the trial court erred

in granting the motions of Signal and Universal to intervene

under Rule 3:19.

III.

In conclusion, for the stated reasons, we hold that the

trial court erred in finding that the exclusivity provision of

the Virginia Workers' Compensation Act barred Hudson's action

against Cooper and Jarrett and in granting the motion of

Signal and Universal to intervene under Rule 3:19.

Accordingly, the judgment of the trial court is reversed and

the case remanded for further proceedings consistent with this

opinion.

Reversed and remanded.

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