Edward Endres appeals from the compensation judge’s decision denying his claim for workers’ compensation benefits from the Minnesota Workers’ Compensation Assigned Risk Plan on grounds that Endres was the de facto owner of the business and did not elect coverage, and on grounds of equitable estoppel.  We affirm the denial of coverage.

In May of 2002, Lisa Johnson executed articles of incorporation and associated documents for a business called Endson, Inc., doing business as Pizza Man, a pizza delivery franchise.  Johnson and Edward Endres subsequently ran Endson’s Pizza Man store located in Farmington, with Endres acting as manager.  Johnson testified that she was working full time at another job but that, despite her other employment, she was actively involved in the business and that she and Endres made most decisions jointly, “all decisions from where we’re going to order, what employees we were going to hire, what type of advertising we were going to use.”

The documents related to formation of the corporation list Johnson as the incorporator, sole shareholder, and only executive officer of Endson.  Johnson testified that she gave Endres the authority to sign contracts on behalf of Endson, including insurance contracts, but that Endres did not have authority to set salaries or grant raises.  Endson also owned a Pizza Man in Rosemount, which was at some point sold.  There is no evidence as to Endres’s involvement, if any, with the Rosemount franchise.

Payroll records indicate that Endres’s remuneration from the Pizza Man operation varied substantially over the years, and payment was often made on an irregular basis.  During the first several years, there were sometimes gaps of weeks or months between paychecks.  In fact, during 2002, Endres apparently received no payment at all from Endson; in all of 2003, he apparently grossed only $2,492.31.  Endres testified that the Farmington Pizza Man employed between 5 and 12 workers and that he was the only full-time employee.  No evidence was offered as to what the other workers earned, how often they were paid, or why Endres was paid so sporadically.

When starting business, Endson sought workers’ compensation insurance coverage through David Hoschette, an independent insurance agent.  Johnson executed an insurance application, prepared by Hoschette, for coverage from the Minnesota Workers’ Compensation Assigned Risk Plan [Assigned Risk].  The 2002 application indicated that Johnson was the “owner,” with “100%” ownership, that the business had been purchased from “3 Way, Inc. DBA Pizza Man” within the past three years, and that the total remuneration for the business was $54,000.  Johnson testified that, after receiving an explanation about exclusions from workers’ compensation coverage, she decided not to elect coverage for herself.  The application indicated that the business was located in Rosemount.  Johnson signed the application in a blank for the signature of the “Sole Proprietor, Partner, or Officer.”

Endson’s workers’ compensation coverage through Assigned Risk subsequently lapsed several times due to nonpayment of the insurance premium.  At some point during one such lapse, Hoschette asked Keith Stanton, an associate in his insurance agency, to investigate other insurance coverage options, and, on January 5, 2004, Stanton forwarded an e-mail to Hoschette from another insurer indicating, among other things, that that insurer would require “a signed workers’ compensation exclusion form from the owner, Ed Endres.”  Hoschette testified that he must have told Stanton that Endres owned Pizza Man.  However, Hoschette also testified that he had never been told by Johnson, Endres, or anyone else that Endres was in fact the owner.

In April of 2004, another application for workers’ compensation insurance with Assigned Risk was completed.  This application contained information that was different from the prior application in several respects, in that it listed the Farmington store address, listed a different business telephone number, was based on total remuneration of $47,000, and designated “Ed Endres” as the “owner,” with “100%” ownership.  Endres signed the application in a blank indicating that he was the “Sole Proprietor, Partner, or Officer” of the company.  As was the case with the original application for insurance signed by Johnson in 2002, no elections of coverage were made in the section dealing with insurance coverage for otherwise excluded persons.  Hoschette testified that he had prepared the application and did not know why he had listed Endres as the owner of the business.

Two subsequent applications for insurance were completed following policy cancellations for nonpayment, one in January of 2005, the other in May of 2006.  The January 2005 application indicated that Endson employed six employees and paid total remuneration of $47,000; the May 2006 application did not specify the number of employees and listed total remuneration of $53,000.  Both applications again listed Endres as “owner,” with “100%” ownership, and Endres again signed both applications over a signature line specifying that he was the “Sole Proprietor, Partner, or Officer.”  And, again, no elections of coverage were made on either form.  Endres testified that all of the applications that he had signed were brought to him for signature by Hoschette during busy periods at the restaurant, that he (Endres) had never read the applications before signing, and that he did not know that he was listed as the owner of the business.

With respect to the total remuneration figures listed on the applications, Hoschette testified that he must have been given those figures by Endres or Johnson as he would not have supplied or estimated payroll himself.  However, both Endres and Johnson denied having supplied the payroll information for any of the insurance applications, also claiming that they did not know whether those figures were accurate.

By about the middle of 2006, Endres’s pay had become somewhat more regular, with checks often issued at two-week intervals, in the amount of $800.00, gross, per check.  Then, in late December of 2006, three $7,000 checks were issued to Endres.  Endres testified that those three checks represented bonuses; however, Johnson testified that bonuses were never paid.  In any event, beginning in January of 2007, Endres’s pay rose from $800.00 to $1,538.46; however, some of these checks were issued in other than biweekly intervals.^[1]  In June of 2007, Endres’s pay rose to $2,038.46, then, in July, rose again, to $2,307.69.  The interval between checks remained at least somewhat irregular, and, on November 13, 2007, Endres apparently received two checks for $2,307.69.  Finally, in January of 2008, Endres’s paycheck increased yet again, to $2,692.31.

