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Lavoie et al. v. Gervais et al.
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 1998 ME 158
Docket: Aro-96-836
Submitted
on Briefs: January 8, 1998
Decided: June 30, 1998
Panel:WATHEN, C.J., and ROBERTS, CLIFFORD, DANA, LIPEZ, and SAUFLEY, JJ.
AUREL LAVOIE et al.
v.
RAINALD GERVAIS, SR., et al.
ROBERTS, J.
[¶1] Aurel Lavoie{1} and Edwina Lavoie appeal from the judgment of
the Superior Court (Aroostook County, Marden, J.) granting a motion for a
summary judgment and/or a motion to dismiss in favor of Rainald Gervais,
Sr.; motions for a summary judgment in favor of Rainald Gervais, Inc., and
Gervais Farms, Inc.;{2} and a motion to dismiss in favor of American Fidelity
Insurance Company/MGA Insurance Services.{3} The Lavoies contend that the
court erred by finding that their claims of fraud fail because Aurel had not
exhausted his administrative remedies; that the court erred by applying an
incorrect legal standard to the dispositive motions of Gervais, Rainald
Gervais, Inc., and American Fidelity/MGA; and that the court erred by not
specially assigning the case. Because we find that the Superior Court did not
have subject matter jurisdiction of the Lavoies' claim based on fraud in the
workers' compensation proceedings, we vacate the judgment and remand
for dismissal of the complaint.
[¶2] Aurel suffered a work-related injury in October 1989. He did
not know, and indeed it was unclear, whether his employer at that time was
Gervais, Rainald Gervais, Inc., or Gervais Farms, Inc. He filed a workers'
compensation claim in December 1989 naming Gervais Farms, Inc., as his
employer. Following a complicated and drawn-out series of proceedings
over the course of two years, the commission issued a decision in June
1992. The commission found that at the time of the injury Aurel had been
employee of Gervais personally, and that Gervais was exempt from providing
workers' compensation coverage because he had fewer than six full-time
employees. See 39-A M.R.S.A. § 401(1)(C) (Supp. 1997) (replacing 39
M.R.S.A. § 21-A(1)(C) (1989)). Consequently, Aurel was denied any recovery
under the Workers' Compensation Act.
[¶3] Aurel filed a motion with the Workers' Compensation Board in
January 1993 requesting that the decision be set aside, alleging that Gervais,
Rainald Gervais, Inc., Gervais Farms, Inc., their attorneys, and their insurers
had perpetrated fraud during the workers' compensation proceedings.
Shortly thereafter, however, Aurel withdrew his motion, apparently in the
belief that the Board did not have jurisdiction to hear it.
[¶4] While the workers' compensation claim was pending, in
February 1990 the Lavoies filed a civil claim for negligence against Gervais
and Rainald Gervais, Inc. For the purposes of that litigation, the parties
stipulated that Gervais was Aurel's employer at the time of the accident.
Following a jury trial, judgment was entered in April 1994 in the Lavoies'
favor in the amount in the amount of $30,000.
[¶5] In September 1993, prior to the entry of judgment in the civil
complaint, the Lavoies filed the instant action. They claimed that Gervais,
Rainald Gervais, Inc., Gervais Farms, Inc., American Fidelity/MGA, and five
other parties (including an insurer, an insurance agency, and attorneys for
some of the defendants{4}) conspired to deny Aurel recovery under the
Workers' Compensation Act and to deny the Lavoies recovery through the
negligence action. Pointing to the representations made by the defendants
during the course of the workers' compensation proceedings and the then-
ongoing negligence action, the Lavoies contended that the parties had
colluded to obscure the identity of Aurel's employer, thus limiting their
ability to recover for his injury.
[§6] The complaint consisted of six counts. Count I, tortious
deprivation of Aurel's rights under the Workers' Compensation Act, and
Count II, tortious deprivation of the Lavoies' rights in the negligence
proceeding, were pleaded in the alternative because the negligence claim
had not been decided when the Lavoies filed the complaint. The remaining
counts referred to both the workers' compensation and the negligence
proceedings: Count III alleged a violation of the Maine Civil Rights Act;
Count IV alleged abuse of process; Count V alleged tortious breach of
contract and interference with contractual relations; and Count VI alleged
negligent and/or intentional infliction of emotional distress.
