Opinion
No. A03-84.
Filed: September 23, 2003.
Appeal from Wabasha County District Court, File No. C899365.
Mark S. Ullery, Gislason Hunter, LLP, (for respondent Ag Partners Coop)
Joseph D. Boles, Rodli, Beskar, Boles Krueger, S.C., (for respondent Randy Pommerening)
Edward Q. Cassidy, Karen M. Charlson, Felhaber, Larson, Fenlon Vogt, P.A., (for appellant)
Patrick J. Sauter, Paula D. Vraa, Paul B. Kohls, Rider, Bennett, Egan Arundel, LLP, (for respondent Max Winders)
Considered and decided by Wright, Presiding Judge, Schumacher, Judge, and Peterson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
In this appeal from a summary judgment requiring appellant Land O'Lakes, Inc., to reimburse respondent Max Winders for attorney fees and costs incurred in defending against a claim asserted by respondent Ag Partners Coop, Land O'Lakes argues that it does not have a duty to defend and indemnify Winders under Minn. Stat. § 181.970 (2002) because (1) Winders was a loaned servant to Ag Partners; (2) Ag Partners' claim was for damages that occurred after Winders's employment with Land O'Lakes ended; and (3) Minn. Stat. § 181.970 became effective after Winders's employment with Land O'Lakes began. We affirm.
FACTS
Winders began working for Land O'Lakes as a Livestock Production Specialist in September 1990. As a Livestock Production Specialist, Winders provided sales and nutrition services to local agricultural cooperatives. In 1992, Winders began working with Ag Partners and its customers, which included respondent Randy Pommerening. Winders met with Pommerening and helped formulate feed for his dairy herd.
Land O'Lakes paid Winders's salary and provided him with health, disability, and life insurance benefits, and Ag Partners reimbursed Land O'Lakes for 100% of the cost of Winders's salary and benefits. Land O'Lakes also periodically reviewed Winders's job performance and had the power to fire him.
On January 2, 1994, Winders voluntarily terminated his employment with Land O'Lakes to begin working for a different company. From January 2, 1994, through the end of 1995 or 1996, Winders continued working with Ag Partners and Pommerening. Ag Partners paid Winders $50 to $100 per month for continuing his services to Pommerening.
This lawsuit began as a collection action when Ag Partners sued Pommerening to obtain payment for an outstanding feed bill. Pommerening brought a counterclaim against Ag Partners, alleging that the services provided in conjunction with the feed were negligently performed. Consequently, Ag Partners filed a third-party complaint against Land O'Lakes and Winders seeking contribution and indemnity. Winders brought a cross-claim against Land O'Lakes, seeking reimbursement for attorney fees and costs incurred in defending himself against Ag Partners, and Land O'Lakes brought a cross-claim seeking contribution and indemnity from Winders.
Land O'Lakes, Ag Partners, and Pommerening settled their claims against each other. Winders and Land O'Lakes each moved for summary judgment on the cross-claim against the other. The district court granted Winders's motion and denied Land O'Lakes' motion. After the parties dismissed their remaining claims, the case was finally resolved by a judgment of dismissal, and Land O'Lakes appealed the district court's grant of summary judgment.
There was no motion with respect to Ag Partners' third-party claim against Winders, but Ag Partners later dismissed its claims against Winders.
DECISION
On appeal from summary judgment, this court must ask two questions: (1) whether there are any genuine issues of material fact in dispute; and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). This court views the facts in the light most favorable to the party against whom judgment was granted and accepts as true the facts presented by that party. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). When the district court grants summary judgment based on the application of a statute to undisputed facts, the result is a legal conclusion, reviewed de novo by the appellate court. Lefto v. Hoggsbreath Enters., 581 N.W.2d 855, 856 (Minn. 1998).
Minn. Stat. § 181.970, subd. 1 (2002), provides:
An employer shall defend and indemnify its employee for civil damages, penalties, or fines claimed or levied against the employee, provided that the employee:
(1) was acting in the performance of the duties of the employee's position;
(2) was not guilty of intentional misconduct, willful neglect of the duties of the employee's position, or bad faith; and
(3) has not been indemnified by another person for the same damages, penalties, or fines.
Minn. Stat. § 181.970, subd. 2 (2002), provides exceptions from subd. 1, but none of these exceptions applies in this case. Also, there is no claim that Winders is guilty of intentional misconduct, willful neglect of his duties, or bad faith or that he has been indemnified by another person.
The district court concluded that under Minn. Stat. § 181.970, subd. 1, Land O'Lakes had a duty to defend Winders against Ag Partners' claim and ordered Land O'Lakes to reimburse Winders for the attorney fees and costs that he incurred in defending this lawsuit.
1. Land O'Lakes argues that because the district court misunderstood and failed to recognize the critical effect of the loaned-servant doctrine as it relates to the application of Minn. Stat. § 181.970, subd. 1, the court incorrectly applied the statute. Land O'Lakes contends that in order to apply Minn. Stat. § 181.970, subd. 1, where one employer is using another employer's employee, the court must first determine who is the employer under the loaned-servant doctrine.
Citing Restatement (Second) of Agency § 227 (1958), the Minnesota Supreme Court explained in Danek v. Meldrum Mfg. Eng'g Co., 312 Minn. 404, 407, 252 N.W.2d 255, 258 (1977), that "[t]he loaned-servant doctrine provides that if an employer loans an employee to another for the performance of some special service, then that employee, with respect to that special service, may become the employee of the party to whom his services have been loaned."
