ROBERT KENSEK v. TITAN WALL SYSTEMS

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0820-05T10820-05T1

ROBERT KENSEK,

Petitioner-Appellant,

v.

TITAN WALL SYSTEMS,

Respondent-Respondent,

and

SECOND INJURY FUND,

Respondent-Respondent.

__________________________________

 

Submitted October 3, 2006 - Decided November 6, 2006

Before Judges Lintner and C.L. Miniman.

On appeal from a Final Decision of the Division of Workers' Compensation, Claim Petition Number 1999-32011.

Kenneth H. Wind, attorney for appellant (Mr. Wind, of counsel and on the brief; Allen Safrin, on the brief).

Hack, Piro, O'Day, Merklinger, Wallace & McKenna, attorneys for respondent Titan Wall Systems (Joseph V. Wallace, of counsel and on the brief).

Stuart Rabner, Attorney General, attorney for respondent Commissioner of Labor as Custodian of the Second Injury Fund (Linda Schober, Deputy Attorney General, on the brief).

PER CURIAM

This is an appeal from a dismissal of petitioner Robert Kensek's claim for workers' compensation benefits following trial. The judge of compensation determined that Kensek failed to sustain the burden of proving employment by respondent Titan Wall Systems and, as a consequence, also failed to prove that he was entitled to make a claim against the Second Injury Fund. N.J.S.A. 34:15-95 to -95.5. Kensek contends that he met both the "control test" and the "relative nature of the work test" of employment and that his claim for compensation benefits should not have been dismissed. Because the judge failed to make adequate findings of fact and conclusions of law, we reverse.

Kensek offered the following testimony on October 27, 2004: On July 27, 1999, Kensek was employed by Titan and had begun work at the end of March or the beginning of April 1999. Kensek also owned his own business at the time of his injury, R.E. Kensek & Son Incorporated (Kensek & Son). When Kensek was hired by Titan, he spoke with Neil Lampowder, who did not know that Kensek had his own company. He and Lampowder did not discuss Titan hiring Kensek's company. Titan paid Kensek with a gross check representing Kensek's pay and the pay for two other men Kensek brought to the job. The men were not employees of Kensek's company at the time of this job, although they had worked for it previously.

Kensek testified that the nature of the work was to patch holes, gouges, and nicks in the wall panels supplied by Titan to the worksite. He would go to the trailer in the morning where Titan's superintendent, Butch, would direct him to where Titan wanted him to go. Butch inspected Kensek's work throughout the day. In addition, Stanley Sternchos, from Titan, and his partner instructed Kensek that Titan wanted patching done to the walls before they were lifted from the trailers on to the building. Kensek was required to work from 7:00 a.m. to 3:30 p.m. If he did not work he did not get paid. Titan either supplied the materials with which Kensek worked or reimbursed Kensek for materials he purchased. All of the equipment was also supplied by Titan. Kensek devoted his entire workday to Titan's job and earned no income other than what was being paid to him by Titan.

Kensek's company carried workers' compensation insurance. He understood if he made a claim under his company's policy that his rates would go up. He did not file a claim solely under his company's policy because he was working for Titan at the time of his accident. When his company did a job it would enter into a contract with the other party and would normally provide a certificate of insurance. Here, however, there was no contract between Titan and Kensek's company, and Kensek did not supply Titan with any documents whatsoever that had the name of his company on them.

After Kensek was injured he filled out a W-4 at Sternchos' request "to protect Titan just in case Kensek filed a workers' compensation claim." Kensek associated the signing of the W-4 with the date when he picked up the last check, dated August 24, 1999.

Kensek filed an income tax return for 1999 and included the income from Titan on his personal, but not his business, income tax return. He admitted on cross-examination that, when he previously worked for Titan, he filled out forms for income tax purposes at the beginning of the employment. He did not do so when he began working for Titan this time. He denied having any recollection of whether Titan supplied him with a W-2 or W-4 for 1999. He just took his income from the checks, subtracted how much he gave to the other men, and took the remainder as income for himself. He did not withhold taxes or social security for Edward Kensek and Robert Murphy, the other men that Kensek brought to the job for Titan.

Kensek cancelled his workers' compensation insurance after he was injured in July 1999. He never worked again after that time for anyone. Although the job had not been completed at the time he had his accident, Edward Kensek and Robert Murphy also stopped working. Edward Kensek was petitioner's brother, was not a principal of Kensek & Son, but had worked for petitioner's company about four or five years prior to the October 27, 2004, hearing. Even though he had his own company, Robert Kensek would occasionally work through the union on certain jobs. Edward also worked through the union.

