RONALD BRUCE YANTIS v. DAVID HALL and VICTOR HALL, d/b/a HALL & HALL CONSTRUCTION CO.; OLD REPUBLIC INSURANCE COMPANY; IRENE STEEN, Administrative Law Judge; and WORKERS' COMPENSATION BOARD AND DAVID HALL and VICTOR HALL, d/b/a HALL & HALL CONSTRUCTION CO.; and OLD REPUBLIC INSURANCE COMPANY V. RONALD BRUCE YANTIS; IRENE STEEN, Administrative Law Judge; and WORKERS' COMPENSATION BOARD
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RENDERED: April 16, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1997-CA-003111-WC
RONALD BRUCE YANTIS
v.
APPELLANT
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS' COMPENSATION BOARD
CLAIM NO. WC-94-43148
DAVID HALL and VICTOR HALL, d/b/a
HALL & HALL CONSTRUCTION CO.;
OLD REPUBLIC INSURANCE COMPANY;
IRENE STEEN, Administrative
Law Judge; and
WORKERS' COMPENSATION BOARD
AND:
NO. 1997-CA-003314-WC
DAVID HALL and VICTOR HALL, d/b/a
HALL & HALL CONSTRUCTION CO.; and
OLD REPUBLIC INSURANCE COMPANY
v.
APPELLEES
CROSS-APPELLANTS
CROSS-PETITION FOR REVIEW OF A DECISION
OF THE WORKERS' COMPENSATION BOARD
CLAIM NO. WC-94-43148
RONALD BRUCE YANTIS;
IRENE STEEN, Administrative
Law Judge; and
WORKERS' COMPENSATION BOARD
CROSS-APPELLEES
OPINION
VACATING AND REMANDING NO. 1997-CA-OO3111-WC
AND
DISMISSING NO. 1997-CA-003314-WX
** ** ** ** ** ** **
BEFORE:
BUCKINGHAM, GUIDUGLI and HUDDLESTON, Judges.
HUDDLESTON, Judge.
The issue we are called upon to decide is
whether the Administrative Law Judge erred when she determined that
Ronald
Bruce
employee"
of
Yantis
David
was
not
a
"loaned
Hall
and
Victor
servant"
Hall,
d/b/a
or
Hall
"special
&
Hall
Construction Co. (Hall), on September 1, 1994, when he fell from
the roof of a house under construction and was seriously injured,
resulting in a finding by the ALJ that he is totally occupationally
disabled, and whether the Workers' Compensation Board erred in
affirming the ALJ's decision.
Hall and its insurer, Old Republic
Insurance Company, have filed a protective cross-appeal.
Yantis was employed by Thomas Hamilton, doing business as
Silverton Hill Farm, as a general farm laborer on Hamilton's 750acre farm and two other farms.
as a "jack-of-all-trades."
Yantis was described by the Board
He fed cattle and dogs, assisted with
the building of farm roads and small bridges, cut and put up hay,
and, occasionally, assisted in building barns and repairing roofs.
Yantis has a limited education and is unable to read or write.
In 1993, Hamilton orally contracted with Hall to build a
large house on property adjacent to his farm.
Hamilton agreed to
pay Victor and David Hall $20.00 per hour for their labor and to
2
pay Hall's employee expenses.
Hall was to furnish all required
tools and pay its own liability insurance premiums, while Hamilton
agreed
to
reimburse
Hall
for
workers'
compensation
premiums paid for coverage for Hall's employees.
insurance
In addition, it
was agreed that Hamilton would make several of his farm employees
available to work on the house when their services were not
otherwise being utilized to carry out farm-related tasks.
During the summer of 1994, Yantis devoted from 60% to 80%
of his time1 to the construction of the house, with the balance
devoted to farm work.
Yantis was paid directly by Hamilton for his
work on the house as well as for his farm work, but while at the
construction site took his orders from David Hall.
Hamilton
retained ultimate control over Yantis, instructing him when he was
to report to the construction site and when he was to engage in
farm work, and he alone had the power to discharge Yantis.
Yantis' injury occurred on September 1, 1994, while he
was assisting David Hall in the construction of the roof of the
house.
