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At a Glance:
Brown v. Aztec Rig Equipment, Inc.
April 18, 1996
921 S.W.2d 835
Published Opinion

Brown v. Aztec Rig Equipment, Inc.

Court of Appeals of Texas,

Houston (14th Dist.).

William BROWN, Jr. and Mary Ella Brown, Appellants,


AZTEC RIG EQUIPMENT, INC. and Administaff, Inc., Appellees.

No. 14–95–00731–CV.


April 18, 1996.


Rehearing Overruled May 23, 1996.

Attorneys & Firms

*837 Don M. Barnett, Houston, for appellants.

John H. Spurgin, Olive Penelope Hobbs, Austin, for appellees.



LEE, Justice.

This is an appeal from a summary judgment in a workers’ compensation, third-party suit. Appellants William Brown and his wife, Mary, filed a negligence suit against appellees Aztec Rig Equipment, Inc. (Aztec) and Administaff, Inc. (Administaff) for alleged personal injuries sustained by Mr. Brown on Aztec’s premises.1 Aztec and Administaff moved for summary judgment on several grounds, including that the Browns’ suit was barred by the exclusive remedy provision of the Texas Workers’ Compensation Act (“the Act”).2 The trial court entered a judgment granting summary judgment for Aztec and Administaff on this ground. The Browns appeal from the court’s judgment and raise twenty-four points of error attacking each of the grounds asserted in the amended motion for summary judgment filed by Aztec and Administaff. Because we find the Browns’ suit is barred by the exclusive remedy provision of the Act, we affirm the court’s judgment.

*838 The following facts are established by the uncontroverted summary judgment proof. Administaff is in the business of staff leasing. It performs personnel management functions for their clients. Through Client Service Agreements with small businesses, Administaff employs the existing work force of its clients and leases them back to carry out the client’s business. Aztec is in the business of repairing and refurbishing oil and gas equipment. Through a series of one-year Client Service Agreements, Aztec has been Administaff’s client since 1988. Under those agreements, Administaff agreed to lease employees to Aztec to carry out Aztec’s business. In particular, Aztec’s President, Glenn Taylor, was designated as Administaff’s on-site supervisor for personnel matters, but remained responsible for overseeing Aztec’s business. Administaff also agreed to “furnish and keep in full force and effect at all times during the term of this Agreement workers’ compensation insurance covering all Administaff employees furnished to Client pursuant to the terms of this Agreement.” The agreements further provide that Administaff was the employer for some purposes. Aztec was the employer for some purposes, and both Administaff and Aztec were co-employers for other purposes. For example, Aztec was required to comply with OSHA regulations. Administaff, on the other hand, was required to comply with the applicable workers’ compensation laws, “including but not limited to: (i) procuring workers’ compensation insurance; (ii) completing and filing all required reports; and (iii) managing claims.” However, the agreements state specifically that both “Administaff and Client will be considered co-employers (dual or joint employers) of those persons furnished to Client by Administaff” for purposes of “employer liability under workers’ compensation laws.” In Exhibit A, which was attached to the 1991 and 1992 agreements, Mr. Brown is listed as one of “those persons furnished to Client by Administaff.”

On November 5, 1990, and March 14, 1991, Mr. Brown signed identical employment agreements with Administaff. Under the agreements, Mr. Brown was assigned to work for Aztec, Administaff’s client company. Mr. Brown also agreed that “for the purpose of workers’ compensation coverage, he is an employee of both Administaff and Client Company.” The agreements state that “in the event of any injury, Employee agrees that his sole remedy lies in coverage under Administaff’s workers’ compensation policy under the theory that Administaff and Client Company are co-employers.” On January 17, 1992, and April 15, 1993, Mr. Brown was allegedly injured on Aztec’s premises. At the time, Mr. Brown was performing certain activities for Aztec’s business under the direction of supervisors employed by Administaff, but leased to Aztec to carry out Aztec’s business. As he had done for three other work-related injuries, Mr. Brown sought workers’ compensation benefits under Administaff’s policy in effect at the time.

At the contested case hearing held in September 1993, a hearing examiner found Mr. Brown was not entitled to benefits for either alleged injury. See  410.169. Mr. Brown appealed the examiner’s ruling. See id. 410.201410.208. During the pendency of that appeal, the Browns’ filed this suit. In January 1994, the appeals panel reversed the hearing officer’s decision regarding the alleged injury on January 17, 1992, and remanded the case for further consideration of notice issues. The panel affirmed the hearing officer’s decision regarding the alleged injury on April 15, 1993. Specifically, the panel found the evidence was sufficient to support the hearing officer’s decision that Mr. Brown did not suffer a compensable injury. See id. 401.011(10). Mr. Brown did not seek judicial review of this part of the appeals panel decision. See id. 410.251410.308.

