Ries v. Jm Custom Homes, LLC

#29718-a-SPM
2022 S.D. 52

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

****

DOUGLAS RIES, Plaintiff and Appellant,

v.

JM CUSTOM HOMES, LLC, Defendant and Appellee.

****

APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA

****

THE HONORABLE ROBERT GUSINSKY
Judge

****

HEATHER M. LAMMERS BOGARD of
Costello, Porter, Hill, Heisterkamp,
Bushnell & Carpenter, LLP
Rapid City, South Dakota Attorneys for plaintiff and
appellant.

GARY D. JENSEN
BRETT A. POPPEN of
Beardsly, Jensen & Lee, Prof. LLC
Rapid City, South Dakota Attorneys for defendant and
appellee.

****

CONSIDERED ON BRIEFS
JANUARY 10, 2022
OPINION FILED 08/24/22
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MYREN, Justice

[¶1.] Douglas Ries received workers’ compensation benefits from his

employer following an employment-related injury at a construction site where his

employer was a subcontractor. After receiving those workers’ compensation

benefits from his employer, Ries filed a negligence claim against the general

contractor responsible for the construction project. After extensive discovery, the

general contractor sought leave from the circuit court to amend its answer to assert

statutory immunity under SDCL 62-3-10, which the circuit court granted. The

general contractor subsequently moved for summary judgment based on that

statutory immunity. The circuit court granted summary judgment after concluding

that the general contractor remained potentially liable for workers’ compensation

under SDCL 62-3-10. Given the exclusivity provision found in SDCL 62-3-2, the

circuit court concluded that workers’ compensation was the sole remedy available to

Ries. Ries appeals, and we affirm.

Facts and Procedural History

[¶2.] JM Custom Homes, LLC (JM) was the general contractor constructing

a home in Rapid City, South Dakota. JM subcontracted with Pine Tree Plumbing

(Pine Tree) to complete the plumbing work on the home. Pine Tree employed Ries.

[¶3.] On June 6, 2017, Ries was injured in the home when he fell through an

unanchored, plywood stair leading from the main level to the basement. The stair

caused him to fall and hang upside down on the staircase. Ries sustained injuries

to his right knee, left hip, and forearms. He later underwent several surgeries,

including a right knee replacement. Following the incident, Ries filed a workers’

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compensation claim under Pine Tree’s policy because the injury occurred during the

course and scope of his employment with Pine Tree. Pine Tree’s insurer, Acuity

Insurance, paid Ries’s workers’ compensation benefits. Ries then filed a negligence

suit in circuit court against JM, the general contractor, alleging JM was negligent

because it used unanchored, half-inch plywood on each step and failed to install

handrails.

[¶4.] After the parties had engaged in extensive discovery, JM filed a motion

to amend its answer to include statutory immunity as a defense. Ries opposed the

motion to amend, arguing that JM waived its ability to assert statutory immunity

because it failed to plead the defense in its initial answer. Both parties submitted

affidavits regarding the motion to amend answer, provided briefs, and presented

oral arguments to the circuit court. The circuit court signed an order granting JM’s

motion to amend answer on March 3, 2021. That order does not explain the circuit

court’s ruling, and there is no written decision in the record. 1 JM filed its amended

answer on March 9, 2021, asserting statutory immunity under SDCL 62-3-10, which

provides that “[a] principal, intermediate, or subcontractor is liable for

compensation to any employee injured while in the employ of any subcontractor and

engaged upon the subject matter of the contract, to the same extent as the

immediate employer.”

1. The record does not contain a transcript of the March 2, 2021 hearing on the
motion to amend. Although it appears the circuit court issued a bench ruling,
because of the absence of that transcript, we are unable to review any
analysis or explanation provided by the circuit court. However, during a
later hearing regarding the motion for summary judgment, the circuit court
indicated that it had “found there was no prejudice that would prevent the
amendment of the answer and the raising of the affirmative defense.”

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[¶5.] JM moved for summary judgment on May 14, 2021, arguing that

because it was subject to potential liability for workers’ compensation benefits

under SDCL 62-3-10, Ries’s sole remedy was from workers’ compensation. See

SDCL 62-3-2 (“The rights and remedies granted to an employee subject to this title

. . . exclude all other rights and remedies of the employee . . . except rights and

remedies arising from intentional tort.”).

[¶6.] In response, Ries argued that JM was not entitled to statutory

immunity under SDCL 62-3-10 because of language in JM’s insurance policy.

