OPINION ENTERED: FEBRUARY 10, 2010
CLAIM NO. 07-01349
UNINSURED EMPLOYERS FUND PETITIONER
VS. APPEAL FROM HON. RICHARD JOINER,
ADMINISTRATIVE LAW JUDGE
TRACY HARDY
MICHAEL COMBS DBA COMBS SEAMLESS GUTTERING
DIANA COMBS DBA WOLF CREEK METAL
and HON. RICHARD JOINER,
ADMINISTRATIVE LAW JUDGE RESPONDENTS
OPINION
AFFIRMING
* * * * * *
BEFORE: ALVEY, Chairman, COWDEN and STIVERS, Members.
STIVERS, Member. Uninsured Employers Fund (“UEF”) appeals from the opinion, award, and order of the Hon. Richard Joiner, Administrative Law Judge (“ALJ”) awarding Tracy Hardy (“Hardy”) income and medical benefits as a result of a work injury sustained on June 20, 2007, while in the employ of Michael Combs (“Michael”) DBA Combs Seamless Guttering (“Seamless Guttering”). The ALJ also dismissed Hardy’s claim against Diana Combs (“Diana”) DBA Wolf Creek Metal (“Wolf Creek”) determining Wolf Creek was not liable pursuant to the up-the-ladder provision in KRS 342.610(2) and Michael was not engaging in a joint venture with Wolf Creek at the time of Hardy’s injury. The UEF also appeals from the order overruling its petition for reconsideration.
On appeal, the UEF argues the ALJ did not make adequate findings of fact regarding the conflicting testimony of Diana, Michael, J.D. Thomas (“Thomas”), and Lois Bush (“Bush”). The UEF asserts the ALJ made two inaccurate statements in his opinion and order which are: 1) It did not appear Wolf Creek provided installation services; and 2) Wolf Creek sold materials, and when asked about installation or installers would refer their customers to various installers which included Michael. The UEF asserts testimony provided by Thomas, Bush, and Michael contradicts Diana’s self serving testimony. Diana testified when someone sought an installer, she would provide various names including that of her son, Michael. The UEF maintains Thomas and Bush were not given a choice of installers but, rather, Michael was sent out to provide a cost estimate. The UEF agrees that in each case, Michael, not Wolf Creek, was paid, but observes Michael testified the job on which Hardy was hurt was referred to him by his mother. The UEF asserts Wolf Creek did not depose anyone to corroborate Diana’s testimony that she provided a list of installers from which the customer could choose.
In an odd argument, the UEF first asserts Diana did not testify, and then argues Diana gave inconsistent testimony regarding the rental arrangement concerning the house in which her son resided. The UEF asserts Diana testified Michael did not pay her rent but paid it to her sister, and Michael testified he paid rent to Diana. Thus, the ALJ had “no rational reason for according her testimony controlling credibility.”
The UEF also argues that the ALJ misapplied the law on two issues: 1) Whether Wolf Creek/Diana had up-the-ladder liability pursuant to KRS 342.610(2) and; 2) Whether Wolf Creek/Diana was a “joint venturer, co-employer of Hardy.” The UEF asserts this case is very similar to the case of Beaver v. Oakley, 279 S.W. 3d 527 (Ky. 2009) in that Wolf Creek “actually functioned” as the contractor and Seamless Guttering as the subcontractor. Wolf Creek had the “stationary forming machine” necessary for Michael to fabricate Wolf Creek’s product into metal roofing, and Wolf Creek provided storage for Michael’s supplies and equipment. Wolf Creek also paid for Michael’s business cell phone. The UEF argues the only guttering material Wolf Creek ordered was for Michael’s job, and Michael included Wolf Creek’s price quote for materials in figuring the estimate for the total job including installation.
The UEF complains that although the opinion and award contains a legal conclusion that Diana and Michael were not joint venturers, the ALJ did not discuss the following:
which facts in the record fatally detract from the legal elements of recurrent ‘joint enterprises’ where Wolf Creek customers seeking installation were directly connected by Wolf Creek with Combs Seamless Guttering.
