Gustafson v. Complete Mfg. Servs. Inc.

MICHAEL GUSTAFSON, Appellant v. COMPLETE MANUFACTURING SERVICES INC.,RONALD SMITH AND OLETHA SMITH, Appellees

NO. 09-18-00415-CV

Court of Appeals Ninth District of Texas at Beaumont

Submitted on October 8, 2019

July 23, 2020

On Appeal from the 284th District Court Montgomery County, Texas

Trial Cause No. 17-09-10868-CV

MEMORANDUM OPINION

Appellant Michael Gustafson sued Appellees Complete Manufacturing Services, Inc. ("CMS"), Ronald Smith, and Oletha Smith for injuries he sustained while on the job.¹ Locke Technical Services, Inc. ("Locke") employed Gustafson and subsequently assigned him to work for CMS, on whose premises the accident occurred. Gustafson alleged CMS was a non-subscriber to workers' compensationinsurance and asserted claims of negligence and gross negligence against Appellees. He further sought to pierce the corporate veil of CMS and hold the Smiths individually liable for his damages. Appellees filed a motion for summary judgment asserting that CMS was entitled to the exclusive remedy defense claiming Locke "leased" Gustafson to CMS and cited to the Staff Leasing Services Act (SLSA). See Act of May 18, 2013, 83rd Leg., R.S., ch. 117, § 29(b), 2013 Tex. Sess. Law. Serv. 495, 507 (codified at Tex. Lab. Code Ann. §§ 91.001-.062). The trial court granted Appellees' summary judgment.

In five issues, Gustafson challenges the summary judgment as to his negligence claims and the corporate veil-piercing theory.² In his first issue, Gustafson disputes the availability of and Appellees' entitlement to the workers' compensation exclusive remedy defense under the SLSA, as amended in the Professional Employer Organizations Act (PEOA). See id. In his second and third issues, Gustafson challenges the contention that his status as a temporary worker or borrowed servant entitled CMS to the exclusive remedy defense, pointing to CMS's non-subscriber status. In his fourth issue, Gustafson asserts the corporate veil should be pierced, and the Smiths should be held individually liable. His last issue addresseshis prima facie case of negligence. Because we determine genuine issues of material fact remain, we reverse the summary judgment and remand to the trial court for further proceedings.

I. Background

Locke employed Gustafson as a shop helper and assigned him to work at CMS, one of Locke's clients. Locke paid him an hourly rate and billed CMS at a higher rate for Gustafson's time. While working in CMS's facility, Gustafson was injured when a forklift load began to shift and the CMS forklift operator quickly set the forks down, causing the channels to cut Gustafson's foot and requiring the amputation of his left big toe. It is undisputed that following the incident, Gustafson received benefits under Locke's workers' compensation policy. Gustafson sued Appellees for negligence and gross negligence and sought to hold the Smiths individually liable based on a corporate veil-piercing theory. Gustafson alleged the incident occurred during the course and scope of his employment and that CMS was a non-subscriber to workers' compensation insurance.

Appellees moved for summary judgment without specifying whether it was a traditional or no-evidence motion. Appellees asserted that CMS was Gustafson's employer, Locke elected to provide workers' compensation coverage, and therefore, Appellees were entitled to summary judgment based on the workers' compensation exclusive remedy provision as a matter of law. Appellees contended in theirsummary judgment motion that Gustafson could have more than one employer and cited to the SLSA. In their summary judgment motion, although Appellees argued that Locke "leased" Gustafson to CMS, they reasoned that it did not matter whether Gustafson "was a borrowed servant, a leased employee or a jointly controlled employee." Appellees further asserted there was no evidence that would allow Gustafson to pierce the corporate veil.