Noting that Pine Tree carries workers’ compensation insurance, Ries claimed that

JM’s insurance policy excludes liability for subcontractors who operate under the

Workers’ Compensation Act (Act).

[¶7.] The circuit court granted JM’s motion for summary judgment and

entered judgment on July 6, 2021. The circuit court determined that JM was

potentially liable to Ries for workers’ compensation under SDCL 62-3-10 and,

because of the exclusivity provisions of SDCL 62-3-2, workers’ compensation was

Ries’s sole remedy. Ries appeals and asserts that the circuit court abused its

discretion when it allowed JM to amend its answer and that the court erred in

granting JM’s motion for summary judgment.

Whether Ries’s notice of appeal included JM’s motion to amend answer.

[¶8.] As an initial matter, we address JM’s claim that Ries cannot challenge

the circuit court’s decision to grant JM’s motion to amend because Ries’s notice of

appeal did not specifically indicate an intention to appeal the circuit court’s decision

to allow JM to amend its answer.

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[¶9.] “On an appeal from a judgment this court may review intermediate

orders. However, they must involve the merits and necessarily affect the judgment

appealed from.” Lang v. Burns, 77 S.D. 626, 631, 97 N.W.2d 863, 866 (1959).

Moreover, notices of appeal should “be liberally construed in favor of their

sufficiency.” People ex rel. S.D. Dep’t of Soc. Servs., 2011 S.D. 26, ¶ 8, 799 N.W.2d

408, 409 (quoting Int’l Union of Operating Eng’rs Loc. No. 49 v. Aberdeen Sch. Dist.

No. 6-1, 463 N.W.2d 843, 844 (S.D. 1990)) (internal quotation marks omitted).

[¶10.] The amendment to JM’s answer asserted the exclusivity provisions of

SDCL 62-3-2, which provided the basis for the circuit court’s order granting

summary judgment. Because the order granting the amendment involves the

merits of summary judgment, the issue is before this Court as part of Ries’s appeal

of the circuit court’s decision granting summary judgment.

Whether the circuit court abused its discretion by granting JM’s motion to
amend its answer.

[¶11.] We review the circuit court’s decision to grant or deny a motion to

amend pleadings using the abuse of discretion standard of review. McDowell v.

Citicorp Inc., 2008 S.D. 50, ¶ 7, 752 N.W.2d 209, 212. “An abuse of discretion occurs

when ‘discretion [is] exercised to an end or purpose not justified by, and clearly

against, reason and evidence.’” Id. (alteration in original) (quoting In re Name

Change of L.M.G., 2007 S.D. 83, ¶ 6, 738 N.W.2d 71, 73–74).

[¶12.] “Under South Dakota law, a defendant is required to plead any and all

affirmative defenses in the answer to plaintiff’s complaint.” Jurgensen v. Smith,

2000 S.D. 73, ¶ 21, 611 N.W.2d 439, 442. However, “[a] trial court may permit the

amendment of pleadings before, during, and after trial without the adverse party’s

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consent.” Klutman v. Sioux Falls Storm, 2009 S.D. 55, ¶ 14, 769 N.W.2d 440, 446

(quoting Burhenn v. Dennis Supply Co., 2004 S.D. 91, ¶ 20, 685 N.W.2d 778, 783);

see SDCL 15-6-15(a) (“[A] party may amend his pleading . . . by leave of court or by

written consent of the adverse party; and leave shall be freely given when justice so

requires.”). “An affirmative defense is not waived if the pleadings are properly

amended to include the unpled defense or if the issue was tried by express or

implied consent.” Dakota Cheese, Inc. v. Ford, 1999 S.D. 147, ¶ 25, 603 N.W.2d 73,

78 (quoting Beyer v. Cordell, 420 N.W.2d 767, 769 (S.D. 1988) (emphasis removed)).

“[T]he most important consideration in determining whether a party should be

allowed to amend a pleading is whether the nonmoving party will be prejudiced by

the amendment.” Id. ¶ 24, 603 N.W.2d at 78 (quoting Isakson v. Parris, 526 N.W.2d

733, 736 (S.D. 1995)). “Prejudice is often shown when a party is surprised and

unprepared to meet the contents of the proposed amendment.” Robinson-Podoll,

2020 S.D. 5, ¶ 14, 939 N.W.2d at 38 (quoting Tesch v. Tesch, 399 N.W.2d 880, 882

(S.D. 1987)).

