Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 34200800024335CUPOGDS
ROBIE, J.
After plaintiff Jorge Tapia was injured in a fall while working on a roof on property owned by defendants Karl Dresden and Paula Mordhorst (together, defendants), Jorge, his wife Gloria, and his brother Guillermo (collectively, the Tapias) sued defendants for negligence, loss of consortium, and negligent infliction of emotional distress, respectively.
When necessary, we refer to the Tapias individually by their first names to avoid confusion.
Defendants demurred to the complaint, and the trial court sustained their demurrer and dismissed the action as to defendants based on the (implicit) conclusion that all three causes of action were barred by the rule of workers’ compensation exclusivity, because workers’ compensation benefits were available to Jorge even though the contractors for whom Jorge was working did not have workers’ compensation insurance.
These contractors, to whom we will refer collectively as the Ungas, are the Unga Corporation, Unga Company, Unga Foam Roofing & Waterproofing, A-1 Weather Solutions dba Pinnacle Foam Roofing & Insulation Company, Willis Unga, and Gustaf Unga. Although the Ungas were also defendants in this action in the trial court, they are not parties to this appeal, which relates solely to the ruling on the demurrer by the property owners Dresden and Mordhorst.
On review, we conclude the trial court erred in sustaining the demurrer, and accordingly we will reverse the judgment of dismissal. The rule of workers’ compensation exclusivity does not apply here (based on the Tapias’ allegations) because: (1) the Ungas did not have a valid or current state contractor license to perform the roofing work and therefore, by operation of law, they and Jorge were defendants’ employees, rather than independent contractors; and (2) the exclusivity rule does not bar a tort action against an employer who fails to carry workers’ compensation insurance. Further, as to Guillermo’s cause of action, which was premised on the “bystander” theory of negligent infliction of emotional distress, it was sufficient that Guillermo is Jorge’s brother and witnessed the fall.
Factual And Procedural Background
We take the following facts from the complaint. In July 2007, defendants “owned, managed, maintained or controlled the property at 1561 Laurel Street” in San Carlos. They hired the Ungas to repair the roof on the property, and the Ungas in turn hired Jorge (a resident of Napa County) and Guillermo (a resident of Mexico). Neither Jorge nor the Ungas had a valid or current state contractor license to perform the roofing work, and neither the Ungas nor defendants carried workers’ compensation insurance.
The Tapias correctly point out that defendants’ papers in the trial court were rife with reference to facts not alleged in the complaint and defendants’ appellate brief is no different. Because “[a] demurrer tests the pleading alone, and not the evidence or the facts alleged” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459), we disregard defendants’ extraneous factual assertions and the arguments based on them, including those based on material (since returned to defendants) that was appended to a request for judicial notice we denied.
The complaint does not make entirely clear that Jorge and Guillermo were hired by the Ungas. As to Jorge, the complaint alleges he was “employed to repair the roof, ” but it does not directly allege who employed him. As to Guillermo, the complaint alleges only that he observed Jorge’s fall. Nevertheless, in their opposition to the demurrer in the trial court, the Tapias construed their own complaint as alleging that defendants hired the Ungas, and Jorge and Guillermo were “hired in turn.” We accept this characterization of the complaint for purposes of our review.
Although the work was performed at a height greater than seven and one-half feet, the Ungas and defendants negligently failed to provide Jorge with an approved personal fall protection, arrest, or restraint system or an approved positioning system. While working on the roof, Jorge fell about 25 feet to the concrete sidewalk below, sustaining severe bodily injury. Guillermo saw the fall and suffered severe emotional distress and anguish as a result. Due to his injuries, Jorge was unable to perform necessary duties as a husband and father.
In a single complaint, Jorge sued defendants for negligence, Gloria sued for loss of consortium, and Guillermo sued for negligent infliction of emotional distress. Defendants demurred.
As to Jorge’s negligence cause of action, defendants asserted the complaint failed to state facts sufficient to constitute a cause of action for three reasons. First, they asserted that Jorge’s cause of action was barred by the workers’ compensation exclusivity rule, because workers’ compensation benefits were available to Jorge “through the Uninsured Employers Fund [now Uninsured Employers Benefits Trust Fund].” Second, they asserted that, as property owners, they did not owe a duty of care to Jorge as an employee of an independent contractor. Third, they asserted they did not actually or proximately cause Jorge’s injuries.