Wolf Creek also argues the four elements of a joint venture set out in Huff v. Rosenberg, 496 S.W. 2d 352 (Ky. 1973) are present in the case sub judice. The UEF asserts: 1) There was an implied agreement; 2) Diana and Michael had a common purpose to make money on each venture; 3) Diana made money on the sales of materials which might have gone to other building suppliers if she did not have the ability to link the customer with an installer, and because Michael had an interest in getting more installation jobs other than those he could obtain on his own, the referrals from his mother were of benefit; and 4) Both parties pooled their resources to accomplish their joint purposes and each party had a right to control their aspect of the work. Accordingly, Wolf Creek argues this matter should be remanded to the ALJ with directions to dismiss the UEF as a party and hold Diana/Wolf Creek, and/or its carrier liable for the benefits to which Hardy is entitled.
Because the only issue on appeal is the relationship between Michael and Wolf Creek/Diana, we will only discuss the testimony relating to this relationship.
Hardy testified he began working for Michael in February, 2007. Michael came to his residence and asked Hardy if he needed a job and indicated he would pay Hardy $12.00 per hour. Hardy worked approximately five days per week until he got hurt, and worked no less than thirty hours each week. Michael determined when they started and stopped work. Michael took Hardy to and from work each day, and Hardy was always paid in cash. Although Hardy had some tools, he used Michael’s tools. He considered Michael his boss. Hardy described Michael’s business as installing seamless gutters and metal roofing on homes. Hardy never saw anyone from Wolf Creek at a job he worked including the job where he was hurt. Sometimes the materials they needed to install had been delivered to the job site and on other occasions, they would pick up the materials. Hardy acknowledged he was never paid by Wolf Creek but always by Michael. He never did any work at Wolf Creek. Diana, Michael’s mom, owned Wolf Creek approximately five years before his injury. Hardy testified that Wolf Creek manufactures metal roofing. Both he and Michael live close to Wolf Creek.
Hardy testified he was Michael’s employee and not an independent contractor. Michael had two other workers working with Hardy when he was injured, and Hardy estimated he worked on approximately thirty jobs while working for Michael. He acknowledged he was never present to know if Diana ever told Michael about a particular job. When they picked up materials for a job, it was always at Wolf Creek. Any material delivered to a work site was delivered by Wolf Creek. If they needed any other type of material like a “two-by-four or something like that,” they would obtain it from a building supply business.
Wolf Creek had a machine which Michael used to bend the metal so it could be installed on roofs. Because of the size of the machine, it stayed on Wolf Creek’s premises. Michael had a “gutter machine” which he pulled with his pickup. On more than one occasion, Hardy saw people for whom they performed work give checks to Michael made out to Wolf Creek. He also acknowledged that those same people owed Wolf Creek for the product they installed. Hardy testified Michael kept the gutter machine in Wolf Creek’s parking lot and stored “the downspouts and all the rest of his stuff” inside a building at Wolf Creek to which Michael had a key.
Hardy acknowledged Michael advertised his business as Combs Seamless Guttering and Roofing. Hardy had no involvement in the financial aspect of the business and never talked to Michael about profit sharing arrangements for any of the jobs. Hardy admitted he had occasionally heard Michael tell customers to make the check out to Wolf Creek and on other occasions to Combs Seamless Guttering and Roofing. He also admitted he did not know if these discussions related to payment for material or the labor.
Hardy testified he was injured when he stepped on a piece of rotten wood and, as he was falling, he grabbed a piece of new metal and cut his hand and wrist. Michael and Hardy’s co-worker applied a tourniquet and took Hardy to Booneville Medical Clinic. Hardy was then sent to the University of Kentucky Hospital (“UK”) where he later underwent surgery.
At the hearing, Hardy produced a list of nineteen different places where he had worked for Michael and acknowledged this was only a partial list. Hardy acknowledged Michael always paid him in cash and he was never paid by Wolf Creek.