[¶13.] JM filed a motion to amend its answer approximately eight months

after its initial answer and after the parties had engaged in extensive discovery.

Although Ries had informally requested pretrial deadlines, none had been agreed to

by the parties or ordered by the circuit court. The circuit court had not set a trial

date. Ries’s ability to prepare to challenge JM’s assertion of this defense was not

restricted. Further, the circuit court found that allowing the amended answer

would not prejudice Ries. Accordingly, we conclude that the circuit court did not

abuse its discretion in granting JM’s motion to amend.

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Whether the circuit court erred in granting summary judgment.

[¶14.] “We review a circuit court’s entry of summary judgment under the de

novo standard of review.” Wyman v. Bruckner, 2018 S.D. 17, ¶ 9, 908 N.W.2d 170,

174 (quoting Heitmann v. Am. Fam. Mut. Ins. Co., 2016 S.D. 51, ¶ 8, 883 N.W.2d

506, 508). “We will affirm a circuit court’s ‘grant of a motion for summary judgment

when no genuine issues of material fact exist, and the legal questions have been

correctly decided.’” Harvieux v. Progressive N. Ins. Co., 2018 S.D. 52, ¶ 9, 915

N.W.2d 697, 700 (quoting Wyman, 2018 S.D. 17, ¶ 9, 908 N.W.2d at 174). We do not

give deference to the circuit court’s decision to grant summary judgment under de

novo review. Oxton v. Rudland, 2017 S.D. 35, ¶ 12, 897 N.W.2d 356, 360.

“Statutory interpretation is a question of law for the court to determine, and when

the trial court resolves the question in a litigant’s favor, summary judgment is

appropriate.” Sioux Valley Hosp. Ass’n v. State, 519 N.W.2d 334, 335 (S.D. 1994).

[¶15.] “The purpose of the South Dakota Worker’s Compensation Act is to

provide an injured employee with an expeditious remedy independent of fault and

to limit the liability of employers and fellow employees.” Thompson v. Mehlhaff,

2005 S.D. 69, ¶ 11, 698 N.W.2d 512, 516. “There is an inherent trade-off” as the

“employee is guaranteed compensation if injured on the job[,] but the employer’s

liability is limited in exchange for this certainty.” Id. ¶ 11, 698 N.W.2d at 516–17.

This “quid pro quo” under which the employer’s assumption of liability is traded for

immunity is codified in SDCL 62-3-2, which provides:

The rights and remedies granted to an employee subject to this
title, on account of personal injury or death arising out of and in
the course of employment, shall exclude all other rights and
remedies of the employee . . . against the employer or any

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employee, partner, officer, or director of such employer, except
rights and remedies arising from intentional tort.

(Emphasis added.) Thus, the Legislature designed workers’ compensation to be “the

exclusive method for compensating workers injured on the job in all but

extraordinary circumstances.” Harn v. Cont’l Lumber Co., 506 N.W.2d 91, 95 (S.D.

1993).

[¶16.] The Legislature did not limit the provisions on compensation

exclusivity and employer immunity to apply only to the employee’s immediate

employer. Rather, the Legislature extended the provisions to any “principal,

intermediate, or subcontractor,” as each is potentially liable for workers’

compensation. SDCL 62-3-10. While the employee must first bring a claim against

his immediate employer, the principal “remains liable to pay all or any unpaid part

of the compensation due.” Metzger v. J. F. Brunken & Son, Inc., 84 S.D. 168, 172,

169 N.W.2d 261, 263 (1969). This is evidenced by SDCL 62-3-10, which provides:

A principal, intermediate, or subcontractor is liable for
compensation to any employee injured while in the employ of
any subcontractor and engaged upon the subject matter of the
contract, to the same extent as the immediate employer. Any
principal, intermediate, or subcontractor who pays
compensation under the provisions of this section may recover
the amount paid from any person, who, independently of this
section, would have been liable to pay compensation to the
injured employee. Each claim for compensation under this
section shall in the first instance be presented to and instituted
against the immediate employer, but such proceeding does not
constitute a waiver of the employee’s rights to recover
compensation under this title from the principal or intermediate
contractor. However, the collection of full compensation from
one employer bars recovery by the employee against any others.
The employee may not collect from all a total compensation in
excess of the amount for which any contractor is liable. This
section applies only in cases where the injury occurred on, in, or
about the premises on which the principal contractor has

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undertaken to execute work or which are otherwise under the
contractor’s control or management.

