JUNE CHALMERS v. STEPHEN J. SWARTZ M.D.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

JUNE CHALMERS and FRED

CHALMERS,

Plaintiffs-Appellants,

v.

STEPHEN J. SWARTZ, M.D.,

Defendant-Respondent.

________________________________________

October 8, 2013

Argued September 24, 2013 Decided

Before Judges Reisner, Ostrer and Carroll.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-669-11.

Kevin L. Parsons argued the cause for appellants (Gill & Chamas, attorneys; Mr. Parsons, of counsel and on the brief).

James S. Raban argued the cause for respondent (Gold, Albanese & Barletti, attorneys; Robert Francis Gold, of counsel; Mr. Raban, on the brief).

PER CURIAM

June Chalmers (plaintiff) and her husband appeal from a November 16, 2012 order granting summary judgment dismissing their complaint against defendant Stephen J. Swartz, M.D. We affirm the grant of summary judgment, and remand for the limited purpose of transferring the case to the Division of Workers' Compensation.

I

Plaintiff worked at a medical office, providing cleaning services.1 According to plaintiff, while taking out the garbage on August 20, 2010, she fell on a discarded piece of pipe in a dark area at the rear of the medical building. She did not immediately report the accident or the serious infection that apparently developed thereafter. However, on February 4, 2011, she filed a lawsuit for personal injuries against Dr. Stephen Swartz (Stephen), who with his father, Dr. Harry Swartz (Harry), had his medical practice in the building. Plaintiff claimed that she was solely employed by Harry. She sued Stephen because he owned the building where the medical offices were located, and she claimed he was negligent in maintaining the premises.

The following facts were undisputed. Harry began practicing medicine in the building in 1958. Stephen began practicing there in 1987. Plaintiff and her sister-in-law were hired to clean the office in 2004. They worked on alternate weeks, Monday through Friday; each week, one of the women would clean the entire building. Plaintiff conceded that both doctors worked on the premises. She testified that she did not know how much time Stephen spent there, or what his role was in the medical practice, because she arrived to clean the offices at night after the employees had left and had no interaction with Stephen.2

According to Stephen's deposition testimony, he usually spent ten hours a day treating patients at a local hospital, and then spent several more hours in the evenings seeing patients at the medical building. He and Harry both testified that they practiced medicine together, paying all of the expenses of the practice from a joint checking account. In 2006, Harry transferred ownership of the building to Stephen for a token payment of ten dollars. However, both doctors testified that Harry continued to maintain the building, because he was "handy."3 They both attested that Stephen did not charge rent to Harry or to the practice, there was no lease, and they paid jointly for the upkeep of the premises.

Plaintiff testified that Harry hired her and was the one who gave her direction in performing her job. Harry's name was on her W-2 forms. He also signed her paychecks. However, the checks were written on Harry and Stephen's joint checking account. Both of their names appeared on the paychecks.

At the time the accident occurred, the medical practice was covered by a policy of workers' compensation naming Harry and Stephen as the policy holders. The employee notice that accompanied the policy listed Harry and Stephen as the employers. The workers' compensation policy listed the same taxpayer identification number as the W-2 form. The premiums were paid from the doctors' joint checking account.

The same checking account was used to pay for a "business owners" liability policy, covering the medical office. The policy listed Harry and Stephen, and their wives, as the insureds. The policy described the "form of business" as a "medical office" and a "partnership." Harry and Stephen admitted in discovery that there were no partnership documents, although they both attested that they practiced medicine together.

At their depositions, both doctors described a medical practice marked by informality. They both testified that they had many geriatric patients. If the patients were not ambulatory, the doctors would sometimes go outside and examine the patients while they were seated in their cars in the office parking lot.

The depositions of two other employees, both of whom had worked at the practice for decades, are also somewhat informative. Each employee indicated that she performed a general medical office function, such as greeting patients or bringing them into the examining rooms. Neither woman testified that she performed this function only for one or the other of the two doctors. Further, Karen Conte, the medical assistant, confirmed that in the 1980's Stephen "came in to work with his father." [emphasis added]. Likewise, Vicki Conte testified that Stephen began "practicing with his father" around 1984. Clearly, however characterized for legal purposes, the two doctors were working together in the medical practice.

