Scanlon v. Caille Farm, Inc.

RANA M. SCANLON, Employee, v. CAILLE FARM, INC., UNINSURED, Employer/Cross-Appellant, and MINNEAPOLIS RADIOLOGY ASSOCS., Intervenor, and SPECIAL COMPENSATION FUND, Appellant.

EXCLUSIONS FROM COVERAGE - FAMILY FARM. The compensation judge properly concluded that the employer, which was engaged primarily in the business of training horses and riders for show and recreational riding, was not a farm operation within the meaning of the family farm exclusion.

Attorneys: Lorelei M. Hoyer, Minnesota Department of Labor & Industry, St. Paul, MN, for the Appellant. Katherine C. Bloomquist and J. Matthew Berner, Bloomquist & Berner, Edina, MN, for the Cross-Appellant. Philip K. Jacobson, Kelly & Jacobson, Minneapolis, MN, for the Respondent.

The Special Compensation Fund has appealed and the employer has cross-appealed from the compensation judge=s determination that the employer was not a family farm as defined in Minn. Stat. ' 176.011, subd. 11a, and that, as a result, the employee=s injury was not excluded from workers= compensation coverage under Minn. Stat. ' 176.041, subd. 1(b). The Fund also appeals on separate grounds the award of temporary total disability compensation for the period from July 12, 2002, to August 21, 2002. We affirm in part and vacate in part.

This case arises out of an admitted work injury sustained by the employee, Rana Scanlon, while working for the employer, Caille Farm, Inc., on May 29, 2002. The primary issue on appeal is whether the Afamily farm@ exclusion in Minn. Stat.'176.041, subd. 1(b), disqualifies the employee=s injury from coverage under the workers= compensation act.

At the time of the injury, Caille Farm was a Minnesota corporation engaged in providing riding lessons and in training and stabling riding horses on a 20-acre tract of land near Monticello, Minnesota. Its president, Barbara Anderson Whiteas, studied equine management and animal science and has worked in various jobs involving the care of horses. Since 1974 she has been continuously engaged in the business of training and showing riding horses and in giving riding lessons. In 1996 she and her future husband, Terry Whiteas, purchased the land for Caille Farm in order to expand her horse-related business activities and provide a location for her business to have its own stable and riding arena. The land also became the site of the family=s residence. In May 2000, Caille Farm was incorporated and it is wholly owned by Barbara and Terry Whiteas. In early 2001, construction was started on a building to accommodate 28 horse stalls, an indoor riding arena, a tack room, a grooming area and an office. Fences were also erected to delineate outdoor riding areas.

As construction began on the horse stable and arena, Caille Farm advertised for a horse riding trainer/instructor in contemplation of the expansion of its business. The advertisement was answered by Rana Scanlon, the employee. The employee had long been involved in horseback riding and had made it her career goal to become a horse trainer and riding instructor, hoping eventually to own her own horse training and riding instruction business. Following graduation from Roosevelt High School in Minneapolis in 1998, she enrolled in an equine science program at the University of Minnesota in Crookston and was close to completing that program when she interviewed for the position at Caille Farm. The employee was interviewed by Barbara Whiteas who hired her for a position as a riding instructor and horse trainer to train horses in the ADressage@ riding style. The employee was asked to sign a form acknowledging that working around horses was a dangerous activity, but was not told that Caille Farm considered itself exempt from any requirement for workers= compensation coverage and had not procured workers= compensation insurance.

The employee began working part time at Caille Farm in March 2001. As the construction of buildings and fences was still underway, she initially helped lay out and set up some fencing. Once the stable building was completed, the employee=s duties were primarily training riding horses and giving riding lessons. She also assisted with group lessons given during children=s horse camps or birthday parties held from time to time at Caille Farm. Sometimes she assisted at horse shows or parades by riding one of the horses under training or by helping some of the employer=s riding students with their preparations if they were participating. The horses were normally fed, cleaned and groomed by stable hands employed by Caille Farm, but on rare occasions the employee did help out with such chores, if the stable hands were not available. She worked from about 16 to 28 hours per week and was paid partly by the hour and partly by a commission based on the charges from riding lessons. During part of the year, including around the time of her injury, the employee also worked part time in a seasonal job for the Minneapolis Department of Parks and Recreation.

On May 29, 2002, the employee was trying to put a rope on one of several horses in a paddock when another horse ran up suddenly behind her. The second horse apparently intended to kick the horse the employee was working with. The employee happened to turn just as the horse kicked, and was struck in the face. She lost three teeth and sustained a facial laceration requiring 30 stitches. The injury also necessitated further treatments by oral surgeons for the placement of implants to anchor artificial crowns.