As to Gloria’s cause of action for loss of consortium, defendants asserted the complaint failed to state facts sufficient to constitute a cause of action for two reasons. First, they asserted that because Jorge’s cause of action was precluded by the workers’ compensation exclusivity rule, Gloria’s cause of action was likewise precluded. Second, they asserted that Gloria could not allege any acts by them that actually or proximately caused her loss or injury or the injury to Jorge.
Finally, as to Guillermo’s cause of action for negligent infliction of emotional distress, defendants asserted the complaint failed to state facts sufficient to constitute a cause of action for three reasons. First, they asserted he did not live in the same household as Jorge. Second, they asserted they did not owe Guillermo a duty of care. Third, they asserted there were no allegations that their alleged negligence was directed at Guillermo, and they were unaware Guillermo was working on the property.
The trial court sustained the demurrer with leave to amend. The court concluded that “the employee of an independent contractor may not sue the owner or hirer for injuries on the job. The injured employee’s remedy is workers’ compensation.” Also, while the Ungas did not have worker’s compensation coverage, workers’ compensation benefits were nonetheless available to Jorge. The court’s ruling did not specifically address the cause of actions asserted by Gloria and Guillermo.
The Tapias declined to amend their complaint, so the court dismissed it with prejudice. The Tapias timely appealed the judgment of dismissal.
DISCUSSION
I
Standard Of Review
“The function of a demurrer is to test the sufficiency of the complaint by raising questions of law. [Citation.]... A general demurrer admits the truth of all material factual allegations of the complaint; plaintiff’s ability to prove the allegations, or the possible difficulty in making such proof, does not concern the reviewing court. [Citation.] ‘As a reviewing court we are not bound by the construction placed by the trial court on the pleadings but must make our own independent judgment thereon....’” (Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 238-239.)
“‘When a plaintiff elects not to amend the complaint, it is presumed that the complaint states as strong a case as is possible’” “‘and the judgment of dismissal must be affirmed if the unamended complaint is objectionable on any ground raised by the demurrer.’” (Soliz v. Williams (1999) 74 Cal.App.4th 577, 585.)
II
Jorge’s Negligence Cause Of Action
A
Workers’ Compensation Exclusivity
The Tapias alleged Jorge was employed to repair the roof on defendants’ property and defendants negligently failed to provide him with an approved safety system, even though he was working at a height greater than seven and one-half feet. Although, as we have noted, the Tapias admitted Jorge was employed by the Ungas, they also alleged that under Labor Code section 2750.5, defendants “assum[ed] the responsibilities of employing [Jorge] as their own employee” because the Ungas performed the roofing work without the requisite state contractor license.
All further section references are to the Labor Code unless otherwise noted.
Defendants demurred based on the workers’ compensation exclusivity rule. They contended the Ungas were “independent roofing contractor[s], ” Jorge was the Ungas’ employee, and “Jorge... will be compensated for his injuries through the workers’ compensation system, either by [the Ungas] or through the Uninsured Employers Benefits Trust Fund.”
There are at least two flaws in defendants’ argument. First, it ignores the Tapias’ allegation that defendants, too, were Jorge’s employer under section 2750.5 because the Ungas did not have a valid or current state contractor license. Second, it ignores the rule that when an employer fails to carry workers’ compensation insurance, workers’ compensation benefits are not an injured employee’s only remedy against the employer, and a tort action against the employer is also permissible. Taken together, these two propositions establish that Jorge’s negligence cause of action is not barred by the rule of workers’ compensation exclusivity.
“Under the Workers’ Compensation Act (hereafter the Act), all employees are automatically entitled to recover benefits for injuries ‘arising out of and in the course of the employment.’” (Privette v. Superior Court (1993) 5 Cal.4th 689, 696-697.) “When the conditions of compensation exist, recovery under the workers’ compensation scheme ‘is the exclusive remedy against an employer for injury or death of an employee.’” (Id. at p. 697.) However, “[t]o encourage employers to obtain workers’ compensation insurance for their employees, the Act’s ‘exclusive remedy’ clause does not apply in favor of employers that fail to obtain such insurance, and consequently they are not immune from tort liability for such injuries.” (Id. at p. 698, citing § 3706.) Thus, as long as defendants can be deemed Jorge’s employer, Jorge was not barred from suing them in tort for his injuries because at the time of the accident they were not carrying workers’ compensation insurance.
