STEPHEN BELLOW, Employee, v. ANTONIO HOLLIDAY d/b/a TONY MOGUL ENTERS., LLC, UNINSURED, Employer/Appellant, and MN DEP=T OF HUMAN SERVS., INGENIX/MEDICA, and STATE SERVS. FOR THE BLIND, Intervenors, and SPECIAL COMP. FUND.
WORKERS= COMPENSATION COURT OF APPEALS
SEPTEMBER 12, 2005
EMPLOYMENT RELATIONSHIP; STATUTES CONSTRUED - MINN. STAT. ' 176.183, SUBD. 1. Where the only issue before the judge was whether either the corporate owner or his corporation was the employee=s employer, where there was evidence that the corporate owner had personally hired the employee but had paid for all of his corporation=s materials and labor from a corporate account, and where the parties did not litigate whether or not the owner directed and controlled the activities of employees within the meaning of Minn. Stat. ' 176.183, subd. 1, the compensation judge=s decision that the corporation was a liable employer was affirmed, but her decision that the owner was also an employer was reversed, and her decision that he was jointly and severally liable for benefits was vacated.
Affirmed in part, reversed in part, vacated in part, and modified in part.
Determined by: Pederson, J., Wilson, J. and Johnson, C.J.
Compensation Judge: Cheryl LeClair-Sommer
Attorneys: Timothy J. McCoy, McCoy, Peterson, & Jorstad, Minneapolis, MN, for the Respondent. Kathryn Hipp Carlson, Miller & Carlson, Minneapolis, MN, for the Appellant.
WILLIAM R. PEDERSON, Judge
Antonio Holliday and Tony Mogul Enterprises, LLC, appeal from the compensation judge=s determination that Stephen Bellow was an employee of both Antonio Holliday and Tony Mogul Enterprises in January of 2004 and from the judge=s finding that they are jointly and severally liable for the employee=s injuries on January 14, 2004. We affirm the judge=s determination that Stephen Bellow was an employee of Tony Mogul Enterprises, LLC, on the date alleged, we reverse the determination that he was an employee also of Antonio Holliday individually, we vacate the finding of joint and several liability, and we modify the judge=s decision to reflect sole liability on the part of Tony Mogul Enterprises, LLC.
Antonio Holliday [Mr. Holliday] owns several businesses. One of these, described by Mr. Holliday as the parent company, is Tony Mogul Enterprises, LLC. That company is in the business of purchasing, remodeling, and rehabbing real estate and selling that real estate for a profit. Mr. Holliday does not perform the work personally but instead contracts with others on a bid basis. One of the properties purchased by Mr. Holliday or his companies and in need of considerable work was a duplex located at 522 Newton Avenue North in Minneapolis.
In mid December 2003, Mr. Holliday placed an advertisement in the City Pages newspaper want ads, seeking a ARehab/Carpenter/Crew@ to work for cash, Ademo to finish.@ The ad directed inquiries to ATony@ at a specified phone number. Ronald Christenson evidently responded to the ad and submitted a Alabor only@ bid for the project. Mr. Christenson apparently had his own crew of two and the necessary tools for the job. Mr. Christenson was hired and made responsible for hiring and firing and paying his own employees, and Mr. Holliday agreed to pay for the labor in increments, based on the progress of the work. The parties agreed also that a bonus would be paid if the work was finished on schedule. Materials for the project were purchased either by Mr. Holliday directly or by Mr. Christenson using debit cards provided by Mr. Holliday. Payment by Mr. Holliday for both labor and materials was primarily by check drawn against the checking account of Tony Mogul Enterprises.
Shortly after starting the Newton Avenue project, Mr. Christenson apparently discharged his employees and informed Mr. Holliday that he did not have the time to find replacements. Because Mr. Holliday wanted to keep the project moving, he agreed to bring qualifying individuals who responded to the City Pages ad over to the work site, where Mr. Christenson would try them out on the job.
On about January 9, 2004, Stephen Bellow [the employee] responded to the City Pages ad. Mr. Holliday answered the phone and arranged to interview the employee later that day at his office located at Cedar Avenue South in Minneapolis. At the interview, Mr. Holliday and the employee discussed generally Mr. Holliday=s business of rehabbing homes and the employee=s qualifications as a carpenter. The employee completed a written application or questionnaire of some sort and was hired at a starting wage of $15.00 an hour, to be paid weekly. The employee advised Mr. Holliday that he wanted $18.00 an hour, but he agreed to the starting wage pending his proving himself on the job. Mr. Holliday agreed to the possibility of a wage increase, and it was agreed that the employee would start work the following week. No mention was made of Mr. Holliday=s agreements or arrangements with Mr. Christenson.
On the following Wednesday, January 14, 2004, the employee again met Mr. Holliday at his office and followed him to the Newton Avenue job site, where he was introduced to Mr. Christenson. Neither Mr. Holliday nor Mr. Christenson advised the employee of their labor agreement, and the employee later testified that it was his understanding that Mr. Christenson was the foreman. Later that morning, while performing tasks assigned to him by Mr. Christenson, the employee fell from a ladder and was injured.