In points of error one through twenty-one, the Browns contend the trial court erred in granting summary judgment based on TEX.LAB.CODE ANN. 408.001, the exclusive remedy provision of the Act.

Section 408.001(a) states:

Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or *839 a work-related injury sustained by a covered employee.

As we noted earlier, Aztec and Administaff moved for summary judgment on several grounds. However, the trial court granted summary judgment in favor of Aztec and Administaff solely on the ground that the Browns’ claims were barred by State Farm Fire & Casualty Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993) (plurality opinion).

The standard of review for summary judgments is well-established. A movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Gibbs, 450 S.W.2d at 828.

As they did in their amended motion for summary judgment and supporting brief, Aztec and Administaff contend the exclusive remedy provision bars the Browns’ suit. They assert they are co-employers of Mr. Brown and as such, can both claim immunity under section 408.001 and Aztec did not exercise the requisite degree of control over Mr. Brown’s work activities to give rise to liability.

As they did below, the Browns essentially take two positions. First, they contend Aztec is not entitled to employer immunity under 417.004. Alternatively, they contend that if Aztec had the right of control then Mr. Brown was Aztec’s borrowed servant and Administaff was subject to third-party liability “to the extent [it] had the right of control.”

We first address the “subscriber” issue. At the time of Mr. Brown’s alleged injuries, the state legislature had deleted the term “subscriber” from the Act and expanded the definition of “employer” to “a person that makes a contract of hire, that employs one or more employees, and that has workers’ compensation insurance coverage.See TEX.REV.CIV.STAT.ANN. art. 8309 § 1, repealed by Act of December 13, 1989, 71st Leg., 2nd C.S. ch. 1, § 16.01, 1989 Tex.Gen.Laws 1, 114–115 (effective January 1, 1991) (codified at TEX.REV.CIV.STAT.ANN. art. 8308–1.03(19)) (emphasis added). The Browns do not contest Administaff’s status as an “employer” under the Act. Indeed, it is uncontroverted that Administaff carried workers’ compensation insurance at the time of Mr. Brown’s alleged injuries.4 However, because Aztec was not the named insured on either of the workers’ compensation policies in effect at the time, the Browns’ argue Aztec did not have workers’ compensation coverage. This is incorrect. Administaff’s Client Service Agreements with Aztec specifically require Administaff to purchase workers’ compensation insurance “covering all Administaff employees furnished to [Aztec] pursuant to the terms of [their] agreement.” Further, the Client Service Agreements and Mr. Brown’s employment agreements expressly provide that Administaff and Aztec are co-employers for purposes of workers’ compensation coverage. In addition, the uncontroverted summary judgment proof is that Administaff purchased workers’ compensation insurance using the service fees paid by Aztec.5

The Browns contend the alternate employer endorsements in the Administaff policies in effect at the time did not relieve Aztec from its obligations to secure workers’ compensation coverage and to give notice that it had obtained such coverage as required by the Act. See  TEX.REV.CIV.STAT.ANN. art. 8308–3.24, 3.25 (repealed 1993). They quote the following language of the endorsement:

The insurance afforded by this endorsement is not intended to satisfy the alternate employer’s duty to secure obligations under the workers’ compensation law. We will not file evidence of this insurance on behalf of the alternate employer with any government agency.

In support of their argument, the Browns rely on id.

The alternate employer endorsements in both policies at issue in this case declare “this endorsement applies only with respect to bodily injury to [Administaff’s] employees while in the course of special or temporary employment by the alternate employer.” They also state that “Part One (Workers’ Compensation) ... will apply as though the alternate employer is insured.” (emphasis added) More importantly, the typed language in the endorsement of these policies provide that “it is agreed that this endorsement applies to all ... clients and/or subscribers of [Administaff], in its capacity as an employee leasing firm, where [workers compensation] is provided by the leasing firm.”6 (emphasis added). Because this typed language was not included in the policy at issue in Zavala–Nava, that case is inapplicable. See id. at 15–16.

