ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
WILLIAM F. CONOUR MIRIAM A. RICH
Conour Doehrman St. Paul Staff Counsel Office
Indianapolis, Indiana Indianapolis, Indiana
COURT OF APPEALS OF INDIANA
FRED TURNER and MELISSA TURNER, )
vs. ) No. 89A01-0002-CV-67
RICHMOND POWER AND LIGHT COMPANY, )
APPEAL FROM THE WAYNE SUPERIOR COURT
The Honorable Daniel L. Pflum, Judge
Cause No. 89D01-9901-CT-003
October 5, 2001
OPINION - FOR PUBLICATION
See footnote appeals the trial court's Indiana Trial Rule 12(B)(1) dismissal of his
negligence action against Richmond Power and Light Company ("RPL"). We reverse.
Turner raises the following consolidated and restated issue for our review: whether Turner's
negligence action against RPL is barred by the exclusive remedy provision of the
Worker's Compensation Act (the "Act").
Facts and Procedural History
The facts reveal that Turner was employed as a crew supervisor for the
Richmond Sanitary District, a department of the City of Richmond (the "City").
On September 24, 1998, Turner and his crew were installing a sewer line.
While excavating the sewer line, a co-employee hit a buried power line
that resulted in Turner being electrocuted. Subsequently, Turner received worker's compensation benefits
from the City.
On January 26, 1999, Turner filed suit in the Wayne County Superior Court
against RPL alleging that the utility negligently marked the location of the underground
power line. On March 26, 1999, RPL filed with the trial court
a Trial Rule 12(B)(1) motion to dismiss Turner's complaint. RPL alleged in
its motion to dismiss that Turner's negligence action against RPL was barred by
the exclusive remedy provision of the Act. On January 26, 2000, the
trial court dismissed Turner's complaint for lack of subject matter jurisdiction. This
Discussion and Decision
Turner contends that
the trial court erred in dismissing his complaint against RPL for lack of
subject matter jurisdiction because his negligence action against the utility is not barred
by the exclusivity provision of the Act. We agree.
I. Standard of Review
When an employer defends against an employee's negligence claim on the basis that
the employee's exclusive remedy is to pursue a claim for benefits under the
Indiana Worker's Compensation Act, the defense is properly advanced through a motion to
dismiss for lack of subject matter jurisdiction under Indiana Trial Rule 12(B)(1).
Foshee v. Shoney's, Inc., 637 N.E.2d 1277, 1280 (Ind. 1994). In ruling
on a motion to dismiss for lack of subject matter jurisdiction, the trial
court may consider not only the complaint and motion, but also any affidavits
or evidence submitted in support. Indiana Dep't of Highways v. Dixon, 541
N.E.2d 877, 884 (Ind. 1989). In addition, the trial court may weigh
the evidence to determine the existence of the requisite jurisdictional facts. Borgman
v. State Farm Ins. Co., 713 N.E.2d 851, 854 (Ind. Ct. App. 1999),
The standard of appellate review of a trial court's grant or denial of
a motion to dismiss pursuant to Trial Rule 12(B)(1) is a function of
what occurred in the trial court. GKN Co. v. Magness, 744 N.E.2d
397, 401 (Ind. 2001). The standard of appellate review is dependent upon:
(i) whether the trial court resolved disputed facts; and (ii) if the trial
court resolved disputed facts, whether it conducted an evidentiary hearing or ruled on
a "paper record." Id. If the facts before the trial court
are not in dispute, then the question of subject matter jurisdiction is purely
one of law and no deference is afforded to the trial court's conclusion.
Id. The standard of review is de novo. Id.
If the facts before the trial court are in dispute, then appellate review
focuses on whether the trial court conducted an evidentiary hearing. Id.
Under these circumstances, a court typically engages in its classic fact-finding function, often
evaluating the character and credibility of witnesses. Id.; Anthem Ins. Cos.,
Inc., v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1238 (Ind. 2000). Where
the trial court conducts an evidentiary hearing, we give its factual findings and
judgment deference. Menard Inc. v. Dage-MTI, Inc., 726 N.E.2d 1206, 1210 (Ind.
2000). In reviewing a trial court's findings of facts and judgment, we
will reverse only if they are clearly erroneous. Magness, 744 N.E.2d at
401. Where the facts are in dispute but the trial court rules
on a paper record without conducting an evidentiary hearing, then no deference is
afforded to the trial court's factual findings or judgment because under those circumstances,
a court of review is "in as good a position as a trial
court to determine whether the trial court has subject matter jurisdiction." MHC
Surgical Ctr. Assocs., Inc. v. State Office of Medicaid Policy & Planning, 699
N.E.2d 306, 308 (Ind. Ct. App. 1998).