According to the Tapias, defendants (as well as the Ungas) were Jorge’s employer by virtue of section 2750.5. That statute provides in relevant part as follows: “There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to [the Contractors’ State License Law], or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor.... [¶]... [¶] [A]ny person performing any function or activity for which a license is required pursuant to [the Contractors’ State License Law] shall hold a valid contractors’ license as a condition of having independent contractor status.”
Because the Ungas did not have a valid or current state contractor license to perform the roofing repair work, under section 2750.5, they must be deemed employees of defendants, rather than independent contractors, because possession of such a license is “a condition of having independent contractor status.” (§ 2750.5.) “The language of section 2750.5 could not be clearer. ‘[T]he plain meaning of the penultimate paragraph of section 2750.5... conditions a finding of independent contractor status as to a person performing services for which a contractor’s license is required upon possession by that person of a valid license.’ [Citation.] ‘[B]y stating that a license is a condition of the status, the Legislature has unequivocally stated that the person lacking the requisite license may not be an independent contractor.’ [Citation.] ‘Thus, if one performs work on a construction job for which a license is required, without holding a valid license, one is by definition an employee, not an independent contractor, pursuant to section 2750.5.’” (Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 330.)
“[A]mong the consequences which flow from a determination that a person is an employee rather than an independent contractor is that an employer-employee relationship exists between the hirer of the employee and those whom the employee has hired to do the hirer’s work. On that point, the law has long been settled in this state. [Citation.] We must presume that the Legislature was aware of that law when it declared unequivocally that a person lacking the requisite license cannot be an independent contractor; we must also presume, therefore, that it intended all the consequences flowing from that declaration, including the creation of an employer-employee relationship between the ultimate hirer and the employees of the unlicensed contractor.” (Blew v. Horner (1986) 187 Cal.App.3d 1380, 1389.)
What that means here is that because the Ungas did not have the contractor license required to perform the roofing repair work defendants hired them to perform, not only was there an employer-employee relationship between defendants and the Ungas, but there was also such a relationship between defendants and Jorge. And under section 3706, because defendants did not carry workers’ compensation insurance, Jorge could “bring an action at law against [them] for damages, as if [the workers’ compensation law] did not apply.” (§ 3706.)
To the extent defendants rely on various cases -- including Privette v. Superior Court, supra, 5 Cal.4th at page 689 and Lopez v. C.G.M. Development, Inc. (2002) 101 Cal.App.4th 430 -- for the proposition that Jorge cannot sue them because he has workers’ compensation benefits available to him, their reliance on those cases is misplaced because none of those cases involved a contractor (like the Ungas) who did not have a valid or current contractor license and therefore had to be considered an employee, rather than an independent contractor, under section 2750.5.
In Privette, the California Supreme Court held that “[w]hen an employee of [an] independent contractor hired to do dangerous work suffers a work-related injury, ” the employee cannot recover from the hirer under the peculiar risk doctrine because “the employee is entitled to recovery under the state’s workers’ compensation system.” (Privette v. Superior Court, supra, 5 Cal.4th at p. 692.) In Lopez, the appellate court concluded that the Privette rule applies even if the contractor does not carry workers’ compensation insurance because “the doctrine of peculiar risk is founded on principles of equity and public policy” and “[e]quity and public policy would not be served by penalizing [the property owner] for [the contractor’s] wrongdoing” in failing to obtain workers’ compensation insurance. (Lopez v. C.G.M. Development, Inc., supra, 101 Cal.App.4that p. 444.) The Lopez court went on to note that “‘[t]he fundamental policy underlying the workers’ compensation laws is that those hiring others to perform services should bear the risk of injuries incurred in the undertakings. When the person seeks to hire the services through a licensed independent contractor, it is reasonable to anticipate that the independent contractor will insure against the risk and that the cost of the insurance will be passed on as part of the price of the contract. Thus it is reasonable to exonerate the hirer of the independent contractor.’” (Id. at p. 445.)