The parties have stipulated that the employee was temporarily totally disabled from May 30, 2002, to June 10, 2002. She then returned to work for the employer but terminated this employment on July 12, 2002, when she learned that the employer did not have workers= compensation coverage and would not pay all of her medical bills. She then sought other work and found a job in a factory beginning on August 22, 2002, after which date she claims no wage loss. During the interval from her resignation at Caille Farm through the date she began the factory job, the employee continued to work for the Minneapolis Department of Parks and Recreation with no increase in her hours, and also found some part-time work with the Nokomis Shoe Shop.

The employee filed a claim petition on August 7, 2002, seeking temporary total disability compensation from May 29, 2002, and reimbursement of medical expenses. As the employer had no workers= compensation coverage, the Special Compensation Fund (AFund@) was named in lieu of an insurer. The Fund answered on August 14, 2002, generally denying the employee=s claims and asserting as a defense to primary liability that the employer constituted a family farm and that the employee=s injury was accordingly excluded from coverage under the workers= compensation act pursuant to Minn.Stat. '176.041, subd. 1(b).

The matter came on for hearing before a compensation judge of the Office of Administrative Hearings on October 15, 2003. The primary issue was the applicability of the Afamily farm@ exception. The parties stipulated that the employee had been paid less than $8,000.00 in cash wages for the purposes of the definition of Afamily farm@ under Minn.Stat.'176.011, subd. 11a. In addition to the claims raised in the employee=s claim petition, the judge considered the employee=s claim for permanent partial disability compensation.

Following the hearing, the compensation judge determined that the employer=s business was not that of a Afamily farm@ and that the employee was not a Afarm laborer@ for purposes of Minn.Stat.'176.011, subd. 11a. The judge awarded temporary total disability benefits for the periods from May 30, 2002, to June 10, 2002, and from July 12, 2002, to August 21, 2002.

The Fund appealed and the employer cross-appealed from the determination that the employee=s injury was not excluded from the act by the family farm exclusion. The Fund also appealed on separate grounds from the award of temporary total disability compensation from July 12, 2002, to August 21, 2002.

On June 4, 2004, this court issued an order staying the appeals and referring the matter back to the Office of Administrative Hearings for further findings as to the amount of cash wages the employer had paid to farm laborers with respect to the definitional requirements of '176.011, subd. 11a.^[1] Scanlon v. Caille Farm, No. WC 04-204, slip op. (June 4, 2004). On September 7, 2004, the compensation judge served and filed his Findings and Order on Remand. The case has now returned to this court from remand.

Minn. Stat. ' 176.041, subd. 1(b) excludes from workers= compensation coverage certain persons employed by a family farm as defined by Minn. Stat. ' 176.011, subd. 11a. The statute defines a family farm as:

[A]ny farm operation which pays or is obligated to pay cash wages, exclusive of machine hire, to farm laborers for services rendered during the preceding calendar year in an amount:

(2) less than the statewide average weekly wage as described in subdivision 20 when the farm operation has total liability and medical payment coverage equal to $300,000 and $5,000, respectively, under a farm liability insurance policy, and the policy covers injuries to farm laborers.

A farm paying farm laborers more in wages for farm services than the statutory limits is not eligible for the exclusion. Wurst v. Friendschuh, 517 N.W.2d 53 (Minn.App. 1994). On remand, the parties stipulated that the employer paid cash wages to all employees in a total amount less than the statewide average weekly wage, and that the employer had an insurance policy in effect which met the requirements of Minn.Stat.' 176.011, subd. 11a(2).

The compensation judge determined that the exclusion was nonetheless inapplicable to the employee=s work injury, concluding that the employer was not a family farm and that the employee was not a farm laborer within the meaning of the statute.

The appellants^[2] assert that the compensation judge erred as a matter of law, asking that we review the issue purely as one of the application of law to undisputed facts. Accordingly, we have considered the legal question presented solely as it applies to the specific facts as found by the compensation judge and on which he relied in reaching his legal conclusions. Among these, as set forth in the judge=s memorandum, we note particularly that:

(a) The employer=s primary business was the operation of a horse and rider training facility.

(b) Its revenues came predominantly from fees paid by clients for training and stabling horses and from riding lessons.

(c) While the employer occasionally sold a horse to one of its riding students, the breeding of horses for sale was not a primary business purpose and any sale of horses was merely incidental to its primary business of training horses and riders.