On February 5, 2008, Endres fell at work, fracturing his ankle.  The record from his hospital evaluation on that date states, in the social history portion, that Endres “owns some restaurants.”  A record from his examination by a different health care provider on February 7, 2008, two days later, similarly indicates that Endres “owns his own restaurant.”  Endres testified that he never told physicians that he owned a restaurant or restaurants, explaining that, with respect to the hospital record, the person recording the case history must have been confused by a comment made by a friend who had accompanied Endres to the hospital.

On June 18, 2008, Endres and Johnson executed a purchase agreement, transferring Johnson’s shares in Endson to Endres for the sum of $6,000.  Endres testified that it had always been his plan to buy the business and that Johnson had given him the right of first refusal in the event of a sale.  Endres also testified that he had asked to buy the business in 2005 or 2006 but that Johnson had wanted too much money for it at that time.  Endres had a two-year degree in business and had managed or owned other businesses in the past.

Endres claimed entitlement to workers’ compensation benefits as a result of his February 5, 2008, injury, and Assigned Risk denied liability, claiming that Endres was excluded from coverage as an owner of the business, because he had not elected coverage.  When the matter came on for hearing on November 13, 2008, Assigned Risk contended, in addition, that Endres should be estopped from claiming coverage based on representations made by Endres as to ownership of Endson.  The parties stipulated that Endres’s weekly wage on the date of injury was $1,346.15, that Endson qualified as a closely held corporation, having at all relevant times less than 10 shareholders, and that Endson had less than 22,880 hours of payroll.  Endres claimed, however, that he never had any ownership interest in Endson through the date of his injury, that he had never been an executive officer of Endson up through that date, and that his alleged representations to the contrary, on the insurance forms, were the result of a mistake.

In a decision issued on December 11, 2008, the compensation judge concluded that Endres was the de facto owner of the business on the date of injury and that, because Endres had not elected coverage, his injury was not compensable.  The judge further concluded that, even if Endres was “not the owner of the business, in law or in fact,” his claim was precluded by the doctrine of equitable estoppel.  Endres appeals.

On appeal, the Workers' Compensation Court of Appeals must determine whether "the 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 (2008).  Substantial evidence supports the findings if, in the context of the entire record, "they 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, "unless 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).

"[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers' Compensation Court of Appeals] may consider de novo."  Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).

The sole issue in this case is whether Endres is entitled to workers’ compensation benefits under the policy issued by Assigned Risk.  The relevant statute, Minn. Stat. § 176.041, provides, in part, as follows:

In the present case, it is undisputed that the articles of incorporation and related documents for Endson, Inc., a closely held corporation within the meaning of the statute, designate Lisa Johnson as the sole shareholder and the sole executive officer of the corporation.  However, other documents in evidence - - specifically, three applications for workers’ compensation insurance coverage - - indicate that Edward Endres owned 100% of Endson, Inc.  After considering the documentary evidence and also the testimony of Johnson, Endres, and insurance agent Hoschette, the compensation judge concluded, in part, that Endres was the de facto owner of Endson and that, because he had not elected workers’ compensation coverage, his injury was not compensable.

“De facto” is defined as “[a]ctual, existing in fact; having effect even though not formally or legally recognized.”  Black’s Law Dictionary 427 (7th ed. 1999).  Leaving aside, for the moment, the legal consequences of “de facto ownership” for election of coverage purposes, the record amply supports the compensation judge’s conclusion that Endres was a “de facto” owner of Endson on the date of his injury.

Again, as previously noted, Endres signed three applications for workers’ compensation insurance that indicated that he was 100% owner of the corporation.  He also signed three related insurance premium financing agreements.  The e-mail in evidence from Hoschette’s insurance agency designates Endres as the owner, for whom election of coverage would be required, and two medical records related to Endres’s treatment for his injury indicate that he had represented himself as owning his “own restaurant.”  Furthermore, Hoschette dealt almost exclusively with Endres on insurance matters, testifying that he met Johnson only once.

Also, importantly, Endres’s pay was, as the compensation judge observed, much more indicative of ownership than employee status.  Endres apparently received no pay whatsoever for full-time work through the end of 2002 and then just under $2,500, gross, for the entire 2003 calendar year.  He also received only three checks during 2004, $800 gross, or less, per check, and thereafter his pay continued to be somewhat irregular, sometimes with long gaps between payments and then sometimes more frequently than every two weeks.  Moreover, at the end of 2006, he received three $7,000 checks, in two days.

We acknowledge that Endres, Johnson, and Hoschette all offered testimony to refute the allegation that Endres had any ownership interest in Endson.  However, the compensation judge expressly indicated that he “did not find any of the witnesses to be particularly credible.”  Given this record, the judge’s credibility assessment is understandable.  As the compensation judge put it, Hoschette “conveniently could not remember” many pertinent events,^[3] and none of the witnesses was able to offer any logical explanation for how the insurance applications came to include the allegedly “mistaken” information or for other relevant facts, such as Endres’s unusual compensation structure.

