                                   IN THE
              ARIZONA COURT OF APPEALS
                                DIVISION ONE


                       TIMOTHY LEE, a single man,
                      Plaintiff/Appellant/Cross-Appellee,

                                       v.

               M AND H ENTERPRISES, INC. dba
       MARTIN HARRIS CONSTRUCTION, a Nevada corporation,
                Defendant/Appellee/Cross-Appellant,

                                      and

                  WAL-MART STORES, INC. dba SAM’S
                     CLUB, a foreign corporation,
                        Defendant/Appellee.


                            No. 1 CA-CV 13-0257
                              FILED 4-21-2015


           Appeal from the Superior Court in Maricopa County
                          No. CV2010-001154
                  The Honorable Mark H. Brain, Judge
            The Honorable Joseph B. Heilman, Judge, Retired
            The Honorable Donald Daughton, Judge, Retired

                                 AFFIRMED


                                  COUNSEL


Hopkins Law Offices PLC, Phoenix
By Stephen M. Hopkins
Counsel for Plaintiff/Appellant/Cross-Appellee
Lewis Brisbois Bisgaard & Smith LLP, Phoenix
By James K. Kloss
Counsel for Defendant/Appellee/Cross-Appellant M and H Enterprises

The Law Office of Don D. Skypeck
By Douglas H. Fitch
Counsel for Defendant/Appellee Wal-Mart Stores, Inc.



                                 OPINION

Judge Michael J. Brown delivered the opinion of the Court, in which
Presiding Judge Kent E. Cattani and Judge Margaret H. Downie joined.


B R O W N, Judge:


¶1           Timothy Lee suffered serious injuries while performing clean-
up duties during the final stages of construction at a Sam’s Club store
located on property owned by Wal-Mart Stores, Inc. (“Wal-Mart”). Lee was
employed at the time by Able Body Labor (“Able Body”)1, which supplied
workers for M&H Enterprises, Inc. (“M&H”), the general contractor on the
project. After Lee successfully pursued a workers’ compensation claim
against Able Body, he sued Wal-Mart and M&H for negligence.

¶2             On appeal, Lee challenges the trial court’s orders granting
summary judgment in favor of Wal-Mart and granting judgment as a
matter of law in favor of M&H. The issues we address are: (1) whether Lee,
as an employee of an independent contractor, could properly assert a
vicarious liability negligence claim against Wal-Mart; (2) whether Lee
presented evidence creating a material factual dispute as to whether Wal-
Mart retained some control over his work and was therefore directly
negligent; and (3) whether the lent employee doctrine relieves M&H from
liability because Lee elected to pursue a workers’ compensation award for
his injuries. For the following reasons, we affirm.




1      The full name of the subcontractor is Professional Staffing, A.B.T.S.,
Inc., d/b/a Able Body Labor. As alleged in the complaint, Able Body is a
“manpower staffing agency.”


                                      2
                        LEE v. M & H, WAL-MART
                           Opinion of the Court

                                 BACKGROUND

¶3            At the request of M&H, Able Body provided workers to
perform clean-up work at the Sam’s Club construction site. Lee, who began
employment with Able Body in 2007, had been regularly assigned such
work over the course of several months. In January 2009, shortly before the
planned opening date of the store, Able Body directed Lee to report for
work at the construction site. An M&H representative instructed Lee to
clean the tops of various freezers, which were roughly ten feet high. Lee
used an onsite scissor-lift to access the portion that needed cleaning, and
proceeded to remove debris. Next to the ten-foot freezers, separated by a
small section of fiberboard, were taller freezers, roughly sixteen feet high.
Rather than use the scissor-lift to reach the taller freezers, Lee attempted to
access them by stepping on the fiberboard. While doing so, the fiberboard
collapsed and Lee was seriously injured when he fell to the floor.

¶4             Lee sued Wal-Mart and M&H, alleging they each acted
negligently by failing to maintain a safe place to work, free of hidden
dangers. Lee also alleged that both Wal-Mart and M&H were in control of
the property and therefore owed him a “non-delegable duty to . . . provide
a safe place to work, free of hidden dangers.” Although he acknowledged
receipt of an award for workers’ compensation benefits (based on his claim
against Able Body), Lee asserted the award was inadequate to compensate
him for his injuries.

