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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Christopher Lovely, Steven Adams, Robert Defoe, Charles Van Curren, and Dustin Leavitt v. Baker Hughes, Inc.; Baker Hughes Oilfield Operations, Inc.; and Baker Petrolite Corporation (3/20/2020) sp-7434
Notice: This opinion is subject to correction before publication in the P ACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
CHRISTOPHER LOVELY, STEVEN )
ADAMS, ROBERT DEFOE, ) Supreme Court No. S-16967
CHARLES VAN CURREN, and )
DUSTIN LEAVITT, ) Superior Court No. 3AN-15-06199 CI
)
Appellants,
) O P I N I O N
)
v.
) No. 7434 - March 20, 2020
)
BAKER HUGHES, INC.; BAKER )
HUGHES OILFIELD OPERATIONS, )
INC.; and BAKER PETROLITE )
CORPORATION, )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Eric A. Aarseth, Judge.
Appearances: Michael W. Flanigan, Flanigan & Bataille,
Anchorage, for Appellants. Steven S. Tervooren, Hughes
White Colbo Wilcox & Tervooren, LLC, Anchorage, and
Mark A. Solheim and Stephen P. Laitinen, Larson King,
LLP, St. Paul, Minnesota, for Appellees.
Before: Bolger, Chief Justice, Winfree, Maassen, and
Carney, Justices. [Stowers, Justice, not participating.]
MAASSEN, Justice.
----------------------- Page 2-----------------------
I. INTRODUCTION
Aconstructioncontractor'semployeeswereinjured onthejoband received
workers' compensation benefits from their employer. The workers later brought a
negligence suit against three other corporations: the one that had entered into the
construction contract with their employer, that corporation's parent corporation, and an
affiliated corporation that operated the facility under construction. The three
corporations moved for summary judgment, arguing that all three were "project owners"
potentially liable for the payment of workers' compensation benefits and therefore were
protected from liability under the exclusive liability provision of the Alaska Workers'
Compensation Act. The superior court granted the motion, rejecting the workers'
argument that status as a "project owner" was limited to a corporation that had a
contractual relationship with their employer.
We conclude that a project owner, for purposes of the Act, must be
someone who actually contracts with a person to perform specific work and enjoys the
beneficial use of that work. We further conclude that the workers raised issues of
material fact about which of the three corporate defendants satisfied this definition. We
therefore reverse the superior court's grant of summary judgment.
II. FACTS AND PROCEEDINGS
A. The Construction Contract
Baker Petrolite Corporation operated a chemical transfer facility1 on the
Kenai Spur Highway. A related entity, Baker Hughes Oilfield Operations, Inc., entered
into a construction contract with UIC Construction, LLC for construction of a
replacement "Baker Petrolite Facility" with more capacity and storage space. The form
1 We note some disagreement in the witness testimony about whether the
facility would be more properly characterized as a "warehouse." Because it does not
appear to be a critical issue, we use the same term as the superior court.
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2
contract, dated April 5, 2013, was signed by David Emerson, vice president of Baker
Hughes Oilfield Operations, as "Owner," and by Chris Phillips for UIC Construction.
Both Baker Hughes Oilfield Operations and Baker Petrolite are subsidiaries of Baker
3
Hughes, Inc., a Delaware corporation with a principal place of business in Texas.
The contract purported to represent "the entire and integrated agreement
betweentheparties[,]. . . supersed[ing]prior negotiations, representationsoragreements,
either written or oral." The contract listed a number of documents which could pre-date
or post-date the contract and which were to be considered "as fully a part of the Contract
as if attached to this Agreement or repeated herein." The contract provided that it would
govern over any inconsistent documents except a modification.
One contract exhibit included as a "Contract Document" was a June 2013
letter stating that Baker Petrolite and UIC Construction had reached a "preliminary
agreement" about "renovation of Baker Petrolite Corporation's existing facility" on the
Kenai Spur Highway. Like the contract itself, it was signed by Phillips and Emerson, but
no corporate name accompanied Emerson's signature. The names of both Baker Hughes
and Baker Hughes Oilfield Operations appeared at the top of the letter.
