Opinion
W.C. No. 4-225-609
September 28, 1999.
FINAL ORDER
A.M. King Industries, Inc., (King) and its insurer, the Colorado Compensation Insurance Authority (collectively the CCIA respondents), seek review of orders of Administrative Law Judge Wheelock (ALJ) dated August 12, 1997, and October 9, 1998. The ALJ determined that King was the claimant's statutory employer when he sustained a work-related injury and awarded benefits. We affirm.
The claimant was injured on August 25, 1994, while delivering scrap metal to Joseph J. Company (Joseph) pursuant to a truck lease agreement with Dick Edder d/b/a Colorado Transportation (Edder). The scrap metal was removed from the Redstone Mine by King pursuant to a contract with Mid-Continent Machinery Equipment Company (Mid-Continent), and sold to Joseph.
Based upon the evidence presented on July 24, 1997, the ALJ entered an order dated August 12, 1997, which determined the claimant was an employee of Edder at the time of the injury and that Edder was uninsured for workers' compensation. The ALJ also determined that King was the claimant's statutory employer. In support, the ALJ found that King hired Edder to transport scrap metal to Joseph and Edder hired the claimant to drive a truck leased from Kirk Saunders d/b/a Saunders of Colorado (Saunders). Under the contract of hire, twenty-five percent of the gross truck revenues were paid to the claimant, ten percent were paid to Edder and sixty-five percent were paid to Saunders.
On October 9, 1998, the ALJ ordered the CCIA respondents to pay temporary total disability benefits of $14,053, and directed them to reimburse the intervenors for PIP benefits paid to the claimant. The CCIA respondents timely appealed.
I.
On review, the CCIA respondents contend the ALJ erred in finding that Edder was the claimant's employer. They contend Edder was a freight broker. They also contend the ALJ erroneously failed to determine whether the claimant was operating as an independent contractor under a written lease agreement pursuant to § 40-11.5-102 C.R.S. 1999, and thus, is excluded from the term "employee." We disagree.
A.
Under § 8-40-203 C.R.S. 1999, an "employer" is a person who has one or more persons engaged in service under a contract of hire, either express or implied. Evidence that Edder was a freight broker whose received "referral fees" for brokered loads did not preclude the ALJ from finding that Edder was a freight broker who had employees. Cf. Dana's Housekeeping v. Butterfield, 807 P.2d 1218 (Colo.App. 1990). (how the parties refer to themselves is not dispositive of their relationship). Furthermore, the broker relationship between Edder and King, is not dispositive of whether there was a contract of hire between Edder and the claimant.
The respondents' reliance on Dailey v. Rocky Mountain Restoration W.C. No. 3-790-028 (May 22, 1987) , aff'd., Dailey v. Industrial Claim Appeals Office, (Colo.App. No. 87CA0879, April 15, 1988) (not selected for publication), for a contrary result is misplaced. In Dailey, a customer hired a masonry business to clean the bricks of her home. The business referred the customer to the claimant to paint the home. The claimant paid the masonry business a referral fee and was later injured while painting the home. The court held that the referral agreement did not create an employment relationship between the masonry business and the claimant because the masonry business was not hired to paint the home, and the referral did not, in and of itself, obligate the claimant to paint the customer's home.
Here, the record supports the ALJ's finding that King hired Edder to provide a truck and driver to deliver scrap metal to Joseph. Furthermore, unlike the circumstances presented in Dailey, Edder was hired to transport the metal and would have provided another driver and truck if the claimant had declined the load. Therefore, this claim is factually distinguishable from Dailey.
B.
Section 8-40-301(5), C.R.S. 1999, provides that the term "employee" excludes any person working as a driver under a lease agreement pursuant to § 40-11.5-102 C.R.S. "with a common carrier or contract carrier." The court has held that the definition of independent contractor under § 40-11.5-102 applies to § 8-40-301(5). Frank C. Klein v. Colorado Compensation Insurance Authority, 859 P.2d 323 (Colo.App. 1993).
Section 40-11.5-102 C.R.S. 1999, states that a written lease which contains the provisions of 40-11.5-102(1)(a),(b), (e),(f),(g),(h), and (i) shall be prima facie evidence of independent contractor status. The ALJ did not make any specific findings of fact concerning application of § 8-40-301(5). However, we conclude as a matter of law that the CCIA respondents failed to prove that the equipment lease contained the provisions of subsection 40-11.5-102(1)(a), and therefore, the ALJ's error is harmless.