While holding a chalk line, Yantis stepped backward into a
chimney hole normally covered by plywood and fell two stories onto
a concrete basement floor.
As a result of the fall, Yantis
sustained multiple facial fractures, a cervical cord contusion,
1
Yantis testified that he spent approximately 70% to 80% of
his time working at the construction site. Hamilton, on the other
hand, testified that Yantis spent approximately 60% of his time
working on the house. In any event, Yantis was instructed that his
first priority was his farm-related duties.
3
fractures to the thoracic discs at the T2, T3 and T4 levels, and a
fracture of the right patella. Following an administrative hearing
before the ALJ, Yantis settled his workers' compensation claim
against Hamilton for $50,000.00, reserving his right to proceed
against Hall.
The Board held that Hall was not a "statutory employer"
under the loaned employee doctrine2 because there was not an
implied contract for hire between Yantis and Hall Construction.
The Board said that "[al]though it is not necessary for a contract
of hire to be in writing, all of the elementary ingredients of a
contract must be present."
Moreover,
the
most
basic
requirement[,]
that
is,
a
meeting of the minds, is simply not present under the
factual
circumstances
in
this
case.
Yantis
never
intended to become employed by or enter into a contract
of hire with Hall . . . [and Hall] never intended or
considered Yantis as one of its employees.
The Board, however, determined that Yantis satisfied the other
essential criteria of the loaned employee doctrine.3
issue
on
appeal
is
whether
the
Board
and
the
ALJ
The only
correctly
determined that there was not an implied contract of hire between
2
Referred
doctrine.
to
in
earlier
cases
3
as
the
"loaned
servant"
That determination, challenged in Hall's cross-appeal, will
be addressed in due course.
4
Yantis and Hall.
We believe, contrary to the ALJ's opinion and the
Board's decision, that the record compels such a finding.
It has long been recognized under Kentucky workers'
compensation law that whenever a general employer sends a worker to
assist
a
special
employer
that
worker
employee" of the special employer.
may
become
a
"loaned
In such cases, the special
employer becomes the "statutory employer" within the meaning of Ky.
Rev. Stat. (KRS) 342.700.
See Allied Machinery, Inc. v. Wilson,
Ky. App., 673 S.W.2d 728 (1984).
See also United Engineers and
Constructors, Inc. v. Branham, Ky., 550 S.W.2d 540 (1977); Rice v.
Conley, Ky., 414 S.W.2d 138 (1967); Wright v. Cane Run Petroleum
Co., 262 Ky. 251, 90 S.W.2d 36 (1935); and Brown v. Tennessee Gas
Pipeline Co., 623 F.2d 450 (6th Cir. 1980).
For the "loaned
employee" doctrine to apply, a three-pronged test must be met.
must be shown that:
It
(1) the worker has an express or implied
contract of hire with the special employer; (2) the work being done
is essentially that of the special employer; and (3) the special
employer has a right to control the details of the work.
Allied
Machinery, 673 S.W.2d at 730 (citations omitted).
The record before us reveals that the three-pronged test
has been met.
First, although Yantis and Hall did not formally
agree to enter into an employer-employee relationship, Yantis
unquestionably knew that he was to work under Hall's direction and
control, and he assented to that arrangement by regularly appearing
at the job site and carrying out the work he was assigned to do by
5
Hall.
This is sufficient to established an implied contract of
employment between Yantis and Hall.
As this Court said in Allied
Machinery, 673 S.W.2d at 731:
While earlier cases have attempted to narrow the
scope of employer immunity by focusing the contract
relationship between the employee and the employer whose
work was being done at that time (Rice, supra), more
recent cases have effectively broadened its scope by
focusing on who had the right to control the details of
the work at the time of the injury. See United Engineers
and Constructors, Inc. v. Branham, [supra]; Brown v.
Tennessee Gas Pipeline Co., [supra].
Indeed, Justice Palmore, expressing the opinion of
a unanimous court in Branham, stated that "the main
dispositive criterion" is the alleged principal/master's
right to control the details of the work at the time of
the injurious event.