2 The contract was "AIA Document A102 - 2007," which contained a
provision that made certain "Contract Documents," including "Conditions of the
Contract," "fully a part of the Contract." The parties also signed a form "General
Conditions of the Contract for Construction." The documents were attached as separate
exhibits in pleadings before the superior court, but we refer to both documents as one
contract, as the parties apparently intended.
3 There is no evidence in our record of the precise relationship among the
three Baker Hughes entities, but the superior court stated in its summary judgment order,
and the parties appear to agree, that Baker Hughes is the parent corporation and Baker
Hughes Oilfield Operations and Baker Petrolite are its subsidiaries.
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Several contract provisions are particularly relevant to the parties'
arguments on appeal. The contract defined "Owner" generally in § 2.1.1 as "the person
or entity identified as such in the Agreement" and included in the definition "the Owner
or the Owner's authorized representative." The contract's first page identified the
"Owner" as Baker Hughes Oilfield Operations, Inc. and the "Contractor" as UIC
Construction, LLC. At § 1.1.2 the contract provided that "[t]he Contract Documents
shall not be construed to create a contractual relationship of any kind . . . between any
persons or entities other than the Owner and the Contractor."
In a section addressing indemnification, the contract defined "OWNER"
4 Section 3.18.3.3 provided:
more expansively.
As used in this indemnity, the name "OWNER" means
Owner and its agents, employees, subcontractors,
independent contractors, officers, and directors, but not any
CONTRACTOR PARTY; and the name "OWNER" means
in addition OWNER'S successors and assigns, all of its
affiliated companies, and all of its parent and subsidiary
corporations, but the foregoing excludes any separate
contractors performing construction work on the Project.
For purposes of the indemnity provision, thus, "OWNER" included both "Owner" (i.e.,
Baker Hughes Oilfield Operations or its "authorized representative") and "its affiliated
companies." "CONTRACTOR PARTY" was defined in another section to include UIC
Construction's employees and subcontractors.
One indemnification provision required the "CONTRACTOR . . . to the
fullest extent permitted by law[] to indemnify . . . OWNER" for damages "from ALL
CLAIMS, DEMANDS, AND CAUSES OF ACTION FOR ALL DAMAGES that arise
out of . . . the injury to or the death of any person, including . . . any natural person
4
The contractdistinguished terms written in all capital letters fromthose that
were not.
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included within the definition[] of . . . CONTRACTOR PARTY." The indemnification
provision excluded "any liability arising out of the sole negligence or willful misconduct
of Owner" as well as "THE OWNER'S SOLE NEGLIGENCE AND WILLFUL
MISCONDUCT." But another indemnification provision required the
"CONTRACTOR[,] . . . to the fullest extent permitted by law, to indemnify . . .
OWNER" "EVEN IN THE EVENT OF THE OWNER'S SOLE NEGLIGENCE" "to
the extent that such injury [was] covered byworker[s'] compensation laws and benefits."
In a different section the "Contractor" agreed to indemnify and hold harmless the
"Owner and its agents and employees from and against claims, damages, losses, and
expenses . . . arising out of or resulting from the failure of the Contractor to perform its
obligations . . . as stated in the Contract Documents."
The contract required the "Contractor" to name "[t]he Owner, its affiliates,
parents and subsidiaries . . . as insureds or additional insureds" in most of the
contractor's insurance policies, but not its workers' compensation policy. The
"Contractor" was also required to purchase workers' compensation insurance and
provide proof of it to the "Owner." The "Owner" had "the absolute right to cancel th[e]
Agreement" if the "Contractor" failed to provide timely proof of workers' compensation
coverage. The contract set amounts of required insurance coverage, including workers'
compensation, and provided that the "Owner may (but shall not beobligated to) purchase
such insurance on the Contractor's behalf and shall be entitled to be repaid by [the]
Contractor for any premiums paid therefor."
