FLECK v. ANG COAL GASIFICATION CO.

VANDE WALLE, Chief Justice.

Melvin Fleck appealed from a summary judgment dismissing his personal injury action against ANG Coal Gasification Company [ANG]. We affirm.

ANG operates a coal gasification plant in Beulah, North Dakota. In 1984, ANG hired Ceramic Cooling Tower Company [CCT] to replace plastic tiles with ceramic tiles in the water cooling towers at ANG's plant. The parties agree that CCT was an independent contractor.

Fleck was an employee of CCT. Part of Fleck's job included removing the existing plastic tiles from the inside of the water cooling towers. These plastic tiles were coated with a black, slimy residue from the water which flowed through the towers when they were operational. Because of high humidity and dirty working conditions in the towers, CCT's employees were provided face masks and rubber "slickers," boots, and gloves. Although he had a history of asthma, Fleck did not wear his face mask.

On July 30, 1984, Fleck experienced respiratory difficulties and collapsed while working in the towers. Fleck subsequently saw a doctor, who diagnosed Fleck's difficulties as asthma, rhinitis, and bronchitis. The doctor prescribed medication and instructed Fleck to return in two months for a follow-up visit. Fleck did not return for the follow-up visit. Fleck applied for and received workers compensation benefits for the July 30 incident.

Fleck brought this action against ANG in 1990, asserting that he had developed occupational asthma as a result of exposure to hazardous chemicals while working in the water cooling towers at ANG's plant. ANG moved for summary judgment, asserting that it had no duty to provide for Fleck's safety on the job, that there were no hazardous substances present in the towers, and that Fleck's injuries were not caused by any exposure while working at the plant. The trial court determined that ANG, as an employer of an independent contractor, had not retained such control of the work so as to incur a duty for Fleck's safety; that the work was not inherently dangerous and did not involve peculiar risk; and that Fleck had failed to present any evidence that hazardous chemicals which might have caused his injuries were present in the towers. The court ordered entry of summary judgment dismissing Fleck's action and awarded costs to ANG.

The following issues are dispositive of the appeal:

I. RETAINED CONTROL—SECTION 414

Generally, one who employs an independent contractor is not liable for the acts or omissions of the independent contractor. Madler v. McKenzie County, 467 N.W.2d 709 (N.D.1991); Schlenk v. Northwestern Bell Telephone Co., 329 N.W.2d 605 (N.D.1983); Restatement (Second) of Torts § 409 (1965). However, Section 414 of the Restatement (Second) of Torts creates liability when the employer retains control over the work:

We have previously recognized a cause of action based upon retained control under Section 414. See Zimprich v. Broekel, 519 N.W.2d 588 (N.D.1994); Madler v. McKenzie County, supra; Schlenk v. Northwestern Bell Telephone Co., supra; Peterson v. City of Golden Valley, 308 N.W.2d 550 (N.D.1981). Employees of an independent contractor fall within the protection of Section 414, and an employer of an independent contractor owes a duty to the independent contractor's employees to exercise the retained control with reasonable care. Madler, supra. Section 414 does not make the employer vicariously liable for the acts of the independent contractor, but creates an independent basis of liability for the employer's failure to exercise retained control with reasonable care. Zimprich, supra; Madler, supra.

The liability created by Section 414 arises only when the employer retains the right to control the method, manner, and operative detail of the work; it is not enough that the employer merely retains the right to inspect the work or to make suggestions which need not be followed. Comment c to Section 414 explains the difference:

See also Zimprich, supra; Madler, supra; Schlenk, supra.

We recognized in Madler that the duty created by Section 414 may arise in two ways: through express contractual provisions retaining the right to control the operative detail of some part of the work, or through the employer's actual exercise of such retained control at the jobsite. Fleck does not assert that ANG retained control over any operative details of the work in the provisions of the contract, and concedes that the contract gives CCT full control over the manner and method of performing the work. Fleck asserts, however, that ANG exercised actual control over the work at the jobsite sufficient to create a duty under Section 414.