The summary judgment evidence included: (1) excerpts from Ronald Smith's deposition containing testimony that Gustafson was a CMS employee and CMS supervised his work; (2) Locke's invoices submitted to CMS for Gustafson's hours worked; (3) Gustafson's check stubs showing his pay rate; (4) certificates of insurance for Locke showing workers' compensation coverage for Locke only; (5) correspondence from the workers' compensation carrier regarding Gustafson's impairment rating and maximum medical improvement listing Locke as the employer; (6) Gustafson's employment records from Locke; and (7) a State of Texas "Personnel Employment Service Certificate of Authority" issued to Locke that expired in 2006. The summary judgment evidence did not include any written agreement between CMS and Locke nor any evidence that Locke was a valid licenseholder at the time this incident occurred. The summary judgment record likewise did not include any evidence that CMS subscribed to workers' compensation insurance.³

In response, Gustafson argued neither the SLSA nor the PEOA applied as no qualifying agreement existed between Locke and CMS, and Locke's election of coverage was immaterial. Gustafson further argued that he was only a temporary worker at CMS, and CMS was a non-subscriber under the Texas Workers' Compensation Act (TWCA). See Tex. Lab. Code Ann. § 401.001 et seq.

In Appellees' reply to Gustafson's summary judgment response, Appellees asserted that even if the SLSA or PEOA did not apply, Gustafson was a borrowed servant or a temporary worker, and therefore, Texas Labor Code section 93.004 applies entitling Appellees to judgment as a matter of law pursuant to the workers' compensation exclusive remedy provision. Gustafson filed a sur-reply complaining that Appellees raised an entirely new basis for its summary judgment for the first time in their reply.⁴

II. Standard of Review

Because traditional and no-evidence summary judgment motions are distinct and afford distinct standards of review, we must make an initial determination regarding which type of motion was before the trial court. Compare Tex. R. Civ. P. 166a(c), with Tex. R. Civ. P. 166a(i). In making this determination, we look to the substance of the motion rather than categorizing the motion strictly by its form or title. See Tex. Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 375 (Tex. App.—Dallas 2009, pet. denied); Sanchez v. Mulvaney, 274 S.W.3d 708, 710 (Tex. App.—San Antonio 2008, no pet.). But see Phillips v. Am. Elastomer Prods., L.L.C., 316 S.W.3d 181, 185 (Tex. App.—Houston [14th Dist.] 2010, pet. denied) (noting that if a "motion does not clearly and unambiguously state that it is being filed under rule 166a(i), the nonmovant has no notice that the movant is seeking a no-evidence summary judgment") (citation omitted). Here, Appellees moved for summary judgment on the affirmative defense of the workers' compensation exclusive remedy, which required them to conclusively establish that defense.

Although a plaintiff may move for no-evidence summary judgment on the ground that there is no evidence of one or more essential elements of an affirmativedefense that a defendant alleged and has the burden to prove, a defendant must file a traditional motion for summary judgment if it wishes to establish each element of that defense as a matter of law. See FDIC v. Lenk, 361 S.W.3d 602, 609 (Tex. 2012) ("'When a defendant moves for summary judgment based on an affirmative defense, . . . the defendant, as movant, bears the burden of proving each essential element of that defense.'" (quoting Ryland Grp., Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996) (per curiam)); see also Haver v. Coats, 491 S.W.3d 877, 881-82 (Tex. App.—Houston [14th Dist.] 2016, no pet.). The burden of proof never shifts to the non-movant unless and until the movant has "establish[ed] his entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law." City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979); see also Casso v. Brand, 776 S.W.2d 551, 556 (Tex. 1989). Thus, because Appellees moved for summary judgment on the affirmative defense of exclusive remedy, they must carry the burden of proof on their traditional motion for summary judgment.

Regarding Gustafson's alter ego theory, Appellees argued "Plaintiffs (sic) have pleaded an alter ego theory, although no evidence supports such a claim." Based on the substance of this portion of the motion, we determine Appellees' summary judgment on Gustafson's veil-piercing claims was a no-evidence motion. In order to defeat a no-evidence motion, the nonmovant must bring forth enoughsummary judgment evidence to raise a genuine issue of fact on each element the movant has challenged. Tex. R. Civ. P. 166a(i); Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). "A genuine issue of material fact exists if more than a scintilla of evidence establishing the existence of the challenged element is produced." Ridgway, 135 S.W.3d at 600 (citation omitted).

We review the grant of a traditional summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010) (citation omitted). "A party moving for summary judgment must conclusively prove all elements of its cause of action or defense as a matter of law." Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001) (citing Tex. R. Civ. P. 166a(c); Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996)). We consider the evidence in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge all reasonable inferences and resolve any doubts in the nonmovant's...