Here, the Administaff workers’ compensation policies, by their plain terms, covered all Administaff employees who were assigned to work for Aztec, the alternate employer. This included Mr. Brown. As for employees not assigned by Administaff, Aztec was responsible for providing workers’ compensation insurance for those employees. Clearly, Aztec had workers’ compensation coverage through Administaff and was an “employer” within the meaning of the Act. That conclusion is supported by the case law.

In Id. at 744.

In Id. at 197. We noted that the cost of that insurance was included in the fee paid by Toys–R–Us to Labor Systems. Id.

In Id. at 759 n. 2.

In Id. at 137–38.

Finally, in Id. at 605.

As stated in Cherry, “we see no reason why an employer cannot contractually provide for payment of premiums on his employee by a third-party acting on his behalf.” 19 (repealed 1991).

Notwithstanding the fact these provisions were not in effect when Administaff purchased the policies in question or when Mr. Brown was allegedly injured, the Browns maintain “the evidence establishes that Aztec failed to notify the Texas Workers’ Compensation Commission that Aztec had obtained workers compensation insurance.” They rely on Kielwein v. Gulf Nuclear Inc., 783 S.W.2d 746, 747 (Tex.App.—Houston [14th Dist.] 1990, no writ).

The summary judgment proof shows Mr. Brown was injured on Aztec’s premises on three other occasions, including two incidents that occurred before the injuries in question and one after the injuries in question. He sought workers’ compensation benefits on Administaff’s policy for each of these injuries. Obviously, both the state and Mr. Brown had notice that Aztec was covered by the Administaff’s policies. In Marshall, this court held the employee’s receipt of workers’ compensation benefits through the temporary employment services company was notice to the state and to the employee that the special employer was a subscriber under the Act. 882 S.W.2d at 606.

*843 Finally, in Id. at 110. In affirming the summary judgment, the appellate court found that the plaintiff had constructive notice of HEB’s subscriber status. Id. The court based its holding on a copy of the workers’ compensation and the uncontroverted affidavit testimony of HEB’s claims coordinator that a policy was in full force and effect at the time. Id.

In this case, Aztec and Administaff offered as summary judgment proof copies of the policies in effect at the time of Mr. Brown’s injuries. The uncontroverted affidavit of Administaff’s Senior Vice–President, William Lange, confirms these “are copies of the workers’ compensation policy [sic] covering William Brown Jr. for the periods, July 1, 1991 to July 1, 1992 and November 1, 1992 to November 1, 1993.” Clearly, Aztec complied with the Act’s notice provisions.

Having determined Aztec was an “employer” within the meaning of the Act and complied with the Act’s notice provisions, we now turn the issue of immunity under the exclusive remedy provision. The Browns contend that even if both Administaff and Aztec had workers’ compensation coverage, only one of them could be Mr. Brown’s employer and entitled to immunity. As we stated, the trial court granted summary judgment solely on the basis of the exclusive remedy of provision of the Act. Implicit in the court’s judgment is that Administaff and Aztec were both entitled to immunity as co-employers.7 Administaff and Aztec argue in the alternative that if only one defendant had the right of control sufficient to be Mr. Brown’s employer, then the Browns failed to state a cause action against the other defendant. However, the trial court did not grant summary judgment based on the failure to state a cause of action. It is not a ground specified in the court’s judgment. Thus, the summary judgment can only be affirmed as to both Administaff and Aztec if they are co-employers. See State Farm, 858 S.W.2d at 380.

Administaff and Aztec maintain the theory of joint employment has long been recognized at common law. The Restatement (Second) Of Agency, Section 226 recognizes that joint employment may exist in a given situation. It states as follows:

A person may be the servant of two masters, [who are] not joint employers, at one time as to one act, if the service to one does not involve abandonment of the service to the other in Texas.

In actuality, the Restatement takes the concept of joint employment one step further by suggesting that an employee may serve two masters even if they are not “joint” or “co-” employers as advocated in this case. Most Texas courts, while not resorting to the theory of “joint” or “co-” employment, have acknowledged its viability. In section 226 or expressly subscribe to the theory of joint employment, they do not reject it.

However, one Texas court has expressly recognized joint employment pursuant to Id. at 159–60. In this case, the summary judgment proof conclusively shows Administaff and Aztec were joint employers of Mr. Brown.