Defendant moved for summary judgment, citing the bar of the Workers' Compensation Act, N.J.S.A. 34:15-8. The trial judge initially denied the motion, primarily because the W-2 form listed Harry as the employer. However, she invited defendant to file a reconsideration motion, because she found the parties' motion briefs inadequate.4

On reconsideration, the judge granted the motion, based on the totality of the circumstances. She accepted as true that Harry directed plaintiff's work, and that his name was on the W-2 form, but found those facts not dispositive. She noted that many businesses had a managing partner, and that did not mean that the business's other executives or partners were not protected by the workers' compensation bar. The judge considered it most significant that plaintiff was paid by checks drawn on a joint checking account with both doctors' names on it, and that the liability and workers' compensation insurance policies were in both their names. She also considered unrebutted evidence that Stephen worked at the medical practice. She reasoned that his status would also shield him under the workers' compensation bar against suing fellow employees.

II

A.

In considering this appeal, we begin by briefly addressing plaintiff's procedural issues. First, she argues that the trial court should not have considered defendant's reconsideration motion. We cannot agree. Trial courts have inherent discretionary authority to reconsider their own interlocutory orders. Lombardi v. Masso, 207 N.J. 517, 534 (2011). In this case, the trial judge invited defendant to file a reconsideration motion, because she wanted to consider further briefing on the significance of the W-2 forms. We find no abuse of the judge's discretion in reconsidering her decision.

Plaintiff also contends that defendant unfairly surprised her by allegedly waiting until after discovery was nearly complete and the mandatory arbitration was over before raising the workers' compensation bar as an issue. That argument is not supported by the record. Defendant raised the workers' compensation bar in his answer to the complaint. Moreover, it is clear from the motion record, including the deposition transcripts, that both sides were well aware that the workers' compensation bar was an issue in the case. This argument requires no further discussion. R. 2:11-3(e)(1)(E).

B.

We next turn to the summary judgment motion, and the law concerning plaintiff's employment status. We review a trial court's grant of summary judgment de novo, considering the evidence in the light most favorable to the non-moving party. See Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010).

In deciding a motion for summary judgment, the trial court must determine whether the evidence, when viewed in a light most favorable to the non-moving party, would permit a rational fact-finder to resolve the dispute in the non-moving party's favor. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The trial court cannot decide issues of fact but must decide whether there are any such issues of fact. Ibid.; R. 4:46-2(c). Our review of a trial court's summary judgment decision is de novo, applying the Brill standard. Prudential Property Ins. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

[Agurto v. Guhr, 381 N.J. Super. 519, 525 (App. Div. 2005).]

Having reviewed the record, we conclude that even viewed most favorably to plaintiff, the evidence supported the grant of summary judgment for defendant.

With exceptions not relevant here, the workers' compensation statute precludes an employee from filing a negligence lawsuit against her employer. N.J.S.A. 34:15-8. "[T]he term 'employee' . . . is to be defined liberally in order to bring as many cases as possible within the scope of the Workers' Compensation Act so that the cost of industrial accidents may be passed along as part of the cost of the product or service provided." Santos v. Std. Havens, 225 N.J. Super. 16, 25 (App. Div. 1988). That rule applies "'not only when the injured person seeks its protection, but when [she] attempts to have [herself] excluded from the coverage of the act.'" Id. at 25-26 (quoting Rutherford v. Modern Transp. Co., 128 N.J. Super. 504, 511 (Law Div. 1974)). The undisputed facts must be evaluated in light of those principles.

On this appeal, there is no dispute that plaintiff was an employee, as opposed to an independent contractor. The issue is whether she was a joint employee of both doctors who practiced at the medical building, or whether she was only an employee of Harry. As a result, cases such as Poppe v. Taxation Division Director, 6 N.J. Tax 108 (Tax. 1983), which plaintiff cites, are not particularly helpful. Poppe considered the issuance of a W-2 form as an indication that the plaintiff was an employee. However, the issue was not whose employee he was, but whether he was an independent contractor. Here, plaintiff argues that she was only Harry's employee, because his name was on the W-2 forms. But, there is no dispute that the wages reflected on the W-2 were paid from Harry and Stephen's joint checking account.

Both sides cite Kalnas v. Layne of New York Co., 173 N.J. Super. 492 (App. Div. 1980), in support of their respective contentions that plaintiff was or was not Stephen's employee. Kalnas is not directly on point. That case concerned two clearly separate corporations, each having a separate workforce, that entered into a joint venture to fulfill a public construction contract. The court distinguished a partnership, whose employees are presumed to be the employees of all of the partners, from a joint venture, in which the employment relationship turns on a number of factors including how the joint venture is to be performed. Id. at 497-98.

