*/
200-CA-00(NP)

RENDERED:  JANUARY 20, 2017; 10:00 A.M.

NOT TO BE PUBLISHED

 

Commonwealth Of Kentucky

Court of Appeals

 

NO. 2016-CA-000969-wc

 


 

uninsured employers’ fund                                         APPELLANT

 

 

 

                           PETITION FOR REVIEW OF A DECISION

v.                   OF THE WORKERS’ COMPENSATION BOARD

                                        ACTION NO. 11-WC-01375

 

 

 

CHARLES BURTON;
O’NEIL DISHON D/B/A ALL SEASON CONTRACTORS
CHRIS CALWELL D/B/A ABSOLUTE STEEL BUILDINGS
TIN MAN MANUFACTURING;
JIM BRANSTETTER,
UNINSURED EMPLOYERS’ FUND,
WORKERS’ COMPENSATION BOARD
and HON. STEVEN BOLTON, ALJ                                            APPELLEES

 

 

 

OPINION

AFFIRMING

 

** ** ** ** **

 

BEFORE:  COMBS, STUMBO AND THOMPSON, JUDGES.

COMBS, JUDGE:    The Uninsured Employers’ Fund appeals from a Workers’ Compensation Board Opinion of June 3, 2016, reversing the Administrative Law Judge’s determination that Appellees (Tin Man Manufacturing, Inc.; O’Neil Dishon d/b/a All Seasons Contractors; Chris Caldwell d/b/a Absolute Metal Building Systems; and Jim Branstetter) were engaged in a joint venture and that they were, therefore, jointly and severally liable for the payment of workers’ compensation benefits to Appellee Charles Burton.  After our review, we affirm.

                   We refer to the record only as necessary to resolve the issues before us.  On October 18, 2011, Appellee Charles Burton (Burton) filed an Application for Resolution of Injury Claim (Form 101), alleging that he sustained multiple injuries in a fall from a roof on May 31, 2011.  Burton named Absolute Metal Building Systems, LLC, as the defendant-employer.  

                   On October 20, 2011, the Commissioner of the Department of Workers’ Claims certified that Absolute did not have workers’ compensation coverage on the date of the injury.  The Uninsured Employers’ Fund (UEF) then filed a motion to join additional party defendants.  By Order of February 23, 2012, the ALJ joined Tin Man Manufacturing, Inc; O’Neil Dishon d/b/a All Seasons Contractors; Chris Caldwell d/b/a Absolute Steel Buildings; and Jim Branstetter.                              

This appeal arises from a decision of the ALJ on remand.  The Board’s opinion of October 24, 2014, which was rendered in the prior appeal, outlines the relationships among the parties and the relevant events:

Charles Burton, the claimant, was injured while working on a construction site.  Chris Caldwell hired Burton to perform this construction work.  Caldwell is the owner of Absolute Metal Building Systems, LLC (“Absolute”).  At the time of the injury, Caldwell was also an independent, commission-based salesman for Tin Man.  The site where Burton sustained his injury is owned by Chris Campbell [not to be confused with the Appellee, Chris Caldwell].  Caldwell had also hired a subcontractor for the Campbell project, Jim Branstetter.  Branstetter directed Burton on a day-to-day basis. 

 

Tin Man manufactures metal roofing and wooden trusses.  Campbell’s project involved the construction of a metal pole barn manufactured by Tin Man.  O’Neil Dishon is the Vice-President and an owner of Tin Man.  Additionally, Dishon is a part owner of All Seasons Contractors (“All Seasons”), a company that primarily installs vinyl siding and gutters, but occasionally performs general contracting work. 

 

(Board Opinion, 10/24/14, at 2-3). 

 

The Board further explained that Caldwell’s own business, Absolute, sold and installed pole barn packages and metal buildings. 

Once he had identified a customer’s needs, Caldwell obtained a price from Tin Man for the materials …. Tin Man’s price to Absolute was solely for the cost of material …. Tin Man did not share in the profit from the construction of the buildings.

 

Campbell owns Cands, Incorporated, a trucking company.  He contacted Absolute to construct a building.  Caldwell, in turn, called Dishon with the request and to obtain a price for the building package from Tin Man.  Caldwell then added in the cost of construction and labor and quoted Campbell a total price.

 

[The ALJ] determined Caldwell was acting as a general contractor in retaining the services of Branstetter, Burton, and a few other men who helped erect the building for Campbell.

 

However, the ALJ concluded Burton is an employee of Tin Man under the “up-the-ladder” theory of liability ….KRS[[1]]342.610(2)[[2]] ….

 

The ALJ next concluded Tin Man is responsible under the joint venture or joint enterprise theory liability … as outlined in Roethke v. Sander, 68 S.W.3d 352 (Ky. 2001)….

