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OPINION
ENTERED: SEPTEMBER 2, 2011
CLAIM NO. 201092018
DONALD DODD PETITIONER
VS. APPEAL FROM HON. DOUGLAS
W. GOTT,
ADMINISTRATIVE LAW JUDGE
JEDA HOMES, LLC,
D & D ROOFING,
KENTUCKY EMPLOYERS\' MUTUAL INSURANCE,
and HON. DOUGLAS W. GOTT,
ADMINISTRATIVE LAW JUDGE RESPONDENTS
OPINION
AFFIRMING
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BEFORE: ALVEY, Chairman; COWDEN and STIVERS, Members.
ALVEY,
Chairman. Donald Dodd
(“Dodd”) seeks review of the decision rendered March 1, 2011 by Hon. Douglas W.
Gott, Administrative Law Judge (“ALJ”), dismissing his claim against JEDA
Homes, LLC (“JEDA”), D & D Roofing (“D & D”), and Kentucky Employers’
Mutual Insurance (“KEMI”). No petition for reconsideration was filed.
On appeal,
Dodd argues the following:
Mr. Dodd purchased workers’
compensation coverage for D & D Roofing and D & G Roofing, but excluded
himself on the coverage. While Mr. Dodd
may have been a partner in the roofing businesses, he was also an employee and
the primary worker. Neither of his
roofing businesses had any additional employees or workers besides the
partners. If Mr. Dodd was not covered
under the coverage, then what was he paying for? Jeda is liable for Mr. Dodd’s injuries as an
up-the-ladder employer.
We affirm.
Dodd testified by deposition on
October 4, 2010. No hearing was held,
and the claim was submitted by the parties for a decision on the record. Dodd is a resident of Kevil, Kentucky. Dodd testified he sustained injuries to his
right ankle and knee on January 18, 2010 when he slipped on plastic used to
cover lumber for another sub-contractor at the site. He subsequently underwent surgeries to both
his right ankle and his right knee, and has not returned to work since the date
of the accident.
Dodd has a GED, and served in the Navy
from 1970 to 1973. After discharge from
the Navy, Dodd worked for a roofer until 1980 where he learned the trade. In 1980, he began operating his own roofing
business under the name of Donald Dodd Roofing.
In 1995 Dodd’s stepson joined him in the roofing business, and he began
operating under the name D & G Roofing.
Dodd also operated a roofing company with his brother under the name of
D & D Roofing. On the date of the
accident, Dodd was working with his stepson.
D & G Roofing was never joined as a party to this claim.
Dodd testified roofers are paid by the
square or three bundles of shingles. The
steepness of the roof is taken into consideration in the calculation of the
payment. JEDA was one of several
companies for whom Dodd, D & D, or D & G performed roofing work. Dodd testified JEDA provided the materials,
but he used his own tools. Dodd hired
employees to assist him as needed. Dodd
did not have to arrive at the worksite at any particular time. Dodd did not have to work a certain number of
hours per day and he could take breaks as needed. Dodd did not wear any uniform items
identifying him as working for JEDA.
Dodd’s truck had a sign bearing the name D & G Roofing. Dodd’s business cards designated him as being
with D & G Roofing. In order to
perform roofing jobs for JEDA, Dodd had to provide proof of workers’ compensation
and liability insurance, which he obtained through Calvert City Insurance. The workers’ compensation coverage was through
KEMI.
Charles Thompson,
JEDA’s owner, testified by deposition on September 1, 2010. Thompson testified JEDA operates a home
building and remodeling business, and has no employees. All work, including roofing, is
contracted. Dodd’s businesses were not
the only roofers used by JEDA. Thompson
testified Dodd had no direct supervision and he was provided the address and
amount of shingles to be used. Dodd had
no specific time to start or stop work. JEDA supplied neither tools nor
ladders, but provided the roofing materials necessary for the job. Dodd did not wear any apparel indicating he
was affiliated with JEDA. No signage was
provided to Dodd by JEDA. JEDA had no
control over whether Dodd hired employees or additional contractors to complete
the job. Dodd was paid by the job or
square. No taxes were withheld in
payments made to Dodd. Dodd, or the
companies he owned, received 1099’s at the end of the year. Dodd performed work for other builders. Dodd provided proof of workers’ compensation
and liability insurance coverage for D & D, and D & G. Thompson testified Dodd was a sub-contractor,
not an employee.
Attached to the Form 101 – Application
for Resolution of Injury Claim, were 1099’s for Donald Dodd dba D & D Roofing,
Donald Dodd D & G Roofing, and D & D Roofing from various sources
ostensibly to establish Dodd’s income.
Also introduced into evidence was the insurance policy with KEMI issued
to Donald Dodd & Dale Chandler dba D & D Roofing. The endorsement attached with that policy for
the applicable time period, March 5, 2009 through March 5, 2010, specifically
excludes both Donald Dodd and Dale Chandler from coverage.