Both Privette and Lopez were based on the fact that the contractor who hired the injured employee was an independent contractor, and the employee was employed by the independent contractor, not the person who hired the independent contractor. Here, because the Ungas did not have a valid or current contractor license to perform the roofing repair work, under section 2750.5, they have to be deemed employees of defendants, rather than independent contractors. Moreover, as we have noted, Jorge, too, must be deemed an employee of defendants, and because defendants did not carry workers’ compensation insurance, the workers’ compensation exclusivity rule does not apply to Jorge. In essence, through the interaction of sections 2750.5 and 3706, the Legislature has provided that where a property owner that does not carry workers’ compensation insurance hires an unlicensed contractor that does not carry workers’ compensation insurance, and an employee of the contractor is injured on the job, a suit for tort damages by the employee against the property owner is not precluded by workers’ compensation exclusivity. And this is so notwithstanding the fact that workers’ compensation benefits may be available to the employee through the Uninsured Employers Benefits Trust Fund (see § 3716) because under section 3706 operation of the exclusivity rule is based on whether the employer carried workers’ compensation insurance, not on whether the employee is entitled to workers’ compensation benefits. Because of the Uninsured Employers Benefits Trust Fund, “‘all employees are automatically entitled to recover benefits for injuries “arising out of and in the course of the employment”’” (Lopez v. C.G.M. Development, Inc., supra, 101 Cal.App.4th at p. 445), even if the employer does not carry workers’ compensation insurance. Nevertheless, when an employer does not carry workers’ compensation insurance, section 3706 permits a tort action like this one.
For the foregoing reasons, Jorge’s negligence cause of action was not barred by the rule of workers’ compensation exclusivity.
B
Duty Of Care
As an alternate ground for their demurrer to Jorge’s negligence cause of action, defendants asserted they “did not owe a duty of care to the employee of an independent contractor as to the matters alleged in the Complaint.” (Italics omitted.) This argument is without merit for the same reason as the previous argument -- it is based on the proposition that the Ungas were independent contractors and Jorge was their employee. As we have explained, however, under the Tapias’ allegations, the Ungas were not independent contractors, but employees of defendants, and Jorge, too, was defendants’ employee. Defendants do not offer any authority or argument addressed to whether they owed a duty of care to Jorge as their employee. Accordingly, the demurrer to Jorge’s cause of action cannot be sustained on the basis of lack of a duty of care.
C
Causation
As their final ground for demurring to Jorge’s negligence cause of action, defendants asserted they “did not actually or proximately cause [his] injuries.” (Italics omitted.) But this argument ignored Jorge’s allegations that he was their employee, they negligently failed to provide him with an approved safety system for working on the roof, and as a result he fell from the roof and sustained severe bodily injury. Instead, contrary to the allegations of the complaint, defendants asserted “[t]hey were simply the owners of real property [who] hired an independent roofing contractor to install a roof with foam insulation.” Because “[a] demurrer tests the pleading alone” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459), defendants’ causation argument is without merit.
Based on all of the foregoing, we conclude the trial court erred in sustaining defendants’ demurrer to Jorge’s negligence cause of action.
III
Gloria’s Loss Of Consortium Cause Of Action
Defendants first demurred to Gloria’s cause of action for loss of consortium on the ground that, like Jorge’s cause of action, it was “precluded by worker’s compensation exclusivity.” On this point, defendants contend that because Jorge’s injury was compensable under the workers’ compensation law (despite the lack of any workers’ compensation insurance), Gloria cannot state a cause of action for loss of consortium. In support of this argument, they cite Santiago v. Employee Benefits Services (1985) 168 Cal.App.3d 898 and Gillespie v. Northridge Hosp. Foundation (1971) 20 Cal.App.3d 867. These cases stand for the proposition that where the exclusivity rule in section 3600 applies, that rule encompasses not only any cause of action asserted by the injured employee but also any loss of consortium cause of action asserted by the injured employee’s spouse. (See Gillespie, at p. 868.) As Gillespie makes clear, however, this bar on tort liability does not apply “in cases under section 3706.” (Ibid.) Thus, as with Jorge’s negligence cause of action, Gloria’s loss of consortium cause of action is not barred simply because workers’ compensation benefits may be available through the Uninsured Employers Benefits Trust Fund. Rather, because defendants were Jorge’s employer under section 2750.5 and they did not carry workers’ compensation insurance for him, section 3706 provides an exception to the exclusivity rule with respect to Gloria’s cause of action.
Defendants also demurred to Gloria’s cause of action on the ground Gloria could not allege any acts by them that actually or proximately caused her loss or injury or the injury to Jorge. On this point, they offered no argument in the trial court, and they likewise offer none here (because their respondents’ brief is a retread of their memorandum of points and authorities in the trial court). In the absence of any such argument, we conclude that the allegations that defendants’ negligent failure to provide Jorge with an approved safety system resulted in his injury, combined with the allegation that Jorge’s injury rendered him unable to perform necessary duties as a husband and father, are adequate to state a cause of action for loss of consortium. Accordingly, the trial court erred in sustaining defendants’ demurrer to Gloria’s cause of action.
