may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1994).
STATE OF MINNESOTA
IN COURT OF APPEALS
Wausau Insurance Company,
a foreign insurance company,
Filed August 20, 1996
Reversed and Remanded
Hennepin County District Court
File No. 94011725
Kyle E. Hart, Holly A.R. Hart, Fabyanske, Svoboda, Westra & Hart, P.A., Suite 1100, 920 Second Avenue South, Minneapolis, MN 55402 (for Appellant)
Jonathan D. Jay, David M. Fogel, Zelle & Larson, LLP, 33 South Sixth Street, City Center, Suite 4400, Minneapolis, MN 55402-4430 (for Respondent)
Considered and decided by Lansing, Presiding Judge, Kalitowski, Judge, and Willis, Judge.
Environmental and Marine Services, Inc. (EMS) appeals a directed verdict for its insurer, Wausau Insurance, holding that Wausau was not obligated to indemnify EMS against an EMS employee's workers' compensation claim. Because fact issues remain on policy coverage, we reverse and remand to the district court. EMS also appeals the district court's subsequent ruling that Wausau had no contractual duty to defend EMS against the employee's claims. Because the policy coverage arguably included an obligation to defend, we reverse.
Guy Ayers-Berry, employed by EMS as a commercial diver, filed the workers' compensation claim at issue. Ayers-Berry's first contact with EMS was a January 1993 telephone call to EMS's vice president, Dave Gillson, to inquire about employment. At Gillson's request Ayers-Berry faxed a resume to EMS. In a later phone call, Gillson hired Ayers-Berry for a construction project in International Falls, Minnesota. During these telephone conversations, Gillson was at his Minnesota office, and Ayers-Berry was at his home in Iowa.
The International Falls project was cancelled before work began, but EMS contacted Ayers-Berry that same month and asked him to work on a construction project in Wisconsin. Ayers-Berry agreed to work on the project and reported directly to the Cornell, Wisconsin work site.
While working on the project, Ayers-Berry developed back pain and filed a workers' compensation claim in Wisconsin. The Wisconsin workers' compensation system found EMS liable for approximately $76,500. EMS incurred an additional $10,400 in legal fees defending against this claim. Wausau declined to defend or indemnify, asserting that Ayers-Berry was not covered as an EMS employee under the terms of its policy.
EMS brought this action to compel Wausau to indemnify for coverage and provide defense against Ayers-Berry's claim. The evidence was presented to a jury, but before closing arguments the district court granted a directed verdict for Wausau holding there was insufficient evidence, as a matter of law, to establish that Ayers-Berry was covered under Wausau's policy. In response to a later motion by EMS, the district court ruled that Wausau did not owe EMS a defense obligation for Ayers-Berry's claims. EMS appeals the directed verdict and the denial of its defense costs.
Wausau's insurance policy provides coverage for workers' compensation benefits only when benefits would be required under Minnesota law. Minnesota provides workers' compensation benefits "[i]f an employee hired in this state by a Minnesota employer, receives an injury while temporarily employed outside this state." Minn. Stat. § 176.041, subd. 3 (1994). The parties agree that EMS is a Minnesota employer. They dispute whether Ayers-Berry was hired in Minnesota and whether he was temporarily employed outside this state.
Whether an employee is hired in Minnesota for the purposes of section 176.041 is a question of fact. Morisette v. Harrison Int'l Corp., 486 N.W.2d 424, 427 (Minn. 1992). In determining whether a contract was formed, a fact-finder "does not rely on words alone, but can 'consider the surrounding facts and circumstances in the context of the entire transaction, including the purpose, subject matter, and nature of it.'" Id. (quoting Capital Warehouse Co. v. McGill-Warner-Farnham Co., 276 Minn. 108, 114, 149 N.W.2d 31, 35 (1967)).
Several facts support the district court's conclusion that Ayers-Berry was not hired in Minnesota: he did not live or work in Minnesota; he had never attended meetings, interviews, or training sessions in Minnesota; and he was hired during a telephone conversation while he was in Iowa.
But other facts support the conclusion that Ayers-Berry was hired in Minnesota: Gillson and Ayers-Berry both submitted affidavits stating that Gillson actually accepted Ayers-Berry's offer of employment during a telephone call from EMS's Minnesota office; EMS is a Minnesota corporation; EMS initially hired Ayers-Berry to work on a project in Minnesota; EMS administered Ayers-Berry's compensation and personnel affairs at its Minnesota office; and Minnesota payroll taxes were deducted from Ayers-Berry's paychecks.
These facts support competing inferences. Because the evidence and its reasonable inferences could support the conclusion that Ayers-Berry was hired in Minnesota, the district court erred by directing the verdict and denying the jury an opportunity to consider the evidence.
Alternatively, Wausau argues that Ayers-Berry is not covered because he was not injured "while temporarily employed outside this state." Minn. Stat. § 176.041, subd. 3. Section 176.041, subd. 3, applies when an employee "hired in Minnesota by a Minnesota employer, is injured while working outside the state in a job which is not intended to be a permanent out-of-state employment or relocation." Stenberg v. Kemp Paulucci Seafoods, Inc., 44 W.C.D. 269, 271 (Minn. Workers' Comp. Ct. App. 1990). Neither EMS nor Wausau argues that the Wisconsin project was intended to be permanent employment. Thus, this issue is also determined by whether Ayers-Berry was hired in Minnesota. Because we have concluded that where Ayers-Berry was hired is a disputed fact issue, the district court erred by removing the question from the jury's consideration.
Ayers-Berry alleged that he was injured while working for EMS on a temporary, out-of-state construction project. Although fundamental fact questions remain on whether he was hired in Minnesota, this dispute does not remove Ayers-Berry's claim from the potential scope of the policy's coverage. It is "arguable" that Ayers-Berry's claim is for workers' compensation benefits payable under Wausau's policy. Because the claims arguably fall within the scope of coverage afforded by the policy, we reverse the district court's denial of EMS's expenses incurred defending against Ayers-Berry's claims.
Reversed and remanded.