In the opinion and order, the ALJ
found as follows:
KEMI’S MOTION
TO DISMISS
KEMI has filed a motion to dismiss, but its motion is more
accurately considered as a request for a declaratory judgment that its policy
issued to D&D Homes [sic] does not provide coverage to Donald Dodd for his
claimed work injury.
KEMI’S first argument is
that Dodd and his partner/co-policy holder, Dale Chandler, did not intend to
cover themselves with the KEMI policy.
KEMI cites the following statement in the initial “Quik App”: “D&D
is a partnership. They [sic] have acted
as one for a while, but did not purchase Workers Comp due to no
employees. They [sic] are purchasing now
to satisfy contractors and customers.
They [sic] do not plan to have other employees and expect premium to
change to minimum clerical at audit.”
KEMI further cites to the
“General Information” questionnaire to the “Quik App” stating that no work
would be done above 15 feet, while most any roofing work the two men could
expect to do is done above 15 feet.
KEMI further cites to the
note from the agent on the policy renewal “Quik App” noting no employees and no
payroll, and a request for a net annual cost to the partnership of $250 for
coverage. The 1099’s attached to Dodd’s
deposition reflect earnings of over $50,000.
KEMI’s second argument is
that Dodd was excluded from coverage in policy number 361802 that was issued to
him and Dale Chandler, doing business as D&D Roofing. The policy contained a “Sole proprietors,
partners, officers, and other exclusion endorsement” stating that “The policy
does not cover bodily injury to any person described in the Schedule.” Dodd was listed in the Schedule.
KEMI further cites to Dodd’s
testimony that D&D did hire employees from time to time (p. 11), thus it
was receiving coverage for the premium it was paying.
KEMI’s third argument is
that Dodd was not working for D&D Roofing at the time of his injury, but
rather the D&G Roofing business he operated with his stepson. KEMI cites to the following testimony from
Dodd, at pages 10-11:
Q. Now, I’m looking at your employment history, you, I guess, had
worked for Donald Dodd Roofing or you were the owner of that company from 1980
through 1995. And at that point you
became the owner of D&G Roofing?
A. Yes.
Q. Is that the same company?
A. Yes. I took a partner.
Q. Okay. And who was your
partner?
A. Dale Chandler.
Q. Okay. I’m showing that you
worked as the owner of that company from 1995 to 2008.
A. Up ‘til I got hurt.
Q. Okay. Because there’s also –
well, I’m also showing there’s a D&D Roofing.
A. Right. That was me and my
brother.
Q. Okay. So D&G Roofing –
A. Is me and my stepson.
Q. Okay. And then –
A. D&D is me and my brother.
Q. Okay. And what’s your
brother’s name?
A. James Dodd.
Q. Okay. And were you working
at Dodd & Dodd, or D&D, I guess, at the time you were injured? Or were you working with your stepson?
A. It was with my stepson.
******
Dodd argues that he is a covered employee of D&D Roofing, and
that KEMI’s noncompliance with KRS 342.395 estops it from relying on the
exclusion endorsement. Dodd asserts that
he is covered absent a Form 4 on file with the Department of Workers
Claims. The ALJ disagrees.
KRS 342.395(1) states:
Where an employer is subject
to this chapter, then every Employee of that employer, as a part of his contract
of hiring or who may be employed at the time of the acceptance of the
provisions of this chapter by the employer, shall be deemed to have accepted
all the provisions of this chapter and shall be bound thereby unless he shall
have filed, prior to the injury or incurrence of occupational disease, written notice to the contrary with the
employer;… (emphasis added)
The “written notice” contemplated by the preceding statute is a Form
4, Rejection of Coverage document. The
Form 4 is an election by an employee. 803 KAR 25:130§1. Dodd was not an employee of D&D
Roofing. He was a partner in the
business. As such, he must take the
initiative to be included in coverage afforded his business “by the issuance of
an appropriate endorsement to a workers’ compensation policy.” KRS 342.012(2).
Instead, after previously choosing not to have coverage on himself or
occasional employees, the requirements of contractors like JEDA Homes to show
proof of workers compensation coverage forced Dodd to secure a policy in order
to obtain work. The representations in
the policy application clearly reflect no intention by Dodd to be personally
covered under the policy. Further, the
policy plainly and lawfully contains an exclusion of coverage for Dodd and his
partner. This exclusion is enforceable, unlike the circumstance presented in Kentucky Employers’ Mutual Insurance v.
J&R Mining, 279 S.W.3d 513 (Ky. 2009), where the Court rejected a
similar exclusion in a KEMI policy in a case involving a corporate
officer. The Court held that KRS 342.640
considers a corporate officer an employee of the company, one who is covered
absent the opt-out procedure of KRS 342.395(1).