¶5            M&H moved for summary judgment, asserting that the lent
employee doctrine barred Lee’s cause of action because he had elected to
pursue his statutory right to obtain a workers’ compensation award for his
injuries. The trial court denied the motion. After reassignment of the case
to a different judge, M&H filed a second motion for summary judgment.
M&H argued that if it had a duty to control Lee’s actions, then his only
remedy was workers’ compensation; but if M&H had no duty to control,
then as a matter of law it could not have breached any duty to Lee.

¶6            Wal-Mart also filed a motion for summary judgment, arguing
that as a landowner, it did not owe a non-delegable duty to Lee because his
injury occurred while he was working as an employee of an independent
contractor. Wal-Mart also asserted it did not contractually assume
responsibility or exercise actual control over the work of M&H, Able Body,
or Lee. Lee countered that, notwithstanding his status as an employee of a
subcontractor and the terms of Wal-Mart’s contract with M&H, a
landowner has a non-delegable duty to provide a reasonably safe place for




                                      3
                        LEE v. M & H, WAL-MART
                           Opinion of the Court

business invitees and there was evidence that Wal-Mart and M&H
exercised shared control over the premises at the time of the accident.

¶7             The trial court denied M&H’s motion but granted Wal-Mart’s,
finding that Wal-Mart had hired M&H to build the Sam’s Club and thereby
“effectively relinquished control of (and liability for), the project to [M&H]”
through its contract. The court explained that although the project was
nearing completion and Wal-Mart possibly had “taken possession” of part
of the site, there was “nothing in the record suggesting that Wal-Mart had
taken possession or control of the area in which Lee was working, nor that
it controlled Lee’s work.” The court denied Lee’s subsequent motion for
reconsideration and/or new trial, and entered judgment in favor of Wal-
Mart.

¶8             A jury trial ensued on Lee’s claim against M&H. At the close
of Lee’s presentation of evidence, M&H moved for judgment as a matter of
law, reasserting its argument that Lee’s claims were barred based on the
lent employee doctrine. The court granted the motion, explaining that a
contract for hire was implied from the circumstances and finding that M&H
exercised control over Lee and no reasonable jury could conclude
otherwise. Therefore, applying the lent employee doctrine, the court found
that the exclusive remedy of workers’ compensation barred Lee from
pursuing civil damages.

¶9            The court entered a final judgment in favor of M&H. Lee
timely appealed and M&H cross-appealed the denial of its second motion
for partial summary judgment.

                               DISCUSSION

I.     Wal-Mart’s Motion for Summary Judgment

¶10            Summary judgment is proper when “there is no genuine
dispute as to any material fact and the moving party is entitled to judgment
as a matter of law.” Ariz. R. Civ. P. 56(a). We review de novo the grant of
summary judgment and view the evidence in the light most favorable to
the non-moving party. Read v. Keyfauver, 233 Ariz. 32, 35, 308 P.3d 1183,
1186 (App. 2013).

¶11          Lee argues the trial court erred in granting summary
judgment because, pursuant to Restatement (Second) of Torts
(“Restatement”) § 422 (1965), Wal-Mart necessarily retained a non-
delegable duty, as the landowner, to keep its premises reasonably safe for



                                      4
                         LEE v. M & H, WAL-MART
                            Opinion of the Court

business invitees. Lee further asserts the court erred because Wal-Mart
retained control over his work and is therefore directly liable for his injuries.

    A.   Premises Liability (Vicarious) under Restatement § 422(a)

¶12            Arizona courts have consistently recognized that a landowner
is not liable for the negligent conduct of an independent contractor unless
the landowner has been independently negligent. See Welker v. Kennecott, 1
Ariz. App. 395, 401-04, 403 P.2d 330, 336-39 (1965) (citing Restatement
(First) of Torts § 409 (1934) (“Except as stated in §§ 410 to 429, the employer
of an independent contractor is not subject to liability for bodily harm
caused to another by a tortious act or omission of the contractor or his
servants.“)); see also E.L. Jones Constr. Co. v. Noland, 105 Ariz. 446, 454, 466
P.2d 740, 748 (1970) (recognizing the general rule that a property owner is
not liable for the negligence of an independent contractor); Restatement
§ 409 cmt. b (explaining that the rule stated in this section, “as to the non-
liability of an employer for physical harm caused to another by the act or
omission of an independent contractor, was the original common law
rule”). The explanation “most commonly given” for this rule is based on
the notion that because “the employer has no power of control over the
manner in which the work is to be done by the contractor, it is to be
regarded as the contractor’s own enterprise, and he, rather than the
employer, is the proper party to be charged with the responsibility of
preventing the risk, and bearing and distributing it.” Restatement § 409
cmt. b.2