One of the consequences of becoming an employee of the borrowing employer can be that the borrowing employer is vicariously liable for the negligent acts of the loaned employee. In Teska v. Potlatch Corp., 184 F. Supp.2d 913, 926 (D.Minn. 2002) (quotation omitted), the court explained:
In an employer-employee relationship, an employer can be held vicariously liable for the negligent acts of its employee, as long as those acts are within the course and scope of the employee's employment. . . . In a case such as this, however, where one employer . . . is using another employer's employee, the Loaned Servant Doctrine works to shift liability for that employee's negligent acts from the regular or general employer . . . to the borrowing or special employer. . . .
The loaned-servant doctrine operates as a defense to a claim of liability. See Pfeifer v. Truck Crane Serv. Co., 308 Minn. 279, 281, 242 N.W.2d 587, 588 (1976) (loaned-servant rule operates as absolute defense to bar liability). But the loaned-servant doctrine does not sever the employment relationship between the loaned servant and the general employer.
In the absence of evidence to the contrary, there is an inference that the actor remains in his general employment so long as, by the service rendered another, he is performing the business entrusted to him by the general employer. There is no inference that because the general employer has permitted a division of control, he has surrendered it.
Restatement (Second) of Agency § 227 cmt. b (1958); see also Nepstad v. Lambert, 235 Minn. 1, 13, 50 N.W.2d 614, 620 (1951) (stating "[t]he control possessed by the general employer may be more remote than that of the special employer, but nevertheless it has real force behind it"). There is no evidence that by performing services for Ag Partners, Winders was not performing the business entrusted to him by Land O'Lakes.
Minn. Stat. § 181.970, subd. 1, imposes a statutory duty on an employer to defend its employee. Under the plain language of the statute, the duty is imposed on an employer, not on the employer who is liable for the employee's negligent acts. See Minn. Stat. § 645.08(1) (2002) (in construing statutes, words and phrases are construed according to their common and approved usage).
By enacting Minn. Stat. § 181.970, subd. 1, the legislature changed the common-law relationship between an employer and an employee as described in Pfeifer in 1976 when there was no law "that obligates an employer to defend his employee, absent an express agreement to do so." 308 Minn. at 280, 242 N.W.2d at 588.
The rules of construction forbid adding words or meaning to a statute that were intentionally or inadvertently left out. When a question of statutory construction involves a failure of expression rather than an ambiguity of expression, "courts are not free to substitute amendment for construction and thereby supply the omissions of the legislature."
Genin v. 1996 Mercury Marquis, 622 N.W.2d 114, 117 (Minn. 2001) (citation omitted) (quoting State v. Moseng, 254 Minn. 263, 269, 95 N.W.2d 6, 11-12 (1959)). Because Minn. Stat. § 181.970, subd. 1, refers only to employers, and courts may not add words or meaning to a statute that were intentionally or inadvertently left out, we conclude that the district court did not err when it applied Minn. Stat. § 181.970, subd. 1, without first determining who is the employer under the loaned-servant doctrine.
2. Land O'Lakes argues that because Pommerening's claims concern Winders's actions after January 1994 when Winders was no longer working for Land O'Lakes and the alleged damage to Pommerening's dairy herd occurred after January 1994, Land O'Lakes has no obligation under Minn. Stat. § 181.970 to defend Winders. But the claims asserted in Pommerening's counterclaim are not limited to Winders' actions after January 1994. Pommerening alleged:
1. As part of [Pommerening's] purchase of goods and services from [Ag Partners], [Ag Partners] was hired to provide services related to feeding [Pommerening's] cattle.
2. [Ag Partners] or [Ag Partners'] agents were negligent in performing its duty to provide said services.
Ag Partners, in turn, alleged in its third-party complaint against Winders:
7. [Ag Partners] has denied and continues to deny that Max Winders was negligent in providing nutritionist services to [Pommerening], or that any such negligence was a cause of any damages to [Pommerening].
8. In the event that [Ag Partners] is found to be liable to [Pommerening] arising from any provision of nutritionist services by Max Winders before or after March, 1994, Third-Party Defendant Max Winders is liable to [Ag Partners] in indemnity or contribution or both for all such damages.
(Emphasis added.)
Minn. Stat. § 181.970, subd. 1, requires an employer to defend "its employee for civil damages, penalties, or fines claimed or levied against the employee." (Emphasis added.) Ag Partners explicitly claimed indemnity or contribution from Winders based on any nutritionist services that Winders provided to Pommerening before March 1994. Although there was evidence produced that indicated that the problems with Pommerening's dairy herd began after Winders was no longer a Land O'Lakes employee, the claim against Winders included the period when Winders was a Land O'Lakes employee. Therefore, the claim was a claim against a Land O'Lakes employee.
3. Land O'Lakes contends that if the damage to Pommerening's cattle occurred over the entire period of time that Winders was associated with Pommerening, the damage began before Minn. Stat. § 181.970 became effective, and, therefore, common law, rather than the statute, governs Land O'Lakes' obligation to defend Winders. But Land O'Lakes did not provide any argument or cite any authority to support this contention. "An assignment of error based on mere assertion and not supported by any argument or authorities in appellant's brief is waived and will not be considered on appeal unless prejudicial error is obvious on mere inspection." Schoepke v. Alexander Smith Sons Carpet Co., 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (1971). Therefore, we will not consider Land O'Lakes' claim that common law continues to apply after a statute that modifies the common law becomes effective.
Section 181.970 became effective August 1, 1993, and applies to claims or causes of action arising on or after that date. 1993 Minn. Laws ch. 216, § 2.