Michael’s March 10, 2008, deposition was introduced. Michael testified he started the business in 2006 and his business was a sole proprietorship. In January or February, 2007, Michael approached Hardy and asked him if he wanted work. Michael estimated the total jobs he did between January and June, 2007, was in the high forties, and Hardy worked approximately a dozen of those jobs. Hardy obtained two roofing jobs for Michael. Michael testified he would get jobs on his own, through advertisements, or through people calling Wolf Creek and leaving their number. Michael usually did the job estimates. Sometimes Michael’s estimate included the cost of material. His work involved installing seamless gutters and an occasional remodeling. Michael obtained his guttering materials from Norandex in Lexington. He would place the order with Norandex, and because his mother had an account with them, the materials would be shipped to Wolf Creek. Michael paid Norandex.
Michael owned a guttering machine given to him by his dad. He obtained his metal roofing exclusively through Wolf Creek. Michael acknowledged he lived next door to Wolf Creek and had been given a key so that he had access to Wolf Creek’s building. He was permitted to use Wolf Creek’s equipment and store his “gutter supplies” there. In return, he would keep an eye on the place. Michael kept his tools at his home. He rents his home from his aunt and mom. Michael and Wolf Creek had separate addresses and mailboxes. In his advertisement, Michael listed his parent’s cell phone number as his business phone number. He reimbursed his parents for the phone bill. He had no worker’s compensation insurance. He stopped operating his business in October or November, 2007.
Michael testified Wolf Creek is a retail sales business that sells metal roofing, and he is not an employee or owner of that business. His mother runs Wolf Creek and is the sole owner. Wolf Creek’s employees do not work for him or “do installation.” Michael was not Wolf Creek’s independent contractor, and Wolf Creek received none of the profits from his jobs. Wolf Creek provided him phone numbers of people needing work done, but it also recommended other installers in addition to him. Wolf Creek received no money for referring business to him.
The March 10, 2008, deposition of Diana was introduced. Diana testified that she was the sole owner of Wolf Creek, a sole proprietorship, which was started on July 17, 2001. The business was sold to Booneville-Owsley Industrial Authority on December 1, 2007. Her duties at Wolf Creek involved ordering materials, handling personnel matters, answering the phone, providing estimates, and determining job duties. Wolf Creek had two full time employees and one part time employee. Her employees did not install roofing or guttering. Wolf Creek was a retail sales business. Materials were sold to general contractors and home owners. Diana acknowledged she referred people inquiring about contractors to her son and other contractors.
Diana acknowledged Michael had access to Wolf Creek’s building. She or Michael placed guttering orders which would be delivered to Wolf Creek, and Michael would then pay Wolf Creek. Selling guttering was not a big part of Wolf Creek’s business. In fact, all guttering Wolf Creek ordered was for Michael. Diana got Michael a cell phone for Christmas which he used as his business phone.
Michael lived next door to Wolf Creek on property she and her sister own, and Michael pays rent to her sister. Diana kept records of all business transactions including those with Michael. She offered to produce her tax returns and canceled checks. She explained her business involved buying cold roll steel and then forming it with a machine in order to produce the formed product. She also sold insulation, vinyl siding, and other supplies relating to metal roofing. Wolf Creek was not involved in installation and never subcontracted with Michael to do installation. Wolf Creek never profited from Michael’s installation jobs and never received any portion of money due to him. Diana did not own an interest in Michael’s business. The only time Michael worked for Wolf Creek was in 2004, and he worked approximately three months and quit because he did not like it.
The October 31, 2008, deposition of J.D. Thomas was introduced. Thomas testified he had roofing put on his house by Luke Gary. He never hired Seamless Guttering for his roof work nor bought supplies from Wolf Creek. Michael put the guttering on his house. He explained that in May, 2007, he called Wolf Creek to inquire about who did guttering. The employee at Wolf Creek told him “they would send somebody out to measure it and give [him] a price.” Someone came within a day or two and provided him an estimate. That person said he came out from Wolf Creek. Thomas does not know who installed the guttering. The man who installed the guttering had a male and a female helping him. They came in two trucks, one of which pulled the guttering machine. He wrote the check to Michael Combs.