Subsection 40-11.5-102(1)(a)(I) pertains to an independent contractor working with a taxi or limousine carrier, and therefore, is not applicable. Subsection (1)(a)(II) applies to an "independent contractor, working with a certificated common carrier or contract carrier, other than a certified taxi or limousine carrier." (Emphasis added).
The CCIA respondents concede that, at the time of the injury Edder was a "common carrier" who did not possess a certificate of public convenience from the public utilities commission. See Brief in Support of Petition to Review, page 13. However, they contend that Edder was required to obtain certification, and that the requirement renders Edder a "certificated common carrier" within the meaning of § 40-11.5-102(1)(a)(II).
The CCIA respondents cite no authority, and we know of no authority, which supports their assertion that § 40-11.5-102(1)(a)(II) applies to a driver who works for a common carrier eligible for certification, but which is not certified. Furthermore, a plain reading of the statute does not support that construction. See Nelson v. Industrial Claim Appeals Office, 981 P.2d 210 (Colo.App. 1998), cert. denied, July 12, 1999 (the rules of statutory construction require that we give the words of the statute their plain and ordinary meaning unless the result is absurd).
Section 40-10-104(1), C.R.S. 1999, provides that no motor vehicle carrier, which includes common carriers, shall operate upon a public highway without first having obtained a certificate of public convenience. See Miller Bros. Inc., v. Public Utility Commission, 185 Colo. 414, 525 P.2d 443 (1974). Further, § 40-10-108 C.R.S. 1999, creates a penalty for failing to obtain a certificate of public convenience. Consequently, it would be illogical to conclude that the term "certificated common carrier" refers to a person who is required to obtain certification but has not done so.
C.
Accordingly, the claimant's employment status is governed by former § 8-40-202(2)(a), C.R.S. 1994, which provides that a person:
"who performs services for pay for another shall be deemed to be an employee,. . . . unless such individual is free from control and direction in the performance of the service, both under the contract for performance of service and in fact such individual is customarily engaged in an independent trade, occupation, profession, or business related to the service performed."
It is undisputed that Edder agreed to pay the claimant for truck driving services. Under these circumstances, it was the CCIA respondents' burden to prove the claimant was free from control and customarily engaged in an independent trade. Stampados v. Colorado D S Enterprises, Inc., 833 P.2d 815 (1992); Barge v. Industrial Claim Appeals Office, 905 P.2d 25 (Colo.App. 1995) .
Under former § 8-40-102(2), C.R.S. 1994, the determination of whether the claimant is an employee is to be based on the factors set forth in § 8-40-202(2) and the case law interpreting § 8-70-115 of the Colorado Employment Security Act. Section 8-40-202(2)(a)(I) provides that the worker's independence may be proven either by a preponderance of the evidence of the conditions set forth in subsection (2)(a), or through a written document. Subsection 8-40-202(2)(b)(II) provides that were the independence is proven by a written document, the document must show that the person for whom the services are performed does not have any of the indicia of control set forth in §§ 8-40-202(2)(b)(II)(A)-(I). However, no one factor is dispositive and the existence of several factors does not compel a finding that the claimant is an independent contractor. Cf. Nelson v. Industrial Claim Appeals Office, supra; Roberts v. Gary C. Thiret, W.C. No. 4-259-283 (October 18, 1996), aff'd., Thiret v. Thomas M. Roberts (Colo.App. No. 96CA1946, April 17, 1997) (not selected for publication).
Further, the question of whether the claimant is free from control is a question of fact for resolution by the ALJ. Locke v. Longacres, 772 P.2d 685 (Colo.App. 1989) ; Weld County Kirby Co. v. Industrial Commission, 676 P.2d 1253 (Colo.App. 1983). Consequently, we are bound by the ALJ's determinations if supported by substantial evidence and plausible inferences drawn from the record. Section 8-43-301(8), C.R.S. 1999; F.R. Orr v. Rinta, 717 P.2d 965 (Colo.App. 1985).