The Client Service Agreements and Mr. Brown’s employment agreements, presented as summary judgment proof, unequivocally state Administaff and Aztec are co-employers for purposes of workers’ compensation. As we discussed, Aztec was covered by Administaff’s workers’ compensation policies. Indeed, the summary judgment proof shows that Mr. Brown sought workers’ compensation benefits under Administaff’s policies for the alleged injuries that are the basis of this suit as well as three other alleged injuries, all of which occurred while Mr. Brown was carrying out Aztec’s business. In affidavits attached as summary judgment proof, Mr. Brown’s supervisors, including Aztec President Glenn Taylor, state they were “employed” by Administaff, but “assigned” to Aztec to carry out Aztec’s business. They also state Mr. Brown was working under the same arrangement at the time of his alleged injuries. Under this arrangement, Administaff handled administrative matters relating solely to personnel management while Aztec directed and supervised the details of work to be done in furtherance of its business and provided the necessary tools and equipment. The affidavit testimony of Administaff Vice–President, William Lange, supports all of the above facts.

The summary judgment proof offered by the Browns does not contradict the co-employment relationship established by Administaff and Aztec. An excerpt from Glen Taylor’s deposition attached to the Browns’ response confirms the “co-employer type agreement that [Aztec] had with Administaff.” So do the discovery responses filed by Administaff and Aztec and offered as summary judgment proof by the Browns. In particular, Aztec admits in its responses to request for admissions, that Administaff and Aztec were Mr. Brown’s co-employers and Mr. Brown was in the course and scope of his employment with both Administaff and Aztec at the time of the incidents in questions. The Browns argue these are admissions that Mr. Brown worked for either Administaff or Aztec because the admissions only inquired whether one defendant or the other was Mr. Brown’s employer. Thus, they claim they are entitled to ignore the part of the response that does not relate to the inquiry made. The Browns do not cite any authority for this novel proposition. Essentially, the Browns are requesting this court to disregard the plain language of discovery responses. We know of no authority allowing us to do so and decline the Browns’ request.

*845 The Browns point out that the summary judgment proof shows Administaff is providing Aztec’s defense in this matter and that any judgment would be paid by Administaff. However, the fact that Administaff is providing a defense in a case where the alleged injuries occurred on Aztec’s premises while carrying out Aztec’s business goes more toward proving a co-employment relationship than to disproving one. The Browns also point out that William Lange’s credibility is questionable, and thus a fact issue exists because he allegedly took an inconsistent position in another lawsuit filed by their attorney.

In that lawsuit, the plaintiff worked for an employment company and was assigned to Administaff’s client company who had contracted with a landowner to provide landscaping services. After he was injured on the landowner’s premises, the plaintiff received workers’ compensation benefits from the temporary employment company’s insurance carrier and sued the landowner, Administaff, and its client company for negligence. Although the plaintiff never signed an employment agreement with Administaff and was never leased by Administaff to its client company, Administaff argued that the plaintiff was under the direction and control of the client company and therefore, was Administaff’s “borrowed servant.” In other words, Administaff claimed it and the client company were both the plaintiff’s employers. In fact, when specifically asked at his deposition about whether the client company gave up the right of control of its employees to Administaff, Lange testified there was a “joint right of control.” That position is entirely consistent with one taken in this lawsuit.

Finally, the Browns argue the employment agreements are not valid because they were not supported by consideration, signed under duress, and unconscionable. These are affirmative defenses to the employment agreements and thus, to the summary judgment. See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984).

First, as pointed out by Administaff and Aztec in the trial court, the Browns did not properly raise the failure of consideration by verified pleading. See Roark, 813 S.W.2d at 496. Mr. Brown provided services to Administaff and its client company in return for wages. More importantly, Mr. Brown agreed to relinquish any common law action for personal injuries against Administaff and its client company in return for workers’ compensation benefits under Administaff’s policy covering the client company. In fact, the summary judgment proof shows Mr. Brown sought such benefits for at least three other injuries. Those injuries occurred while he was leased by Administaff to the client company to carry out the client company’s business. Clearly, the employment agreements were supported by consideration.

Second, the Browns did not offer any summary judgment proof of duress. Duress is a threat to some act which the threatening party has no legal right to do. Gibson v. Methodist, 822 S.W.2d 95, 100 (Tex.App.—Houston [1st Dist.] 1991, writ denied) (opinion on motion for rehearing) (holding that expert’s affidavit testimony that blood test unavailable at the time of transfusion would have prevented plaintiff from contracting AIDS failed to raise a fact issue as to negligence).