¶13            As our supreme court has noted, however, “many exceptions
to the rule of nonliability have now been recognized so that even where the
employer has not been personally negligent, he may be vicariously liable
for the contractor’s negligence.” Ft. Lowell-NSS Ltd. P’ship v. Kelly, 166 Ariz.
96, 101, 800 P.2d 962, 967 (1990).3 Most, if not all, of the exceptions fall into
three broad categories:



2      In many reported decisions, as well as the Restatement, the terms
employer, possessor of land, and landowner are used interchangeably in
discussing the liability of an entity that hires a general contractor to perform
construction work. For purposes of our analysis relating to Lee’s claims
against Wal-Mart, the terms have the same meaning.

3     As recognized in Ft. Lowell, “[a]lthough no fault of the possessor
need be shown, the negligence of the independent contractor must be



                                       5
                       LEE v. M & H, WAL-MART
                          Opinion of the Court

      1. Negligence of the employer in selecting, instructing, or
      supervising the contractor.

      2. Non-delegable duties of the employer, arising out of some
      relation toward the public or the particular plaintiff.

      3. Work which is specially, peculiarly, or “inherently”
      dangerous.

Restatement § 409 cmt. b.4

¶14           According to Lee, Wal-Mart had a non-delegable duty to keep
the premises safe and is therefore vicariously liable under Restatement
§ 422, which describes an employer’s general scope of liability for injuries
resulting from work performed on land and structures:

      A possessor of land who entrusts to an independent
      contractor construction, repair, or other work on the land, or
      on a building or other structure upon it, is subject to the same
      liability as though he had retained the work in his own hands
      to others on or outside of the land for physical harm caused
      to them by the unsafe condition of the structure

      (a) while the possessor has retained possession of the land
      during the progress of the work, or

      (b) after he has resumed possession of the land upon its
      completion.

¶15         Lee argues he was a business invitee when his injury occurred
on Wal-Mart’s property, and that under Restatement § 422, possessors of
land have a non-delegable duty to provide such invitees a safe place to
work. In Welker, however, this court rejected the argument that a


proven before liability may attach to the employer.” 166 Ariz. at 104, 800
P.2d at 970. For purposes of analyzing Lee’s vicarious liability claim, we
assume, without deciding, he would be able to satisfy his burden.

4      These exceptions are generally set forth in Restatement §§ 410–415,
which deal with direct liability of a landowner, and §§ 416–429, which relate
to vicarious liability of a landowner based on the negligence of an
independent contractor. See Rause v. Paperchine, Inc., 743 F. Supp. 2d 1114,
1119 (D. Ariz. 2010).



                                     6
                         LEE v. M & H, WAL-MART
                            Opinion of the Court

landowner owes a non-delegable duty under Restatement § 422 to an
employee of an independent contractor. 1 Ariz. App. at 404, 403 P.2d at
339. Thus, under Welker, Wal-Mart did not have a non-delegable duty to
provide Lee a safe place to work because Lee was working as an employee
of an independent contractor at the time he was injured.

¶16           A primary issue in Welker was whether the landowner, a
mining company, was negligent in causing the death of an employee of its
general contractor. 1 Ariz. App at 397, 403 P.2d at 332. The victim’s family
alleged that the landowner had a non-delegable duty of care for the
employees of the general contractor under Restatement § 422.5 Id. at 401,
403 P.2d at 336. On appeal, we held that the duties outlined in Restatement
§ 422 “are not owed to employees of an independent contractor”
performing construction work. Id. at 404, 403 P.2d at 339. In doing so, we
reasoned in part that because workers’ compensation is essentially paid by
the landowner through a negotiated contract price with the contractor, the
landowner should not be held liable for the injuries to the contractor’s
workers. Id. We further reasoned that the various distinctions developed
as exceptions to the general rule of non-liability “are nebulous at best” and
“become so highly confusing as to be undesirable when applied to
employees of an independent contractor doing construction work.” Id.