B. The Lawsuit
Christopher Lovely, Steven Adams, Robert DeFoe, Charles Van Curren,
and Dustin Leavitt (the workers) all worked for UIC Construction on the project. On
May 8, 2014, some of UIC's employees sought medical care after breathing fumes with
a strong odor. According to a Baker Petrolite incident report, an employee of Baker
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Petrolite "was cleaning a tote that had last contained [a corrosion inhibitor] which
contains mercaptan and is very odorous." The "odor" from cleaning the tote was
"transferred" from the existing Baker Petrolite facility "into the new facility via [the]
vent discharge, the open windows/doors of the new facility and the prevailing wind
direction." According to the Material Safety Data Sheet, the corrosion inhibitor is
considered hazardous and when inhaled can cause a number of adverse health effects,
both acute and chronic, including headaches, dizziness, and nausea. The workers
contended that they suffered chronic health problems as a result of their exposure.
Theworkersreceived workers' compensationfromUICConstruction,their
employer. They later sued Baker Hughes, Baker Hughes Oilfield Operations, and Baker
Petrolite (collectively the corporations), alleging negligence causes of action.
The three corporations filed several summary judgment motions. One of
them contended that the workers' claims were barred because each of the corporations
5 and thus exempt from liability under
was a "project owner" as defined by AS 23.30.045
6 The corporations asserted that they all met the statutory definition of
AS 23.30.055.
"project owner" because "[t]he Contract states the Owners of the project are [Baker
Hughes Oilfield Operations] and any of its affiliated companies, including parent and
5 Alaska Statute 23.30.045(a), which requires employers to "secure the
payment to employees of the compensation payable under [the Act]," further provides:
"If the employer is a contractor and fails to secure the payment of compensation to its
employees or the employees of a subcontractor, the project owner is liable for and shall
secure the payment of the compensation to employees of the contractor and employees
of a subcontractor, as applicable." "Project owner" is defined as "a person who, in the
course of the person's business, engages the services of a contractor and who enjoys the
beneficial use of the work." AS 23.30.045(f)(2).
6 AlaskaStatute23.30.055provides that workers' compensationis an injured
employee's exclusive remedy against an employer and other persons who, by statute, are
"liable for or potentially liable for securing payment of compensation."
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subsidiary companies." Relying on the contract provisions related to indemnification
and the designation of additional insureds, the corporations contended that if any of them
was "a statutory 'project owner,' each affiliated company [was] as well."
The corporations presented other arguments in support of each one's status
as a project owner. They contended that Baker Hughes Oilfield Operations "was the first
Owner by virtue of its unique Project role," pointing to the testimony of a Baker Hughes
Oilfield Operations employee who was "tasked with initiating Baker Hughes-related
construction projects,and developing newBakerHughes-related facilities." Theyargued
that Baker Petrolite was a project owner because Baker Hughes Oilfield Operations had
assigned all of its rights under the contract to Baker Petrolite "as of October 31, 2013,
well before the May 8, 2014 event" that prompted the lawsuit. They attached a copy of
an undated assignment with an October 31, 2013 effective date, signed by the same
person, David Emerson, on behalf of both corporations. They also contended that Baker
Petrolite was "the operator of the site" and "enjoyed the intended use of UIC's
construction" of the facility. As for the parent corporation, Baker Hughes, the
corporations asserted that "[p]arent and affiliated companies . . . receive a number of
benefits from a successful subsidiary company," relying on a law review note that
7
primarily discussed subsidiary companies in the context of federal patent law.
The workers responded that "the actual facts" did not support the
corporations' arguments. According to the workers, the only corporation that might
qualify as a project owner was Baker HughesOilfield Operations,which they said owned
the land and which had entered into the construction contract as "the Owner." They
contended that nothing in the Alaska workers' compensation statute "was intended to
7
Bryce Young, Note, Recovering Lost Profits: The Resurrection of
T. T HOMAS L.J. 275 (2011).
Subsidiaries (Is There Life on Mars?), 8 U. S
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----------------------- Page 8-----------------------
allow 'project owners' to daisy chain every related company into the designation of
'project owner.' "
Theworkersdisputed whetherthedocumentassigningthecontractto Baker
Petrolite had actually been signed on its effective date - October 31, 2013 - pointing
out that it was undated and "signed by the same person for both parties." To support
their argument that the purported assignment had no effect on actual operations, they
attached deposition testimony from an employee of Baker Hughes Oilfield Operations
who confirmed that it was his decision to hire UIC Construction; that he was "the project
manager"; that "theonly oversight authority of the construction project wasthrough [his]
office"; and that he visited the construction site "every four to six weeks for progress
meetings or construction review."