There is no requirement for Dodd to have coverage on himself as a partner
in a roofing business, and so obviously no requirement for him to reject
coverage via a Form 4. It was his
business decision to be excluded from the policy he purchased from KEMI.
Alternatively, the ALJ is also compelled by Dodd’s own testimony to
find that D&D Roofing was not the company performing work at the home site
at which he was injured on January 18, 2010.
After explaining the difference between the D&D and D&G
partnerships, Dodd clearly said that it was the D&G Roofing business he ran
with his stepson Dale Chandler that was performing the roofing work on the day
he was injured.
JEDA HOMES’ MOTION TO DISMISS
JEDA Homes’ motion to dismiss is based on the argument that Dodd was
an independent contractor and not an employee.
In distinguishing between an independent and an employee, both the act
and reality favor an existence of an employer/employee relationship. Hushman Snack Foods Co., v.
Dillon, 591 S.W.2d 701 (Ky. App. 1979).
In Ratliff v. Redmon, Ky.
396 S.W.2d 320 (1965), the Supreme Court of Kentucky held that in determining
whether one is acting for another as an employee or as an independent
contractor the following areas are to be considered: a) the extent of control
the master may exercise over the details of the work; b) whether or not the employee is engaged in a distinct occupation
or business; c) the kind of occupation, with reference to whether the work is
usually done under the direction of the employer or by a specialist without
supervision; d) the skill required in the particular occupation; e) whether the
employee or the workman supplies the instrumentalities, tools and the place of
work for the person doing the work; f) the length of time for which the person
is employed; g) the method of payment, whether by the time or by the job; h)
whether or not the work is a part of the regular business of the employer; and
i) whether or not the parties believe they are creating the relationship of
master and servant.
The Court later said that four of these factors are to be
predominantly considered: the nature of the work as related to the business
generally carried by the alleged employer; the extent of control exercised by
the alleged employer; the professional skill of the alleged employee; and the
true intent of the parties. UEF v. Garland, Ky. 805 S.W.2d 116 (Ky. 1991).
In this case, there is little that lends itself to an
employer-employee relationship. The
nature of JEDA’s business is building houses, but its owner, James Thompson,
did none of the labor himself. He had no
employees and contracted out all of the work, including the roofing work done
by Dodd. Roofing was not the business of
JEDA Homes.
Thompson and JEDA did not exercise any control over the manner in
which Dodd roofed a house. The only
thing JEDA did was furnish shingles at the work site. Roofing is a skill that
acquires much experience. Dodd testified
to the tasks required in roofing a house, and the skills necessary to
accomplish those tasks at pages 5-8 of his deposition. He said that he started the roofing trade in
the union, and it took seven years experience to become a journeyman. (p. 9)
The intent of the parties was that of Dodd being an independent
contractor. Dodd did all his work under
his business name. He was not affiliated
with JEDA Homes, and did not carry himself out as working for it. He executed a W-9 and received a 1099 at the
end of the year reflecting his earnings.
He continued to work for other contractors and builders while contracting
work with JEDA Homes.
Dodd’s Brief does not argue that he was an employee of JEDA under
the familiar Ratliff v. Redmon
analysis. Instead, it argues that he
contracted with JEDA, and that JEDA is liable as an up-the-ladder employer
under KRS 342.610(2), which states:
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 provided for in this chapter….A person who
contracts with another:…(b) To have work performed of a king [sic] which is a
regular or recurrent part of the work of the trade, business, occupation, or
professional of such person shall for the purposes of this section be deemed a
contractor, and such other person a subcontractor.
Dodd’s argument for coverage under the up-the-ladder statute is
misplaced. First, the trigger to
coverage is an uninsured subcontractor.
But in this case, D&D Homes was insured. Unfortunately for Dodd, he did not pay for
coverage on his own work injuries, and the KEMI policy expressly excluded him
from coverage as a partner in the business.
Similarly, the statute provides for up-the-ladder coverage to employees
of the subcontractor. Dodd was not an
employee; he was a partner in the business.
An employee has the burden of proof and the risk of non-persuasion to
convince the trier of fact of every element of his workers’ compensation
claim. Snawder v. Stice, 576 SW2d 276 (Ky. App.
1979).
In the absence of a 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 conclusion. Stated otherwise, inadequate,
incomplete, or even inaccurate fact finding on the part of an ALJ will not
justify reversal or remand if there is substantial evidence in the record that
supports the ultimate conclusion. Eaton Axle Corp. v. Nally, 688 S.W.2d 334 (Ky. 1985).