Here, several facts before the trial court were in dispute, and even for
those facts not in dispute, the parties disagree about the inferences to be
drawn from those undisputed facts. In addition, it appears from the record
that the trial court did not conduct an evidentiary hearing. Rather, it
ruled on a paper record consisting of: (1) the parties' complaints; (2) affidavits
of witnesses; (3) deposition testimony; and (4) memorandum. Accordingly, our standard of
review is de novo; we will affirm the judgment of the trial court
on any legal theory the evidence of record supports. See Magness, 744
N.E.2d at 401. However, the ruling of the trial court is presumptively
correct, and we will reverse on the basis of an incorrect factual finding
only if Turner persuades this court that the balance of the evidence is
tipped against the court's findings. Id.
II. The Act
The Act provides compensation for employees who suffer injuries which arise out of
and in the course of their employment. Construction Mgmt. & Design, Inc.
v. Vanderweele, 660 N.E.2d 1046, 1049 (Ind. Ct. App. 1996), trans. denied.
Worker's compensation obviates the uncertainty, delay, and expense of common law remedies by
substituting a fixed compensation according to reimbursement schedules. Baker v. Westinghouse Elec.
Corp., 637 N.E.2d 1271, 1274 (Ind. 1994). The remedies provided in the
Act are in derogation of the common law, and a statute that is
in derogation of common law must be strictly construed against limitations on a
claimant's right to bring suit. McQuade v. Draw Tite, Inc., 659 N.E.2d
1016, 1018 (Ind. 1995). Prior to the Act, an employee's only remedy was
an action in tort against the employer which was rarely successful. Frampton
v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425, 427 (Ind.
1973). Worker's compensation is for the benefit of the employee and the
Act must be strictly construed in favor of the employee so as not
to negate the Act's humane purposes. Id.
The right of an injured employee to bring a legal claim against his
or her employer is governed by Indiana Code section 22-3-2-6, which provides that
the benefits under the Act constitute the exclusive remedy to the employee against
The rights and remedies granted to an employee subject to IC 22-3-2 through
IC 22-3-6 on account of personal injury or death by accident shall exclude
all other rights and remedies of such employee, the employee's personal representatives, dependents,
or next of kin, at common law or otherwise, on account of such
injury or death, except for remedies available under IC § 5-2-6.1.
This statute limits an employee whose injury meets the jurisdictional requirements of the
Act to the rights and remedies provided therein. Campbell v. Eckman/Freeman &
Assoc., 670 N.E.2d 925, 929 (Ind. Ct. App. 1996), trans. denied.
Thus, if an employee's injury occurred by an accident which arose out of
and in the course of his employment, that individual is entitled to worker's
compensation benefits, and the exclusivity provisions bar a court from hearing any common-law
action brought by the employee for the same injuries. Id.
However, the Act permits an injured employee to pursue a legal claim against
any "other person than the employer":
Whenever an injury or death, for which compensation is payable under chapters 2
through 6 of this article shall have been sustained under circumstances creating in
some other person than the employer and not in the same employ a
legal liability to pay damages in respect thereto, the injured employee, or his
dependents in case of death, may commence legal proceedings against the other person
to recover damages notwithstanding the employer's or the employer's compensation insurance carrier's payment
of or liability to pay compensation under chapters 2 through 6 of this
Ind. Code § 22-3-2-13. This statute permits a worker's compensation claimant to
bring a legal action against a third party tortfeasor so long as: (1)
the civil action does not create a legal liability on the employer to
pay damages; and (2) the third party defendant is not "in the same
employ" as the injured employee. State v. Coffman, 446 N.E.2d 611, 613
(Ind. Ct. App. 1983).
Indiana Code section 22-3-6-1 defines "employer" and "employee" as follows:
(a) "Employer" includes the state and any political subdivision, any municipal corporation within
the State, any individual or the legal representative of a deceased individual, firm,
association, limited liability company, or corporation or the receiver or trustee of the
same, using the services of another for pay. A parent or a
subsidiary of a corporation or a lessor of employees shall be considered to
be the employer of the corporation's, the lessee's, or the lessor's employees for
purposes of IC 22-3-2-6. If the employer is insured, the term includes
the employer's insurer so far as applicable. However, the inclusion of an
employer's insurer within this definition does not allow an employer's insurer to avoid
payment for services rendered to an employee with the approval of the employer.