There is no question but that Yantis performed work for
Hall Construction under the immediate direction and control of
David Hall and that he was performing Hall's work.
There is a
clear implication of assent by Hall Construction and Yantis to the
establishment an employer-employee relationship.
See Louisville &
N. R. Co. v. Pendleton's Adm'r, 126 Ky. 605, 104 S.W. 382, 385
(1907). The fact that Hamilton retained the ability to direct
6
Yantis when to work for Hall Construction is not a dispositive
factor.
In all cases, the general employer maintains the ability
to direct the employee when to work for the special employer.
A
contract of hire can be implied from the fact that the employee
assented to the directions given by one other than his general
employer.
In Branham, supra, a tort action was filed against the
general contractor of a construction project.
The plaintiff,
Branham, was a member of a crane operating crew leased to the
general
contractor
operator.
along
with
a
crane
by
a
heavy
equipment
Branham and the other member of the crane's operating
crew were in charge of the crane.
At the time of the injury, the
general contractor, United, had assigned some its employees to
assist the crane's operating crew in lowering the gantry of the
crane.
Branham
was
injured
while
disassembling
the
gantry.
Branham collected workers' compensation benefits from the heavy
equipment company and then pursued a tort claim against the general
contractor, contending that its employees' negligence caused his
injuries.
The Supreme Court held that United was immune from tort
liability under the "contractor-under" statute.
Significant to
this case, however, was the Court's separate holding that United's
employees were lent employees of the crane crew while helping to
lower the gantry, and that United was immune from tort liability on
that basis.
lowering
the
Id. at 547.
gantry
was
The Court noted that the "procedure of
peculiarly
7
within
the
province
and
expertise of the [heavy equipment company's] crew." Id.
The Court
said that "the employees of United whose negligence is said to have
caused the accident were assisting the crane crew in work for which
the crane crew was responsible and, in the performance of that
particular work, were under the supervision of the crane crew
alone, and not of [United's foreman] or United."
Id. at 541.
The
Court determined that United's employees had an implied contract of
hire with the heavy equipment company through their assent to the
directions of the crane crew.
This Court relied on Branham in Allied Machinery, supra,
a case which involved a tort claim filed by an employee of a coal
company against Allied Machinery, a repair company.
The employee,
Wilson, was required by his employer to aid the repair company's
mechanic at which time he was injured.
Wilson collected workers'
compensation benefits from the coal company and then brought a
negligence action against Allied.
The Court held that Wilson was
a "loaned employee" of Allied's:
Wilson's testimony reflects his knowledge of and assent
to working under the direction of Allied's mechanic.
Repair of the damage caused by the broken hydraulic pump
was essentially the work of Allied.
The . . . employees
were taking orders from Allied's mechanic during the days
it took to repair the truck.
criteria were met.
8
We find that Larson's
Allied Machinery, 673 S.W.2d at 730.
Notably, the dissent argued that because Wilson had
"absolutely no opportunity to exert or assert a real choice in this
matter," there could be no implied contract of hire.
Id. at 732.
In the present case, the Board adopted a similar argument when it
stated in its holding that "there was no informed consent by Yantis
to become an employee of Hall Construction."
employee is faced with a Hobson's choice.4
In most cases an
An employee can either
obey his employer's direction to work for the special employer, or
refuse
and,
terminated.
more
than
likely
than
not,
find
his
employment
Thus, in most cases, the employee does not have a real
choice in the matter.
The Board relied on Rice v. Conley, supra, to support its
determination that there was no implied contract of hire between
Yantis and Hall.
Rice does not control the present case.
As noted
in Allied Machinery, supra, earlier cases, such as Rice, attempted
to narrow the scope of employer immunity by focusing on the
contract relationship between the employee and the special employer
at the time of the injury.
Recent cases such as Branham, supra,
and Brown v. Tennessee Gas Pipeline Co., supra, focus on who had
the right to control the details of the work at the time of the
4
Hobson's choice is an apparently free choice that offers no
real alternative.
[After Thomas Hobson (1544-1631), English
liveryman, from his requirement that customers take either the
horse nearest the stable door or none.