The superior court granted summary judgment to the corporations.
8 the court found there to be
Beginning with the statutory definition of "project owner,"
"no dispute" that all three corporations "enjoy[ed] the beneficial use of" UIC
Construction's work. Turning to whether each of them had "engaged the [contractor's]
services," the court found it to be undisputed that UIC Construction "was contracted to
perform work for the benefit of" all three corporations; that the June 2013 letter showed
Baker Petrolite contracting with UIC Construction "for preliminary work"; that all three
corporations "require[d] UIC to indemnify themfrompotential workplace liability"; and
that the contract had been assigned by Baker Hughes Oilfield Operations to Baker
Petrolite. The court considered theseundisputed facts sufficient to conclude that all three
corporations had "engaged the [contractor's] services." The court found that the date the
assignment was signed, though disputed, was irrelevant because "even if the transfer
8 AS 23.30.045(f)(2) (defining "project owner" as "a person who, in the
course of the person's business, engages the services of a contractor and who enjoys the
beneficial use of the work").
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took place after the date of injury, [the assignment] is still evidence consistent with
[Baker Petrolite] being the benef[iciary] of the work and in the chain of engaging UIC's
services."
The court then concluded that all three corporations were potentially liable
for workers' compensation covering UIC Construction's employees: "If [Baker Hughes
Oilfield Operations] were insolvent and unable to provide the workers' compensation,
[Baker Petrolite and Baker Hughes] are both potentially liable." In support of this
conclusion the court cited the same facts noted above and "the indemnification clause in
the Contract," noting - without reference to specific contract language - that "it is
difficult to imagine [Baker Hughes] not being liable to provide workers' compensation
insurance if its subsidiary company were underfunded." The court observed that the
workers had "not shown, nor could they show, that under no circumstances could [the
three Baker Hughes corporations] never face such liability." The court concluded that
the three corporations were therefore "excluded from additional liability" under
AS 23.30.055 as project owners. It granted summary judgment to the corporations and
later entered final judgment in their favor.
The workers appeal.
III. STANDARDS OF REVIEW
We review a grant of summary judgment de novo, drawing all factual
9 We interpret a statute using our
inferences in favor of the nonmoving party.
independent judgment, "adopt[ing] the rule of law that is most persuasive in light of
precedent, reason, and policy."10 As a general rule, contract interpretation is a question
9 Cornelison v. TIG Ins. , 376 P.3d 1255, 1267 (Alaska 2016).
10
Bachner Co. v. State, 387 P.3d 16, 20 (Alaska 2016) (quoting Roberson v.
Southwood Manor Assocs., LLC, 249 P.3d 1059, 1060 (Alaska 2011)).
-9- 7434
----------------------- Page 10-----------------------
of law that we review de novo, but such interpretation can involve fact questions "when
11
the meaning of contract language is dependent on conflicting extrinsic evidence." In
such circumstances,thefactquestions mayprecludesummary judgmenton thecontract's
meaning.12
IV. DISCUSSION
A. Only An Entity That Meets The Definition Set Out In AS 23.30.045(f)
Is A Project Owner Protected By The Exclusive Liability Provision Of
AS 23.30.055.
The Alaska Workers' Compensation Act provides that an employee's
exclusive remedy against the employer for a workplace injury is for benefits under the
Act,13 but it also allows the employee to pursue tort actions against third parties who may
bear some responsibility.14
In 2004 the legislature amended the Act, expanding the
category of entities potentially liable for workers' compensation and therefore protected
15 As amended, the
from third-party tort claims by the exclusive remedy provision.
exclusive remedy provision protects not only the employer, as defined in AS 23.30.395,
but also any person "who, under AS 23.30.045(a), is liable for or potentially liable for
securing payment of compensation."16 The corporations do not argue that they are the
workers' "employer" as that term is defined in AS 23.30.395, leaving only
11 Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1000 n.1 (Alaska 2004).