¶17             After Welker, this court continued to recognize that
landowners are not liable under Restatement § 422 for injuries suffered by
employees of independent contractors engaged in construction activities.
See Allison Steel Mfg. Co. v. Superior Court for the County of Pima, 22 Ariz. App.
76, 81, 523 P.2d 803, 808 (1974) (citing Welker and noting that if landowner
had no control or active role in bringing about the dangerous condition that
caused the plaintiff’s injury, it could not be held liable under a theory of
non-delegable duty); Parks v. Atkinson, 19 Ariz. App. 111, 114-15, 505 P.2d
279, 282-83 (1973) (upholding summary judgment in favor of the landowner
by relying on Welker for the proposition that Restatement § 422 did not
apply to an employee of an independent contractor who fell from a scaffold
at the site); see also Mason v. Arizona Pub. Serv. Co., 127 Ariz. 546, 551, 622
P.2d 493, 498 (App. 1980) (citing Welker and recognizing that “in the absence
of retained control, the duties owed by a landowner to third persons are not

5      The court in Welker analyzed Restatement (First) of Torts § 422
(1934), which for purposes of this case is not materially different from the
current version of Restatement § 422. See Restatement § 422 Reporter’s
Notes.




                                        7
                         LEE v. M & H, WAL-MART
                            Opinion of the Court

owed to the employees of an independent contractor”). Lee has not cited,
nor has our research revealed, any Arizona reported decision that has
overruled or otherwise questioned the validity of Welker as it pertains to
Restatement § 422.6

¶18             Lee argues that our supreme court’s decision in Ft. Lowell
impliedly overruled Welker. In Ft. Lowell, the supreme court explained that
if an exception applies, a landowner may be vicariously liable for a
contractor’s negligence in failing to maintain a safe workplace. 166 Ariz. at
101, 800 P.2d at 967. But, unlike this case, Ft. Lowell did not involve a claim
brought by an employee of an independent contractor. 166 Ariz. at 98, 800
P.2d at 964. Thus, Ft. Lowell cannot be said to have overruled Welker.
Moreover, referencing this court’s decision in Koepke v. Carter Hawley Hale
Stores, Inc., 140 Ariz. 420, 423, 682 P.2d 425, 428 (App. 1984), the supreme
court in Ft. Lowell noted:

       Prior to Koepke, Arizona courts considered section 422 only in
       the context of finding it was not applicable to suits by
       employees of independent contractors. As the Koepke court
       noted, the policy underlying this refusal to apply Restatement
       § 422 to such employees is unrelated to the question of
       liability for injuries to other invitees.

Ft. Lowell, 166 Ariz. at 102 n.6, 800 P. 2d at 968 n.6 (emphasis added.)

¶19           In Rause, the federal district court analyzed Welker and Ft.
Lowell in concluding that a paper mill owner was not vicariously liable for
damages resulting from the death of an employee of a subcontractor at the
mill. 743 F. Supp. 2d at 1119. The surviving members of the deceased
worker’s family sued the mill owner, alleging premises liability under
Restatement § 422(a), and claiming that the owner and possessor of the


6       In Lewis v. N.J. Riebe Enterprises, Inc., 170 Ariz. 384, 825 P.2d 5 (1992),
our supreme court rejected the presumption stated in Welker and other
cases that “without retained control, a general contractor owes absolutely
no duty of care to employees of subcontractors.” Lewis, 170 Ariz. at 389, 825
P.2d at 10. The court instead found that a “general contractor has a general
duty to provide employees of subcontractors with a reasonably safe place
to work.” Id. at 388, 825 P.2d at 9. The supreme court’s rejection of Welker,
however, was related only to Welker’s analysis of Restatement § 414. See id.;
Rause, 743 F. Supp. 2d at 1124 (“Welker has not been overruled, and the
criticism of Welker, as articulated in Lewis, does not affect Welker’s holding
as it relates to Restatement § 422.”).