(Emphasis added.)

[¶17.] This Court held in Metzger that a general contractor is subject to the

same non-fault liability for workers’ compensation as an immediate employer and

therefore has statutory immunity from negligence actions. Metzger, 84 S.D. at 172,

169 N.W.2d at 263. Metzger involved similar facts to this case; the defendant, a

general contractor, contracted with a subcontractor who employed Metzger. Id. at

169, 169 N.W.2d at 262. Metzger died while completing work for the subcontractor,

and his administrator filed a workers’ compensation claim against the

subcontractor. Id. Metzger’s estate received workers’ compensation benefits from

the subcontractor and then sued the general contractor, who sought statutory

immunity under SDC 64.0108. 2 Id. This Court concluded that due to the general

contractor’s potential liability under workers’ compensation law, the general

contractor “should enjoy the regular immunity of an employer from third-party suit

when the facts are such that he could be made liable for compensation,” as the

contractor is, “in effect, . . . the employer for the purposes of the compensation

statute.” Id. at 172, 169 N.W.2d at 263 (quoting Arthur Larson, The Law of

Workmen’s Compensation § 72.31(a)–(b) (current version at Arthur Larson, Larson’s

Worker’s Compensation Law § 111.04[1][a]–[b] (2021)).

[¶18.] Our holding in Thompson v. Mehlhaff reaffirmed these principles;

there, we stated, “[t]he general contractor receives immunity because the general

2. While Metzger contemplated SDC 64.0108, the statute was a predecessor of
SDCL 62-3-10. The changes between the statutes are non-substantive.

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contractor is the back-up provider of workers’ compensation coverage.” 2005 S.D.

69, ¶ 16, 698 N.W.2d at 518. In Thompson, two men, each employed by separate

employers, were killed in a trucking collision while in the scope of their separate

employment. Id. ¶ 3, 698 N.W.2d at 515. The estates of both men collected

workers’ compensation from their respective employers. Id. ¶ 4, 698 N.W.2d at 515.

One worker’s estate then sought to recover from the other worker’s employer,

asserting that the employer was vicariously liable for its employee’s negligence. Id.

The employer denied liability and asserted statutory immunity. Id.

[¶19.] This Court determined that statutory immunity did not apply to this

“type of down-the-ladder” claim because although general contractors receive

immunity because they remain potentially liable for workers’ compensation

benefits, “the opposite is not true.” Id. ¶ 16, 698 N.W.2d at 518. “The reason for the

difference in result is forthright: the general contractor has a statutory liability to

the subcontractor’s employee, actual or potential, while the subcontractor has no

comparable statutory liability to the general contractor’s employee.” Id. (quoting

Arthur Larson, Worker’s Compensation Law § 111.04[2] (2002)).

[¶20.] Ries argues that JM’s insurance policy precludes the application of

SDCL 62-3-10 for two reasons: (1) the policy named JM as the “insured” rather than

a subcontractor; and (2) Pine Tree was operating under the Act; therefore

precluding JM’s liability. Ries relies on the following language found within JM’s

policy: “The Workers Compensation Law may make you responsible to the

employees of a contractor (or subcontractor) doing work for you, unless such

contractor (or subcontractor) is operating under the Workers Compensation Act.”

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Ries contends that JM would ordinarily be liable for subcontractors but for this

language. He argues that because Pine Tree was operating under the Act, the

insurance policy’s language eliminates JM’s liability for workers’ compensation

benefits owed to a subcontractor’s employee. Citing Metzger, Ries asserts that

because JM is not liable to the same extent as a subcontractor due to the policy’s

language, it cannot claim statutory immunity under SDCL 62-3-10. Ries also

argues that a disputed material fact exists regarding the statute’s application,

precluding summary judgment.

[¶21.] In response, JM argues that the language of the insurance policy

between JM and its insurer is irrelevant to the application of the statutory

immunity provided by the Legislature. Alternatively, JM asserts that

interpretation of the policy language and its effect on statutory immunity is a

question of law. Along that vein, JM argues that the policy language does not

exclude benefits to employees of a subcontractor; instead, they argued the “provision

advises the insured that a state’s workers’ compensation law may make the insured

liable to employees of a subcontractor unless the subcontractor is operating under a

workers’ compensation act.” JM also argues that the policy provided coverage when

it stated, “[w]e will pay promptly when due the benefits required of you by workers

compensation law.”