12 See id. at 1004 (setting out conflicting testimony about meaning of clause
and observing that genuine issue of fact existed as to its meaning).
13 AS 23.30.055.
14 AS 23.30.015.
15 Ch. 80, SLA 2004.
16 AS 23.30.055 (emphasis added).
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AS 23.30.045(a) - extending liability to a "project owner" - as a possible basis for the
corporations' asserted exclusive liability defense. In this case we must determine
whether corporations that are not parties to a contract, but are related to a corporation
that is a party, may be "project owners" under the Act and therefore protected from
liability to the same extent as employers.
The beginning point for our statutory analysis is AS 23.30.045(a), which
provides:
If the employer is a subcontractor and fails to secure the
payment of compensation to its employees, the contractor is
liable for and shall secure the payment of the compensation
to employees of the subcontractor. If the employer is a
contractor and fails to secure the payment of compensation to
its employees or the employees of a subcontractor, the project
owner is liable for and shall secure the payment of the
compensation to employees of the contractor and employees
of a subcontractor, as applicable.
The terms used in AS 23.30.045(a) are defined in AS 23.30.045(f):
In this section,
(1) "contractor" means a person who undertakes by
contract performance of certain work for another but does not
include a vendor whose primary business is the sale or
leasing of tools, equipment, other goods, or property;
(2) "project owner" means a person who, in the course of
the person's business, engages the services of a contractor
and who enjoys the beneficial use of the work;
(3) "subcontractor" means a person to whom a contractor
sublets all or part of the initial undertaking.
We construe these definitions together because they are part of the same statute and refer
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17
to each other. To be a "project owner," the entity in question must "engage[] the
services of a contractor." A "contractor" is an entity that "undertakes by contract certain
work for another." A "subcontractor" enters the mix only if the "contractor" has "sublet"
part of the work it assumed by contract.
The parties dispute what it means to "engage the services of a contractor."
The workers argue that the "common understanding" of the phrase refers to "the person
who actual[ly] makes the agreement with the contractor," and they maintain that only
Baker Hughes Oilfield Operations -the named "Owner" under the contract -can meet
the statutory definition. The corporations argue that they are all project owners because
each one participated in some way in the construction project and their participation
shows that they "engaged the services of" UIC Construction as required by the "project
owner" definition. They maintain that the legislature did not limit "project owner" status
to those who have a contractual relationship with a contractor, but they provide no legal
analysis to support this assertion. Instead, they describe the extent of each corporation's
involvement in the project, pointing out, for example, that Baker Hughes's "worldwide
architect . . . put together the initial site plan and building layout" and that Baker
Petrolite's "management met with [Baker Hughes Oilfield Operations] to develop a
general construction plan."
"We construestatutes according toreason, practicality,and common sense,
considering the meaning of the statute's language, its legislative history, and its
17 "[W]hen construing a statute, 'we must, whenever possible, interpret each
part or section of a statute with every other part or section, so as to create a harmonious
whole.' " Alaska Airlines, Inc. v. Darrow , 403 P.3d 1116, 1127 (Alaska 2017) (quoting
State, Dep't of Commerce, Cmty. &Econ. Dev., Div. of Ins. v. Progressive Cas. Ins. Co. ,
165 P.3d 624, 629 (Alaska 2007)).
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18
purpose." When the legislature amended the statute in 2004 to add the definition of
"project owner," it defined the term in relation to the definition of "contractor": A
"project owner" is "a person who, in the course of the person's business, engages the
19 The definition
services of a contractor and who enjoys the beneficial use of the work."
of "contractor" requires a contract: In AS 23.30.045, " 'contractor' means a person who
undertakes by contract performance of certain work for another . . . ."20
We also consider the meaning of "engage." When used as a transitive verb,
"engage" means "[t]o obtain or contract for the services of; employ."21 As an intransitive
verb, "engage" can mean "[t]o involve oneself or become occupied; participate: engage
22 This latter meaning appears to be the way the corporations ask us to
in conversation."
