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Fireman's Fund Insurance Co. v. Workers' Compensation Appeals Board

October 12, 2010

FIREMAN'S FUND INSURANCE COMPANY ET AL., PETITIONERS,
v.
WORKERS' COMPENSATION APPEALS BOARD AND CALIFORNIA INSURANCE GUARANTEE ASSOCIATION, RESPONDENTS.



PROCEEDINGS to review a decision of the Workers' Compensation Appeals Board. Affirmed and Remanded. (W.C.A.B. No. ADJ3426326).

The opinion of the court was delivered by: Armstrong, J.

CERTIFIED FOR PUBLICATION

Pursuant to an agreement, Rocket Science Laboratories (Rocket Science) provided employees for film production, and Payday, Inc. (Payday) agreed to be the employer and make payments to employees including workers' compensation. Thomas Colamaria was hired as a supervising producer for "Temptation Island," and injured his back during the production and claimed workers' compensation benefits. Payday was insured for workers' compensation by Reliance National Indemnity Co. (Reliance) and Rocket Science was insured for workers' compensation by Fireman's Fund Insurance Co. (Fireman's Fund). Reliance became insolvent and workers' compensation was provided by the California Insurance Guarantee Association (CIGA). CIGA is an association of insurers licensed in California. (Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 786.) Rocket Science and Fireman's Fund asked to be dismissed as defendants by the Workers' Compensation Appeals Board (WCAB). The WCAB denied dismissal, finding that Payday and Rocket Science were jointly and severally liable employers for workers' compensation, that the Fireman's Fund policy language was clear and provided unlimited coverage without the required exclusion for employees like Colamaria, and that CIGA was not liable if there was other insurance under Insurance Code section 1063.1, subdivision (c)(9). CIGA pays "covered claims" of insolvent member insurers pursuant to Insurance Code section 1063.1, subdivision (c)(1). (Isaacson, supra, 44 Cal.3d at pp. 786-787.) "'Covered claims' does not include (A) any claim to the extent it is covered by any other insurance of a class covered by this article available to the claimant...." (Ins. Code, § 1063.1, subd. (c)(9).)

Fireman's Fund and Rocket Science petitioned for writ of review. Petitioners contend that they have no liability and should be dismissed because Payday obtained workers' compensation coverage from Reliance pursuant to the agreement with Rocket Science as contemplated by Labor Code section 3602, subdivision (d).*fn1 Petitioners also contend that they intended that employees like Colamaria would be covered by the workers' compensation policy provided by Reliance, and not Fireman's Fund, under section 3602, subdivision (d).

We conclude that Payday and Rocket Science are jointly and severally liable employers to employees like Colamaria for workers' compensation, and that the liability of Rocket Science and Fireman's Fund is not extinguished by compliance with section 3602, subdivision (d). Section 3602, subdivision (d) expressly provides that complying employers shall not be subject to civil, criminal, or other penalties or tort liability, which does not include employer joint and several liability for workers' compensation. Section 3602, subdivision (d) also does not preclude Rocket Science from having applicable workers' compensation coverage under the Fireman's Fund policy. We also conclude that coverage under the Fireman's Fund policy is clear and unlimited without the statutory exclusion for employees like Colamaria, and that the policy provisions control. We affirm the WCAB's decision and remand the matter for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

Pursuant to an agreement in 1994, the predecessor of Rocket Science agreed to provide employees for film production and Payday agreed to be the employer and make all payments to employees, including workers' compensation, for 2 percent of the gross payroll. In 2000, Rocket Science hired Thomas Colamaria as a supervising producer for the production of "Temptation Island" off the coast of Belize. Colamaria was paid by Payday. Colamaria injured his back during the production on September 17, 2000, and October 2, 2000, and filed claims for workers' compensation. Payday was insured for workers' compensation by Reliance and Rocket Science was insured for workers' compensation by Fireman's Fund. Reliance became insolvent and CIGA filed an appearance as a defendant.