[¶7] The Lavoies' complaint, in 88 numbered paragraphs, laid out the
factual underpinnings of all six counts in a section entitled "Facts
Demonstrating a Pattern of Fraud, Deceit and Misrepresentations." In
particular, the Lavoies chronicled the alleged inconsistencies in the
representations made by the defendants and their representatives during
the course of the proceedings before the board and the court. Each count in
turn was premised on and referred specifically to this alleged pattern of
fraud.
[¶8] With respect to Count II (tortious deprivation of the Lavoies'
rights in the negligence proceeding), the court, ruling on the dispositive
motions of Gervais, Rainald Gervais, Inc., Gervais Farms, Inc., and American
Fidelity/MGA, took judicial notice of the negligence judgment. Because the
Lavoies had been awarded $30,000, the court found that they were not
prejudiced in the negligence action and that Count II was moot. The Lavoies
do not challenge this finding on appeal.
[¶9] The Lavoies stipulated that Gervais was Aurel's employer, they
prevailed, and they did not appeal the judgment in the earlier negligence
action. The Lavoies may not now bring a collateral action claiming that they
somehow were harmed during the course of that proceeding. See Warren v.
Waterville Urban Renewal Auth., 235 A.2d 295, 299 (Me. 1967), cert.
denied, 390 U.S. 1006 (1968) ("A party cannot claim aggrievement from
trial conduct which he actively seconded or tacitly tolerated."). Apparently,
the Lavoies, having acquiesced in the court's ruling with respect to Count II
in the present action, concede this point. Thus we are left with Counts I,
III, IV, V, and VI to the extent that each alleges some harm arising out of
the workers' compensation proceedings. The Lavoies may, of course, use
the evidence discovered during the course of the negligence proceeding to
support the contention that Aurel suffered harm during the workers'
compensation proceeding.
[¶10] Count I (tortious deprivation of rights under the Workers'
Compensation Act), Count III (violation of the Maine Civil Rights Act),
Count IV (abuse of process), Count V (tortious breach of contract and
interference with contractual relations), and Count VI (negligent and/or
intentional infliction of emotional distress) share a logically necessary
precursor. All of these counts, as pleaded by the Lavoies, are dependent on
a finding that the defendants engaged in fraud during the workers'
compensation proceedings. Absent a finding of fraud, all of the counts by
necessity must fail. Thus we address first the question whether fraud
perpetrated in the course of a workers' compensation proceeding is a
proper subject for an action in the Superior Court.
[¶11] We have previously held that "the rights of a party under the
Workers' Compensation Act are purely statutory." Guaranty Fund Mgmt.
Servs. v. Workers' Compensation Board, 678 A.2d 578, 583 (Me. 1996)
(citations omitted). The Act does not provide for review in the Superior
Court of a board decision on the basis of alleged fraud. Rather, pursuant to
39-A M.R.S.A. § 321 (Supp. 1997), a party may petition the board to reopen
any case "in which fraud on the part of the opposing party is alleged."{5} The
Workers' Compensation Act creates the exclusive remedy for an employee
alleging fraud in the course of a workers' compensation proceeding. See
Procise v. Electric Mut. Liability Ins. Co., 494 A.2d 1375, 1382 (Me. 1985);
39-A M.R.S.A. §§ 104, 408 (Supp. 1997).{6} Therefore, the Superior Court
was without subject matter jurisdiction to hear these causes of action
founded on the alleged fraud of the defendants.
[¶12] We need to address an earlier ruling, which the Lavoies
apparently found confusing. In Baker v. Klein, 655 A.2d 367, 368 (Me.
1995), the Workers' Compensation Commission (predecessor to the
Workers' Compensation Board) terminated Baker's workers' compensation
benefits, and Baker sought review of that decision, unsuccessfully, with the
Appellate Division of the commission, the Law Court, and the Supreme Court
of the United States. Baker then filed a separate action in the Superior
Court alleging fraud by the insurer and its expert, which the court dismissed
for failure to exhaust administrative remedies. Id. Affirming the judgment,
we stated: "By filing a civil complaint in the Superior Court alleging that
fraud caused the Commission's denial of his benefits, Baker has failed to use
the administrative procedure set forth in [section 321 of] the Act. This
failure to exhaust his administrative remedy required dismissal of his
action." Id. at 368-69 (citing Procise, 494 A.2d at 1381). That holding is
correct insofar as it directs the claimant to first seek review of his claim of
fraud with the board, in conformance with the provisions of the Act. It is
misleading, however, to the extent it implies that an allegation of fraud in
the context of a workers' compensation proceeding would ever be heard by
the Superior Court. The Act simply provides no mechanism for review in
that court of allegations of fraud in a workers' compensation proceeding.
