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Carrera v. Olmstead

Supreme Court of Washington, En Banc

September 7, 2017

BASILIO CORNELIO CARRERA, an unmarried individual, by the DEPARTMENT OF LABOR & INDISTRIES, as statutory assignee, Respondent,
v.
THOMAS OLMSTEAD and BARBRA E. OLMSTEAD, husband and wife, and the marital community comprised thereof; LAW OFFICE OF THOMAS S. OLMSTEAD, a Washington sole proprietorship; JOHN DOES and JANE DOES 1 through 10 inclusive, Defendants, and SUNHEAVEN FARMS, a Washington General Partnership; SUNHEAVEN FARMS, LLC, a Washington limited liability company; BRENT SCHULTHIES FARMS, LLC, a Washington limited liability company; BRENT SCHULTHIES and ELAINE SCHULTHIES, husband and wife, and the marital community comprised thereof, individually and as general partner of Sunheaven Farms; and JOHN DOES and JANE DOES 1 through 10 inclusive, Petitioners.

          STEPHENS, J.

         Basilio Carrera lost his right hand in a workplace accident. We are asked to determine whether the Department of Labor and Industries (L&I) may pursue a third party claim for Carrera's injuries against Sunheaven Farms LLC, the contractor responsible for workplace safety at Carrera's job.

         We affirm the Court of Appeals' holding that L&I may pursue such a claim. The Court of Appeals correctly concluded that statutes of limitations do not run against the sovereign when, as here, the State brings an action in the public interest. Benefit to a private party in addition to that state interest does not strip a state action of its sovereign character. Here, L&I's claim stands to benefit the State by reimbursing the medical aid fund (Fund) and furthering public policy goals; it is therefore exempt from the statute of limitations under RCW 4.16.160.

         The Court of Appeals also correctly interpreted chapter 51.24 RCW as authorizing L&I to recover damages beyond what it may retain. RCW 51.24.030(5) authorizes L&I to recover all damages except loss of consortium. Sunheaven's attempt to restrict recovery to economic damages alone is unsupported by the statutory text. L&I may seek both economic and noneconomic damages, but any recovery must be distributed according to the formula provided in RCW 51.24.050(4), which authorizes L&I to retain only legal costs and expenditures from the Fund and to distribute the rest to the injured worker.

         FACTS AND PROCEDURAL HISTORY

         In the summer of 2009, Brent Hartley Farms hired 19-year-old Carrera as a seasonal laborer. Carrera's job was to assist with sorting and packing harvested onions. At the start of the season, Carrera and the other new hires received a basic safety lecture.[1] Workplace safety training and compliance was the responsibility of third party contractor Sunheaven, which provided Brent Hartley Farms and other local farms with centralized administrative and operational support.

         On August 14, 2009, Carrera's job changed. His supervisor took him to the farm warehouse, gave him a hand broom, and told him to sweep the floor. He instructed Carrera to dump the contents of his dust pan onto a nearby conveyor belt, which carried garbage and plant debris out of the warehouse and into waiting trucks. In an alleged violation of state law, the conveyor's side guards had been removed. Carrera received no additional safety training for his new role, nor was he advised how to work safely in the proximity of the modified conveyor belt. While Carrera was sweeping, crouched next to the conveyor, the machine caught his hand or sleeve. The conveyor severed his right hand and wrist from his forearm. Unable to reattach the limb, doctors at the Harborview Medical Center performed a medical amputation at the forearm level. In addition to the loss of his dominant hand, Carrera suffers ongoing pain and discomfort and was diagnosed with posttraumatic stress disorder. On July 11, 2014, L&I classified Carrera as "totally and permanently disabled" and placed him on pension support. Clerk's Papers at 214.

