Opinion
C.A. No. 00A-07-001
Submitted: February 6, 2001
Decided: May 31, 2001
Upon Consideration of Appeal Form of Unemployment Insurance Appeals Board REVERSED.
Thomas H. Ellis, Esq., Wilmington, Delaware. Attorney for Appellant.
Herbert R. Harvey, Jr., Pro Se.
ORDER
Upon consideration of the parties' briefs, and the record, it appears that:
1. The claimant in this case started a small logging company with his brother. Within a few months the company experienced financial distress because there was no logging work to be done, at least none at that time. Since there was no money available to pay wages, the claimant laid himself off An appeals referee determined that the claimant had voluntarily left his work without good cause attributable to such work and was therefore not qualified to receive benefits. The Unemployment Insurance Appeal Board, however, decided that the claimant was entitled to benefits, noting that "(t)he claimant was separated from his work because of lack of work." The Division of Unemployment Insurance then filed this appeal. I conclude that the appeals referee was correct and that the UIAB's decision is legally incorrect.
2. The facts, all of which are undisputed, are as follows. In September 1999, the claimant, Herbert R. Harvey, Jr., formed a small logging company with his brother, Charles. They incorporated as High-Vue Logging, Inc. Herbert was president. Charles was vice-president. Another brother, Robert, was an employee but apparently not an officer or owner. A friend, Judith West, served as bookkeeper and secretary-treasurer. The exact ownership of the corporation is not clear from the record but it appears that either Herbert was the owner, or he and Charles were coowners. Initially, the three Harvey's were all working employees of the company. The claimant was paid $600 per week. Business was apparently good at first, but by February 2000 they had run out of logging jobs. In February the claimant and Charles accepted a loan from a friend of $2000 to try to keep the business going. At some point, apparently at the end of February, Robert left and got a job elsewhere. In early March the claimant laid himself off because there was no money available for him to take a salary. His account of his laying off is as follows:
Well our company, we got to where we didn't have the money to pay for both of us working so I decided to for the company to, my company to lay me off and draw benefits and my brother was going to keep working. And the reason for him to keep working he was going to try to find work for us because we have to find tracts of timber and stuff to cut that's how we you know make our living and stuff. And so cause the company didn't have the money to pay me.
Charles apparently drew one more salary check on March 24. By the time of the hearing in April 2000 no one was receiving any wages from the company. At the April hearing before the appeals referee, the claimant explained that they were supposed to have timber coming through but that rain was holding it up. He was hopeful that work could be resumed when the weather got better. Whether or not the claimant and his brother ever were able to resume active logging business is not stated in the record.
3. In reviewing the decisions of the UIAB, this Court must determine whether the findings and conclusions of the Board are free from legal error and supported by substantial evidence in the record. The function of the reviewing court is to determine whether the agency's decision is supported by substantial evidence. Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The appellate court does not weigh the evidence, determine questions of credibility, or make its own factual findings. It merely determines if the evidence is legally adequate to support the agency's factual findings. It also determines if the Board made any errors of law.
See Unemployment Insurance Appeal Board v. Martin, Del. Supr., 431 A.2d 1265 (1981); Ponchvatilla v. United States Postal Service, Del. Super., C.A. No. 96A-06-19, Cooch, J. (June 9, 1997), Mem. Op. At 2; 19 Del. C. § 3323(a) ("In any judicial proceeding under this section, the findings of the [UIAB] as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the Court shall be confined to questions of law.").
General Motors v. Freeman, Del. Supr., 164 A.2d 686, 688 (1960); Johnson v. Chrysler Corporation, Del. Supr., 213 A.2d 64, 66-67 (1965).
Oceanport Ind. v Wilmington Stevedores, Del. Supr., 636 A.2d 892, 899 (1994); Battisa v. Chrysler Corp., Del. Super., 517 A.2d 295, 197 (1986), app. Dism., Del. Supr., 515 A.2d 397 (1986).
Johnson v. Chrysler, 213 A.2d at 66.
Title 29 Del. C. § 10142(d).
3. The findings, conclusions and decision of the UIAB, in pertinent part, are as follows:
The Appeals Referee found that the claimant voluntarily quit his employment without good cause attributable to his work. The Board disagrees and reverses the Referee for the following reasons.
The Board finds that the company that had paid unemployment had no work and no money and laid off the claimant. He is entitled to unemployment benefits.
The decision of the Appeals Referee is reversed. The claimant was separated from his work because of lack of work.
4. While the UIAB's findings, conclusions and decision are factually correct, they do not give due regard to the statutory language regarding disqualification from benefits relied upon by the appeals referee. In this case the claimant commenced his own business, and then, within a reasonably short period of time, was not able to earn an income because his new business was not profitable. Although the issue has apparently not been addressed in Delaware, other jurisdictions with statutory provisions the same or substantially the same as ours have held that business owners who decide to close their business or otherwise terminate their own employment because of business failure act voluntarily, even where the failure is due to adverse economic circumstances. Although the decision to close one's business or discontinue one's own employment may be made under adverse circumstances, it retains its character as a voluntary act. I am persuaded that this reasoning applies here, particularly when one considers that only about five months passed from when the claimant decided to start his own business to when an interruption in business profits prompted him to lay himself off and seek unemployment. Although the claimant's decision to discontinue his own employment was driven by the fact that there was no work, his decision to lay himself off at that time and seek unemployment benefits nonetheless was a voluntary act on his part.
Director, Department of Industrial Relations v. Ford, Ala. Ct. App., 700 So.2d 1388 (1997); Fish v. White Equipment Sales Service, Wisc. Supr., (1974); Mednick v. Unemployment Compensation Board of Review, Pa. Super., 173 A.2d 665 (1961).
5. The facts here also support the appeals referee's finding that the claimant left his employment without good cause attributable to such work. The Unemployment Compensation Act is intended to provide relief to workers and their families who suffer involuntary unemployment through no fault of their own. The possibility of failure is a known and foreseeable risk in almost any new business venture. The claimant attributed his business problems to weather and an inability to find tracks of timber to cut. There is nothing in the record to suggest that such risks are not normal risks associated with a new logging business. I am persuaded that the term "good cause" for leaving employment was not intended to protect people who voluntarily set out on a business venture which in a relatively short time succumbs, at least temporarily, to risks associated with the new venture. The claimant's inability to find work in March and April, therefore, does not constitute good cause for leaving work within the intent of the statute, and the appeals referee was correct to conclude that the claimant was disqualified from benefits.
19 Del. C. § 3301.
See Mednick, supra.
6. Therefore, the decision of the UIAB is reversed.
IT IS SO ORDERED.