[¶22.] Ultimately, however, we think the question before us has less to do

with whether JM was obligated to cover this injury and is better focused more

broadly upon whether JM has accepted the obligation to be liable under the

workers’ compensation statute. As Metzger and Melhaff explain, a general

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contractor’s claim for immunity exists solely because of its ancillary liability to pay

workers’ compensation benefits to injured subcontractors’ employees under SDCL

63-3-10. This exchange of immunity for liability is emblematic of an indirect, more

remote relationship between a subcontractor’s employees and a general contractor

cast in the role of a statutory employer. Though it differs from the traditional

employee and employer relationship, it is no less connected to the statutory

moorings of our workers’ compensation system, which require, among other things,

that employers “accept” the provisions of our workers’ compensation statutes.

[¶23.] A private-sector employer is “deemed to have accepted” if it has

secured its obligation to pay benefits by purchasing insurance, entering into a

reciprocal or interinsurance contract, or complying with self-insurance rules. See

SDCL 62-3-5; SDCL 62-5-2 to -3, -5. An employer who fails to secure its liability

using one of these methods “shall be deemed to have elected not to operate under”

the workers’ compensation system. SDCL 62-5-7.

[¶24.] Thus, JM is incorrect when it argues that “worker’s compensation

coverage is irrelevant to whether worker’s compensation is Ries’s exclusive remedy

and that JM is immune from this negligence lawsuit.” To avail itself of statutory

immunity, JM must show that it has “accepted” the workers’ compensation statutes

by securing benefits for the employees of its subcontractors. JM’s insurance policy

secures such coverage.

[¶25.] The language found in SDCL 62-3-10 and SDCL 62-3-2 is clear. A

general contractor, which has availed itself of the workers’ compensation statutes,

is potentially liable to a subcontractor’s employee for workers’ compensation

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benefits under SDCL 62-3-10. Where such potential liability exists, as it does here,

SDCL 62-3-10 provides that Ries’s sole remedy is workers’ compensation. Such a

result is consistent with Metzger and Thompson. Here, JM is the general contractor

who, in turn, subcontracted with Pine Tree. Pine Tree employed Ries. Though Ries

was statutorily required to file a claim against Pine Tree, JM remained potentially

liable for workers’ compensation benefits under SDCL 62-3-10. Thus, the exclusive

remedy provision found in SDCL 62-3-2 limited Ries’s recovery to workers’

compensation, which he received from Pine Tree. The circuit court did not err in

granting JM’s motion for summary judgment. We affirm.

[¶26.] KERN, SALTER, and DEVANEY, Justices, concur.

[¶27.] JENSEN, Chief Justice, dissents.

JENSEN, Chief Justice (dissenting).

[¶28.] I agree with the majority opinion that “[t]o avail itself of statutory

immunity, JM must show that it has ‘accepted’ the workers’ compensation statutes

by securing benefits for the employees of its subcontractors.” However, I dissent

from the opinion affirming summary judgment because JM failed to make the

necessary showing that it is an “employer” entitled to immunity under the exclusive

remedy provisions of the workers’ compensation statutes.

[¶29.] To prevail on its motion for summary judgment, JM had the burden to

prove its affirmative defense that it was an employer entitled to claim the benefit of

the exclusive remedy provision in SDCL 62-3-2. See Zephier v. Cath. Diocese of

Sioux Falls, 2008 S.D. 56, ¶ 9, 752 N.W.2d 658, 663–64 (concluding that affirmative

statutory defenses require the defendant to first “presumptively establish[] the

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defense . . . [before] the burden then shifts to the plaintiff to establish the existence

of material facts in avoidance of the [defense].’”) (citation omitted).

[¶30.] JM failed to present any facts in support of its statement of material

facts showing that it paid Ries for any services he performed or that it is an

employer entitled to claim immunity as provided in the exclusive remedy statute in

SDCL 62-3-2. Instead, JM presented facts showing that Pine Tree was a

subcontractor of JM and that “Ries was an employee of Pine Tree[.]”

[¶31.] Ries’s response to the motion for summary judgment included a policy

declarations page showing that Pine Tree had workers’ compensation coverage in

force for its employees at the time Ries was injured. JM did not dispute this fact,

and its statement of material facts included a recitation that Ries made a workers’

compensation claim to Pine Tree and received benefits from Pine Tree’s workers’

compensation carrier. Ries’s submission also included the workers’ compensation

policy for JM in effect at the time of the injury. The declarations page shows that

the JM policy provided workers’ compensation coverage for seven of its employees.