The November 11, 2008, deposition of Lois Bush was introduced. Bush testified she called Wolf Creek about putting a roof on her house. Diana gave her a price per foot for the materials and advised her Wolf Creek did not do installation work but her son, Michael, did installation. Diana said she would contact her son and have him contact Bush “to do an appraisal.” Diana told Bush the appraisal was free. Later, Michael called her and made an appointment to give her an estimate. Michael came to her house and provided an estimate and installed the roof on June 15, 2007. Michael bought the metal to put on the building. Michael never told Bush he was working for Wolf Creek. The check was made payable to Michael Combs.
The ALJ determined Hardy was Michael’s employee, determined Hardy’s impairment rating, and awarded temporary total disability (“TTD”) and permanent partial disability (“PPD”) benefits. Regarding the issue before us, the ALJ after citing KRS 342.610(1) and (2) made the following findings of facts:
The Uninsured Employers Fund asserts that this statutory provision applies to make Wolf Creek Metal a contractor and therefore responsible for the liabilities of Michael Combs. Alternatively the UEF suggests Wolf Creek and Michael Combs were acting as joint venturers. The family relationship engenders some suspicion that the two entities are not really all that separate. However, the evidence does not bear out the suspicions.
It does not appear that Wolf Creek Metal provided installation services. Wolf Creek sold materials and when asked about installation or installers would refer their [sic] customer to various installers of which Michael Combs was one. Since Michael Combs was the son of Dianna Combs, owner of Wolf Creek, you would expect him to be on the list if not at the top of the list. But it does not appear from the evidence that the relationship went any farther than that. I remain unpersuaded that the relationship between Wolf Creek Metal and Michael Combs was that of contractor subcontractor, or that they were engaged in a joint venture. Therefore, the claim against Wolf Creek Metal will be dismissed.
The UEF filed a petition for reconsideration making the same argument it now makes on appeal. Significantly, the UEF did not ask the ALJ to make additional findings regarding the existence of up-the-ladder liability or a joint venture. The UEF’s petition for reconsideration was overruled.
Since the UEF was unsuccessful in its burden of proof regarding the issues of Wolf Creek/Diana’s up-the-ladder liability and the alleged joint venture between Michael and Diana, the question on appeal is whether, upon consideration of the whole record, the evidence compels a finding in his favor. Wolf Creek Collieries v. Crum, 673 S.W.2d 735 (Ky.App. 1984). Compelling evidence is defined as evidence that is so overwhelming no reasonable person could reach the same conclusion as the ALJ. REO Mechanical v. Barnes, 691 S.W.2d 224 (Ky.App. 1985).
As fact finder, the ALJ has the sole authority to determine the quality, character, and substance of the evidence. Square D Company v. Tipton, 862 S.W.2d 308 (Ky. 1993); Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418 (Ky. 1985). As fact finder, the ALJ may reject any testimony and believe or disbelieve various parts of the evidence, regardless of whether it comes from the same witness or the same adversary party's total proof. Magic Coal Co. v. Fox, 19 S.W.3d 88 (Ky. 2000). Although a party may note evidence that would have supported a different outcome than that reached by ALJ, such proof is not an adequate basis to reverse on appeal. McCloud v. Beth-Elkhorn Corp., 514 S.W.2d 46 (Ky. 1974). It must be shown that there was no evidence of substantial probative value to support the decision. Special Fund v. Francis, 708 S.W.2d 641 (Ky. 1986).
That said, the function of the Board in reviewing an ALJ's decision is limited to a determination of whether the findings made are so unreasonable under the evidence that they must be reversed as a matter of law. Ira A. Watson Department Store v. Hamilton, 34 S.W.3d 48 (Ky. 2000). The Board, as an appellate tribunal, may not usurp the ALJ's role as fact finder by superimposing its own appraisals as to weight and credibility or by noting other conclusions or reasonable inferences that otherwise could have drawn from the evidence. Whittaker v. Rowland, 998 S.W.2d 479 (Ky. 1999).
