Opinion
NO. 2015-CA-001357-WC
02-19-2016
UNINSURED EMPLOYERS' FUND APPELLANT v. JOSEPH WARREN; JOHN WALKER, DBA WALKER CONSTRUCTION; MYRON DOSSETT; JAMES LINDSEY CLARK; HON. JANE RICE WILLIAMS, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: Patrick M. Roth Assistant Attorney General Frankfort, Kentucky BRIEF FOR APPELLEES MYRON DOSSETT AND JAMES LINDSEY CLARK: S. Boyd Neely, Jr. Mayfield, Kentucky BRIEF FOR APPELLEE JOSEPH WARREN: James Adams II Hopkinsville, Kentucky
NOT TO BE PUBLISHED PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-13-00882 OPINION
AFFIRMING BEFORE: KRAMER, D. LAMBERT AND STUMBO, JUDGES. STUMBO, JUDGE: The Uninsured Employers' Fund appeals from an Opinion of the Workers' Compensation Board reversing and remanding an Opinion, Award and Order of the Administrative Law Judge ("ALJ"). The Board determined that "up-the-ladder" liability pursuant to KRS 342.610(2)(b) could not be imposed on Myron Dossett and James Lindsay Clark because remodeling and renovation work was not a regular and recurrent part of their business. For the reasons stated below, we AFFIRM the Opinion on appeal.
Kentucky Revised Statute. --------
On June 10, 2013, Joseph Warren filed a workers' compensation claim alleging that he injured his left hand on October 1, 2012, while using a skill saw. The nature of Warren's employment was initially contested. At the time of the injury, Warren was working on a parcel of real property owned by Dossett and Clark, who operate a business renting personal residences to individuals. Walker Construction, Warren's purported employer, denied the claim on the ground that Warren was not an employee at the time of the injury. The matter proceeded before the ALJ, who determined by way of an Order rendered on December 16, 2013, that Warren was an employee of John Walker d/b/a Walker Construction.
Thereafter, the Uninsured Employers Fund ("UEF") moved to join Dossett and Clark as party defendants alleging up-the-ladder liability. By way of an Opinion, Award and Order rendered on January 23, 2015, the Administrative Law Judge ("ALJ") rendered an award in favor of Warren upon finding up-the-ladder liability against Dossett and Clark. The ALJ determined that Dossett and Clark, as a regular and recurrent part of their normal business operation, hired contractors to handle the care and maintenance of their rental properties. According to the ALJ, this led to the hiring of Walker and/or James Stoker as contractors to oversee the work. The ALJ concluded that Warren was present on one of these rental properties as an employee of Walker at the time of the injury, and that as such, Dossett and Clark have up-the-ladder liability for any benefits awarded.
Dossett and Clark prosecuted an appeal to the Board, which rendered an Opinion on August 7, 2015, reversing and remanding the ALJ's decision. As a basis for the Opinion, the Board determined that,
the evidence fails to support the ALJ's determination [that] Warren was engaged in an activity which was a regular and recurrent part of Dossett and Clark's business. The evidence clearly establishes [that] Dossett and Clark were involved in the property rental business, had no employees, and were not involved in ongoing or repeated renovation or construction projects.The focus of the Board's Opinion was that the evidence of record failed to support the conclusion that remodeling and renovation work was a regular and recurrent part of Dossett and Clark's enterprise; therefore, up-the-ladder liability pursuant to KRS 342.610(2)(b) was not supported. The UEF appeals from this decision.
The UEF now argues that the Board erred in determining that the record failed to support the ALJ's finding of up-the-ladder liability as to Dossett and Clark. It contends that Dossett and Clark are responsible for all of the numerous maintenance activities that are regularly and recurrently performed in order to operate their residential property rental business. It argues that if not performed by contractors, the maintenance work would have to be performed personally by Dossett and Clark directly or by hired employees. The UEF also maintains that there is no requirement that the activity recur like clockwork, but only that it be performed in the normal course of business. As such, the UEF argues that as a regular and recurrent part of its normal business operation, Dossett and Clark contracted to hire contractors to do the regular and recurrent care and maintenance on their rental properties. This, it argues, in turn led to the hiring of John Walker Construction and/or James Stoker as contractors for the rental properties. The UEF concludes by contending that on the date of the injury, Warren was an employee of Walker. It maintains that because Dossett and Clark hired contractors like Walker on a regular and recurrent basis, they have up-the-ladder liability for any benefits awarded.
KRS 342.610(2) states,
A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to the employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter. Any contractor or his or her carrier who shall become liable for such compensation may recover the amount of such compensation paid and necessary expenses from the subcontractor primarily liable therefor. A person who contracts with another:
(a) To have work performed consisting of the removal, excavation, or drilling of soil, rock, or mineral, or the cutting or removal of timber from land; or
(b) To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person
shall for the purposes of this section be deemed a contractor, and such other person a subcontractor. This subsection shall not apply to the owner or lessee of land principally used for agriculture.As the UEF properly notes, the purpose of KRS 342.610 is "to discourage a contractor from subcontracting work that is a regular or recurrent part of its business to an irresponsible subcontractor in an attempt to avoid the expense of workers' compensation benefits." General Electric Company v. Cain, 236 S.W.3d 579, 585 (Ky. 2007).
In disposing of this matter, the Board determined that the evidence failed to support the ALJ's determination that Warren was engaged in an activity which was a regular and recurrent part of Dossett and Clark's business. That is to say, the Board found that renovation and remodeling were not a regular and recurrent part of Dossett and Clark's rental business. We find no error in this conclusion. Dossett and Clark testified that they are strictly in the rental business; that they have no specific construction knowledge; that they have never engaged in remodeling or construction; that they don't have any tools or equipment for remodeling or construction; and, that they never gave instructions to nor supervised Warren. Additionally, Cain, supra, held that "[e]mployees of contractors hired to perform major or specialized demolition, construction, or renovation projects generally are not a premises owner's statutory employees unless the owner or the owners of similar businesses would normally expect or be expected to handle such projects with employees." Cain, 236 S.W.3d at 588. There is nothing in the record upon which one may conclude that owners of businesses similar to that of Dossett and Clark would normally be expected to engage in remodeling and renovation with its own employees. Dossett and Clark testified that they had no employees.
Our function is limited to correcting the Board only when we perceive that the Board has "overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice." Western Baptist Hospital v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992). The Board determined that the evidence failed to support the conclusion that Dossett and Clark were regularly engaged in remodeling and renovation. The record supports this conclusion. Additionally, the Board has not overlooked or misconstrued controlling statutes or precedent. Rather, it properly applied KRS 342.610(2)(b) and the supportive case law in concluding that Dossett and Clark did not regularly - nor even sporadically - directly engage in the type of work they hired Walker to perform. Dossett and Clark have not thwarted the purpose of KRS 342.610(2)(b) by attempting to avoid workers' compensation liability via an intervening subcontractor. Cain, supra. Rather, the record supports the Board's conclusion that Dossett and Clark hired Walker to perform remodeling and renovation services of the type not normally carried out by their residential rental business. We find no error.
For the foregoing reasons, we AFFIRM the Opinion of the Workers' Compensation Board.
ALL CONCUR. BRIEF FOR APPELLANT: Patrick M. Roth
Assistant Attorney General
Frankfort, Kentucky BRIEF FOR APPELLEES MYRON
DOSSETT AND JAMES LINDSEY
CLARK: S. Boyd Neely, Jr.
Mayfield, Kentucky BRIEF FOR APPELLEE JOSEPH
WARREN: James Adams II
Hopkinsville, Kentucky