Despite the foregoing, we do not
believe the ALJ erred in his determination Dodd was an owner, not an employee
of his own roofing business, albeit D & D, or D & G, and therefore
excluded from coverage. Likewise we do
not believe the ALJ erred in his determination neither JEDA nor KEMI is responsible
for payment of benefits to or on behalf of Dodd. The ALJ’s decision is supported by
substantial evidence. Wolf
Creek Collieries v. Crum, 673 S.W.2d 735 (Ky. App. 1984). As the fact finder, the ALJ has the sole
authority to determine the weight, credibility, substance and inferences to be
drawn from 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). Where the evidence is conflicting, the ALJ
may choose whom or what to believe. Pruitt v. Bugg Brothers, 547 S.W.2d 123 (Ky. 1977). The ALJ has the discretion and sole authority
to reject any testimony and believe or disbelieve parts of the evidence,
regardless of whether it comes from the same witness or the same party’s total
proof. Caudill v.
Maloney\'s Discount Stores, 560 S.W.2d 15 (Ky. 1977). Magic Coal v. Fox,
19 S.W.3d 88 (Ky. 2000); Halls Hardwood Floor Co. v. Stapleton, 16
S.W.3d 327 (Ky. App. 2000).
Similarly, the ALJ has the sole
authority to judge the weight and inferences to be drawn from the
evidence. Miller v.
East Kentucky Beverage/Pepsico, Inc., 951 S.W.2d 329 (Ky. 1997); Luttrell
v. Cardinal Aluminum Co., 909 S.W.2d 334 (Ky. App. 1995). Mere evidence contrary to the ALJ’s decision
is not adequate to require reversal on appeal.
Whittaker v. Rowland, 998 S.W.2d 479 (Ky.
1999). In order to reverse the
decision of the ALJ, it must be shown there was no evidence of substantial
probative value to support his decision.
Special Fund v. Francis, 708 S.W.2d 641 (Ky.
1986). KRS 342.285 grants the ALJ
as fact-finder the sole discretion to determine the quality, character, and
substance of evidence. AK Steel Corp. v. Adkins, 253 S.W.3d 59 (Ky. 2008). The
ALJ, as fact finder, is free to pick and choose whom and what to believe. Copar, Inc. v. Rogers,
127 S.W.3d 554, 561 (Ky. 2003).
For that reason, we cannot say the ALJ’s conclusions were unreasonable
based upon the evidence. Speedway/Super America v. Elias, 285 S.W.3d 722, 730 (Ky.
2009); Kentucky River Enterprises, Inc. v. Elkins, 107 S.W.3d 206 (Ky.
2003).
As noted by KEMI, Dodd was neither an
employee of JEDA nor his own roofing business. Therefore KRS 342.295, which provides for
“employee” acceptance or rejection of the Workers’ Compensation Act, is
inapplicable.
Likewise, the ALJ appropriately
determined Dodd was the owner of both D & D and D & G, and he was
excluded from coverage pursuant to the terms of his insurance policy. Dodd failed to introduce any evidence he was
an employee, and admitted in his deposition testimony he was an owner. It should also be noted, despite Dodd’s
failure to join D & G as a party, he was apparently performing the roofing
job for JEDA at the time of the accident through that partnership. As pointed out by JEDA, KRS 342.012
specifically provides an owner of a business, including partners, will only be
included for coverage purposes if they elect to do so. Dodd did not.
As documented in the policy, he and his partner were specifically
excluded.
Dodd argues the purpose of KRS 342.610
is to prevent subcontracting to irresponsible people. Fireman’s Fund Ins.
Co. v. Sherman & Fletcher, 705 S.W. 2d 459 (Ky. 1986). Then he further stated, “if
Mr. Dodd paid for workers’ compensation coverage for non-existent employees and
did not have himself or his partner covered, then he was certainly
irresponsible.” That is not the standard
to be considered. Dodd was not an
employee of the subcontractor, he was the subcontractor. Therefore,
KRS 342.610(2) is also inapplicable.
Based
upon the foregoing, the ALJ properly dismissed Dodd’s claim. Accordingly, the decision by Hon. Douglas W.
Gott, Administrative Law Judge, rendered March 1, 2011 is hereby AFFIRMED.
COWDEN,
BOARD MEMBER, CONCURS.
STIVERS, BOARD MEMBER, CONCURS IN RESULT ONLY.
COUNSEL
FOR PETITIONER:
HON. MARK EDWARDS
HON. DAVID TROUTMAN
222 WALTER JETTON BLVD.
PADUCAH, KY 42003
COUNSELS
FOR RESPONDENTS:
HON. WARD BALLERSTEDT
333 GUTHRIE GREEN, SUITE 203
LOUISVILLE, KY 40202
HON. BRIAN T. GANNON
1315 HERR LANE, SUITE 210
LOUISVILLE, KY 40222
HON. WALTER W. TURNER
151 N EAGLE CREEK DR, STE 310
LEXINGTON, KY 40509
ADMINISTRATIVE
LAW JUDGE:
HON. DOUGLAS W. GOTT
400 EAST MAIN ST, STE 300
BOWLING GREEN, KY 42102