Third, the Browns assert the employment agreements are unconscionable because Mr. Brown cannot read and could not have read the agreements that he signed. The Browns’ sole authority for this contention is section 17.45(5) of the Deceptive Trade Practices Act. See Nguyen Ngoc Giao v. Smith & Lamm, P.C., 714 S.W.2d 144, 146 (Tex.App.—Houston [1st Dist.] 1986, no writ). In that case, the court stated:

As a general rule, every person having the capacity to enter into contracts, in the absence of fraud, misrepresentation or concealment, must be held to have known what words were used in the contract and to have known their meaning, and he must also be held to have known and fully comprehended the legal effect of the contract. Therefore if a party is unable to read the contract, he must have it read to him. The rule will not operate, however, where trick or artifice is resorted to for the purpose of preventing the party from reading it or having it read to him.

Id. (citations omitted)

In the instant case, there is no summary judgment proof of trick or artifice which prevented Mr. Brown from having the agreements read to him. See id. Accordingly, we find the employment agreements signed by Mr. Brown were valid and suggest that he fully contemplated the co-employment relationship he now disputes.

Lastly, we point out that the state legislature now recognizes co-employer relationships for purposes of worker’s compensation in staff leasing arrangements identical to the one in this case. Act of September 1, 1993, 74th Leg., R.S., ch. 994, 1993 Tex.Gen.Laws 4346 (codified at section 91.042(c) of the Labor Code currently provides:

For workers’ compensation purposes, a license holder and the license holder’s client company shall be co-employers. If a license holder elects to obtain workers’ compensation, the client company and the license holder are subject to 408.001.

The staff leasing statute was not in effect at the time of Mr. Brown’s alleged injuries. Further, there are no Texas cases prior to the effective date of the act expressly dealing with the precise issue of whether a staff leasing company and its client are co-employers for purposes of employer immunity under the exclusive remedy provision of the Act. In Pederson, Rodriguez, and Regalado, the courts were not faced directly with the issue of co-employment in part because, unlike this case, suit was brought against only the clients of the *847 employment companies, not against both entities.8 Based on the specific facts of this case, we see no reason to disregard the co-employer relationship where the parties expressly contemplated such a relationship.

Because: (1) the summary judgment clearly establishes a co-employment relationship; (2) the courts of this state do not prohibit co-employers; and (3) the legislature has expressly recognized such a relationship in the context of workers’ compensation, we hold that Administaff and Aztec were co-employers of Mr. Brown. Therefore, both Administaff and Aztec are entitled to immunity under the exclusive remedy provision of the Act. Accordingly, the Brown’s negligence suit against Administaff and Aztec is barred by the exclusive remedy provision of the Act and summary judgment was proper. Points of error one through twenty-one are overruled and the trial court’s judgment is affirmed.



Mary Brown seeks damages for loss of consortium. Because her claim is derivative of her husband’s negligence action, Mrs. Brown can recover only if she establishes the tortfeasor’s liability for her husband’s injuries. See Reed Tool Co. v. Copelin, 610 S.W.2d 736, 738-39 (Tex.1981).


TEX.LAB.CODE ANN. 408.001 (Vernon Pamph.1995)).


Those grounds are as follows: (1) the suit for damages based on the alleged injury of April 15, 1993, is barred by collateral estoppel; (2) the suit for damages based on the alleged injury of January 17, 1992, is barred by limitations; and (3) Mr. Brown waived his common-law claims.


The Administaff policies in effect at the time of Mr. Brown’s injuries are attached to Aztec’s previous motion for summary judgment but are specifically referred to in Administaff’s and Aztec’s reply to the Browns’ response.


The Browns also suggest there was no coverage because the Administaff policies at issue had a $500,000.00 deductible clause. The Browns did not raise this ground in their response and therefore, it is waived. See McConnell v. Southside Indep. School Dist., 858 S.W.2d 337, 341 (Tex.1993).


The other policy contains the identical typed language except the phrase “who have been approved as the alternate employers by the company” is substituted for the phrase “where [workers’ compensation] is provided by the leasing firm.”


According to Administaff and Aztec, a docket entry shows the court found that Aztec was the employer. Assuming this were true, a docket entry is not generally sufficient to constitute a judgment or decree of the court. State Farm, 858 S.W.2d at 380.


Although Zavala–Nava involved a suit against the employment agency and its client, the issue of joint employment was not before the court. 820 S.W.2d at 16.

End of Document