IV
Guillermo’s Negligent Infliction Of Emotional Distress Cause Of Action
“The law of negligent infliction of emotional distress in California is typically analyzed... by reference to two ‘theories’ of recovery: the ‘bystander’ theory and the ‘direct victim’ theory.” (Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1071.) “The distinction between the ‘bystander’ and ‘direct victim’ cases is found in the source of the duty owed by the defendant to the plaintiff. The ‘bystander’ cases... address ‘the question of duty in circumstances in which a plaintiff seeks to recover damages as a percipient witness to the injury of another.’... [B]ystander liability is premised upon a defendant’s violation of a duty not to negligently cause emotional distress to people who observe conduct which causes harm to another. [¶] Because in such cases the class of potential plaintiffs could be limitless, resulting in the imposition of liability out of all proportion to the culpability of the defendant, this court has circumscribed the class of bystanders to whom a defendant owes a duty to avoid negligently inflicting emotional distress. These limits are... as follows: ‘In the absence of physical injury or impact to the plaintiff himself, damages for emotional distress should be recoverable only if the plaintiff: (1) is closely related to the injury victim, (2) is present at the scene of the injury-producing event at the time it occurs and is then aware that it is causing injury to the victim and (3) as a result suffers emotional distress beyond that which would be anticipated in a disinterested witness.’” (Id. at pp. 1072-1073.)
“In contrast, the label ‘direct victim’ arose to distinguish cases in which damages for serious emotional distress are sought as a result of a breach of duty owed the plaintiff that is ‘assumed by the defendant or imposed on the defendant as a matter of law, or that arises out of a relationship between the two.’ [Citation.] In these cases, the limits set forth [above] have no direct application. [Citations.] Rather, well-settled principles of negligence are invoked to determine whether all elements of a cause of action, including duty, are present in a given case.” (Burgess v. Superior Court, supra, 2 Cal.4th at p. 1073.)
Here, the Tapias plainly alleged a cause of action for negligent infliction of emotional distress to Guillermo on the bystander theory because they alleged Guillermo is Jorge’s natural brother, he saw Jorge’s fall, and as a result he suffered severe emotional distress and anguish. With this in mind, we can quickly address defendants’ demurrer to Guillermo’s cause of action.
Defendants first demurred to Guillermo’s cause of action for negligent infliction of emotional distress on the ground Guillermo did not live in the same household as Jorge. But that is not required where the plaintiff is the sibling of the injured person. “Absent exceptional circumstances, recovery [for negligent infliction of emotional distress on the bystander theory] should be limited to relatives residing in the same household, or parents, siblings, children, and grandparents of the victim.” (Thing v. La Chusa (1989) 48 Cal.3d 644, 668, fn. 10, italics added.) Thus, as Jorge’s brother, Guillermo was entitled to seek recovery on the bystander theory even though they did not live in the same household.
Inexplicably, defendants quote this very sentence in their argument but fail to acknowledge the disjunctive “or” in the sentence.
Defendants’ second and third grounds for their demurrer to Guillermo’s cause of action were based on the erroneous premise that Guillermo was seeking to recover as a “direct victim” rather than as a “bystander.” Specifically, defendants asserted that Guillermo’s cause of action was defective because “[i]n order for a plaintiff to recover damages for emotional distress arising from negligently caused injury to another as a direct victim of the negligent conduct, there must be a duty between the tortfeasor and the plaintiff based on more than mere foreseeability that the conduct would cause the distress.” (Italics omitted.) They also asserted that “[f]ailure to allege facts showing that defendant’s negligence was directed at plaintiff precludes a cause of action for negligent infliction of mental distress alleging plaintiff [w]as a direct victim of defendant’s negligence based on injury to a third party.” (Italics omitted.) Neither of these assertions has any bearing here, however, because Guillermo’s cause of action was premised on his status as a bystander who witnessed Jorge’s fall, not as a direct victim of defendants’ negligence.
For the foregoing reasons, the trial court erred in sustaining defendants’ demurrer to Guillermo’s cause of action for negligent infliction of emotional distress on the bystander theory.
DISPOSITION
The judgment of dismissal is reversed, and the case is remanded to the trial court with directions to vacate the order sustaining defendants’ demurrer and enter a new order overruling the demurrer. The Tapias shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
We concur: RAYE, Acting P. J., BUTZ, J.