The term also includes an employer that provides on-the-job training under the
federal School to Work Opportunities Act (20 U.S.C. 6101 et. seq.) to the
extent set forth in IC 22-3-2-2.5.
(b) "Employee" means every person, including a minor, in the service of another,
under any contract of hire or apprenticeship, written or implied, except one whose
employment is both casual and not in the usual course of the trade,
business, occupation, or profession of the employer.
There is no dispute that Turner is an employee of the Sanitary District,
a governmental agency of the City. In addition, the parties are in
agreement that the Sanitary District and the City are the same governmental entity,
an entity from which Turner has received worker's compensation benefits. However, the
parties are in dispute over whether RPL and the City are separate and
distinct entities under the Act.
B. Allowance of Third Party Actions
1. State/Governmental Agency
Turner contends that he may assert a third party action against RPL because
he does not have an employment relationship with the utility company. RPL
characterizes the relationship between it and the City as analogous to the relationship
between different branches of the same governmental entity. RPL argues that this
case is controlled by our prior decisions in State v. Coffman, 446 N.E.2d
611 (Ind. Ct. App. 1983), and Indiana State Highway Dept. v. Robertson, 482
N.E.2d 495 (Ind. Ct. App. 1985).
In Coffman, a driver of a State Highway Department truck was involved in
a collision with a State Police officer. 446 N.E.2d at 612.
Both the truck driver and the police officer were acting in the course
and scope of their employment at the time of the accident. Id.
Thereafter, the truck driver received worker's compensation benefits from the State and
then brought a tort action against the State. Id. The State's
motion for summary judgment was denied by the trial court, and we reversed.
Id. at 612-13.
The truck driver asserted that he and the police officer were not in
the "same employ," relying on our statement in Ward v. Tillman, 386 N.E.2d
1003, 1005-06 (Ind,. Ct. App. 1979), that the "test to determine whether Ward
and Tillman were 'in the same employ' is whether or not the denominated
defendant, Tillman, could obtain compensation benefits in the same or similar circumstance."
The truck driver argued that the police officer could not be his co-employee
because the State Police were covered under their own disability fund, and not
under worker's compensation. Coffman, 446 N.E.2d at 614.
This court did not address this test, and instead noted that the Act
provided that an injured employee could not sue another person if the action
would create a legal liability in the employer to pay damages. Ind.
Code § 22-3-2-13. The Indiana Tort Claims Act provided that a governmental
entity would pay any judgment or settlement against an employee when the act
causing the loss was within the scope of his employment. Ind. Code
§ 34-4-16.5 (now Ind. Code § 34-13-3-5(c)(1)). We concluded that truck driver's
sole remedy was under the Act because a judgment against the police officer
would create a legal liability in the State to pay damages. Coffman,
446 N.E.2d at 614.
In Robertson, an employee of the State Department of Mental Health was performing
job-related duties when she was involved in a collision on a state highway.
482 N.E.2d at 496. She collected worker's compensation benefits, but also
sued the State Highway Department for the negligent design, construction, and maintenance of
the intersection. Id. The state employee did not allege that the
Highway Department and the Department of Health were different entities under the Act,
and we did not address this question. Rather, she argued that the
State was subject to suit under a "dual capacity" theory. Id. at
498. We noted that we had repeatedly rejected the "dual capacity" theory,
and held that the state employee's exclusive remedy was under the Act.
Id. at 499. Accordingly, we reversed the denial of the State's summary
judgment motion. Id.
Based upon the facts and circumstances of the present case, we do not
find these cases instructive. RPL is not a "pure" government agency like
the State police in Coffman or the State Highway Department in Robertson.
Therefore, for guidance we look to our opinion in Seaton-SSK Engineering v. Forbes,
639 N.E.2d 1048 (Ind. Ct. App. 1994), and our supreme court's opinion in
McQuade v. Draw Tite, Inc., 659 N.E.2d 1016 (Ind. 1995).
2. Parent Corporation/Subsidiary
In Forbes, the plaintiff was an employee of Permanent Mold, a wholly-owned subsidiary
of CMI-International. 639 N.E.2d at 1048. The plaintiff was injured while
operating a machine manufactured by Seaton, also a wholly-owned subsidiary of CMI.