(d) Feed and supplies were almost entirely purchased from off-site vendors. A small amount of hay was occasionally cut on land sharecropped to neighboring farmers but the employer=s share of any hay produced was not sold as a crop but was instead used as feed to reduce expenses.

(e) Horses were customarily boarded only for owners purchasing horse and/or rider training.

(g) All onsite equipment, including any equipment commonly associated with agriculture, such as a tractor, was used primarily in the horse/rider training business.

The statute requires that the employer be engaged in the operation of a family farm. The Minnesota Supreme Court has stated that this phrase Aconnotes the operation of a farm by one or more family members who reside on the farm and are actually engaged in farming it.@ The court further stated that these terms were limited to their commonly understood meanings. Citing Minn.Stat. '500.24, it noted that the legislature had elsewhere Aincorporated that widely understood connotation into a statutory definition of >family farm=.@ Meyering v. Wessels, 383 N.W.2d 670, 673, 38 W.C.D. 482, 486 (Minn. 1984). We note that Minn.Stat.'500.24, subd. 2(a), further defines the term Afarming@ in the context of its family farm legislation, as Athe production of (1) agricultural products; (2) livestock or livestock products; (3) milk or milk products; or (4) fruit or other horticultural products.@

It is undisputed that the employer=s business operations in this case were not the production of agricultural products, milk or milk products, fruit or other horticultural products. The question becomes whether the employer=s operations were those of the production of livestock or livestock products. Accepting the compensation judge=s factual findings, the business of Caille Farm was essentially one of providing riding instruction and horse training for riding shows and recreational riding, and not one of breeding, raising and selling horses as livestock. The appellants urge that we consider testimony from Caille Farm=s president that she had intended that the business would eventually develop into one focusing more on horse breeding and sales. We note, however, that the compensation judge found, and the evidence fully supports, that the business was not, either at the time of injury or hearing, significantly engaged in breeding or raising horses for sale.

The appellants argue that for the purposes of the workers=compensation exclusion, the term Afarming@ should be given a somewhat broader definition than that given in Minn.Stat.'500.24, subd. 2(a). They contend that the activities of Caille Farm logically fall within the definition of the term Afarming@ in common parlance, and that the employee=s duties, which they characterize as managing or tending livestock, must be deemed those of a farm laborer. They rely on language in Tucker v. Newman, 217 Minn. 473, 14 N.W.2d 767, 771, 13 W.C.D. 202, 209 (1944), where our supreme court noted that the term Afarm labor@ ordinarily connotes Athe tilling of the soil, its products, and the raising and caring for such domestic animals as are usually found in those surroundings.@ (Emphasis added). The appellants note that horses are domestic animals traditionally found on and associated with farms. Thus, they contend, training and caring for horses on rural homesteaded property must be deemed the business of a family farm under our statute.

This argument confuses the court=s comments on the kinds of activities which typically might be performed by a farm laborer with the question of what constitutes farming for purposes of the family farm exclusion. Minnesota cases, including Tucker, have always drawn a distinction between labor performed in association with an agricultural enterprise, and that performed as part of some other commercial activity, regardless whether the work performed is of a type commonly performed by a farm laborer. Thus, for example, in Klein v. McCleary, 154 Minn. 498, 192 N.W. 106, 1 W.C.D. 254 (1923), an employee was injured while clearing several acres of land on which the employer intended to plant potatoes and garden vegetables to reduce the costs of the meals provided at the employer=s summer resort business. While noting that the activity of clearing land for cultivation was one typically considered farm labor, the court nonetheless held the employee covered by the workers= compensation act, noting that Athe work of clearing the land was in furtherance of the business of the landowner as the proprietor of a summer resort, and not in furtherance of the business of a farmer.@ It is not solely the nature of the specific tasks performed, but the purposes for which they are performed that distinguishes farming from other business activities.

In the present case, the employer was not in the business of breeding or raising livestock. The employer=s business was one of providing highly specialized horse and rider training for horses kept not for the performance of farm or ranch work or as livestock but, essentially, as companion animals for sport and recreation^[3]. That an employer running such a business might feed, groom and house the horses used for the business does not, in our view, require we hold that business to have been a Afarm operation.@ Similarly, we would be disinclined to conclude that agriculture as traditionally defined would include the mere operation of a boarding or a livery stable. Even if we were to so conclude, we note that the compensation judge here found that the stabling of horses on Caille Farm was performed merely as an adjunct to the provision of horse training services or riding instruction.

In Tucker, supra, 14 N.W.2d at 772, our supreme court cautioned against over-inclusive application of the farm laborer exemption, the precursor to the current family farm exemption:

Although it is the policy of the legislature to exempt farm labor from the Workmen=s Compensation Act, we should not extend that policy by such a broad interpretation of the term as to include independent and separate commercial enterprises clearly not intended to be within the meaning of Afarm labor@.

