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Whitfield v. Bonanno Real Estate Group

419 N.J. Super. 547, 17 A.3d 855 (App. Div. 2011)

PARTNERSHIPS; WORKERS COMPENSATION — If an employer of an injured employee is also a general partner of the tortfeasor, the employer will, in its capacity as such a partner, be liable for tort damages and not be protected, in that capacity, by the workers compensation bar.

A general partnership owned an office building. One of its partners occupied the building. An employee of that partner was injured when she slipped on black ice in the parking lot. The employee collected workers compensation benefits and therefore the employer was immune from further suit by its employee. That didn’t stop the employee from suing the general partnership that owned the property. That suit gave rise to the question as to whether, because one partner of the general partnership had earned the benefit of the workers compensation bar when its employee was injured, does the general partnership itself, and by extension, the other partners in that general partnership, get protection from a law suit by the injured party. In this case, the employer was the managing general partner of the partnership and owned the other partner as well.

The Appellate Division, in an attempt to be very careful not to have its “ultimate conclusion and holding” misconstrued or “read too broadly,” set forth a set of the issues that were “not” presented. First, this was not a case where the general partnership being sued claimed that it was essentially the same entity as employer-partner, i.e., it was not claiming that it was an alter ego for purposes of the workers compensation act. This statement by the Court was necessary because the employer essentially owned and controlled the general partnership that owned the property. Second, this was not a case that involved the so-called “dual persona” or “dual capacity doctrine. Essentially, this is where “[a]n employer may become a third person, vulnerable to tort suit by an employee, if – and only if – it possesses a second persona so completely independent from and unrelated to its status as employer that by established standards the law recognizes that persona as a separate legal person.” Lastly, this was not a case where the Court was “called upon to consider whether [the general partnership] was actively negligent.”

According to the Court, “[i]n the end, this case devolve[d] to consideration of two issues: 1) the nature of the relationship between a general partner and its partnership; and 2) the public policies fostered by the [Workers Compensation Act], both through the immunity provided by N.J.S.A. 34:15-8, and the reserved right of an injured worker to commence a common law suit against a third person, N.J.S.A. 34:15-40.”

The Court painfully walked through case law in New Jersey and outside of New Jersey. Out-of-state cases from New Hampshire, Nevada, and New York provided “precedent to support the proposition that a statutory immunity granted to one partner necessarily flows to the general partnership.” It then rejected the holdings from those three states, pointing to rulings in yet other states and by satisfying itself that “in other contexts, our courts have held to the contrary.”

Here, the Court took great comfort in an issue resolved by the Revised Uniform Partnership Act (RUPA) that had vexed courts and commentators when the partnership law was governed by the former Uniform Partnership Act (UPA). Under the UPA, courts variously treated partnerships as either entities separate and apart from the general partners or, very commonly, treated partnerships as aggregates of the general partners. The RUPA put an end to this by establishing that partnerships formed under the RUPA, or that were otherwise governed by the RUPA, are entities separate and apart from the individual partners. With that in mind, and looking to the compensation principles and the policy goals of the Workers Compensation Act, the Court had no difficulty restricting the statutory immunity to the employer-general partner in its capacity as employer, but not extending that immunity to the general partnership and, by extension, not extending that immunity to the employer in its role as general partner of the partnership. Consequently, the partnership’s motion to have the complaint against is dismissed by summary judgment was denied.

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