 

By subsequent order … the ALJ reaffirmed his prior holdings, and also found Burton was “an employee of both Caldwell and Tin Man under KRS 342.640(1) and (4).”  [T]he ALJ rejected the claim Burton was an independent contractor. 

 

(Id. at 3-5, 7-10).

 

The Board determined that Tin Man could not be liable simultaneously as an employer, an up-the-ladder employer, and a member of a joint venture.  Thus, the Board vacated the holding of the ALJ.[3]  The Board remanded with the instruction that the ALJ “clarify his holdings and … identify a single theory of Tin Man’s liability, if any.”  Id. at 13.  (Emphases added.)  The Board reasoned as follows:

Tin Man has also raised legitimate questions as to the sufficiency of the evidence supporting the ALJ’s conclusions that it is an up-the-ladder contractor and that it engaged in a joint venture with Caldwell and/or Absolute.  Given our holding herein and the apparent inconsistencies existing in the [ALJ’s] two Opinions, we believe meaningful review is not possible and therefore, it would be premature to address these arguments. 

Id.

On August 19, 2015, the ALJ rendered a 57-page Opinion, Award, and Order on remand and determined that: “[b]ased on the evidence … [Burton] was not a direct employee of Tin Man Manufacturing, Inc. or All Seasons Construction at the time of the injury.”  (ALJ Opinion on Remand, 8/19/15, at 33-34).  Citing Roethke v. Sanger, 68 S.W.2d 352, the ALJ concluded that a joint venture existed among: (1) Tin Man Manufacturing, Inc.; (2). O’Neil Dishon d/b/a All Seasons Contractors; (3) Chris Caldwell d/b/a Absolute Metal Building Systems; and (4) Jim Branstetter.  “[A]s a composite entity they constitute the ‘employer’ for the purposes of Mr. Burton’s claim.”  (Id. at 34).  Citing KRS 342 640(1) and (4), the ALJ found that Burton “was a ‘statutory employee’ of the defendants ….”  (Id. at 43).  The ALJ determined that the members of the joint venture -- and/or their insurance carrier -- were jointly and severally liable for payment of the workers’ compensation benefits awarded.

                    At the threshold of our analysis, we must first address the ALJ’s use and interpretation of the term “statutory employee” in determining that Burton was an employee under KRS 342.640(1) and (4).  That statute, which is entitled “Coverage of Employees,” provides in relevant part:

The following shall constitute employees subject to the provisions of this chapter . . . :

(1) Every person, including a minor, whether lawfully or unlawfully employed, in the service of an employer under any contract of hire or apprenticeship, express or implied, and all helpers and assistants of employees, whether paid by the employer or employee, if employed with the knowledge, actual or constructive, of the employer;

. . .

(4) Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury.

  An actual employer/employee and a statutory employer/employee are not necessarily synonymous.  KRS 342.640 simply defines who is an employee for purposes of coverage under the Workers’ Compensation Act.  However, in his use of the term “statutory employee,” the ALJ was apparently referring to Burton’s status as an employee as distinguished from that of an independent contractor. 

The terms “statutory employee” and “statutory employer” have a particularized meaning in workers’ compensation law -- especially in the context of “up-the-ladder” liability for coverage.  See Doctors' Associates, Inc. v. Uninsured Employers' Fund, 364 S.W.3d 88, 91 (Ky. 2011) (KRS 342.610(2) views the “up-the-ladder contractor as being the employer of an uninsured subcontractor's employees, i.e., their statutory employer.”) (italics original).  When he reviewed this case on remand, the ALJ did not find that any defendant was an up-the-ladder/statutory employer as defined or envisioned by KRS 342.610(2).   The ALJ only found that “the employer … was the joint venture made up of the Defendants herein and the employee was the Plaintiff.”  (Id. at 52). 

Tin Man and All Seasons filed Petitions for Reconsideration, which the ALJ denied by Order rendered on October 30, 2015.  Tin Man and All Seasons then appealed and cross-appealed to the Board.

On June 3, 2016, the Board rendered the Opinion which is the subject of the appeal now before this Court.  Tin Man argued that that the ALJ erred in finding it liable under the joint venture theory -- as did All Seasons, inter alia.   The Board agreed and concluded as follows:

Because the evidence does not support the ALJ’s determination regarding the existence of a joint venture, or the finding of either Tin Man or All Seasons as Burton’s actual or statutory employer, we reverse in part and remand for a determination of Burton’s actual employer, and if necessary, a determination of his statutory employer, supported by the evidence of record.

 

(Board Opinion, 6/3/16 at 3).  (Emphases added.)