Fleck relies upon evidence of three factors which, he asserts, demonstrates ANG's control over CCT's performance of the contract: (1) ANG provided the rubber "slickers," gloves, and boots worn by CCT's employees on the jobsite; (2) ANG employees periodically tested the air in the cooling towers to assure there was sufficient oxygen; and (3) an ANG employee periodically walked through the cooling towers to view the work. The parties dispute these issues, and there is conflicting evidence on each. In accordance with our law on summary judgment, all favorable inferences must be drawn in favor of Fleck as the party opposing summary judgment, and we therefore assume the truth of Fleck's assertions.1 See, e.g., Farmers Union Oil Co. v. Harp, 462 N.W.2d 152 (N.D.1990).

However, even assuming Fleck's factual assertions are true, those facts do not give rise to a duty under Section 414. Fleck testified that he got "the rain gear and the gloves" from the CCT foreman, who in turn got them from ANG. However, Fleck fails to point out any evidence that ANG required that these items be worn by CCT's workers. Accordingly, ANG's conduct can be viewed, at best, as a "suggestion" or "recommendation" regarding safety equipment that CCT did not necessarily need to follow. See Comment c, Restatement (Second) of Torts § 414; Zimprich, supra; Madler, supra; Schlenk, supra.

Similarly, ANG's testing for sufficient oxygen in the water cooling towers, and providing that information to CCT, did not constitute retention of control over the operative detail of the work. Fleck suggests, in a conclusory fashion, that ANG's testing constituted control over "the handling of safety at the work site." However, Fleck wholly fails to explain how ANG's taking of air samples correlates to retained control over the method and manner of performing the work. We agree with the trial court that the fact ANG "supplied analytical data concerning the material composition of the substances in the cooling towers" does not constitute retained control sufficient to impose liability under Section 414.

Finally, Fleck urges that ANG's daily inspection of the work constituted retained control over the work. By Fleck's own testimony, this inspection consisted of an ANG "plant supervisor ... [who] [c]hecked on us once in a while ... to see how the job was going." There was no evidence that this ANG employee directly supervised or controlled any aspect of the work. This clearly amounts to mere inspection and monitoring to assure compliance with the contract, which does not give rise to liability under Section 414. See Zimprich, supra; Comment c, Restatement (Second) of Torts § 414.

Summary judgment is appropriate, even if there are disputed factual issues, if resolution of the disputed facts would not alter the result. Aaland v. Lake Region Grain Cooperative, 511 N.W.2d 244 (N.D. 1994). Giving Fleck the benefit of all inferences and assuming the truth of his factual assertions, there is still no evidence that ANG retained control over the operative detail of any part of the work contracted to CCT. Accordingly, no duty arose under Section 414 as a matter of law, and summary judgment was appropriate.

II. INHERENT DANGER AND PECULIAR RISK

Fleck asserts that the work CCT performed was inherently dangerous and involved peculiar risks, and that ANG is therefore vicariously liable for CCT's conduct under Sections 416 and 427 of the Restatement (Second) of Torts. Those sections provide exceptions to the general rule of employer non-liability for the acts of an independent contractor:

We have previously recognized causes of action based upon Sections 416 and 427. See McLean v. Kirby Co., 490 N.W.2d 229 (N.D. 1992); Schlenk, supra; Peterson, supra.

The dispositive issue is whether the protections afforded by Sections 416 and 427, making one who employs an independent contractor vicariously liable under certain circumstances for physical harm to "others," extend to the employees of the independent contractor.2 Fleck asserts that we have already held in Schlenk and Peterson that those sections do apply to employees of independent contractors. In those cases, however, we specifically stated that we were not resolving that issue:

Schlenk, supra, 329 N.W.2d at 607-608 (footnote and citations omitted); see also Peterson, supra.