                                        8
                         LEE v. M & H, WAL-MART
                            Opinion of the Court

paper mill had a duty to maintain the premises in a safe condition for
invitees and to ensure that all construction work was completed in
accordance with applicable safety regulations. Id. The court relied on
Welker and noted that Ft. Lowell had “distinguished cases where the injured
party is a business invitee from those where the injured party is the
employee of an independent contractor.” Rause, 743 F. Supp. 2d at 1124.
Citing other Arizona cases that have recognized Welker’s viability,
including Parks, Allison, and Koepke, the district court found that under
Welker the mill owner did not owe a non-delegable duty to the decedent.
Id.

¶20           In sum, this court’s holding in Welker—that Restatement
§ 422 does not constitute an exception to the general rule that a landowner
is not liable for injuries suffered by an employee of an independent
contractor performing work on the property, 1 Ariz. App. at 404, 403 P.2d
at 339—remains the law in Arizona. For that reason, Wal-Mart, as the
landowner, did not owe Lee a non-delegable duty of care under
Restatement § 422 because he was working as an employee of an
independent contractor at the time he sustained injuries.7

    B.   Retained Control - Restatement § 414

¶21           Lee argues that Wal-Mart “retained some control” over his
work and is therefore directly liable for his injuries under Restatement §
414. Specifically, Lee notes that during a final walk-through inspection of
the construction site, a Wal-Mart representative requested that the tops of
the freezers be cleaned, and thus contends his fall while cleaning those
freezers was a result of Wal-Mart’s direct orders.

¶22         Restatement § 414 addresses the direct liability of a
landowner based on a theory of retained control:

         One who entrusts work to an independent contractor, but
         who retains the control of any part of the work, is subject to


7       Although Lee states Wal-Mart violated a duty to warn of hidden
dangers, the only exception to the general rule of nonliability that Lee cites
in his opening brief is Restatement § 422. Because Lee has failed to develop
this argument by tethering it to a recognized exception that extends to
employees of independent contractors, we do not address it. See In re U.S.
Currency in the Amount of $26,980.00, 199 Ariz. 291, 299, ¶ 28, 18 P.3d 85, 93
(App. 2000) (refusing to consider arguments offered without development
or citation to supporting legal authority).


                                       9
                        LEE v. M & H, WAL-MART
                           Opinion of the Court

       liability for physical harm to others for whose safety the
       employer owes a duty to exercise reasonable care, which is
       caused by his failure to exercise his control with reasonable
       care.

Thus, to trigger liability under Restatement § 414, a landowner “must have
retained some measure of control not over the premises of the work site,
but over the actual work performed.” See Lewis, 170 Ariz. at 390, 825 P.2d
at 11. The scope of the landowner’s duty, if any, “is determined by the
amount of control” the landowner retained over the construction work
performed by a contractor. Id. at 389, 825 P.2d at 10 (determining the
parameters of a general contractor’s duty based on the control it retained
over the subcontractor’s work). Both the governing contractual provisions
and the actual exercise of control over work are “relevant considerations”
in determining whether a landowner retained control. Id. at 390, 825 P.2d
at 11.

¶23            Generally, the existence of a duty is a question of law for the
court. See Lewis, 170 Ariz. at 387, 825 P.2d at 8. Because the issue of a breach
of duty is inextricably linked with the scope of retained control, however,
“the issue of retained control is also a question of fact which ordinarily
should be left to the fact finder.” Id. at 389, 825 P.2d at 10 (emphasis
omitted). Nonetheless, a trial court may properly grant summary judgment
in favor of a landowner if no reasonable jury could conclude the landowner
retained control over the work at issue. Id. (citing Orme School v. Reeves, 166
Ariz. 301, 802 P.2d 1000 (1990)).

¶24           Applying these principles here, the contract between Wal-
Mart and M&H provided that M&H had control of the construction site and
that Wal-Mart disclaimed all responsibility for the construction personnel
of the contractor (M&H) and its subcontractors (Able Body):

       Neither Owner [Wal-Mart] nor Contractor [M&H] has the
       right and shall not seek, to exercise any control over the other
       party, its employees, or its agents. Contractor shall control
       the methodology for performing the Work to meet Owner’s
       specifications. Each party shall be solely responsible for
       hiring, firing, promoting, demoting, rates of pay, benefits, and
       other terms and conditions in regard to its own employees.
       Neither Contractor nor any of its employees or agents may be
       considered Owner’s agents or employees for any purpose and
       have no authority to act or purport to act on Owner’s behalf.