However, on remand, the ALJ did not find that either Tin Man or All Seasons was Burton’s actual or statutory employer.  On the contrary, the ALJ found that: “Based on the evidence of record, the Plaintiff was not a direct employee of Tin Man Manufacturing, Inc. or All Seasons Construction at the time of his injury.”  (ALJ Opinion on Remand, 8/19/15, at 33-34, emphasis added).  Moreover, the ALJ did not make a finding that Tin Man or All Seasons was a statutory/up-the-ladder employer under KRS 342.610(2).  The ALJ found instead that Burton’s employer was the joint venture composed of the other named appellees.

In its opinion of June 3, 2016, the Board rejected the conclusion of the ALJ as to the joint-venture theory, reasoning as follows:

[A] joint enterprise is “an informal association of two or more persons, partaking the nature of a partnership, usually, but not always limited to a single transaction in which the participants combine their money, efforts, skill and knowledge for grain [sic], with each sharing in the expenses and profits or losses.”  Eubank v. Richardson, 353 S.W.2d 367, 369 (Ky. App. 1962).  Four elements are required in order for a joint enterprise to be present.  They are 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.  Huff v. Rosenburg, 496 S.W.2d 352, 355 (1973).  As to the third element, it is necessary that there be a sharing of the profits and losses.  Roethke v. Sanger, 68 S.W.3d 352, 364 (Ky. 2001).  In the absence of an express agreement, the sharing of losses may sometimes be implied from an express agreement to share profits.  A person does not become a member of a partnership or joint adventure by the mere fact that his compensation is measured by the amount of profits earned in the business.  Id. (citing to Drummy v. Stern, 296 S.W.2d 198 (Ky. App. 1954).  In this instance on remand, the ALJ determined that Tin Man, All Seasons, Absolute and Branstetter were members of a joint enterprise.  (Board Opinion, pp. 34 - 35.)

 

                    The Board concluded that the third element of a joint venture was missing: namely, a community of pecuniary interest among the members -- particularly, the sharing of the losses and profits.  The Board explained that All Seasons: did not perform work on any jobs or contracting work for Absolute, received no financial gain, and had no involvement in the Campbell project upon which Burton was injured.  The Board found that there was no evidence of an agreement -- either express or implied -- that All Seasons would share in profits or losses.  Nor was there any evidence of an agreement that Tin Man would share in profits and losses.  The Board cited Dishon’s and Caldwell’s testimony, which established that Tin Man did not receive any money on jobs performed through Chris Caldwell.  Tin Man was only paid for the materials that it supplied.   The Board specifically found that “Tin Man was merely a supplier of building materials, not a contractor, employer or joint venture [sic] which would impose liability for payment of benefits to Burton.”  (Board Opinion, 6/3/16, at 39-40).  Finally, the Board held that no substantial evidence of record supported a finding as to the third element necessary to establish a joint venture (“ a community of pecuniary interest”).  It did not address the remaining elements.  

                    The Board reversed the ALJ’s finding of the existence of a joint enterprise among Tin Man, All Seasons, Absolute, and Branstetter in the course of the Campbell project.  (Id. at 40).  It directed the ALJ on remand “to identify Burton’s employer at the time of his injury.  The ALJ is then directed to determine whether any contractor has up-the-ladder liability pursuant to KRS 342.610(2) and applicable case law.”  (Id. at 39-40). 

                      On July 5, 2016, UEF filed a Petition for Review in this Court. 

                         As a preliminary matter, we address the argument made by Burton, All Seasons, and Tin Man: that UEF failed to name Tin Man, an indispensable party, and that, therefore, the appeal should be dismissed. 

Appeals to this Court from the Board are initiated by filing a Petition for Review pursuant to CR[4] 76.25, which provides as follows:

The petition shall designate the parties as appellant(s) and appellee(s) and shall contain the following: (a) the name of each appellant and each appellee and the names and addresses of their respective counsel. The appellant shall specifically designate as appellees all adverse parties and the Workers' Compensation Board.

 

Although Tin Man was omitted from the caption on the cover page of the UEF’s Petition, the certificate of service reflects that Tin Man’s counsel was served with a copy.  At page one, under the heading “Parties on Appeal,” UEF specifically designated Tin Man Manufacturing as a “Respondent” and identified its counsel.  We believe that UEF has satisfied the rule.  See Lassiter v. Am. Exp. Travel Related Services Co., Inc., 308 S.W.3d 714, 718 (Ky. 2010) (“[N]aming a party in the caption of the notice is, standing alone, sufficient to satisfy the rule, even though the party is not named in the body of the notice.  This rule recognizes that the principal objective of a pleading is to give fair notice to the opposing party.”) (internal citations omitted).