JM made no showing that Ries was one of those employees or that it had purchased

workers’ compensation coverage for Ries under its policy. 3

[¶32.] SDCL 62-5-1 requires an “employer” under the workers’ compensation

statutes to “secure the payment of compensation to the employer’s employees in one

of the ways provided by § 62-5-2 or 62-5-3.” SDCL 62-5-2 and -3 provide that “[a]n

employer may secure the payment of compensation to any employee” by purchasing

3. Absent some showing that Ries was a covered employee under JM’s policy,
the general policy language that the insurer will “pay promptly when due the
benefits required of you by the workers compensation law[,]” is unavailing.

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workers’ compensation coverage for an employee under SDCL 62-5-2 or by

purchasing insurance to cover an employee through an association under SDCL 62-

5-3. Alternatively, SDCL 62-5-5 allows an employer to self-insure to secure the

payment of compensation under SDCL 62-5-1.

[¶33.] If an employer secures the payment of compensation, SDCL 62-5-1

limits the liability of an employer to an employee for any work-related injury

“arising out of and in the course of the employment only as specified by this title.”

However, SDCL 62-3-5 provides that no private employer “may be deemed to have

accepted the provisions of this title unless the employer has complied with the

provisions of §§ 62-5-1 to 62-5-5, inclusive.” The quid pro quo explained in Metzger

and Thompson is not implicated here as JM did not secure payment for Ries as

required for an employer under SDCL 62-5-1. “The employer’s immunity from

common-law liability arises from the fact that he contributes to the compensation

fund; absent contribution, no immunity exists.” Blumhardt v. Hartung, 283 N.W.2d

229, 233 (S.D. 1979) superseded by statute SDCL 62-3-2 as recognized by Canal Ins.

Co. v. Abraham, 1999 S.D. 90, ¶ 21 n.5, 598 N.W.2d 512, 517 n.5. Thus, JM cannot

claim the immunity provided to employers under SDCL 62-3-2, even if we could

somehow construe JM to be an “employer” under the statute.

[¶34.] In addition to JM failing to meet its burden on summary judgment, a

substantial question exists whether this Court should continue to rely on Metzger to

support general contractor immunity under the exclusive remedy statute in SDCL

62-3-2. While not directly addressed in the parties’ briefing, the exclusive remedy

statute has changed since Metzger was decided. In Metzger, the exclusive remedy

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statute in SDC 64.0104 foreclosed any “other rights and remedies” to an employee

receiving workers’ compensation benefits:

The rights and remedies herein granted to an employee subject
to this title, on account of personal injury or death by accident
arising out of and in the course of employment, shall exclude all
other rights and remedies of such employee, his personal
representatives, dependents, or next of kin, on account of such
injury or death.

Applying this language, Metzger tied the broad immunity provided in SDC 64.0104

to SDC 64.0108, which made the general contractor secondarily liable for a workers’

compensation remedy when an employee of a subcontractor was injured on the

project and the employee did not receive full compensation from the subcontractor.

Based upon the secondary liability of a general contractor, Metzger treated the

general contractor as a “statutory employer” entitled to immunity from an injured

employee’s suit. At the time Metzger was decided, the plain language of the statute

did not prevent this extension of immunity to a non-employer general contractor.

[¶35.] The current language of SDCL 62-3-2 specifically limits the immunity

provided in the exclusive remedy statute to an employer by providing that “[t]he

rights and remedies granted to an employee . . . on account of personal injury or

death arising out of and in the course of employment, shall exclude all other rights

and remedies of the employee . . . against the employer or any employee, partner,

officer, or director of the employer[.]” (Emphasis added.) An “employer” is defined

by SDCL 62-1-2 to include (1) any individual or entity “using the service of another

for pay[,]” or (2) “[a]ny person performing labor incidental to the person’s own

occupation who has elected to proceed under the provisions of SDCL 58-20-3 by

purchasing workers’ compensation insurance to cover the person . . . irrespective of

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whether the person is using the services of another for pay.” JM does not meet

either definition of an employer.

