Statutory Employee Is an Employee
December 9, 2013
This is an appeal from the United States District Court for the Southern District of Florida. The case is Amerisure Ins. Co. v. Orange and Blue Construction, Inc., 2013 WL 5881662.
Epoch was hired as the general contractor on a project and entered into a subcontract for part of the work with Orange & Blue Construction. Orange & Blue then subcontracted most of its work to CL & B Contracting, which further subcontracted its work to Sandi Construction.
Tejeda, who was working for Sandi as a laborer, fell at the construction site and died. His estate filed a wrongful death action, claiming that Epoch negligently failed to provide and maintain a reasonably safe workplace and that Epoch acted in a manner that was virtually certain to cause serious injury or death.
The subcontract between Orange & Blue and Epoch required Orange & Blue to purchase workers compensation insurance, employers liability insurance, and commercial general liability insurance, naming Epoch as an additional insured on these policies. Epoch was named as an additional insured under the commercial general liability policy written with Amerisure Insurance Company. After Tejeda's estate filed its lawsuit, Amerisure filed a declaratory judgment action seeking a declaration that it had no duty to defend or indemnify Epoch. The U.S. District Court ruled in favor of Amerisure, finding that both the workers compensation exclusion and the employers liability exclusion in the general liability policy barred coverage. This appeal followed.
The U.S. Court of Appeals, Eleventh Circuit, noted that under the employers liability exclusion, Amerisure had no duty to defend or indemnify Epoch for injuries suffered by Epoch's employees arising out of and in the course of employment by the insured or while performing duties related to the conduct of the insured's business. The court said that there was no dispute that Tejeda was injured while working as a laborer for Sandi at Epoch's construction site. Thus, if Tejeda can be considered one of Epoch's employees under the insurance policy, Amerisure had no duty to defend or indemnify.
Epoch argued that Tejeda could not be considered one of its employees because he was working for Sandi, Epoch's third-tier subcontractor. The court ruled that this argument failed under Florida law. Although Tejeda may not have been one of Epoch's employees in the traditional sense, he was a statutory employee for purposes of the state workers comp law. The appeals court found that Florida courts have consistently held that the term “employee” in insurance policies also includes statutory employees. So, because Tejeda was a statutory employee of Epoch, the employers liability exclusion applied.
Epoch also argued that the subcontract between Epoch and Orange & Blue is an insured contract because Orange & Blue agreed to maintain safety at the construction site, and thus the claims should be considered liabilities under the insured contract exception to the employers liability exclusion. The court said that the insured contract exception applies only to contracts in this instance in which Epoch assumed the tort liability of another party. And, the court pointed out, the estate did not allege that Epoch assumed the tort liability of any other party as the result of an insured contract. Instead, the tort claim flows directly from Epoch's own alleged acts and omissions. Therefore, the insured contract exception did not apply.
The ruling of the district court was affirmed.
Editor's Note: The U.S. Circuit Court found that the state workers comp law equated statutory employees with employees in the traditional sense. Thus, even though Tejeda was not a direct employee of Epoch and, indeed, was an employee of a sub-sub-subcontractor, state law in effect made Tejeda an employee of Epoch. The language of the employers liability exclusion then clearly applied to the deadly injuries suffered by Tejeda since he was injured while performing duties related to Epoch's (his employer) business.