construe the word; that is, that they were all "engaged," to one degree or another, in the
construction project. But the statute uses "engage" as a transitive verb; it has a direct
object, "the services." The relevant question is not "Was this corporation engaged in the
23 but rather "Did this corporation engage the services of the
construction project?"
contractor?" The common meaning of "engage" in its most relevant sense, as a transitive
verb, highlights the importance of a contractual relationship between "project owner"
18 Id. at 1121.
19 Ch. 80, § 3, SLA 2004; AS 23.30.045(f)(2) (emphasis added).
20 AS 23.30.045(f)(1) (emphasis added).
21 Engage, THE AMERICAN HERITAGE DICTIONARY (5th ed. 2020).
22 Id. (emphasis in original).
23 A variety of entities - for example, subcontractors, suppliers, inspectors,
licensing authorities, and affiliates of the contracting parties - may be engaged in a
construction project to some degree without having "engaged the services of the
contractor."
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----------------------- Page 14-----------------------
and "contractor." Reading the statutory definitions together, we must conclude that a
project owner is someone who engages the services of - that is, contracts with - a
person to perform specific work and enjoys the beneficial use of that work.
The legislative history supports this interpretation of AS 23.30.045(f). The
sponsor of the 2004 legislation explained that under the amendments, "the responsibility
for payment of workers' compensation is extended up the chain of contracts to include
project owners"; he also indicated that the exclusive liability provision would extend to
"those parties that are upstream in the chain of contracts from the employer of the
24 The phrase "chain of contracts" implies linked contractual
injured employee."
relationships. The corporations point to nothing in the legislative history that supports
their different interpretation of the statute. Nor do they explain how the participation of
Baker Hughes and Baker Petrolite in the planning process would create any legal
obligations between them and UIC Construction, the statutorily-defined "contractor,"
25 Baker Hughes Oilfield
which undertook "by contract performance of certain work for"
Operations.
Thelegislaturehas expressed anintentthat theActbeinterpreted toprovide
the "predictable delivery" of compensation coverage to injured workers "at a reasonable
cost" to employers who provide this coverage.26 Construing the statute as the
corporations suggest would undermine these goals. Whendetermining potential liability
for compensation depends on the interactions of corporations without clear lines of legal
24 Minutes, Sen. Labor & Commerce Comm., Hearing on Senate Bill (S.B.)
323, 23rd Leg., 2d Sess., 20-21 (Mar. 4, 2004) (emphasis added),
http://www.akleg.gov/PDF/23/M/SL!C2004-03-041332.PDF, (statement of Sen. Ralph
Seekins, sponsor of S.B. 323).
25 AS 23.30.045(f)(1).
26 AS 23.30.001(1).
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responsibility, coverage for workers and for others involved inthecompensation process
is less predictable. And becauseemployers and their workers' compensation carriers can
recover all or part of the compensation benefits they have paid from a successful third-
party damages claim, expanding the number ofentities that are exempt fromthose claims
without express legislative direction to do so decreases the opportunities for employers
and carriers to offset their payments, effectively increasing the cost of workers'
compensation.
The corporations argue that the 2004 amendments "protected potentially
liable parties from 'double-dipping' by injured workers," citing our decision in Schiel
27 We interpreted "double dipping" in the legislative
v. Union Oil Co. of California .
history as referring to a situation in which a contractor or subcontractor first paid
workers' compensation to its employee and then, "because of an indemnification
agreement, also had to defend against a tort suit the worker filed against the project
28 But "project owner" remains a statutorily-defined term; an entity does not
owner."
become a project owner simply because of an agreement between two other parties that
the entity will be indemnified if sued.
In all the cases in which we have considered and applied the "project
owner" definition, the project owner was a contracting party. In Schiel we discussed the
"master services contract between UNOCAL [which we assumed to be the project
owner] and Peak," the injured worker's direct employer.29 We set out the chain of
contracts in Nelson v. Municipality of Anchorage, in which the Municipality contracted
with one business for specific work and that business subcontracted part of the work to
27 219 P.3d 1025 (Alaska 2009).