UEF contends that the ALJ’s finding of a joint venture is supported by the evidence.  UEF hypothesizes that the parties shared a pecuniary interest because Tin Man “hoped to earn a profit from the sales [sic] of a building it would have not have sold without the represented capacity to construct ….”  UEF also argues that “Dishon as principal in All Seasons shared in the prospect of picking up additional construction business if Caldwell fell short in arranging it ….”  Neither supposition, however, is evidence of an agreement -- express or implied -- to share in profits and losses.  Our role “is to correct the Board only where the Court perceives the Board has overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice.”  Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687–88 (Ky. 1992).  We find no error on the part of the Board premised upon these contentions.

Next, UEF argues that even if an element of a joint venture is absent, the ALJ’s decision should be affirmed because the record would support a finding of an implied oral partnership among the same parties.  Again, we disagree.  Dutton v. Dutton, 2012-CA-001403-MR, 2014 WL 631572, at *4 (Ky. App. Feb. 14, 2014), holds that a specific agreement to share profits must constitute an essential element of every partnership.  Harmount & Woolf Tie Co. v. Baker, 251 Ky. 795, 66 S.W.2d 45, 47 (1933), similarly holds that the absence of such an agreement to share profits is conclusive proof that a partnership does not exist.

UEF’s remaining argument is that the record supports a finding that Tin Man alone is liable as an “up-the-ladder” employer under KRS 342.610(2).   However, that issue is not properly before us.  The ALJ alone is the fact-finder.  KRS 342.285.  “[I]t it is never appropriate [for a reviewing body] to render findings and conclusions upon the evidence before the [fact-finder], or to direct that any specific finding be made by the [fact-finder].”  Wolf Creek Collieries v. Crum, 673 S.W.2d 735, 736 (Ky. App. 1984).    

In its October 24, 2014, Opinion, Vacating and Remanding, the Board directed the ALJ to clarify his prior rulings and “identify a single theory of Tin Man’s liability … [and] identify Burton’s employer.”  (Board Opinion, 10/24/14, at 13).  On remand, the ALJ did just that -- albeit erroneously.  He identified Burton’s employer as the joint venture and determined that its members were jointly and severally liable for the payment of workers’ compensation benefits. 

The Board stated that “Tin Man was merely a supplier of building materials, not a contractor, employer or joint venture [sic] which would impose liability for payment of benefits to Burton.” (Board Opinion, 6/3/16, at 39 -40).  We consider that statement in the context in which it was made – namely, that the evidence did not support the ALJ’s finding of a joint venture with respect to Tin Man because it was only paid for the materials it supplied and did not share in profits.  We regard anything else as surplusage.  See J. L. Storedahl & Sons, Inc. v. Cowlitz County, 125 Wash. App. 1, 8, 103 P.3d 802, 804 (2004) (“A tribunal with only appellate jurisdiction is not permitted or required to make its own findings and such findings, if entered, are surplusage.”).  We may not decide, nor do we express, any opinion as to whether or not Tin Man is a contractor under KRS 342.610(2).  That issue is yet to be decided.

In its Response, Tin Man contends that the issue (that it was not a contractor) was addressed in the first appeal and thus that it is the law of the case. We disagree.  As noted above, at page 13 of its October 24, 2014, Opinion, the Board specifically declined to address the issue because it was premature.  Brown v. Commonwealth, 313 S.W.3d 577, 610 (Ky. 2010), holds that the doctrine of law-of-the-case is applicable only as to matters finally decided on the merits by an appellate court.  

We affirm the June 3, 2016, Opinion of the Workers’ Compensation Board.  On remand, the Administrative Law Judge is directed to identify Burton’s employer at the time of his injury.  The ALJ is then directed to determine whether any defendant has up-the-ladder liability as a contractor pursuant to KRS 342.610(2) and applicable case law.

                   ALL CONCUR.

 

 

 

 

 

BRIEF FOR APPELLANT:

 

Dennis M. Stutsman

Frankfort, Kentucky

 

BRIEF FOR APPELLEE:

 

CHARLES BURTON:

 

Jackson Watts

Versailles, Kentucky

 

O’NEILL DISHON, DBA ALL SEASONS CONTRACTORS:

 

W. Barry Lewis

Hazard, Kentucky

 

TIN MAN MANUFACTURING:

 

Ronald J. Pohl

Lexington, Kentucky

 

 

 



[1] Kentucky Revised Statutes.

 

[2] Up-the-ladder liability refers to the liability of a contractor for the payment of workers’ compensation benefits to the injured employee of an uninsured subcontractor and is governed by  KRS 342.610(2), which provides in relevant part:  “A contractor who subcontracts all or any part of a contract and his or her 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.”

 

 

[3] The order of the Board vacating encompassed the following orders of the ALJ: July 31, 2013, Opinion, Award and Order; September 9, 2013, Order on reconsideration; April 7, 2014, Supplemental Opinion, Award and Order; and May 5, 2014, Order on reconsideration.

[4] Kentucky Rules of Civil Procedure.