Furthermore, in the absence of the UEF requesting additional findings on the issue of up-the-ladder liability and a joint venture in its petition for reconsideration, on questions of fact, the Board is limited to a determination of whether there is substantial evidence contained in the record to support the ALJ’s conclusions. Stated otherwise, inadequate, and incomplete, or even inaccurate fact finding on the part of an ALJ will not justify reversal or remand if there is identifiable evidence in the record that supports the ultimate conclusion. Eaton Axle Corp. v. Nally, 688 S.W.2d 334 (Ky. 1985); Halls Hardwood Floor Co. v. Stapleton, supra.
Although the UEF argues the ALJ did not make adequate findings of fact resolving the conflict evidence between Diana’s testimony and the testimony of Michael, Thomas, and Bush, we find that issue was not preserved for appeal. In its petition for reconsideration and its brief to this Board, the UEF argues the ALJ made two factually inaccurate statements, Diana’s testimony is not credible, and Diana’s testimony is contraverted by two disinterested witnesses and her son. However, the UEF did not request the ALJ to make corrected or additional findings regarding up-the-ladder liability or the alleged joint venture between Michael and Diana. Thus, we conclude the UEF cannot complain, on appeal, about the ALJ’s inaccurate findings, the testimony upon which he chose to rely, and the fact Diana’s testimony was contradicted by three witnesses. The UEF waived its right to complain about alleged inaccurate, inadequate, or contradictory findings of the ALJ.
On the issue of up-the-ladder liability, having reviewed the case of Beaver v. Oakley, 279 S.W. 3d 527 (Ky. 2009) we find it provides no support for the UEF’s position on appeal. In Beaver, Oakley was an employee of Crawford Electric when he was injured while working on Sunrise Hospitality’s construction site. Crawford Electric had a contract with Sunrise Hospitality to perform electrical work at the construction site. Sunrise Hospitality also had a written contract with Whitaker Construction Management, LLC for it to act as the construction manager of the project. Whitaker recommended subcontractors to Sunrise Hospitality, but Sunrise Hospitality contracted directly with Crawford Electric on its on initiative. Since Whitaker’s owner could not oversee the project on a daily basis, he hired Beaver as the project superintendent to supervise Sunrise’s job and make regular progress reports to him. Whitaker did not withhold taxes from Beaver’s check and did not have anything in writing with Beaver regarding their arrangement. Neither Whitaker nor Beaver had a written contract with Crawford Electric. Oakley filed a lawsuit in circuit court alleging Beaver’s negligence at the job site caused his injury. The Supreme Court ultimately determined as follows:
Given our precedent in Branham and the proof presented to the trial court showing that Whitaker functioned as the contractor and Beaver his representative, no genuine issue of material fact remained; and the trial court properly granted Beaver summary judgment, based on up-the-ladder immunity.
In the case sub judice, there is no proof that on the date of the injury Michael was a subcontractor of Diana/Wolf Creek, nor is there any proof the work Hardy performed for Michael was a regular or recurrent part of Diana/Wolf Creek’s business of selling metal roofing and related materials. Although the UEF points to Michael’s testimony which contradicts his mother on collateral matters and Thomas’s testimony, there is no testimony indicating Michael was a subcontractor of Wolf Creek. KRS 342.610(2) reads as follows:
(2) A contractor who subcontracts all or any part of a contract and his 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 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.