28 Id. at 1033.
29 Id. at 1032-33.
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30
the injured employee's employer. We mentioned pertinent contract provisions when
31
discussing "project owner" status in Anderson v. Alyeska Pipeline Service Co.
And in
Trudell v. Hibbert we wrote that "the [project owners] contracted with" the injured
32
worker's employer for building repairs.
The only contract the parties identified and discussed here was the April
2013 construction contract signed by UIC Construction and Baker Hughes Oilfield
Operations, which incorporated the June 2013 letter memorializing what the superior
court called a preliminary agreement between Baker Petrolite and UIC Construction.
UIC Construction is the only "contractor" whose services the corporations contend they
engaged. On remand the superior court must consider whether the evidence shows that
each of the three Baker Hughes corporations was a party to that contract.
B. The Contract's Indemnity Provisions Are Irrelevant To Whether A
Baker Hughes Entity Is A Project Owner Under The Statutory
Definition.
The foregoing analysis is based on the language of the Act and does not
consider the import, if any, of the contract's indemnity provisions, which form a major
part of the corporations' argument. The corporations' contract analysis appears to begin
with language from the Act's exclusive remedy provision, AS 23.30.055. The statute
states that its protection extends to "employers" as defined in AS 23.30.395 and also
includes "a person who, under AS 23.30.045(a), is liable for or potentially liable for
securing payment of compensation." According to the corporations, "it is clear [fromthe
statutes] that any entity who is potentially liable for workers' compensation benefit
30 267 P.3d 636, 638 (Alaska 2011).
31 234 P.3d 1282, 1284, 1288 (Alaska 2010).
32 272 P.3d 331, 333 (Alaska 2012), vacated in part on other grounds on
reh'g, 299 P.3d 1279 (Alaska 2013).
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----------------------- Page 17-----------------------
payments to employees, regardless of whether the entity was engaged in contract
negotiations, cannot be liable in tort."
We disagree. The persons who "cannot be liable in tort" are those who
"under AS 23.30.045(a)" are "liable for or potentially liable for securing payment of
compensation"; that is, persons who are employers or project owners as defined by
statute. Being "liable for or potentially liable for securing payment of compensation"
does not by itself make someone a "project owner"; rather, being a "project owner," as
defined by statute, makes someone "liable for or potentially liable for securing payment
of compensation." The analysis begins with the statutory definitions, not whether
someone is "liable . . . or potentially liable." Theoretically, someone could assume
liability for workers' compensation payments by contract, as the corporations argue they
did here, but not be a "project owner" as statutorily defined and not be entitled to the
protection of the exclusive remedy provision. In short, regardless of how the
corporations defined themselves by contract, andregardlessof the obligations they claim
to have assumed, whether they are protected from third-party liability as project owners
still depends on whether they satisfy the statutory definition. 33
Furthermore, the corporations' contract arguments do not support their
claim that all three are "liable . . . or potentially liable" for the payment of workers'
compensation. The superior court accepted this argument; it concluded that all three
corporations "would be potentially liable to provide workers' compensation insurance"
if UIC Construction failed to do so. The court wrote that Baker Hughes's "potential
liability [was] acknowledged within . . . the indemnification clause in the Contract," and
it apparently relied on the same indemnification provisions to support its conclusion that
33 See Anderson , 234 P.3d at 1288 ("Because Alyeska satisfies the definition
of 'project owner' in AS 23.30.145(f)(2), it is covered by the exclusive liability
provisions of AS 23.30.055.").
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Baker Petrolite was potentially liable as well. The corporations urge us to adopt the same
rationale. They ask, "Where else would one consider a party's potential liability, save
for first examining the express or implied indemnity provisions in the contract?"
(Emphasis in original.)