Here, the ALJ expressly considered the factors in § 8-40-202(2)(b)(II)(A)-(I), and was implicitly unpersuaded that the written lease agreement established the claimant was free from Edder's direction and control. See George v. Industrial Commission, 720 P.2d 624 (Colo.App. 1986) (ALJ not held to crystalline standard in articulating findings. Because the ALJ's determination is supported by substantial albeit conflicting evidence, it must be upheld. See Prestige Homes, Inc. v. Legouffe, 658 P.2d 850, 856 (Colo. 1983).
There was a direct conflict between the claimant and Edder concerning the nature of their relationship. Within her sole prerogative the ALJ resolved the conflict in favor of the claimant's testimony. The claimant testified that Edder determined when, where and how he performed his work. (Tr. p. 52). The claimant also stated that Edder required him to call in daily for loads, and required him to leave the truck at Edder's lot when it was not being used to haul loads dispatched by Edder. (Tr. pp. 19, 29, 30, 57, 67). Moreover, even though the written lease agreement indicated that the claimant had leased all the trailers in Edder's yard, the claimant testified that Edder decided what trailer he could use for each load and he was not free to use the trailers except to generate income for Edder. (Tr. pp. 123, 137). Further, the record contains evidence the claimant was paid in his personal name and required to submit all bills of lading to Edder for payment. (Tr. p. 57).
Admittedly, the written lease provided that the claimant could not be terminated without 30 days written notice. Contrary to the respondents' argument this factor may or may not be indicative of whether the claimant was an independent contractor. If the lessor is free to terminate the lessee's services without further liability, the circumstances suggest an employment at will. In contrast, an independent contractor relationship is suggested by language which renders the lessor liable for the fixed contract price even upon termination of the lease.
Here, Edder was not required to give the claimant any loads. Consequently, Edder could terminate the lease upon 30 days written notice but not offer the claimant any further loads. Under these circumstances, Edder would have no further liability. Consequently, the ALJ could reasonably infer that this factor militated in favor of an employer/employee relationship.
D.
The caselaw interpreting § 8-70-115 has held that to be customarily engaged in an independent business, the worker must "actually and customarily provide similar services to others at the same time he or she works for the putative employer." Carpet Exchange of Denver, Inc. v. Industrial Claim Appeals Office, 859 P.2d 278 (Colo.App. 1993). Here, there is no allegation or finding that the claimant was actually and customarily driving truck for anyone else at the same time he drove for Edder. Rather, the record supports the ALJ's findings that the claimant worked exclusively for Edder, and was paid in his individual name and not a trade name. (Tr. pp. 28, 29, 57). Consequently, the ALJ did not err in finding that the CCIA respondents' failed to rebut the evidence that the claimant was Edder's "employee."
E.
Nevertheless, the respondents contend that there was no employer/employee relationship because the claimant had no obligation to accept any assignments from Edder. We disagree.
The claimant's testimony supports the ALJ's implicit determination that there was a contractual obligation by claimant to use the leased equipment to haul loads dispatched by Edder. This inference is supported the claimant's testimony that he was not free to use the truck and trailers to haul loads for other brokers. Based upon this evidence the ALJ implicitly inferred that there was an expectation the claimant would accept some loads from Edder.
II.
Next, the CCIA respondents contest the ALJ's finding that King was the claimant's statutory employer. They contend Joseph was the claimant's statutory employer because part of its regular business is to arrange for the transportation of scrap metal. The CCIA respondents also contend that the injury occurred while the claimant was unloading metal at Joseph's premises, and therefore, the injury occurred at a time when the claimant was under Joseph's direct employee. Again we disagree.
Statutory employer status exists when a contractor has subcontracted out its "regular business." M M Management Company v. Industrial Claim Appeals Office, 979 P.2d 574 (Colo.App. 1998). The "regular business" test is satisfied if the contracted services are part of the employer's regular business as defined by its "total business operation," considering the elements of routineness, regularity, and the importance of the contracted services to the contractor's business operations. Finley v. Storage Technology Corp., 764 P.2d 62 (Colo. 1988). Under former § 8-41-401(1) (2), C.R.S. (1993 Cum. Supp.), any company which is engaged in business by leasing or contracting out part or all of its work to a subcontractor is the employer of the employees of the subcontractor and is liable for the injuries of employees of the subcontractors, unless the subcontractor is insured.