                                      10
                         LEE v. M & H, WAL-MART
                            Opinion of the Court

       ....

       Notwithstanding the foregoing provisions of this Article 12,
       the Owner, through the establishment of minimum standards
       for Project site access procedures, does not assume responsibility
       for the control of the construction personnel of the Contractor or its
       Subcontractors . . . with safety or security measures, or for
       implementation and enforcement of site access, security and
       safety measures, all of which shall remain solely and
       exclusively the responsibility of the Contractor.

(Emphasis added). Under the contract’s plain language, M&H controlled
both the construction personnel and the implementation of onsite safety
measures.

¶25           Moreover, even assuming Wal-Mart instructed M&H to clean
the tops of the freezer units where Lee’s accident occurred, that conduct
would be insufficient to constitute the exercise of actual control as
contemplated by Restatement § 414. Wal-Mart’s exercise of its right to
inspect the area in connection with final walkthroughs to ensure
compliance with its contract with M&H did not amount to taking direct
control of M&H such that it retained “a right of supervision that [M&H
was] not entirely free to do the work in [its] own way.” Restatement § 414
cmt. c. Wal-Mart had reserved and exercised “only the right to inspect the
construction work to see that the contract specifications are met while
[M&H] control[ed] how and when the work [was] to be done[.]” Lewis, 170
Ariz. at 391, 825 P.2d at 12 (emphasis added); see also Koepke, 140 Ariz. at
426, 682 P.2d at 431 (finding lack of actual control because “there [was] no
evidence indicating that [the landowner] had any authority to direct the
manner in which the contractors worked”).

¶26          We conclude no genuine dispute of material fact exists
regarding Wal-Mart’s lack of control over Lee’s work for purposes of
Restatement § 414, either by the terms of its contract with M&H or by its
actions. As such, summary judgment in favor of Wal-Mart was
appropriate.

II.    M&H’s Motion for Judgment as a Matter of Law

¶27            We review a trial court’s decision on a motion granting
judgment as a matter of law de novo. Sec. Title Agency, Inc. v. Pope, 219 Ariz.
480, 492, ¶ 51, 200 P.3d 977, 989 (App. 2008). The trial court properly grants
judgment as a matter of law if “a party has been fully heard on an issue and



                                        11
                         LEE v. M & H, WAL-MART
                            Opinion of the Court

there is no legally sufficient evidentiary basis for a reasonable jury to find
for that party on that issue[.]” Ariz. R. Civ. P. 50(a)(1).

¶28           As a threshold issue, Lee contends that M&H has waived its
argument that Lee was its employee by making several binding admissions
to the court that Lee was an employee of Able Body. An employee may
have two employers, however, both of which are immune to tort liability.
See Lindsey v. Bucyrus-Erie, 161 Ariz. 457, 458, 778 P.2d 1353, 1354 (App.
1989); Nation v. Weiner, 145 Ariz. 414, 417-18, 701 P.2d 1222, 1225-26 (App.
1985) (explaining the admission that one party is the employee’s employer
does not “prevent” another party from being the employee’s employer).
Lee has not cited, and our review of the record has not revealed, any
admission by M&H that it was not Lee’s employer. We therefore find no
waiver.

¶29            The Arizona Constitution directs the legislature to enact
workers’ compensation laws protecting workers injured or killed “from any
accident arising out of and in the course of” employment. Ariz. Const. art.
18, § 8. This requirement arose from the view that work-related injuries
inevitably accompany industrialization, the costs of which should be borne
by the responsible industry and its consumers. See Ford v. Revlon, Inc., 153
Ariz. 38, 46, 734 P.2d 580, 588 (1987) (Feldman, V.C.J., concurring).