The plaintiff received worker's compensation benefits through Permanent Mold, and later sued CMI
and Seaton. Id. The trial court denied CMI and Seaton's motion
for summary judgment, and we affirmed. Id.
We applied an "economic reality" test to determine whether CMI and Seaton were,
along with Permanent Mold, the plaintiff's "employer." Id. at 1050. This
test involves a consideration of the "totality of the circumstances surrounding the work
performed." Id. Relevant factors include: control of the worker's duties, payment
of wages or benefits, the right to hire, fire, and discipline, and performance
of duties as an integral part of the employer's business. Id.
We found this test consistent with public policy: "[i]nasmuch as employers are
insulated from full responsibility from employment-related injury, it is equitable to confer such
insulation only where an employment relationship actually existed between the parties." Id.
After analyzing the facts and circumstances, we found that the two subsidiaries had
two of three directors in common; CMI had about twenty subsidiaries in various
states; the subsidiaries filed a consolidated tax return; day-to day operations were handled
by individual plant supervisors; each subsidiary had a payroll account funded by the
parent; the subsidiaries had a joint profit-sharing plan; Seaton made equipment for foundries,
while Permanent Mold made castings for the automotive industry; some subsidiaries were unionized
and some were not; and the subsidiaries were "self-insured" for worker's compensation.
Id. at 1051. While the basic details of the operations were not
disputed, we concluded that "the factfinder must determine whether the employees of one
subsidiary are subject to the degree of control by the parent or a
sister subsidiary characteristic of an 'employment' relationship." Id.
The Indiana Supreme Court in McQuade reached a similar result as
our decision in Forbes, when it reversed summary judgment for the employer's parent
corporation even though the parent corporation controlled the employer's operations, shared a worker's
compensation policy with the employer, and performed payroll and accounting functions for the
employer. 659 N.E.2d at1019. The court noted that business owners "may
take advantage of the benefits of dividing the business into separate corporate parts,
but principles or [sic] reciprocity require that courts also recognize the separate identities
of the enterprises when sued by an injured employee." Id. at 1020
(quoting Boggs v. Blue Diamond Coal Co., 590 F.2d 655, 662 (6th Cir.
1979)). Accordingly, our supreme court held that the exclusivity provision of the
Act does not prevent an employee from suing his or her employer's parent
corporation when there is an alleged breach of duty separate and distinct from
any vicarious liability attributable to the parent for acts of its subsidiary.
McQuade, 659 N.E.2d at 1019. "What our decision is meant to prevent
is a situation where an injured party would be deprived of his or
her day in court by the purely fortuitous circumstance that the alleged tortfeasor
is the corporate parent of the injured party's employer." Id. at 1019
3. Hybrid Entity
RPL retains aspects that indicate that it is an agency or department of
the City, and other aspects which indicate that it is a separate and
distinct entity from the municipality. Because of the hybrid nature of RPL,
the electric company cannot be neatly "pigeonholed" as a governmental agency or as
a separate and distinct entity from the City. Therefore, we must analyze
the overall structure of RPL and its relationship to the City to determine
whether Turner may assert a third party action against the utility.
There are several factors that indicate that RPL is an agency of the
City. The City in 1914, bought the privately owned electric company, now
known as RPL, for the purpose of providing adequate, low cost, dependable service
to the residents of the municipality. Since 1914, RPL has become the
largest municipally owned electric company in Indiana. RPL is not a privately
owned corporation, rather it is wholly owned by the City. Also, the
City owns the land upon which the utility resides. These two indicators
provide strong evidence that RPL is a department of the City.
In addition, the composition of the board of directors of the utility provides
evidence of its affiliation with the City. The board of directors of
RPL consists of nine members, with one member as chairperson and one as
vice chairperson. It appears that in the early 1920's, the board of
directors of RPL were appointed by the mayor of the City. When
a scandal erupted concerning kickbacks in coal purchase, the decision was made to
place the members of the City Council on the board of directors of
the utility. Currently, RPL's board of directors consists entirely of the members
of the City Council. The chairman of RPL's board of directors is
the president of the City Council. Typically, the board of directors of
the utility meets twice a month, and these meetings precede the City Council
meetings. Thus, the elected members of the legislative branch of the City
sit as the board of directors of RPL. The City's practice conforms
with Indiana Code section 8-1.5-3-3
See footnote which provides that:
(a) The legislative body of a municipality may, by ordinance, provide for the
control of any or all of its municipality owned utilities by:
* * *
(2) a board consisting of the members of the municipal legislative body
RPL is tied to the municipality by the fact that members of the
City's legislative branch also sit as the board of directors of RPL.