[¶36.] This Court has recognized that “proceedings under the Work[ers’]

Compensation Law . . . are purely statutory, and the rights of the parties and the

manner of procedure under the law must be determined by its provisions.” Martin

v. Am. Colloid Co., 2011 S.D. 57, ¶ 12, 804 N.W.2d 65, 68 (alteration in original)

(citation omitted). When called upon to interpret workers’ compensation statutes

we apply two rules of construction to determine the legislative intent:

The first rule is that the language expressed in the statute is the
paramount consideration. The second rule is that if the words
and phrases in the statute have plain meaning and effect, we
should simply declare their meaning and not resort to statutory
construction. When we must, however, resort to statutory
construction, the intent of the legislature is derived from the
plain, ordinary and popular meaning of statutory language.

Progressive Halcyon Ins. Co. v. Philippi, 2008 S.D. 69, ¶ 5, 754 N.W.2d 646, 649

(citation omitted). The language of SDCL 62-3-2 and SDCL 62-1-2 is clear that

workers’ compensation immunity is only extended to an “employer,” and JM is not

an “employer.”

[¶37.] This reading of SDCL 62-3-2 is consistent with other jurisdictions that

have analyzed whether a general contractor is the “statutory employer” of a

subcontractor’s employee when the exclusive remedy statute limits an injured

employee’s rights and remedies against only the employer. See, e.g., Munoz v.

Bulley & Andrews, LLC, No. 127067, 2022 WL 186573, at *5 (Ill. Jan. 21, 2022)

(holding that a general contractor was not entitled to immunity against a

subcontractor employee’s claim “under the plain language of [the exclusive remedy

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statute] . . . .” because it did not qualify as an employer); see also Meiggs v.

Associated Builders, Inc., 545 A.2d 631, 632 (D.C. 1988) (concluding that a general

contractor was not an employer of a subcontractor’s employee under the District of

Columbia workers’ compensation statutes, and therefore, did not enjoy immunity

under the exclusive remedy provision). In Munoz, the Supreme Court of Illinois

recently applied the plain language of its workers’ compensation exclusive remedy

statute to hold that “while the [workers’ compensation act] bars an employee from

bringing a civil suit directly against his or her employer, it does not limit the

employee’s recovery from a third-party general contractor.” Munoz, at *7.

[¶38.] Metzger’s analysis extending immunity to a general contractor is no

longer sustainable in view of the plain language of SDCL 62-3-2 limiting the

exclusive remedy protections to employers of the injured worker. 4 Additionally, the

quid pro quo immunity articulated in Metzger has no application under our current

workers’ compensation scheme where a general contractor has not purchased

coverage and contractually relies upon the subcontractor to purchase coverage for

its employees. “The intent of a statute is determined from what the legislature said,

rather than what the courts think it should have said, and the court must confine

4. Neither does SDCL 62-3-10 support an adherence to Metzger. A general
contractor is secondarily liable under SDCL 62-3-10 to provide workers’
compensation benefits to a subcontractor’s employee, but only in the event
the subcontractor’s employee does not receive “full compensation” from the
subcontractor. SDCL 62-3-10 is simply a legislative mandate requiring a
general contractor to ensure its subcontractors provide workers’
compensation to its employees. The statute is silent in terms of providing
any immunity to a general contractor. Further, SDCL 62-3-10 has no
application when a general contractor has not purchased workers’
compensation coverage or paid any benefits to an injured employee of the
subcontractor.

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itself to the language used.” Martinmaas v. Engelmann, 2000 S.D. 85, ¶ 49, 612

N.W.2d 600, 611 (citations omitted).

[¶39.] Thompson is no more persuasive. The issue in Thompson was whether

a subcontractor was entitled to immunity under the workers’ compensation statutes

from an action by a general contractor’s employee. 2005 S.D. 69, ¶ 16, 698 N.W.2d

at 518. In concluding that the subcontractor could not claim the benefit of the

exclusive remedy statute in SDCL 62-3-2, Thompson seemingly reaffirmed Metzger,

in dicta, by reasoning that the “general contractor receives immunity because the

general contractor is the back-up provider of worker’s compensation coverage.” Id.

However, Thompson did not reexamine the applicability of the exclusive remedy

statute to a general contractor, and in particular, failed to consider the effect of the

legislative changes to the exclusive remedy provision in SDCL 62-3-2, limiting the

grant of immunity to an employer.

[¶40.] For these reasons, I would reverse the entry of summary judgment

because Ries’s complaint for negligence against JM is not prohibited by the

exclusive remedy statute in SDCL 62-3-2.

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