In conclusion on the issue of de facto ownership, the compensation judge explained that

While the record easily supports the judge’s decision as to de facto ownership, the question remains as to how that finding affects Endres’s rights and Assigned Risk’s liabilities under the workers’ compensation act.  “De facto ownership” is not designated as an excluded employment under Minn. Stat. § 176.041, and this court has held that an employer denying a claim based on the statutory exclusions from coverage has the burden of proving that all of the elements for exclusion have been satisfied.  Field v. Fiberich Technologies, 51 W.C.D. 325 (W.C.C.A. 1994).^[4]  For example, this court has approved a determination that coverage existed for a part owner of a corporation where that owner did not hold executive office in the corporation as required by Minn. Stat. § 176.041.  See, e.g., Anderson v. Bagley Maintenance, Inc., slip op. (W.C.C.A. Nov. 25, 1988).  However, whether or not de facto ownership would by itself be sufficient to deny Endres workers’ compensation coverage here, we cannot conclude that the judge erred in denying coverage on equitable estoppel grounds.

Estoppel is an equitable doctrine “intended to prevent a party from taking unconscionable advantage of his own wrong by asserting his strict legal rights.”  Northern Petrochemical Co. v. United States Fire Ins. Co., 277 N.W.2d 408, 410 (Minn. 1979).  Its application may be appropriate where the party against whom estoppel is sought made inducements that were relied upon to the harm of the party seeking the estoppel.  Sandnas v. Iron Range Lumber, Inc., 52 W.C.D. 392 (W.C.C.A. 1994).  Estoppel may be appropriate even where there was no affirmative intent to deceive, Pincombe v. Miketin Boarding Home, slip op. (W.C.C.A. Sept. 23, 1999), citing Lofgren v. Pieper Farms, 540 N.W.2d 834, 53 W.C.D. 464 (Minn. 1995), and whether equitable estoppel should apply is generally a question for the trier of fact, see Pincombe, id.; Clay v. America Residential Mortgage Corp., 58 W.C.D. 629 (W.C.C.A. 1998).  At a minimum, there must be a showing that the party being estopped made a misrepresentation of material fact on which the party seeking estoppel reasonably relied to its detriment.  Howe v. Zippy Distrib. Co., 39 W.C.D. 732 (W.C.C.A. 1987).

In the present case, Endres signed three applications for workers’ compensation insurance coverage, each of which designated him as “100%” owner, and his signature appeared over a line for “Signature of Sole Proprietor, Partner or Officer.”  The forms all clearly specified that coverage would not be provided for persons otherwise excluded from coverage under the workers’ compensation act, including sole proprietors, partners, and certain executive officers of closely held corporations, unless an election of coverage was made.  No election was made for any individual, including either Johnson or Endres.  Furthermore, the record reasonably supports the compensation judge’s conclusion that Endres’s compensation was not included in the total remuneration figure used to calculate the insurance premium, in that Endres’s weekly wage on the date of injury was $1,346.15, or nearly $70,000 annually, and the total remuneration figure listed on the applicable insurance application was $53,000.^[5]  Assigned Risk relied, to its detriment, on Endres’s representations by issuing an insurance policy for a premium that did not include the de facto owner’s compensation.

Endres argues that equitable estoppel cannot apply to bar his claim because “equitable estoppel is not an exclusion found within the . . . list of exclusions found in Minn. Stat. § 176.041.”  However, equitable estoppel is not, to our knowledge, mentioned anywhere in the workers’ compensation act, yet the doctrine has nevertheless been applied in other workers’ compensation cases.  In fact, in Moss v. Pat’s Constr. Co., slip op. (W.C.C.A. Oct. 9, 1989), this court applied estoppel to bar a claim for an injury to the spouse of an executive officer who did not meet the statutory criteria for exclusion.^[6]

This is an unusual case, and the particular facts of the case - - and the judge’s reasonable inferences therefrom - - are crucial to our decision.  Endres had previous business experience, had owned his own business in the past, and had procured worker’s compensation insurance for that business.  He behaved as if he had an ownership interest in Endson, he held himself out to others, on at least two occasions, as owner of the restaurant, he signed three insurance applications clearly indicating that he was the “100%” owner of Endson, and it was he, not Johnson, with whom the independent insurance agent had virtually all contact.  Endres received little or no pay when the business was starting up, what pay he received thereafter was irregular, and then, after the business became established, his compensation increased substantially and included several unexplained large year-end checks.  Furthermore, and importantly, the insurance applications he signed did not include his compensation in the total remuneration figure supplied to the insurer for premium calculation.  Finally, none of the three witnesses at hearing - - not Endres, not Johnson, and not Hoschette - - offered any credible explanation for what happened here.  Under these very specific circumstances, the compensation judge reasonably concluded that Endres was the de facto owner of the company and that his claim for benefits was barred by equitable estoppel.  We therefore affirm that decision.