Kensek's company had no regular employees. When Kensek did hire help at his company, he deducted social security and taxes every week and paid his employees individually by check. Robert Murphy also worked on the Titan job. Kensek explained that the difference between employees and non-employees was that he took income tax, social security, unemployment, and other deductions out every week for the people that were employees. Murphy was not Kensek's employee because Murphy wanted to be paid the full amount and be responsible for all the taxes. Kensek testified that he and the two other men were each paid $250 a day. He further testified that he paid all of his social security out of the monies given to him by Titan and also paid his own payroll taxes. Kensek testified that when Lampowder hired him, Lampowder said Titan did not want to be bothered with any payroll paperwork and that he would pay them $250 flat per day.

The judge cross-examined Kensek about the misspelling of his name on the checks from Titan as payable to R.E. Kensel. The judge seemed perplexed that Kensek did not have Titan correct the checks and that Kensek even signed his name Kensel on the back each time. The judge wanted confirmation that Kensek had paid the social security taxes, as he claimed. The judge also wanted the business records and tax returns produced.

Stanley L. Sternchos testified on behalf of Titan, although he was no longer employed by Titan at the time of his testimony. Sternchos ran Titan, which had twenty-five to forty employees in 1999. Kensek came on board with some of his employees to do some patching on the job. Titan did not have people on staff that were skilled in doing these repairs. Kensek would submit various papers with respect to the number of man days that he and his men worked. Sternchos would then have his supervisor, Butch Lombardi, confirm those man days and then Kensek would be paid. There were no deductions made from any of the monies paid to Kensek, nor were any types of tax forms issued to him. According to Sternchos, Kensek wanted to fill out a W-4 form, but one was not issued on his behalf by Titan.

Sternchos testified that he was not aware of a company by the name of Kensek & Son. Lampowder hired Kensek as a subcontractor, not as an employee. Titan Wall Systems purchased all of the materials that Kensek used on the site. In addition, Butch Lombardi told Kensek what areas of the building he was to patch and would direct Kensek to do the work over if the work was not done to Butch's satisfaction.

Most of the work at the job site was done by subcontractors of Titan. Sternchos hired all of the subcontractors and approved the arrangement with Kensek, although he did not personally speak with him about it. Sternchos required proof from all of the subcontractors of their insurance, but did not know if that was requested of Kensek.

On questioning from the judge, Sternchos stated that the other subcontractors were hired on a lump sum contract, and Titan would not normally give those subcontractors 1099's. Sternchos denied any deliberate misspelling of Kensek's name on the checks and, to his knowledge, Titan never sent 1099's to a corporation or a company doing subcontracting work because it was his understanding that 1099's only go to individuals. The judge asked how the government would know Titan had paid money to Kensek when the name on the checks was misspelled. The witness replied that he had no idea.

On May 4, 2005, the judge stated that he did not find the testimony of either witness credible and gave counsel an opportunity to bolster that credibility with documentary evidence respecting the payment of social security, state and federal taxes. That theme pervaded the July 27, 2005, proceeding, which was then continued to September 7, 2005. The judge asked whether Kensek would have been hired if there had been no damage to the walls. The judge stated on September 7, 2005, that he had never received a response to that question.

The judge told Kensek's attorney that he "submitted one witness who has talked in a self-serving conclusory manner which I find to be deceitful period." Then he stated that the attorney for Titan Wall Systems "for some ungodly reason brought in a witness that I also think is deceitful." The judge also pointed out that Kensek had not corroborated any of his testimony about paying taxes and his own social security, which the judge believed was a very easy thing to corroborate. The judge found that Kensek had not submitted enough facts to permit him to conclude that Kensek had met his burden of proof. He stated:

The checks that I reviewed showed major inconsistencies to me in his testimony, and Mr. Sternchos, the same issue. What game these people, Titan Wall Systems and Robert E. Kensek, were running, I have no idea. . . . It does look like and smell like some sort of a scam, whether it's to individuals, whether it's to taxes, whether it's to something else. It does walk like a duck and quack like a duck, but I don't have to get to that issue.

Ultimately, the judge found that Kensek's counsel could not do anything with Kensek, as Kensek appeared to the judge to be deliberately deceitful. The judge, therefore, dismissed the claims.

The judicial role in reviewing decisions of a judge of workers' compensation is restricted to determining

"whether the findings made could reasonably have been reached on sufficient credible evidence present in the record," considering "the proofs as a whole," with due regard to the opportunity of the one who heard the witnesses to judge of their credibility and, in the case of agency review, with due regard also to the agency's expertise where such expertise is a pertinent factor.