         After the accident, Carrera retained attorney Thomas Olmstead. Olmstead sued Brent Hartley Farms, notwithstanding the employer's statutory immunity from nonintentional tort liability. The superior court dismissed the suit. Olmstead failed to name Sunheaven as a defendant and also failed to inform L&I of the case at the time of filing. L&I did not learn of Carrera's claim until its dismissal, at which point L&I identified Sunheaven as a potentially liable third party. L&I then sent notice to Carrera that it would pursue a third party action if he did not. See Carrera v. Olmstead, 196 Wn.App. 240, 244, 383 P.3d 563 (2016); RCW 51.24.050(1). When Carrera did not respond within 60 days, his claim was statutorily assigned to L&I. See id; RCW 51.24.070(2). L&I initially brought a malpractice claim against Olmstead in Kitsap County Superior Court and later amended its complaint to add a third party negligence claim against Sunheaven. The case before this court relates only to this third party claim.

         Sunheaven moved for partial summary judgment. It conceded that L&I could recover damages when assigned an injured worker's claim under RCW 51.24.050, but asked the trial court to limit any recovery to the expected cost of Carrera's L&I benefits package.[2] The trial court granted Sunheaven's motion and held that because more than three years had passed, any tort claim by Carrera was time barred-and thus L&Is attempt to recover Carrera's noneconomic damages was barred as well. However, the trial court allowed L&I to seek reimbursement of its benefits liability via recovery of economic damages capped at the lien amount. L&I appealed.

         The Court of Appeals reversed. Carrera, 196 Wn.App. at 243. That court held that while L&I may not retain Carrera's noneconomic damages, RCW 51.24.050 authorizes it to "seek[] and recover[] damages greater than the amount it may retain." Id. at 253. The Court of Appeals rejected the trial court's approach as "effectively split[ting] the cause of action by limiting the available damages." Id. Reasoning that allowing L&I to litigate third party actions benefits the public, the Court of Appeals held that the statute of limitations does not apply to L&I's claims under RCW 51.24.050. Id. at 258. Sunheaven appealed, and this court granted review. Carrera v. Olmstead, 187 Wn.2d 1017, 390 P.3d 349 (2017).

         ANALYSIS

         We granted review to address two questions: (1) whether RCW 4.16.160 exempts third party claims assigned to L&I under RCW 51.24.050 from the relevant statute of limitations and (2) whether chapter 51.24 RCW authorizes L&I to seek damages beyond the amount necessary to reimburse the Fund.[3] We answer both questions in the affirmative.

         A. Overview of Third Party Liability under Washington's Industrial Insurance Act

         The Industrial Insurance Act (Act), chapter 51.24 RCW, removes most workplace injury claims from Washington's common law tort regime. See RCW 51.04.010. The Act is structured around a "grand compromise" between workers and employers: injured workers are guaranteed certain benefits regardless of fault, while employers are immunized from workplace negligence actions. Birklid v. Boeing Co., 127 Wn.2d 853, 859, 904 P.2d 278 (1995); RCW 51.04.010. Contributions from nonexempt employers are directed into a common Fund, which L&I uses to pay benefits to injured workers. The result is predictable payments and limited liability for employers, while injured workers receive "speedy and sure" (albeit reduced) relief. Flanigan v. Dep't of Labor & Indus., 123 Wn.2d 418, 422, 869 P.2d 14 (1994).

         As articulated by the legislature, the purpose of the Act is twofold: to protect industry and to safeguard the interests of Washington workers. The Act states:

The common law system governing the remedy of workers against employers for injuries received in employment... proves to be economically unwise and unfair.... The remedy of the worker has been uncertain, slow and inadequate. ... The welfare of the state depends upon its industries, and even more upon the welfare of its wage worker. The state of Washington, therefore, ... declares that all phases of the premises are withdrawn from private controversy, and sure and certain relief for workers, injured in their work, and their families and dependents is hereby provided regardless of questions of fault and to the exclusion of every other remedy.

RCW 51.04.010 (emphasis added). The Act is intended to ensure the survival of industry while protecting injured workers. Id. The Act thus benefits both workers and employers-and by extension, "[t]he welfare of the state." Id.

         The Act Preserves Third Party Liability for Workers' Injuries

         While it generally immunizes employers from liability for negligence, the Act extends no such protection to third parties. Instead, RCW 51.24.030 carves out an exception to the general abolition of civil suits by authorizing an injured employee or her beneficiary to sue potentially liable third parties. See RCW 51.24.030(1) ("If a third person, not in a worker's same employ, is or may become liable [for]... a ...


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