Michael and Diana testified Michael’s business was a sole proprietorship, and Diana had no interest in his business. Diana and Michael testified Wolf Creek was not engaged in the installation of either metal roofing or guttering materials and did not share in the profits of Michael’s business. Although Michael ordered his guttering supplies using Wolf Creek’s account with Norandex, he paid Norandex directly. Even Hardy’s testimony establishes he never saw anyone from Wolf Creek at his job. Although Michael used some of Wolf Creek’s equipment and stored his equipment in Wolf Creek’s building, Hardy did not testify Michael had a subcontracting arrangement with Wolf Creek. Hardy acknowledged Wolf Creek was owed for the materials Michael used on the job, and although he saw Michael get checks made payable to Wolf Creek, he did not know if those checks were for materials or labor. Clearly, the testimony of Diana, Michael, and Hardy constitutes substantial evidence supporting the ALJ’s decision that Michael was not a subcontractor of Diana/Wolf Creek and, Diana/Wolf Creek had no up-the-ladder liability pursuant to KRS 342.610(2). Although the UEF cites the testimony of the two disinterested witnesses, that testimony does not compel the result the UEF now seeks. Although Thomas testified Wolf Creek said it would send someone to provide an estimate, he also testified he paid Michael. Thomas did not testify Wolf Creek had any involvement or interest in the installation of the guttering. On the other hand, Bush clearly established Diana told her Wolf Creek did not install metal roofs, thus supporting Diana’s and Michael’s testimony on this issue.
Finally, we have reviewed the case of Huff v. Rosenberg, supra, cited by the UEF and also find it provides no support for the UEF’s position. In Huff, the Court of Appeals, now the Supreme Court, defined the elements of a joint venture stating as follows:
The elements which are essential to a joint enterprise are commonly stated to be four: (1) an agreement, express or implied, among the members of the group; (2) a common purpose to be carried out by the group; (3) a community of pecuniary interest in that purpose, among the members; and (4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control. (citation omitted).
Id. at 355.
Applying these criteria to the facts sub judice, we find the proof does not compel a finding that there was an agreement, either express or implied, between Diana and Michael to engage in a joint enterprise. The fact Diana referred business to her son or that Michael collected checks due to Wolf Creek does not establish the parties were engaged in an ongoing or temporary joint enterprise at the time Hardy was injured. Likewise, there is no evidence of a common purpose to be carried out. Nor does there appear to be a community of pecuniary interest other than the fact Michael obtained his roofing and guttering materials through and/or from Wolf Creek. The fact Michael chose to purchase his materials from and, in some cases, through his mother’s business does not in and of itself establish a community of pecuniary interest and profit sharing. In fact, to the contrary, the testimony was that Michael and Diana did not share in the fruits of his labor. Finally, there is no testimony Michael and Diana had an equal voice in directing the installation of guttering and roof materials, thus giving each an equal right of control. On the contrary, the testimony establishes Diana had no control over Michael’s business. The testimony of Diana, Michael, and Hardy constitutes substantial evidence supporting the ALJ’s decision there was no joint venture.
After reviewing the evidence and having found that it does not compel the result the UEF now seeks and that the ALJ’s decision is supported by substantial evidence, we conclude under the circumstances the UEF has fallen far short of its obligation to demonstrate the findings of the ALJ are so unreasonable under the evidence they must be disregarded as a matter of law. Ira A. Watson Department Store v. Hamilton, 34 S.W.3d 48 (Ky. 2000).
Accordingly, because the ALJ’s decision is supported by substantial evidence of record, we may not disturb that ruling on appeal. Special Fund v. Francis, 708 S.W.2d 641 (Ky. 1986). The decision of the ALJ is therefore AFFIRMED.
ALL CONCUR.
COUNSEL FOR PETITIONER/
UNINSURED EMPLOYERS FUND:
HON DENNIS STUTSMAN
1024 CAPITAL CENTER DR STE 200
FRANKFORT KY 40601
RESPONDENT PRO SE:
MICHAEL COMBS
RT 2 BOX 201A
BOONEVILLE KY 41314
COUNSEL FOR RESPONDENT/
TRACY HARDY:
HON TIM WILSON
309 N BROADWAY
LEXINGTON KY 40508
COUNSEL FOR RESPONDENT/
WOLF CREEK METAL:
HON MELISSA LEWIS
P O BOX 800
HAZARD KY 41702
ADMINISTRATIVE LAW JUDGE:
HON RICHARD JOINER
145 EAST CENTER ST
MADISONVILLE KY 42431