The parties proceeded to trial on the issues of employment and insurance coverage and liability before the workers' compensation administrative law judge (WCJ). Ron Renaud, the President of Payday from August 1994 to August 2005, testified that the 1994 agreement was the operative contract between Payday and Rocket Science. Renaud testified further that Payday paid the employees for "Temptation Island" based on time cards, but did not hire them or have control over their duties. Renaud intended to provide the services specified in the agreement, including insuring the employees for workers' compensation. Renaud also testified that some production companies have their own employees covered under Payday's workers' compensation insurance. Renaud did not know whether Rocket Science was covered by other insurance during the production of "Temptation Island."

Trial was continued, and Colamaria and CIGA entered into Stipulations with Request for Award that temporary disability indemnity would be paid pending resolution of employment and reimbursement. Colamaria and CIGA subsequently entered into a Compromise & Release settlement agreement for $127,308, with CIGA reserving any right to contribution or reimbursement from any and all defendants. CIGA also filed a petition for contribution to recover all benefits paid under Insurance Code section 1063.1, subdivision (c)(9). Rocket Science and Fireman's Fund filed a petition to be dismissed as defendants, contending in part that they did not intend insurance coverage for employees like Colamaria under section 3602, subdivision (d).

The WCJ issued Findings of Fact finding that Payday was the general employer and Rocket Science the special employer of Colamaria when he injured his back. The WCJ also denied the motion for dismissal by Fireman's Fund and Rocket Science, finding that because their liability was joint and several, the policy did not contain an express exclusion of coverage for special employees like Colamaria, and that the claim was covered by other insurance and not CIGA under Insurance Code section 1063.1, subdivision (c)(9). In the opinion on decision, the WCJ explained that the findings were based on the continuing agreement between Payday and Rocket Science, the Reliance and Fireman's Fund workers' compensation insurance policies, Renaud's testimony, the depositions of Colamaria, Jean-Michael Michenaud, and Richard Christopher Cowan (the partners of Rocket Science), and Matt Laviano, the Executive Director of Business and Legal Affairs for Rocket Science.

Fireman's Fund petitioned the WCAB for reconsideration, contending that Payday and Rocket Science had complied with section 3602, subdivision (d) by obtaining workers' compensation coverage from Reliance pursuant to the agreement, which extinguished Rocket Science's liability and acted as an express exclusion of coverage for special employees like Colamaria. Consistent with the Legislature's intent in enacting section 3602, subdivision (d), Payday and Rocket Science intended sole coverage by the Reliance policy as indicated by the agreement and Cowan's deposition testimony, and not duplicate coverage under the Fireman's Fund policy. Therefore, the Fireman's Fund policy was not other insurance under Insurance Code section 1063.1, subdivision (c)(9), so that the motion for dismissal should have been granted.

In the report on reconsideration, the WCJ added that under County of Los Angeles v. Workers' Comp. Appeals Bd. (1981) 30 Cal.3d 391, 405-406 [County general employer which provided special employer special employee jointly and severally liable for workers' compensation, solely liable for special employee on County payroll at time of injury as self-insured under Ins. Code, § 11663] and Kowalski v. Shell Oil Co. (1979) 23 Cal.3d 168, 175 [contract not determinative of special employment where no control over employee], it is well settled that Payday as the general employer and Rocket Science as the special employer are jointly and severally liable to their injured special employees like Colamaria for workers' compensation. The WCJ noted that liability between general and special employers and their insurers for injuries to special employees normally follows payroll. However, Reliance was in liquidation and CIGA's liability was limited under Insurance Code section 1063.1, subdivision (c). The WCJ explained further that the Fireman's Fund policy does not contain an express exclusion of coverage for special employees like Colamaria, or any reference to the agreement between Payday and Rocket Science. The Fireman's Fund policy language is also clear, explicit, broad, unqualified and unambiguous, so that there was no need to go outside its provisions for interpretation of coverage. The WCJ concluded that the Fireman's Fund policy is other insurance under Insurance Code section 1063.1, subdivision (c)(9), and that reconsideration and the motion to dismiss should be denied.

The WCAB adopted the WCJ's findings and report based on the record and denied Fireman's Fund's petition for reconsideration.

Fireman's Fund and Rocket Science petitioned for writ of review and this court initially denied the petition. Fireman's Fund and Rocket Science petitioned the Supreme Court for review. The Supreme Court granted, with directions for this court to vacate its order denying the petition for writ of review and issue writ of review to be heard when ordered ...


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