Here, the evidence supports the ALJ's findings that King's regular business included the transportation of scrap metal. Albert King, the president of King testified that King is a demolition contractor. The written contract between King and Mid-Continent required King to dismantle, remove and sell all salvageable metallic materials from the Redstone Mine. The contract also provided that all metallic scrap be removed at King's expense for sale or disposal. However, at the time of the injury King had no trucks and drivers to remove scrap metal from the site. (Tr. pp. 164, 181). Consequently, King contracted with Edder to transport the metal to various buyers. Furthermore, it is undisputed that Edder was not insured for workers' compensation. Under these circumstances, the ALJ reasonably inferred that King was the claimant's statutory employer and is liable for the injury.
However, because King was insured for workers' compensation at the time of the injury, the CCIA respondents are solely liable for the claimant's injury and liability may not be extended to Joseph as a statutory employer. See § 8-41-401(1) ; Buzard v. Super Walls, Inc., 681 P.2d 520 (Colo. 1984) (claimant may not reach "upstream" beyond insured contractor). Therefore, the ALJ did not err in failing to impose liability on Joseph. Consequently, the ALJ's error, if any in considering Keith Vaughn's deposition testimony that Joseph's regular business did not include the transportation of scrap metal, is harmless and shall be disregarded. Section 8-43-310 C.R.S. 1999; A R Concrete Construction v. Lightner, 759 P.2d 831 (Colo.App. 1988). (error which is not prejudicial will be disregarded).
III.
The CCIA respondents also contend that King and Joseph were engaged in a joint venture, and therefore, they argue that King and Joseph are joint and severally liable for the claimant's injury.
The CCIA's respondents did not raise this issue before the ALJ, and we decline to consider it for the first time on appeal. Kuziel v. Pet Fair, Inc., 931 P.2d 521 (Colo.App. 1996); Colorado Compensation Ins. Authority v. Industrial Claim Appeals Office, 884 P.2d 1131 (Colo.App. 1994).
Insofar as the CCIA respondents have further arguments they are not persuasive.
IT IS THEREFORE ORDERED that the ALJ's orders dated August 12, 1997, and October 9, 1998, are affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Kathy E. Dean
NOTICE
This Order is final unless an action to modify or vacate this Order is commenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver, CO 80203, by filing a petition for review with the court, with service of a copy of the petition upon the Industrial Claim Appeals Office and all other parties, within twenty (20) days after the date this Order is mailed, pursuant to section 8-43-301(10) and 307, C.R.S. 1999.
Copies of this decision were mailed September 28, 1999 to the following parties:
Francis T. Lewis, 3260 Bell Mountain Dr., Colorado Springs, CO 80918
A. M. King Industries, Inc., Attn: Albert King, 2875 Feather River Blvd., Oroville, CA 95965-9630
Dick Edder, 314 Nichols Court, Colorado Springs, CO 80905
Kirk Saunders, c/o Joan Goldsmith, Esq., 6665 Delmonico Dr., Ste. D, Colorado Springs, CO 80919
David J. Joseph Co., c/o. Scott M. Busser, Esq., 300 S. Jackson St., Ste. 570, Denver, CO 80209
Liberty Mutual Insurance Co., Attn: Teresa Manshardt, P.O. Box 3539, Englewood, CO 80155-3539
Joan Goldsmith, Esq., 6665 Delmonico Dr., Ste. D, Colorado Springs, CO 80919
Stacy J. Tarler, Esq., Anderson, Campbell Laugensen, P.C., 3464 S. Willow St., Denver, CO 80231-4566
Gerald R. Blixt, Esq., Bennett Hollaway, P.O. Box 2168, Colorado Springs, CO 80901-2168 (For Claimant)
Scott M. Busser, Esq., 300 S. Jackson St., Ste. 570, Denver, CO 80209 (For David J. Joseph Liberty Mutual Ins. Co.)
Laurie A. Schoder, Esq., Colorado Compensation Insurance Authority (Interagency Mail) (For A.M. King Industries and CCIA)
Pat Salt, Esq., Retherford, Mullen, Johnson Bruce, P.O. Box 1580, Colorado Springs, CO 80901-1580 (For Farmers Insurance Exchange)
Steven J. Dawes, Esq. and Pamela L. Mosher, Esq., Senter Goldfarb Rice, P.O. Box 22833, Denver, CO 80222 (For Shelter General Insurance)
BY: A. Pendroy