Of those jurisdictions which have considered the issue, the vast majority hold that employers of independent contractors are not vicariously liable to the employees of the independent contractor under Sections 416 and 427. See, e.g., Morris v. City of Soldotna, 553 P.2d 474 (Alaska 1976); Jackson v. Petit Jean Electric Co-op., 270 Ark. 506, 606 S.W.2d 66 (1980); Privette v. Superior Court, 5 Cal.4th 689, 854 P.2d 721, 21 Cal.Rptr.2d 72 (1993); Ray v. Schneider, 16 Conn.App. 660, 548 A.2d 461 (1988); Peone v. Regulus Stud Mills, Inc., 113 Idaho 374, 744 P.2d 102 (1987); Johns v. New York Blower Co., 442 N.E.2d 382 (Ind.Ct.App.1982); Dillard v. Strecker, 255 Kan. 704, 877 P.2d 371 (1994); King v. Shelby Rural Electric Cooperative Corp., 502 S.W.2d 659 (Ky.1973), cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 235 (1974); Rowley v. City of Baltimore, 305 Md. 456, 505 A.2d 494 (1986); Vertentes v. Barletta Co., 392 Mass. 165, 466 N.E.2d 500 (1984); Conover v. Northern States Power Co., 313 N.W.2d 397 (Minn.1981); Zueck v. Oppenheimer Gateway Properties, Inc., 809 S.W.2d 384 (Mo.1991); Anderson v. Nashua Corp., 246 Neb. 420, 519 N.W.2d 275 (1994); Sierra Pacific Power Co. v. Rinehart, 99 Nev. 557, 665 P.2d 270 (1983); Whitaker v. Norman, 75 N.Y.2d 779, 551 N.E.2d 579, 552 N.Y.S.2d 86 (1989); Curless v. Lathrop Co., 65 Ohio App.3d 377, 583 N.E.2d 1367 (1989); Tauscher v. Puget Sound Power and Light Co., 96 Wn.2d 274, 635 P.2d 426 (1981); Wagner v. Continental Casualty Co., 143 Wis.2d 379, 421 N.W.2d 835 (1988); Jones v. Chevron U.S.A., Inc., 718 P.2d 890 (Wyo.1986). Two federal courts, construing North Dakota law, have concluded that we would follow the majority view. See Olson v. Pennzoil Co., 943 F.2d 881 (8th Cir.1991); Ackerman v. Gulf Oil Corp., 555 F.Supp. 93 (D.N.D.1982).

The minority view, adopted in a handful of jurisdictions, holds that employees of the independent contractor are included within the protections of Sections 416 and 427. See, e.g., Lindler v. District of Columbia, 502 F.2d 495 (D.C.Cir.1974); Makaneole v. Gampon, 70 Haw. 501, 777 P.2d 1183 (1989); Giarratano v. Weitz Co., 259 Iowa 1292, 147 N.W.2d 824 (1967); Phillips v. Mazda Motor Manufacturing (USA) Corp., 204 Mich.App. 401, 516 N.W.2d 502 (1994); Vannoy v. City of Warren, 15 Mich.App. 158, 166 N.W.2d 486 (1968); Elliott v. Public Service Co., 128 N.H. 676, 517 A.2d 1185 (1986); Lorah v. Luppold Roofing Co., 424 Pa.Super. 439, 622 A.2d 1383 (1993). California, long one of the leading minority view states, recently overruled its prior cases and adopted the majority view. See Privette v. Superior Court, supra.

Courts adopting the majority view have outlined several well-reasoned and persuasive policy arguments in support of their holdings that employees of the independent contractor are not protected under Sections 416 and 427. Most of these policy reasons are based upon the availability of workers compensation benefits to the employee.