Moreover, there are other indicators that support the conclusion that RPL is integrated
with the City. RPL employee paychecks are issued by the City.
The City Controller issues and signs all checks on behalf of the utility.
RPL funds may not be released without approval from the City Controller.
In addition, the City and RPL participate in the same worker's compensation
plan. Turner received his worker's compensation benefits from Employer Security Insurance Company
pursuant to a policy of insurance issued to the City contest the fact
that RPL retains certain characteristics of a municipal department. However, there also
exist notable aspects of RPL that unerringly lead us to the conclusion that
RPL operates as a separate and distinct entity from the City. For
example, RPL is not included in the City's organizational chart, which contains departments
of the City such as sanitation, fire, police, finance, engineering, parks, planning, and
the city attorney. RPL argues that the utility is part of the
department of administration, but there is no evidence to support such a contention.
Further, the record supports the conclusion that the City does not play a
part in RPL's personnel matters. RPL does its own hiring of employees,
while employees of departments of the City are hired through human resources.
There is also no exchange of personnel between RPL and the City, and
new RPL employees do not participate in any "training program" promulgated by the
City. Further, the termination of general RPL employees is done internally; the
City does not participate in such employment decisions. Essentially, RPL trains and
manages its own employees.
In addition, RPL and the City generally have different benefits for their employees.
Although RPL and City department employees share the same worker's compensation carrier,
RPL employees have separate health insurance and pension plans. In addition, the
utility reimburses its employees for education expenses apart from the municipality. We
also note that RPL executives are provided with personal cars and related expenses
that are paid for by RPL. Thus, RPL's benefit package is not
analogous with the City's benefit package for department employees.
Moreover, the method upon which RPL enters into service contracts with its customers,
bills, and collects payment indicates that the utility is independent from the City.
RPL contracts directly with customers for providing electric service. Further, the
City, along with residential and commercial customers, is billed for its electric consumption.
The City compensates RPL for all electricity it consumes in a given
time period. For all intents and purposes, the City is just another
customer of the utility. RPL directly receives payment from its customers, payment
which is placed in RPL bank accounts.
There exist other factors which indicate the utility acts as if it is
not affiliated with the City. The utility and the City maintain separate
accounts. RPL has its own payable and receivable accounts. In addition,
the utility maintains its own investment accounts apart from the City's investment accounts.
Further, the utility owns all of its equipment and facilities that are
essential for the delivery of electric service. For example, the utility owns
maintenance vehicles, power stations, sub stations, service buildings, electric meters, and administration buildings.
Although the City may have purchased RPL in 1914, it appears that
since the date of purchase the utility company has claimed sole ownership of
the means for delivering electric service. The record indicates that the City
is not listed as the entity retaining title to such property.
In addition, RPL maintains its own budget and retains its own finance officer.
RPL specifically designates in its budget the amount needed for salaries, equipment,
advertising, and other operating and business expenses. Although the City Controller issues
the checks, it appears that the City does not have the discretion to
raid the coffers of RPL. To the contrary, the City Controller must
abide by the instructions and direction of RPL finance personnel. It is
true that RPL money is in a joint account with City money, which
is all managed by the City Controller. But RPL is apprised of
the exact amount of its funds in the account. The City Controller's
authority with regard to RPL funds is ministerial, not discretionary. Moreover, the
City departments are funded via tax dollars, whereas RPL is a self-sustaining utility
that receives no tax money. Besides the release of funds, it appears
that budgetary matters differ between RPL and the City.
Also, RPL utilizes the services of the City attorney, but these expenses are
allocated in RPL's budget. In addition, it appears that RPL regularly retains
private counsel to handle its business affairs, such as providing assistance in effecting
rate changes. The record supports the conclusion that RPL has its own
outside counsel. Moreover, the utility maintains its own liability insurance. Thus,
it appears that RPL conducts its legal matters and maintains insurance coverage separate
and distinct from the City.
The hierarchy of management of RPL differs from that of other City departments.
Unlike the City departments, the mayor does not appoint top management of
the utility. The board of directors are duly elected by the citizens of
Richmond. In turn, the board hires the general manager, the individual who
runs the day-to-day operations of the utility. It appears from the record
that the general manager guides and directs the operation of the utility without
any significant influence from the City.