¶30            Under Arizona’s workers’ compensation system, an
employee seeking compensation for an injury must choose between
pursuing a statutory claim with the Industrial Commission and filing a
common law tort action. Anderson v. Indus. Comm’n, 147 Ariz. 456, 457, 711
P.2d 595, 596 (1985). The choice to sue in tort is made by a written rejection
of the compensation system filed with the employer before injury. Ariz.
Rev. Stat. (“A.R.S.”) § 23-906(B), (C). If an employee fails to file a rejection,
the compensation system is the employee’s “exclusive remedy against the
employer or any co-employee acting in the scope of his employment[.]”
A.R.S. § 23-1022(A). Thus, an injured employee who has failed, before
injury, to reject the workers’ compensation system may not maintain a tort
action against his or her employer. Anderson, 147 Ariz. at 457, 711 P.2d at
596. Because Lee never opted out of the workers’ compensation system
prior to his injury, his sole remedy against any of his employers for injuries
he sustained is under that system.

¶31         Lee argues nonetheless that the trial court erred in granting
judgment as a matter of law in favor of M&H because he was not an
employee of M&H, thereby placing him outside the law that prohibits
employees from pursuing a tort claim when they have received


                                       12
                        LEE v. M & H, WAL-MART
                           Opinion of the Court

compensation through the workers’ compensation system. “When a labor
contractor . . . supplies or ‘lends’ its employee to another employer, the
result may be an arrangement in which one employee has two employers.”
Araiza v. U.S. W. Bus. Res., Inc., 183 Ariz. 448, 452, 904 P.2d 1272, 1276 (App.
1995). In this kind of situation the lending employer, Able Body, is known
as the “general employer” and the borrowing employer, M&H, is the
“special employer.” 5 Arthur Larson and Lex K. Larson, Larson’s Workers’
Compensation Law § 67.01 (2014). “The significance of this arrangement is
that both employers are liable for workers’ compensation and both are
immune from tort liability for injuries received by the employee on the job
pursuant to A.R.S. § 23–1022(A).” Araiza, 183 Ariz. at 452, 904 P.2d at 1276;
see also Wiseman v. DynAir Tech of Ariz., Inc., 192 Ariz. 413, 416, ¶ 10, 966
P.2d 1017, 1020 (App. 1998).

¶32         Three elements must be proven to establish that a “lent
employee” has become the employee of the “special employer”:

       (a) the employee has made a contract of hire, express or
       implied, with the special employer;

       (b) the work being done is essentially that of the special
       employer; and

       (c) the special employer has the right to control the details of
       the work.

Word v. Motorola, Inc., 135 Ariz. 517, 520, 662 P.2d 1024, 1027 (1983). “When
all three of [these] conditions are satisfied in relation to both employers,
both employers are liable for work[ers’] compensation.” Id. In cases
involving labor contractors, “employers obtaining workers from [a labor
service provider] have usually, but not invariably, been held to assume the
status of special employer.” Id. at 520 n.5, 662 P.2d at 1027 n.5 (internal
quotation omitted).

¶33           Lee asserts there is no evidence that M&H exercised sufficient
control over Lee to render him an M&H employee under the lent employee
doctrine. Because Lee does not dispute the existence of the first two
elements, only the third factor—whether M&H had the right to control the
details of Lee’s work—is relevant here. In deciding whether an employer
has the right to supervise and control, we consider the totality of the
circumstances, including, but not limited to:

       [T]he duration of the employment; the method of payment;
       who furnishes necessary equipment; the right to hire and fire;


                                      13
                        LEE v. M & H, WAL-MART
                           Opinion of the Court

       who bears responsibility for workmen’s compensation
       insurance; the extent to which the employer may exercise
       control over the details of the work, and whether the work
       was performed in the usual and regular course of the
       employer’s business.

Avila v. Northrup King Co., 179 Ariz. 497, 501, 880 P.2d 717, 721 (App. 1994).
The key for this analysis is whether the special employer has “the right to
supervise and control [the work], not the exercise of that right.” Nation, 145
Ariz. at 418, 701 P.2d at 1226 (emphasis added).

¶34           On this record, we conclude that M&H had the right to
supervise and control the work Lee was performing at the Sam’s Club
construction site. Of the 100-150 subcontractor employees actively
involved in the construction project, Able Body was the only subcontractor
that did not have an onsite foreman supervising its workers. As the trial
court noted, “[u]nlike every other subcontractor out there, there were no []
foremen or anyone else supervising [Lee] and his [co-worker]. They were
on their own. It wasn’t like the electricians who’d have people telling them
how to do their job.” Indeed, by Lee’s own testimony, M&H was his “boss”
and he was required to follow its instructions each day. Furthermore, Lee’s
construction safety expert admitted that M&H had control of the work site
and Lee’s work.