In Kalnas, the court determined that the two corporations intended to perform separate portions of the job at separate times, and hence there was insufficient evidence that the plaintiff, who was an employee of one corporation, was also an employee of the other for purposes of the workers' compensation bar. Id. at 498. The court reviewed at some length the factors relevant to an employment relationship, in the context of a joint venture:

[W]henever there is a dispute as to whether there is in fact an employment relationship encompassed by the act, and particularly where the circumstances of the relationship depart from traditional modes, the resolution of the question requires a factual analysis of all of the indicia of the relationship in order to determine if it is truly that of master-servant. And in order to constitute such a relationship, it must be characterized by such elements as the employer's supervisory power, his right to control the activities of the employee, his right to terminate the relationship, his payment to the employee of regular wages for services, and his provision of tools and equipment and facilities.

Thus, it is clear that while the joint venturers themselves are, inter se, essentially partners, that partnership characterization does not necessarily and for all purposes determine either the relationship of each of the joint venturers to the employees of the others nor of the joint venture as an entity to the joint venturers' employees. Whether each joint venturer can be deemed the employer of all the employees engaged in the work of the joint enterprise must clearly depend on the particular facts and circumstances surrounding the joint venture. This is especially so where, as here, each joint venturer comes to the joint venture with his own work force. . . . Clearly, depending on how the joint venturers have agreed to perform the joint enterprise and have actually performed it, their respective employees may remain their own or may for purposes of the joint enterprise become each others as well and therefore also become the employees of the joint venture as a separate entity.

[Id. at 497-98.]

Because a joint venture is typically entered into for a limited, frequently one-time purpose, those principles have limited applicability here, beyond a general instruction to consider the totality of the circumstances.

The decision of this case is somewhat hampered by the apparent informality with which Stephen and Harry conducted their medical practice, and by the parties' failure to seek or produce financial records pertaining to the practice. However, assuming the practice did not function as a partnership, we find relevant the concept of joint employment, as described in Domanoski v. Borough of Fanwood, 237 N.J. Super. 452 (App. Div. 1989):

It is well settled in this jurisdiction that for workers' compensation purposes an employee may be simultaneously employed by more than one employer, either because of the employee's separate contracting with multiple employers or because his general employer has "lent" him to a special employer. The question to be determined in the dual employment situation is whether, at the time of the injury, the petitioner was, as a factual matter, the employee of one or the other or both of the employers.

In determining which among multiple employers are liable for workers' compensation, this court has noted the indicia of employment that ordinarily require evaluation, including the existence of a separate agreement between the employee and each employer, the determination of whose work is being done at the time of the compensable injury, which has the right to control the details of the work, which pays, and which has the power to hire, discharge or recall the employee. The relative weight to be accorded these factors and the manner in which they are to be balanced are not, however, . . . subject to mechanical or automatic application. Rather, the criteria determinative of the employment relationship must be "rationalized and applied so that each case may be considered and determined upon its own particular facts." And, . . . in the dual employment situation, the most significant inquiry is the determination of "whose interest the employee was furthering at the time of the accident."

[Id. at 455-56 (emphasis added) (citations omitted).]

The court concluded that an off-duty police officer, injured while working as a supermarket security guard, with the town's permission, was a joint employee of the town and the supermarket. Id. at 457. The court found he "was serving the public interest as well as a private one." Ibid. Hence, both employers were obligated to share the expense of providing him with workers' compensation benefits. We conclude that Domanoski is on point here.

In this case, a commonsense view of the undisputed facts yields the conclusion that plaintiff was the employee of both doctors in the medical practice. She was paid from a joint checking account in the names of both doctors. She was covered by a workers' compensation policy in the names of both doctors. The policy, including the employee notification poster, listed both doctors as her employers. See Scott v. Pub. Serv. Interstate Transp. Co., 6 N.J. Super. 226, 229 (App. Div. 1950) (holding that "[w]here the employee is entitled to compensation benefits from both employers, he is barred from maintaining a common law negligence action against either of them"). Plaintiff's work served the purposes of both doctors, because she cleaned the entire building in which the medical practice was located, as opposed to limiting her cleaning services to Harry's work space. Even if Harry directed plaintiff's work, there is no dispute on this record that she performed her work for the benefit of both Harry and Stephen, and they both paid for her work. See id. at 229-30; Domanoski, supra, 237 N.J. Super. at 456.

As we noted in Hall v. Fanticone, 322 N.J. Super. 302, 307 (App. Div. 1999), "a 'joint employment' can arise 'simply because of the joint character of the business arrangement between the two employers.'" (quoting 1C Arthur Larson, The Law of Workmen's Compensation 48.43 at 8-522 (1990)). Both doctors submitted unrebutted certifications attesting that theirs was a joint medical practice, in which they shared all the expenses of the practice and shared the authority to make employment and other management decisions. Although Stephen owned the building, Harry had transferred it to him for nominal consideration in 2006. Stephen attested that there was no lease, he did not charge rent, and Harry took care of most of the maintenance chores because he was "handy." Plaintiff could have, but did not, seek financial or other document discovery aimed at rebutting any of defendant's contentions. We conclude plaintiff was a joint employee of Harry and Stephen. See Hall, supra, 322 N.J. Super. at 307; Cser v. Silverman, 46 N.J. Super. 599, 601-02 (Cty. Ct. 1957).