Applying the "economic reality" test, it appears that RPL is more akin to
a subsidiary of a municipal corporation than a governmental agency. See Forbes,
639 N.E.2d at 1050. There is little "functional integration;" RPL operates essentially
in a vacuum apart from the rest of the City's departments. See,
e.g., F.W. Woolworth Co. v. Taxation & Revenue Dept. of State of N.M.,
458 U.S. 354, 364 (1982). We believe that RPL operates as a
"discrete business enterprise" from the City. See Id. at 367. There
is no exchange of personnel and the hiring, training, and firing process of
RPL is independent from the City. Although there exist some managerial links,
these are not sufficient to insulate RPL from a third party action by
Turner. Further, RPL possesses autonomy to determine its own policies, programs, and
directives regarding the delivery of electric service. The utility further has sole
ownership of the means of delivering electric service. In addition, RPL develops
its own budget, maintains separate investment and banking accounts, liability insurance, and conducts
its legal affairs apart from the City.
Based upon these facts and circumstances, we believe RPL is a separate and
distinct entity from the City. Thus, Turner's negligence action against the utility
is not barred by the exclusivity provision of the Act. The trial
court erred in dismissing Turner's suit under Trial Rule 12(B)(1).
Our determination that RPL is a separate and distinct entity from the City
comports with the Indiana Supreme Court's decision in Buckley v. Standard Inv. Co.,
581 N.E.2d 920 (Ind. 1991). In Buckley, the plaintiff brought a negligence
action against Citizens Gas and Coke Utility ("Citizens"). Id. at 921.
Thereafter, Citizens filed a summary judgment motion with the court arguing that it
was entitled to immunity under the Indiana Tort Claims Act. Id.
The trial court determined that Citizens was a political subdivision of the State,
and we affirmed. Id.
We noted that a "political subdivision" was defined to include a "city" and
a "board or commission" of a city under Indiana Code section 34-4-16.5-2(2),
See footnote and
determined Citizens was within that definition because it was controlled by the Board
of Directors for Utilities.
Id. Citizens was operated under the authority
of Indiana Code section 8-1-11.1-1(a), which creates as an executive department of a
consolidated city a department of public utilities which is to be governed by
the Board. Id. The Board is in turn appointed by a
Board of Trustees for Utilities, which board is created by the same statute.
Our supreme court found "this tenuous statutory connection between the city and the
operations of Citizens is not the type of relationship required to entitle Citizens
to the benefits of immunity from tort liability." Id. The court
noted that the Board was not made answerable to the city through the
statute, and that the connection between the Board and the city was "slight
and does not involve control over the actions or the makeup of the
board." Id. at 922. Thus, "the statutory scheme under which Citizens
is operated does not create a governmental entity. The legislature cannot simply
mention an existing, independent Board of Trustees in a statute which allows them
to maintain the independence and thereby make them a department of the city."
Id. Accordingly, the Indiana Supreme Court held that Citizens was
not a political subdivision of the City of Indianapolis entitled to immunity under
the Indiana Tort Claims Act. Id.
Our view that RPL is not an agency or department of the City
is also consistent with the ideals expressed in Article One, section 12 of
the Constitution of Indiana:
All courts shall be open; and every person, for injury done to him
and his person, property or reputation, shall have remedy by due course of
law. Justice shall be administered freely without purchase; completely, and without denial;
speedily without delay.
Accordingly, we reverse the trial court's dismissal of Turner's negligence action against the
Based on the foregoing, we hold that the trial court's Trial Rule 12(B)(1)
dismissal of Turner's negligence action against RPL constitutes reversible error.
RILEY, J., concurs.
MATTINGLY-MAY, J., dissents with opinion.
COURT OF APPEALS OF INDIANA
FRED TURNER and MELISSA TURNER, )
vs. ) No. 89A01-0002-CV-67
RICHMOND POWER AND LIGHT COMPANY, )
MATTINGLY-MAY, Judge, dissenting with opinion.
I believe the City and RPL are, for purposes of workers compensation coverage,
the same entity. For that reason, Turners negligence action against the City
was barred by the Act and was properly dismissed by the trial court.
I must therefore respectfully dissent.
RPL is an electric utility owned by the City. Its employees paychecks
are issued by the city controller. The City owns the real estate
RPL uses, and RPL and City departments and agencies share equipment. RPL
is governed by a board that is made up of the same persons
who serve on the Richmond City Council. Its employees paychecks are issued
by the City, and the City and RPL participate in the same workers
compensation plan. RPL utilizes the services of the Richmond city attorney.