¶35           Finally, the record shows that M&H exercised actual control
over Lee when he was at the construction site. For example, when he
arrived each morning, Lee would locate the M&H superintendents and
receive his instructions for the day. On the morning of the accident, Lee
followed this same procedure and was directed by a superintendent for
M&H to clean the tops of the freezers. Therefore, Lee was an employee of
M&H under the lent employee doctrine.

¶36           Lee argues that M&H did not exercise control over him
because Able Body’s safety rules controlled his conduct at the worksite.
Under these rules, Able Body was responsible for compensating its
workers, maintaining workers’ compensation insurance, and providing
safety equipment and tools. However, as noted above, Able Body’s status
as Lee’s general employer does not exclude the possibility that M&H also
had control over Lee, and therefore was his special employer. See Araiza,
183 Ariz. at 452, 904 P.2d at 1276. Whether Able Body maintained some
element of control over Lee through its safety work rules does not affect
whether M&H exercised control over Lee under the lent employee doctrine.
See Word, 135 Ariz. at 520, 662 P.2d at 1027.


                                     14
                        LEE v. M & H, WAL-MART
                           Opinion of the Court

¶37           Lee also argues that public policy does not support granting
tort immunity unless the employer is liable for workers’ compensation
benefits. Lee relies on Tarron v. Bowmen Machine & Fabricating, Inc., 225 Ariz.
147, 235 P.3d 1030 (2010), and Inmon v. Crane Rental Servs., Inc., 205 Ariz.
130, 67 P.3d 726 (App. 2003), to support this contention. However, neither
Tarron nor Inmon support Lee’s position because those cases did not involve
a temporary worker seeking to hold the special employer liable for the
employee’s work-related injuries. See Tarron, 225 Ariz. at 150, ¶ 14, 352 P.3d
at 1033 (noting that the plaintiff employee sustained injuries due to the
negligence of borrowed employees loaned to the special employer by the
defendant general employer), Inmon, 205 Ariz. at 131-32, ¶ 2, 67 P.3d at 727-
28 (explaining that plaintiffs, who were steel company employees,
sustained injuries due to the negligence of borrowed employees provided
by the defendant general employer, a crane rental service company).

¶38            Finally, no case in Arizona applying the lent employee
doctrine mandates that a special employer must have had workers’
compensation coverage in place to receive tort immunity. Instead, the
special employer is liable to an injured employee for workers’
compensation regardless of whether the special employer had coverage in
place at the time of the employee’s injury. See Nation, 145 Ariz. at 420, 701
P.2d at 1228 (concluding that the plaintiff had the right to recover workers’
compensation benefits from the defendant special employer if she applied
for such benefits); see also Porteadores Del Noroeste S.A. De C.V. v. Indus.
Comm’n, 234 Ariz. 53, 59-60, ¶ 21, 316 P.3d 1241, 1247-48 (App. 2014)
(recognizing that a foreign company, as a special employer under the lent
employee doctrine, was subject to Arizona’s workers’ compensation
statutes for injuries sustained by an employee). Furthermore, even if an
employer does not carry workers’ compensation insurance, the employee
can still receive compensation through the Special Fund/No Insurance
Section of the Industrial Commission of Arizona. See A.R.S. § 23-907(C). In
such a scenario, the non-insured employer is then liable to the Commission
for any payments made to the injured employee. See A.R.S. § 23-961(G). A
special employer is not immune from liability when its employees are
injured within the course and scope of their work duties.

¶39          In sum, we agree with the trial court’s determination that as a
matter of law, M&H was Lee’s special employer under the lent employee
doctrine. Thus, we need not address M&H’s cross-appeal on vicarious
liability.




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                        LEE v. M & H, WAL-MART
                           Opinion of the Court

                              CONCLUSION

¶40            Based on the foregoing, we hold that the trial court properly
determined Lee could not prevail, as a matter of law, on his liability theories
against Wal-Mart under Restatement §§ 422 and 414. We also hold that the
court correctly decided Lee was a lent employee of M&H, which limited his
ability to recover against M&H to workers’ compensation benefits. We
therefore affirm the court’s judgment.




                                   :ama




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