Plaintiff's position, that she must be considered solely Harry's employee, is inconsistent with the record and with the presumption of employment applicable to workers' compensation claims. If, instead of falling outside the building, plaintiff had injured herself while cleaning Stephen's office, he could not have successfully defended against a workers' compensation claim on the grounds that she was not his employee. Given the liberal construction of the term "employee," in favor of providing workers' compensation benefits, plaintiff would have prevailed on that issue. We conclude that the same analysis applies here, where plaintiff is seeking to avoid application of the workers' compensation bar. See Santos, supra, 225 N.J. Super. at 25-26. Considering this record, viewed in light of the applicable law, no reasonable trier of fact could find that plaintiff was not Stephen's employee for purposes of the Workers' Compensation Act. Hence, she is barred from suing Stephen in negligence for the August 2010 accident.

C.

For the first time on appeal, plaintiff, citing Townsend v. Great Adventure, 178 N.J. Super. 508 (App. Div. 1981), argues that her case should be transferred to the Division of Workers' Compensation pursuant to Rule 1:13-4(a). The Rule provides, in pertinent part, that

if any court is without jurisdiction of the subject matter of an action or issue therein . . . it shall, on motion or on its own initiative, order the action, with the record and all papers on file, transferred to the proper court, or administrative agency, if any, in the State. The action shall then be proceeded upon as if it had been originally commenced in that court or agency.

[Ibid.]

Defendants argue that Townsend is not on point because, in Townsend, the plaintiff eventually filed a workers' compensation petition, albeit beyond the two-year time limit allowed by the compensation statute. However, Townsend did not turn on whether the plaintiff had filed a workers' compensation petition. Rather it turned on the court's view of the interests of justice, as reflected in Rule 1:13-4(a), which the court invoked sua sponte. Townsend, supra, 178 N.J. Super. at 518 n.2.

The court held that plaintiff's negligence complaint against his employer, Great Adventure, should have been transferred to the Division of Workers' Compensation:

Clearly, [the plaintiff] should have simultaneously filed a petition in the Division of Workers' Compensation since he was alert to the possibility that such a claim might be appropriate. Indeed, if appellant had filed such a petition instead of the Law Division action on August 25, 1977, it unquestionably would have been timely. See N.J.S.A. 34:15-51. Yet there can be no doubt that appellant did file a pleading within two years of the accident seeking to recover from Great Adventure for his injuries. Thus, even though appellant filed in the wrong forum his complaint against Great Adventure should have been transferred, not dismissed. This is particularly true because a dismissal caused his claim to be barred without an adjudication on the merits, certainly a result not to be favored since his claim, though in the wrong forum, was timely brought.

[Id. at 517-18 (footnote omitted).]

Citing Townsend, we ordered the same remedy in Doe v. St. Michael's Medical Center, 184 N.J. Super. 1, 9 (App. Div. 1982).

In defendant's May 23, 2011 interrogatory answers, he indicated that he and his father "gave statements to an investigator retained by the workers' compensation insurance carrier." Consequently, the workers' compensation insurer was on notice of the accident well within the two-year statute of limitations for the filing of a claim petition. See N.J.S.A. 34:15-51. We conclude that, in the interests of justice, pursuant to Rule 1:13-4(a), the case should be transferred to the Division of Workers' Compensation, and we remand this matter

to the Law Division for the limited purpose of entering a transfer order.

Affirmed in part, remanded in part.

1 At her deposition, plaintiff agreed that the building was a "Cape Cod house that's been converted into an office."

2 Her deposition was not entirely consistent with that contention. Plaintiff asserted that the bulb intended to illuminate the garbage disposal area had burned out. At her deposition, counsel asked her if she complained to "Dr. Harry" about the burned out bulb. She said that she did. She was then asked "Besides Dr. Harry did you complain to anyone else, like Dr. Steven or any of the staff about the light bulb of the fixture?" Plaintiff responded: "Both doctors knew. We told both doctors at one point or another." According to plaintiff they both responded, "We'll take care of it."

3 One of the office employees, Karen Conte, confirmed that Harry "does all the maintenance." Another employee testified that Harry built the fence around the garbage area himself.

4 Defendant styled his second motion as a motion for summary judgment, however, it appears clear that it was actually a motion for reconsideration of the judge's initial ruling.