I believe the majoritys reliance on
McQuade and Forbes is misplaced, and that
it is inappropriate to treat the City and RPL as a parent corporation
See footnote Implicit in
Forbes and explicit in McQuade, 659 N.E.2d at
1020, is the well-recognized principle that an entity cannot organize itself and its
subsidiaries so as to take advantage of the division into separate corporate parts,
but then later disavow the separate corporate identities when sued by an injured
employee. Because that policy concern is not so clearly implicated by the
structuring of local government into separate divisions, I would decline Turners invitation to
treat RPL as a corporate subsidiary of the City. Rather, I believe
the relationship between RPL and the City is analogous to the relationship between
different branches of the same governmental unit.
I further disagree with the majoritys assertion that its result comports with Buckley
v. Standard Investment Co. There, our supreme court determined Citizens Gas &
Coke utility was not a political subdivision of the City of Indianapolis entitled
to Tort Claims Act immunity. The majority recites the Buckley courts holding
that the tenuous statutory connection between the city and the operations of Citizens
is not the type of relationship required to entitle Citizens to the benefits
of immunity from tort liability. 581 N.E.2d at 921. The Buckley
court noted that the Board was not made answerable to the city through
the statute, and that the connection between the Board and the city was
slight and does not involve control over the actions or the makeup of
the board. Id. at 922. Thus, the statutory scheme under which
Citizens is operated does not create a governmental entity. The legislature cannot
simply mention an existing, independent Board of Trustees in a statute which allows
them to maintain that independence and thereby make them a department of a
The relationship between RPL and the City of Richmond is not so tenuous
as that of Citizens and the City of Indianapolis, and I believe the
majoritys analysis is therefore inconsistent with that of Buckley. RPL, like Citizens,
does operate under a statutory scheme. However, that is the extent of
the similarity between the status of RPL and that of Citizens.
As the majority suggests, RPL is presumably governed by Ind. Code chapter 8-1.5-3,
which applies to all municipalities (other than consolidated cities) that own or operate
utilities. That chapter, like chapter 8-1-11.1 that authorized the operation of Citizens,
allows for governance of the utility by a board. However, Ind. Code
§ 8-1.5-3-3(a)(2) provides that the board may be composed of the members of
the municipal legislative body, and the RPL board is, in fact, made up
of the same individuals who compose the Richmond City Council. As such,
it cannot be said that the City does not control the RPL board
or that the board is not answerable to the City. To the
extent the Buckley case was premised on that lack of connection or control,
Buckley does not support the argument that RPL is not a government entity.
Because the City and RPL are more properly characterized as different branches of
the same governmental unit, I believe Turner was in the same employ when
he was injured as were the employees of RPL. The trial court
therefore properly determined it lacked subject matter jurisdiction to hear Turners action, and
I would affirm its dismissal of the lawsuit.
We note that his wife, Melissa Turner, was also named as
a plaintiff in the January 26, 1999, complaint against RPL. Under count
II of the complaint, Melissa alleges that "[a]s a result of the negligence
of defendant RP&L, she has suffered a diminishment and loss of her husband's
love, care, affection, and services." R. 9. For the sake
of brevity, we have only referred to Turner's claim against RPL.
We heard oral argument at Franklin College on December 7, 2000.
We gratefully acknowledge the hospitality of the students, faculty, and administration of
the College and the capable advocacy of the parties' counsel.
Footnote: Indiana Code section 8-1.5-3-4 outlines the powers and duties of the
board of directors of a utility. This statutory provision provides in pertinent
(a) The board has general supervisory powers over the utilities under its control,
with responsibility for the detailed supervision of each utility to be vested in
its superintendent, who is responsible to the board for the business and technical
operation of the utility. The board shall:
(1) fix the number and compensation of employees;
(2) adopt rules governing the appointment of employees including making proper classifications and
(A) determine the eligibility of applicants;
(B) determine by competitive examination the relative fitness of the applicants for positions;
(C) establish eligible lists arranged according to the ratings secured;
(D) provide for the appointment of those have the highest ratings; and
(E) provide for the promotion of employees;
(3) subject to IC 36-4-9-2, appoint a superintendent or manager of each utility
under its control who is responsible to the board for the business and
technical operation of the utility; the board shall make the appointment on the
basis of fitness to manage the particular utility to which he is to
be assigned, taking into account his executive ability and his knowledge of the
(4) subject to IC 36-4-9-12, hire attorneys when required for operation of the
(5) hire professional or expert personnel when required for the operation of the
(6) submit a budget of its financial needs for the next year in
the detail required by the municipal legislative body;
(7) recommend to the legislative body reasonable and just rates and charges for
services to the patrons of each utility;
(8) appropriate, lease, rent, purchase, and hold all real and personal property of
(9) enter upon lands for the purpose of surveying or examining the land
to determine the location of any plant or appurtenances;
(10) award contracts for:
(A) the purchase of capital equipment;
(B) the construction of capital improvements;
(C) other property or purposes that are necessary for the full and efficient
construction, management, and operation of each utility;
(11) adopt rules for the safe, economical, and efficient management and protection of
(12) deposit at least weekly with the municipal fiscal officer all money collected
from each utility to be kept in a separate fund subject to the
order of the board; and
(13) make monthly reports to the fiscal officer of the receipts and disbursements
of money belonging to each utility and an annual report of the condition
of the utility.