(citation omitted). In Meyering, supra, 383 N.W.2d 670, 38 W.C.D. 482, the supreme court examined the history of the legislative changes to this exemption leading to our current statute and concluded that their purpose was simply to narrow the application of the exemption further, Ato limit the exclusion only to those small family farm operators who minimally employ help for cash wages.@ It is accordingly clear that the court=s caution to avoid extending the application of the earlier exemption statute remains applicable to our current law. We will not extend the family farm exemption to include the business of training horses and riders for recreational and show riding, which we conclude constitutes an independent and separate commercial enterprise not clearly intended to fall within the meaning of Afarm operations.@

We further agree with the compensation judge that the employee in this case, who was hired as a trainer and riding instructor, was not a farm laborer. It has long been the rule in Minnesota that whether an employee is a farm laborer is determined by the whole character of the employment. E.g., Nelson v. Harder Royal Breeders, Inc., 290 Minn. 302, 187 N.W.2d 634, 25 W.C.D. 409 (1971). The employee in the present case was principally employed to train horses for the Dressage style of recreational riding and to give riding lessons. Any other duties she performed were sporadic and incidental. We fail to see any direct agricultural purpose in her employment under the facts of the present case.^[4] ATo be considered a farm laborer, an individual must perform chores typically considered part of operating a farm and must perform those chores on a farm.@ Wurst v. Freindschuh, 517 N.W.2d 53,55 (Minn.App. 1994). We conclude that neither of these elements was met here.

The employee testified that she was working part time both for the Minneapolis Department of Parks and Recreation and for the Nokomis Shoe Shop during all or part of the period from July 12, 2002, to August 21, 2002. The compensation judge apparently overlooked this testimony and awarded temporary total disability compensation for this period. The Fund appeals.

In her brief, the employee concedes that she was ineligible for temporary total disability compensation during this period. Noting that she worked about the same hours for the Minneapolis Department of Parks and Recreation before and after leaving the job with Caille Farm, she contends that the calculation of temporary partial disability compensation would result in an award in about the same dollar amount as temporary total disability compensation. Accordingly, she requests that this court merely amend the compensation judge=s findings and order to simply characterize the award for this period as temporary partial disability.

The employee=s argument overlooks the additional earnings with the Nokomis Shoe Shop, where the employee apparently was not employed while working for Caille Farm. In addition, given the seasonal nature of the employment with the Minneapolis Department of Parks and Recreation, it is by no means clear to us that the calculation of temporary partial benefits would be as straightforward as the employee suggests. No specific wage evidence was submitted for any of the employee=s jobs, including that with the employer, Caille Farm, the parties having merely stipulated that the employee=s wages in that employment were less than $8,000.00 and entitled her to temporary total disability benefits at the statutory minimum rate of $136.00. Instead, the parties and the compensation judge focused principally on the issue of whether the injury was one excluded from the workers= compensation act, and largely overlooked the specific details of the employee=s wage loss during this period.

The record does not contain sufficient evidence on which to determine the employee=s eligibility for temporary partial disability during this period, or in what amount. Accordingly, we vacate the award of temporary total disability compensation for this period.

^[1] Minn.Stat.'176.011, subd. 11a(1) defines a family farm as a farm operation paying less than $8000 in cash wages to farm laborers. The parties had stipulated merely that the employer paid less than $8,000 in cash wages to the employee. We noted that the statute and case law clearly required that the wages paid to all of an employer=s farm laborers be added together to determine if the $8,000 cap has been exceeded.

^[2] As the appellant and cross-appellant have expressly adopted the same position in arguing this issue, we have used Aappellants@ here in reference to both.

^[3] Our legislature has explicitly made a distinction between horses used for agricultural purposes and those bred, kept, cared for or controlled for purposes of enjoyment as Acompanion animals.@ See generally the Pet and Companion Animal Welfare Act, Minn.Stat. ''346.35-346.44.

^[4] The appellants cite a Nebraska case, Leppert v. Parker, 352 N.W.2d 180 (1984), for the proposition that horse training should be held to be farm labor. Leppert is clearly distinguishable, as the employer was a large farming and ranching operation with 22 quarter sections of land, 750 cattle and 50 horses, and the employee=s principal duties were grooming and feeding the horses, cleaning their stalls, and assisting with horse breeding. The court also noted that Ait is the nature of the employer=s business which determines the exemption, and not the work performed by the employee.@ Id at 352.