Several courts have noted that the primary purpose underlying the Restatement sections creating vicarious liability is to assure compensation for injured persons. See, e.g., Sloan v. Atlantic Richfield Co., 552 P.2d 157 (Alaska 1976); Privette v. Superior Court, supra; Peone v. Regulus Stud Mills, Inc., supra; Wagner v. Continental Casualty Co., supra. We have indicated that the purpose of the peculiar risk rule is to ensure that innocent plaintiffs will not be left remediless while the owner is free to disclaim responsibility by entrusting the work to an independent contractor. McLean v. Kirby Co., supra. Thus, the policy concern which is the subject of Sections 416 and 427—assuring a remedy for injured "others"—is already satisfied when the injured party receives workers compensation benefits. The California Supreme Court rationalized the policy concern in Privette v. Superior Court, supra, 21 Cal.Rptr.2d at 74, 854 P.2d at 723:

See also Zueck v. Oppenheimer Gateway Properties, Inc., supra; Edward J. Henderson, Liability to Employees of Independent Contractors Engaged in Inherently Dangerous Work: A Workable Workers' Compensation Proposal, 48 Fordham L.Rev. 1165 (1980). The Idaho Supreme Court observes:

Peone v. Regulus Stud Mills, Inc., supra, 744 P.2d at 106.

Furthermore, many courts recognize that, because the cost of workers compensation premiums are necessarily included in the contract price, the employer of the independent contractor has indirectly paid those premiums and should be protected by the exclusive remedy provisions in the workers compensation laws. See, e.g., Vagle v. Pickands Mather & Co., 611 F.2d 1212 (8th Cir.1979) (applying Minnesota law), cert. denied, 444 U.S. 1033, 100 S.Ct. 704, 62 L.Ed.2d 669 (1980); Privette v. Superior Court, supra; Dillard v. Strecker, supra; King v. Shelby Rural Electric Cooperative Corp., supra; Rowley v. City of Baltimore, supra; Vertentes v. Barletta Co., supra; Zueck v. Oppenheimer Gateway Properties, Inc., supra; Wagner v. Continental Casualty Co., supra; Jones v. Chevron U.S.A., Inc., supra; see also Section 65-01-02(15)(c), N.D.C.C. (a general contractor is liable for workers compensation premiums for the employees of a subcontractor or independent contractor if the subcontractor or independent contractor fails to pay the premiums). The Washington Supreme Court explains:

Courts have also noted the incongruous result if an employer of an independent contractor were subjected to greater liability for injuries to the independent contractor's employees than if the employer had used its own employees to perform the dangerous work:

Wagner v. Continental Casualty Co., supra, 421 N.W.2d at 842. See also Privette v. Superior Court, supra; King v. Shelby Rural Electric Cooperative Corp., supra; Tauscher v. Puget Sound Power and Light Co., supra; Jones v. Chevron U.S.A., Inc., supra. The California Supreme Court has also noted a corresponding incongruity:

Privette v. Superior Court, supra, 21 Cal. Rptr.2d at 78-79, 854 P.2d at 727-728. The result is that the minority view penalizes employers who hire experienced independent contractors with trained employees to perform dangerous work, instead encouraging the employer to use its own unskilled, untrained employees. See Privette v. Superior Court, supra; King v. Shelby Rural Electric Cooperative Corp., supra; Tauscher v. Puget Sound Power and Light Co., supra; Jones v. Chevron U.S.A., Inc., supra. The majority rule, which encourages the hiring of trained professionals with special expertise to perform work that is inherently dangerous or encompasses a peculiar risk, better promotes the dual policy concerns of safety to the general public and safety to those performing the work:

Courts have also recognized valid reasons for distinguishing between members of the general public injured by worksite negligence and injured employees of an independent contractor:

Morris v. City of Soldotna, supra, 553 P.2d at 481-482. This reasoning was further explained in Jackson v. Petit Jean Electric Co-op., supra, 606 S.W.2d at 69:

See also Ackerman v. Gulf Oil Corp., supra; Ray v. Schneider, supra; Dillard v. Strecker, supra; Wagner v. Continental Casualty Co., supra.

It has also been recognized that permitting recovery by the employees of independent contractors would create an "unwarranted windfall," and would "exempt a single class of employees, those who work for independent contractors, from the statutorily mandated limits of workers' compensation." Privette v. Superior Court, supra, 21 Cal.Rptr.2d at 80, 854 P.2d at 729. The Missouri Supreme Court observes:

Zueck v. Oppenheimer Gateway Properties, Inc., supra, 809 S.W.2d at 390 (footnote omitted).