About four months later, the employee filed a claim petition for workers= compensation benefits, eventually amending the petition to identify as the employer Antonio Holliday, Tony Mogul Enterprises, LLC, and other entities owned by Mr. Holliday. Because Mr. Holliday and his several businesses were uninsured for workers= compensation liability, the Special Compensation Fund was also named as a party. Mr. Holliday denied that either he or any of his businesses was the employee=s employer on January 14, 2004.
The matter came on for a hearing before a compensation judge on November 30, 2004. At trial, the parties stipulated to the following: (1) that Stephen Bellow was an employee on January 14, 2004; (2) that on that date, in the course and scope of his employment, he sustained injuries to his head, right eye, right shoulder, body trunk, and right-side ribs; 3) that the employee=s weekly wage as of January 14, 2004, was $600.00; 4) that the employee was temporarily totally disabled as a result of his work injury of January 14, 2004, from the date of the injury through the date of the hearing; and 5) that the medical care and treatment rendered from January 14, 2004, through the date of the hearing was reasonable and necessary and causally related to the work injury of January 14, 2004. The sole issue before the compensation judge was whether the employee was an employee of Antonio Holliday or Tony Mogul Enterprises on January 14, 2004.
In amended findings and order issued February 2, 2005, the compensation judge found that Antonio Holliday, as owner of Tony Mogul Enterprises, LLC, had entered into a contract for hire with the employee on January 14, 2004. At Finding 7 the judge found that:
Stephen Bellow was an employee of Antonio Holliday and Tony Mogul Enterprises, LLC as of January 14, 2004 since he was performing service in the course of the business for Antonio Holliday and Tony Mogul Enterprises, LLC, renovation and rehabilitation of residential real estate at the duplex at 522 Newton Avenue N., Minneapolis (referred to as a duplex).
And at Finding 8, the judge found that:
Antonio Holliday, as the owner and officer of Tony Mogul Enterprises, LLC, directed and controlled the activities of the employees, as provided by Minn. Stat. ' 176.183. subd. 1. Antonio Holliday and Tony Mogul Enterprises, LLC are jointly and severally liable as employers of the employee as of January 14, 2004.
Mr. Holliday and Tony Mogul Enterprises, LLC, appeal.
STANDARD OF REVIEW
On appeal, the Workers= Compensation Court of Appeals must determine whether Athe findings of fact and order [are] clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted.@ Minn. Stat. ' 176.421, subd. 1 (2004). Substantial evidence supports the findings if, in the context of the entire record, Athey are supported by evidence that a reasonable mind might accept as adequate.@ Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984). Where evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed. Id. at 60, 37 W.C.D. at 240. Similarly, findings of fact should not be disturbed, even though the reviewing court might disagree with them, Aunless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.@ Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
At trial, the parties stipulated that Stephen Bellow was an Aemployee@ on January 14, 2004. The only issue for the compensation judge=s determination was whether Mr. Bellow was an employee of Antonio Holliday individually or of Tony Mogul Enterprises, LLC. Both appellants assert that neither Antonio Holliday nor Tony Mogul Enterprises was the employee=s employer. They contend that the compensation judge inappropriately focused her analysis on (1) the employee=s understanding of who his employer was, (2) Mr. Holliday=s failure to communicate to the employee the details of the labor contract between himself and Mr. Christenson, and 3) the fact that the appellants owned the worksite and benefitted from the employee=s labor. Instead, they argue, the judge should have looked to the independent contractor rules for guidance in determining if a party is an employer. The most important factor for consideration, they contend, is whether the purported employer had control over the method and manner of performance. In this case, they assert, it is undisputed that Mr. Holliday did not have control over the method and manner of the employee=s performance of the work. He did not set the employee=s hours, did not instruct him on his carpentry duties, did not tell him what tools to bring, and did not instruct him on the job site. They also assert that the employee=s wages were to be paid by Mr. Christenson pursuant to his labor bid with Mr. Holliday. We are not persuaded.
Minn. Stat. ' 176.011, subd. 10, defines Aemployer@ as Aany person who employs another to perform a service for hire.@ The existence of an employment relationship between two parties is a question of fact, and, if a reasonable inference may be drawn either way, the decision of the compensation judge must stand. Farnam v. Linden Hills Congregational Church, 276 Minn. 84, 87-88, 149 N.W.2d 689, 692, 24 W.C.D. 135, 140 (1967).
The evidence is uncontroverted that Tony Mogul Enterprises is engaged in the business of purchasing, remodeling, and rehabbing real estate for re-sale at a profit. Mr. Holliday is the sole owner of that company. One of the properties being rehabbed by Mr. Holliday=s company was the duplex located at 522 Newton Avenue North. Mr. Holliday placed an ad in the newspaper seeking carpenters to work on this project. The employee responded to the ad, completed an application or questionnaire, was interviewed by Mr. Holliday, and was hired as a carpenter at an hourly wage of $15.00. The following week, the employee was led to the job site by Mr. Holliday and introduced to Mr. Christenson. At no time did Mr. Holliday ever inform the employee of his labor contract with Mr. Christenson or even suggest that Mr. Christenson would be his employer. Contrary to the appellants= assertion, the employee=s understanding of who his employer was, Mr. Holliday=s failure to communicate to the employee the details of the labor contract between himself and Mr. Christenson, and the fact that Mr. Holliday or Tony Mogul Enterprises owned the property in question are all entirely relevant factors in determining the identity of the employer in this case. These factors, in addition to the hiring process itself, support the judge=s finding of an employment relationship.