(b) The board may purchase by contract electricity, water, gas, power, or any
other commodity or service for the purpose of furnishing the commodity or service
to the patrons of the municipally owned utility or to the municipality itself.
(c) If the board wants to purchase the commodity or service from a
public utility and the parties cannot agree on a rate or charge to
be paid for it, either party may apply to the commission or other
appropriate state or federal regulatory agency to establish a fair and reasonable rate
or charge to be paid for the commodity or service.
(d) The board may discontinue water service by a waterworks to:
(1) a water consumer; or
(2) any property . . . .
Footnote: Currently Ind. Code § 34-6-2-110.
Footnote: On rehearing, the
Buckley court clarified a misstatement concerning the statutory
provision for the initial appointment of the board members. Buckley v. Standard
Inv. Co., 586 N.E.2d 843, (Ind. 1992). However, the court reaffirmed its
holding: "the Board of Trustees is an independent, self-perpetuating body with a tenuous
statutory relationship to city government that involves no control over the actions or
current makeup of the Board by the city of Indianapolis." Id.
In determining RPL is a separate entity from the City, the majority
notes that it appears that RPL regularly retains private counsel to handle its
business affairs . . . [t]he record supports the conclusion that RPL has
its own outside counsel . . . [t]hus, it appears that RPL conducts
its legal matters . . . separate and distinct from the City.
Slip op. at 17. I do not read the record as supporting
this characterization of that aspect of RPLs relationship with the City.
Turner asserts in his Statement of the Facts that RPL has the power
to sue and be sued in its own name, has private counsel on
retainer, and in fact has sued in its own name and has hired
outside counsel in each case, rather than use the CITYS counsel. (Br. of
Appellant at 4.) The record reference Turner offers does not directly support
that statement. It reflects the following exchange between Turners counsel and RPLs
chief operating officer:
Q. Do you know of any time RP&L has filed a lawsuit against anybody?
A. I believe it has happened. It was before my time so I
wasnt involved in it. I think the, maybe even five, eight years
ago had to go to lawsuit, but it was before my time.
I dont know how its done.
Q. And that suit was brought on behalf of RPL directly, right?
A. I wasnt involved with it, I dont know.
Q. Is that your understanding, it was RP&L that brought suit?
Q. Does RP&L have attorneys on staff?
A. I would consider the city attorney an attorney on staff. We pay
for part of his wages and I call him up quite frequently and
use them --
Q. The only counsel --
A. --but they would be the only consider staff.
Q. Do you have attorneys that you retain as independent law firms?
Q. Are there some that are on a constant retainer?
A. Not what I would consider the true definition of retainer, no. We
use them constantly, we pay for their services, but we dont pay a
separate retaining fee.
Q. You just pay an hourly rate?
A. Hourly rate, correct.
Q. But youre using them all the time?
Q. Those are just local Richmond firms or Indianapolis firms?
A. Indianapolis and at times Washington, D.C.
Q. And those are paid for by RP&L?
Q. Is that, are you the one that hires the lawyers?
A. Im the one that recommends hiring them but the city attorney has the,
I guess final authority on whether or not he approves hiring them or
Q. Does he ever not follow your recommendation?
A. Not since Ive been on board, no.
(R. at 148.)
Turner asserts in his argument, though not in his Statement of the
Facts, that RPL is a separate and distinct profit-driven corporation, (Br. of Appellant
at 10) and that the CITY and RPL are effectively separate corporate entities.
Id. at 15.) Turner directs us to no evidence in the
record indicating the City and RPL have separate corporate structures, and my review
of the record reveals none.