[Close v. Kordulak Bros., 44 N.J. 589, 599 (1965) (quoting State v. Johnson, 42 N.J. 146, 162 (1964).]

Accordingly, our function is to determine whether the judge's findings and conclusions "are inconsistent with the evidence and offend the interests of justice." Kertesz v. Korsh, 296 N.J. Super. 146, 151 (App. Div. 1996). In doing so, we must bear in mind that in a workers' compensation case, "it has long been recognized that the Act is remedial social legislation and as such is to be liberally construed so that its beneficent purposes may be accomplished." Squeo v. Comfort Control Corp., 99 N.J. 588, 596 (1985) (citations omitted).

Because this case was decided solely on the credibility of the two witnesses, we begin with the legal precepts governing the judicial function of determining credibility. Testimony must proceed not only from the mouth of a credible witness, but it also must be credible in itself; it must be probable in light of common experience. Eileen T. Quigley, Inc. v. Miller Family Farms, Inc., 266 N.J. Super. 283, 297 (App. Div. 1993). Furthermore,

"the testimony of a competent witness cannot be capriciously rejected. There must appear some good reason for such action, as, for example, that his story was inherently improbable, or that it was contradicted by some other testimony, or by some proven fact or circumstance, or by testimony impeaching his truth and veracity."

[In re Perrone, 5 N.J. 514, 522 (1950) (quoting Baldauf v. Russell, 88 N.J.L. 303, 306 (E. & A. 1915).]

While a judge may disbelieve testimony, he may not disregard it. Twp. of Middletown v. Murdoch, 73 N.J. Super. 511, 523 (App. Div. 1962). Rather, the judge must state his reasons for disbelieving testimony in order to permit a reviewing court to determine whether the judge's discretion was arbitrarily exceeded. Ibid.

In this case the examination of both witnesses by the judge suspiciously probed into issues that were not material to the claim for benefits, such as the misspelling of Kensek's name on the checks, whether Kensek should produce documents to corroborate his undisputed testimony that he paid taxes on the income from Titan and whether Kensek should produce records from his business to corroborate his undisputed testimony that his company had no employees at the time Kensek was working for Titan. Equally immaterial was the issue of whether Titan issued 1099's and whether the government would know that Titan paid money to Kensek when the name on the check was misspelled. The only issue before the judge at the time of trial was the status of Kensek as an employee of Titan, not whether the government received all of the taxes it was due. It was an incorrect exercise of discretion to reject all of both witnesses' testimony because the judge did not credit some of their testimony on an immaterial, collateral issue, and then to conclude that Kensek had not met his burden of proof.

In deciding whether an individual is an employee within the meaning of the Workers' Compensation Act, "the court must bear in mind that the purpose of the Workers' Compensation Act is to pass on the cost of industrial accidents as part of the cost of the product." Smith v. E.T.L. Enterprises, 155 N.J. Super. 343, 349 (App. Div. 1978) (citations omitted).

In the legal analysis of the evidence the judge of compensation on remand shall be guided by the following legal principles. In determining whether an individual is an employee within the provisions of the Act, the court must consider all of the circumstances attendant upon the relationship of the parties. The term "employee" should be given neither a mechanical nor overly restrictive interpretation. Rather, the term must be construed liberally in order to bring as many cases as possible within the coverage of the [A]ct.

[Ibid. (citations omitted).]

We recognized two tests by which the status of an injured claimant could be determined, the "control test" and the "relative nature of the work test." Id. at 350, 352. Without reciting the particulars of those tests, we note that Kensek produced evidence that was relevant to the factors of these tests. We also note that Sternchos corroborated some of the evidence adduced by Kensek and disputed very little of Kensek's evidence. A judge of compensation is required to review the evidence and find the facts and then "must set forth an 'analytical expression of the basis which, applied to the found facts, led to the holdings below.'" Id. at 348 (citing Benjamin Moore & Co. v. Newark, 133 N.J. Super. 427, 428 (App. Div. 1975)). Because the judge failed to make these findings and disbelieved all of the testimony of both witnesses based on matters not material to the issue at hand, we are constrained to reverse and remand for a new trial. Because this judge decided issues of credibility, on remand the matter should be assigned to another judge. R. 1:12-1(d).

Reversed and remanded.

 

The parties had bifurcated some of the issues for trial, undoubtedly to avoid the expense of experts if the court concluded that Kensek was an independent subcontractor.

(continued)

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A-0820-05T1

November 6, 2006