We don=t find the independent contractor rules helpful or even relevant in this case. Those rules pertain only to whether or not the worker was employed by a party other than himself, and here the parties have stipulated that Mr. Bellow was an Aemployee@ on January 14, 2004. There is substantial evidence to support the compensation judge=s finding that Antonio Holliday, the owner of Tony Mogul Enterprises, entered into a contract for hire with the employee on January 14, 2004, and we affirm that finding.
The appellants next argue that, if this court affirms the judge=s finding that Mr. Bellow was an employee of Antonio Holliday or Tony Mogul Enterprises, we should vacate the judge=s findings that Mr. Bellow was an employee of both and that they are jointly and severally liable. They assert that, at the commencement of the hearing, the parties stipulated that, if the court found Mr. Holliday to be a general contractor or an employer, the responsible employer should be either Tony Mogul Enterprises or Antonio Holliday individually. Given this agreement by the parties, they assert, the judge did not have jurisdiction to make a contrary finding. The appellants request that we remand the matter to the compensation judge for a finding that either Antonio Holliday or Tony Mogul Enterprises is the employer.
Although the pre-trial stipulation on this issue is not entirely clear, it does appear from the entire record that the only factual determination to be made by the compensation judge was whether Mr. Bellow was employed by Mr. Holliday individually, by Tony Mogul Enterprises, or by neither of them. There clearly was no claim that the employee was employed by two or more employers. Rather than remand the issue to the compensation judge, however, we conclude that the evidence supports only a finding that the employer is Tony Mogul Enterprises.
Mr. Holliday testified that, while he owns and operates several businesses, Tony Mogul Enterprises is the entity that is engaged in buying, rehabbing, and reselling homes. With respect to the property at 522 Newton Avenue North, the documentary evidence reveals that labor and materials were paid for by Tony Mogul Enterprises. While Mr. Holliday did use his personal credit card to purchase some of the construction materials, it appears that amounts were electronically withdrawn from the company checking account to pay the credit card bill. Because he is the sole owner, Antonio Holliday is obviously closely identified with Tony Mogul Enterprises. This does not mean, however, that Mr. Holliday, in an individual capacity, was the employer in this case. Given Mr. Holliday=s testimony regarding the nature of the business engaged in by Tony Mogul Enterprises, and given the evidence that labor and materials were paid for by the company, we conclude that the employer in this case is Tony Mogul Enterprises. We therefore reverse the judge=s determination that Antonio Holliday, individually, was an employer of the employee, and we modify the findings and order to reflect that Tony Mogul Enterprises, LLC, was the employee=s sole employer.
Subdivision 1 of Minnesota Statutes ' 176.183, which pertains to liability for benefits in the event that an otherwise liable employer is uninsured, provides in part that, for purposes of the subdivision, the word A>employer= includes any owners or officers of a corporation who direct and control the activities of employees.@ Minn. Stat. ' 176.183, subd. 1. At Finding 8, the compensation judge concluded that Antonio Holliday, as the owner and officer of Tony Mogul Enterprises, LLC, Adirected and controlled the activities of the employees,@ within the meaning of Minnesota Statutes ' 176.183, subdivision 1. Pursuant to that statutory provision, the judge concluded that Antonio Holliday and Tony Mogul Enterprises, LLC, were jointly and severally liable as employers of the employee as of January 14, 2004. Again relying upon the parties= alleged pre-trial stipulation, the appellants contend that the judge erred in finding that Antonio Holliday and Tony Mogul Enterprises were jointly liable for the employee=s workers= compensation benefits. We agree that the finding must be vacated.
As we noted earlier in this decision, the only issue presented to the compensation judge for determination was whether the employer was Antonio Holliday or Tony Mogul Enterprises. The parties did not litigate the issue of whether Antonio Holliday, as the owner and officer of Tony Mogul Enterprises, was also a liable party under Minnesota Statutes ' 176.183, subdivision 1. The issue of whether Mr. Holliday directed and controlled the activities of employees within the meaning of that statute was not raised at trial. While the judge was required to make a finding regarding the insurance status of the employer and the employer=s liability to the employee, Mr. Holliday=s status as a liable Aemployer@ under Minnesota Statutes ' 176.183, subdivision 1, was not at issue. We therefore vacate Finding 8.
 At trial, the employee testified that he filled out an employment application, and Mr. Holliday referred to the form as merely a questionnaire. The form at issue is not in evidence.
 Neither the employee, through his claim petition, nor Mr. Holliday, by petition for joinder, sought to make Ronald Christenson a party to the case.
 The appellants cite Minn. R. 5224.0330.