We have accordingly examined the indemnity provisions in the contract,
but we find nothing in them to support the corporations' argument. All the obligations
identified in § 3.18, the indemnity section - "to indemnify, defend and hold harmless"
from various claims and causes of action - flowed in the same direction: from the
Contractor to the Owner. Nowhere in these provisions was the "potential liability" of
any Baker Hughes entity for workers' compensation "acknowledged"; indeed, under
these provisions the Owner assumed no obligation to the Contractor whatsoever. A
different part of the contract permitted, but did not require, "the Owner" (i.e., Baker
HughesOilfield Operations) to buy workers' compensationinsuranceifthe"Contractor"
failed to provide proof that it had done so, but this cannot be construed as requiring all
three corporations, even those not parties to the contract, to provide workers'
compensation.34
We find no support in the contract's indemnity provisions for the
corporations' argument that all three of them were project owners.
34 At oral argument on this appeal the corporations relied not just on the
contractual indemnity provisions but also on AS 45.45.900, which they had not cited in
the superior court or in their appellees' brief. The statute prohibits contractual indemnity
provisions that "purport[] to indemnify the promisee" against loss "from the sole
negligence or wilful misconduct of the promisee." Because this argument was not
briefed, we do not consider it further, State v. Pub. Safety Emps. Ass'n , 257 P.3d 151,
165 (Alaska 2011) ("[A]rguments are waived on appeal if they are inadequately
briefed.").
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C. Material Factual Disputes Also Precluded Summary Judgment.
We comment briefly on two documents that the superior court found to
support the corporations' arguments on summary judgment; we believe both of them
implicate factual issues that should have precluded the court's reliance on them. First,
the corporations held out the assignment as proof that Baker Petrolite was a project
owner; the superior court stated that the workers did "not dispute" that the assignment
"transferred the Contract from [Baker Hughes Oilfield Operations] to [Baker Petrolite]"
at some point during construction, and that although the date was disputed, the fact of
the assignment was itself "evidence consistent with [Baker Petrolite] being the
benef[iciary] of the work and in the chain of engaging UIC's services."
But in fact the workers did argue that the contract had not been assigned at
all because the corporations' actions belied an assignment, and on appeal they continue
to question both the validity of the assignment and the date any assignment took place.
A Baker Hughes Oilfield Operations employee testified that he provided the only
oversight authority on the project from start to finish, purported assignment
notwithstanding. The assignment gives no indication that UIC Construction consented
to it, even though the April 2013 contract prohibited assignment without theother party's
35 And the assignment says it was "executed by Assignor and
written consent.
Assignee . . . on the dates set forth below," but there is no date next to Emerson's two
signatures on behalf of the two parties. The validity of the assignment and the date it was
executed appear to be material to determining which corporation was a "project owner"
at the time of the accident, and the employees presented enough evidence to show that
these facts were genuinely disputed.
35
The only exception was that the "Owner" could, without written consent,
assign the contract "to a lender providing construction financing for the Project."
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We also see fact issues surrounding the June 2013 letter referencing "a
preliminary agreement." The superior court interpreted the letter as coming from Baker
Hughes Oilfield Operations but as proving that Baker Petrolite "contracted with UIC for
preliminary work," as the letter recites. But the only document in the record identified
as a "preliminary agreement" is between Baker Hughes Oilfield Operations and UIC
Construction; Baker Petrolite is not a party. Furthermore, the June 2013 letter was
incorporated into the construction contract as one of the "Contract Documents," and as
such it is inoperative to the extent it conflicts with the contract's terms - one of which,
as noted above, provides that "[t]he Contract Documents shall not be construed to create
a contractual relationship of any kind . . . between any persons or entities other than the
Owner and the Contractor."
In sum, the June 2013 letter by itself does not prove the existence of a
contractual relationship between Baker Petrolite and UIC Construction, despite its
recitals. And even if there were a Baker Petrolite contract for "preliminary work," it
would appear to be relevant to the workers' claims only if they were doing that
"preliminary work," under that contract, at the time they were injured. In other words,
a finding that Baker Petrolite was a project owner for different work under an earlier
contract would not mean it was a project owner for purposes of this suit.
The parties may well identify other fact issues that need to be addressed on
remand in the course of determining which of the Baker Hughes entities was a project
owner.
V. CONCLUSION
We REVERSE the superior court's grant of summary judgment and
REMAND the case to the superior court for further proceedings consistent with this
opinion.
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