One final reason also supports our adoption of the majority view. The workers compensation act in effect represents a legislatively created "settlement" of claims between injured workers and their employers. Both sides have forfeited certain common-law rights to implement the social purposes of the act. See Barry v. Baker Electric Cooperative Inc., 354 N.W.2d 666 (N.D.1984); Breitwieser v. State, 62 N.W.2d 900 (N.D.1954); 1 Larson, Law of Workmen's Compensation § 1.10 (1993). The employee gives up the right to sue the employer for negligently inflicted injuries, in exchange for sure and certain benefits for all workplace injuries, regardless of fault. See Sections 65-01-01 and 65-01-08, N.D.C.C.; Privette v. Superior Court, supra, 21 Cal.Rptr.2d at 78, 854 P.2d at 727 (labeling this the "compensation bargain"); Zueck v. Oppenheimer Gateway Properties, Inc., supra.

We have previously held that release of a servant for the underlying negligent conduct also releases a master's vicarious liability based upon the same conduct. Horejsi v. Anderson, 353 N.W.2d 316, 318 (N.D.1984). The same rationale applies here: the underlying negligent conduct of the independent contractor has been statutorily "released," and accordingly there can be no vicarious liability based upon that conduct. To hold otherwise would effectively permit a double recovery for the independent contractor's conduct, in violation of the exclusive remedy provisions of the workers compensation act.

The Supreme Court of Nebraska recently relied upon this reasoning in adopting the majority view:

Anderson v. Nashua Corp., supra, 519 N.W.2d at 285.

Relying upon the foregoing reasons, we adopt the majority view and hold that an employer of an independent contractor is not vicariously liable to the independent contractor's employees under Sections 416 and 427 of the Restatement (Second) of Torts.3

III. COSTS

Fleck asserts that the court erred in awarding to ANG costs and disbursements, including expenses of depositions. Fleck argues that Section 28-26-06, N.D.C.C., which allows recovery of disbursements, applies only when there has been a trial in the action, not when the action is dismissed by summary judgment. Thus, Fleck asserts, ANG is limited to recovering the statutory costs under Section 28-26-02(2), N.D.C.C., which allows "[t]o the defendant, for all proceedings before trial, five dollars."

Fleck's novel assertion stems from his misreading of Section 28-26-06(2), N.D.C.C., which provides:

"2. The necessary expenses of taking depositions and of procuring evidence necessarily used or obtained for use on the trial...."

The statute does not limit deposition expenses to those actually used at trial, but specifically includes those "obtained for use on the trial." If, as Fleck asserts, those expenses were allowable only when the deposition is actually used at a trial, the latter language would be wholly superfluous. In construing a statute, we must give meaning to every word, phrase, and sentence. In re J.D., 494 N.W.2d 160 (N.D.1992); Flermoen v. North Dakota Workers Compensation Bureau, 470 N.W.2d 220 (N.D.1991).

Furthermore, in interpreting a statute we must presume that the Legislature did not intend an absurd or ludicrous result or unjust consequences. Thompson v. Danner, 507 N.W.2d 550 (N.D.1993). The necessary consequence of Fleck's interpretation would be that a plaintiff who has a facially valid claim sufficient to get past summary judgment would be liable for pretrial expenses under Section 28-26-06, but a plaintiff whose claim is so devoid of factual support that it is dismissed at the summary judgment stage would be immune from liability for the pretrial expenses his marginal claim had generated. Clearly, the Legislature did not intend such an absurd and unjust result.

We construe Section 28-26-06(2), N.D.C.C., to apply if the deposition is actually used at trial, or if the deposition was obtained with the intent to use it on the trial, regardless of whether a trial is ultimately held. The district court therefore did not err in awarding costs and disbursements in excess of five dollars to ANG.

We have considered the remaining issues raised by Fleck and find them to be without merit. The judgment is affirmed.

SANDSTROM, NEUMANN, LEVINE and MESCHKE, JJ., concur.