But see Hanover Ins. Co. v. Workers' Compensation Board, 1997 ME 104,
695 A.2d 556 (review in the Superior Court pursuant to the Maine
Administrative Procedures Act will lie with respect to assessment
determinations made by the full Board acting as an administrative body, as
opposed to determinations traditionally delegated to individual hearing
officers, which are not subject to review in that court).
[¶13] As we stated in Procise, interpreting the statutory precursor to
section 321, i.e., 39 M.R.S.A. § 102 (1978),{7} "The Workers' Compensation
Act provides the exclusive procedure for review of any administrative
decision in which the basic contention is that the plaintiff was wrongfully
denied workers' compensation benefits." Procise v. Electric Mut. Liability
Ins. Co., 494 A.2d at 1382 (citation omitted). Plainly, all of the Lavoies'
claims rest on the "basic contention" that Aurel was wrongfully denied his
workers' compensation benefits. That contention must first be addressed by
a hearing officer and, if appropriate, reviewed by the board, and finally,
appealed to us. The Superior Court simply has no role in reviewing claims of
fraud in the context of workers' compensation proceedings.
The entry is:
Judgment vacated. Remanded with
instruction to dismiss the complaint.
Attorney for plaintiffs:
Mary Margaret Parker, Esq.
P.O. Box 235
Island Falls, Maine 04747
Attorneys for defendants:
Frank H. Bishop, Esq.
Stevens, Engels & Bishop
P.O. Box 311
Presque Isle, Maine 04769
(for Rainald A. Gervais, Sr.)
Francis E. Bemis, Esq.
Hardings Law Offices
P.O. Box 427
Presque Isle, Maine 04769
(for Rainald Gervais, Inc.)
Eugene J. McLaughlin, Jr., Esq.
P.O. Box 589
24 North St.
Presque Isle, Maine 04769
(for Gervais Farms, Inc. )
David C. King, Esq.
Barbara A. Cardone, Esq.
Rudman & Winchell
P.O. Box l40l
Bangor, Maine 0440l
(for American Fidelity & MGA Ins. Co.)
FOOTNOTES******************************** {1}. Aurel Lavoie died December
16, 1997, and his death has been suggested on the record. As of the date
of this opinion, no motion for substitution pursuant to 18-A M.R.S.A. §3-817
(1998) and M.R. Civ. P. 25 has been made. {2}. While this action was pending,
Rainald Gervais, Inc., changed its name to Gervais Sound Center, Inc. We
will refer to its original name, Rainald Gervais, Inc. {3}. American Fidelity
Insurance Company provided workers' compensation coverage to Gervais Farms,
Inc., and Rainald Gervais, Inc. MGA acts as a local agent for American Fidelity.
{4}. The motions for a summary judgment by these parties were granted by
the court. The Lavoies have not challenged this aspect of the judgment.
{5}. 39-A M.R.S.A. § 321 (Supp. 1997) provides in part: A party may
petition the board, within one year of initiation of a payment scheme, award
or decree, to reopen any case in which fraud on the part of the opposing
party is alleged. If the board finds that the petitioning party exercised
due diligence in investigating the initial claim and further finds that
fraud occurred, the board may reopen the case as to any issue that may have
been affected by the fraudulent act and the board may terminate or modify
an employer's obligation to make payment upon a finding that fraud on the
part of a party affected the employer's obligation to make payment. Except
in the case of fraud on the part of the employee, an employee is not barred
by any time limit from filing a petition to have any issues determined in
accordance with this Act as though the payment scheme had not been initiated.
{6}. 39-A M.R.S.A. § 104 (Supp. 1997) provides in part: An employer
who has secured the payment of compensation in conformity with sections
401 to 407 is exempt from civil actions, either at common law or under sections
901 to 908; Title 14, sections 8101 to 8118; and Title 18-A, section 2-804,
involving personal injuries sustained by an employee arising out of and
in the course of employment, or for death resulting from those injuries.
39-A M.R.S.A. §408 (Supp. 1997) provides in part: Except as provided
in subsection 2, an employee of an employer who has secured the payment
of compensation as provided in sections 401 to 407 is deemed to have waived
the employee's right of action at common law and under section 104 to recover
damages for the injuries sustained by the employee. {7}. 39 M.R.S.A. §
102 (1978) provided in relevant part: "Upon the petition of either
party at any time the commission may annul any agreement which has been
approved by the commission provided it finds that such agreement was entered
through mistake of fact by said petitioner or through fraud."
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