The American Heritage
Dictionary 615 (1985).]
9
injury. Justice Palmore, writing for a unanimous court in Branham,
said
that
"the
main
dispositive
criterion
is
whether
it
is
understood that the alleged principal or master has the right to
control the details of the work" at the time of the injury.
Branham, 550 S.W.2d at 543.
Thus, a contract of hire can be
inferred from the employee's acceptance of the special employer's
control and direction.
Arthur Larson and Lex Larson, Larson's
Workers' Compensation §48.15 (1998).
See generally 82 Am. Jur. 2d
Workers' Compensation § 231 (1994).
In the instant case, the ALJ determined that Yantis was
under the direction and control of Hall Construction while working
at the construction site.
There is clear evidence that Yantis
assented to work for Hall Construction.
David Hall instructed
Yantis to clean the job site, hand workers lumber, perform general
labor, including driving nails, all of which work was essentially
that of Hall Construction.
As a result of Yantis' submission to
Hall's direction and control, and Hall's acceptance of him to do
its work, an implied contract of hire between Yantis and Hall
existed.
See Louisville & N .R. Co. v. Pendleton's Adm'r, supra.
Yantis, in fact, worked as a dual employee of both
Hamilton and Hall.
Larson describes dual employment as follows:
Dual employment occurs when a single employee, under
contract with two employers, and under the separate
control of each, performs services for the most part for
each employer separately, and when the service for each
10
employer is largely unrelated to that for the other.
In
such a case, the employers may be liable for workers'
compensation separately or jointly, depending on the
severability of the employee's activity at the time of
the injury.
Larson,
supra,
§48.40.
This
"dual
employment
concept
was
recognized as long ago as 1935 by Kentucky's highest court in
Wright v. Cane Run Petroleum Co., 262 Ky. 251, 90 S.W.2d 36 (1935):
The
general
employer
who
carries
on
a
hazardous
employment is liable under the Workmen's Compensation Law
for injuries sustained or death incurred by his employees
arising out of and in the course of their employment,
although
at
the
time
they
were
direction of the general employer.
working
under
the
In such case, the
employer who directs his servant to work for another is
regarded in law as the general employer, and the one for
whom he works is a special employer, and the relation of
employer
and
employee,
between both of them.
exclusive
control
of
in
the
circumstances,
exists
If the employee is under the
the
special
employer
in
the
performance of work which is a part of his business, he
is, for the time being, his employee; yet at the same
time, he is the employee of the general employer, as well
as the employee of the special employer.
11
And he may,
under the common law of master and servant, look to the
former for his wages and to the latter for damages for
negligent injuries; so under the Workmen's Compensation
Act he "may so far as its provisions are applicable, look
to one or the other, or to both, for compensation for
injuries for occupational hazards."
Id., 90 S.W.2d at 39 (citations omitted).
Quoted with approval in
Marc Blackburn Brick Co. v. Yates, Ky., 424 S.W.2d 814, 818
(1968).5
Yantis while under the direction and control of Hall
sustained his injury.
Hall is, therefore, Yantis' "statutory
employer" under both the loaned employee and the dual employee
doctrines.
For these reasons, in Appeal No. 1997-CA-003111-WC the
Board's decision is vacated and this case is remanded to the
Administrative
Law
Judge
with
consistent with this decision.
directions
to
make
an
award
The workers' compensation benefits
heretofore paid to Yantis by Hamilton shall be credited to any
award adjudged to be due from Hall.
Cross-appeal No. 1997-003314-
WX is dismissed.
ALL CONCUR.
5
Hamilton is not a party to this appeal. Hence, we are not
called on to decide whether Hamilton or Hall has primary
responsibility for the payment of workers' compensation benefits to
Yantis.
12
BRIEF FOR APPELLANT/
CROSS-APPELLEE:
BRIEF FOR APPELLEES/
CROSS-APPELLANTS:
Joseph H. Mattingly III
JOSEPH H. MATTINGLY III, P.S.C.
Lebanon, Kentucky
Dawn S. Logsdon
VIMONT & WILLS PLLC
Lexington, Kentucky
13
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