Brendel Construction, Inc. v. North Dakota Workforce Safety & Insurance, 011221 NDSC, 20200161

Docket Nº20200161
Opinion JudgeJensen, Chief Justice.
Party NameBrendel Construction, Inc., Appellant and Cross-Appellee v. North Dakota Workforce Safety & Insurance, Appellee and Cross-Appellant
AttorneyLawrence E. King (argued) and Alyssa L. Lovas (on brief), Bismarck, ND, for appellant and cross-appellee. Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, ND for appellee and cross-appellant.
Judge PanelJon J. Jensen, C.J., Lisa Fair McEvers, Jerod E. Tufte Crothers, Justice, concurring in part and dissenting in part. Daniel J. Crothers, Gerald W.VandeWalle
Case DateJanuary 12, 2021
CourtSupreme Court of North Dakota

2021 ND 3

Brendel Construction, Inc., Appellant and Cross-Appellee

v.

North Dakota Workforce Safety & Insurance, Appellee and Cross-Appellant

No. 20200161

Supreme Court of North Dakota

January 12, 2021

Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable Pamela A. Nesvig, Judge.

Lawrence E. King (argued) and Alyssa L. Lovas (on brief), Bismarck, ND, for appellant and cross-appellee.

Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, ND for appellee and cross-appellant.

OPINION

Jensen, Chief Justice.

[¶1] Brendel Construction appeals from a district court judgment affirming an administrative law judge's (ALJ) decision to hold Brendel Construction liable for unpaid workers compensation premiums and penalties attributed to a subcontractor's account and determining Randy Brendel was personally liable for unpaid workers compensation premiums. North Dakota Workforce Safety and Insurance (WSI) cross-appeals the district court's order dismissing WSI's cross-appeal from the decision of the ALJ as untimely filed. We affirm the imposition of liability against Brendel Construction for unpaid workers compensation premiums and penalties, and affirm the imposition of liability against Randy Brendel. We reverse and remand the dismissal of WSI's cross-appeal as untimely filed.

I

[¶2] In August 2017, WSI identified Brendel Construction as the general contractor for a roofing project in Bismarck where crew members were reported to be working without fall protection. WSI's investigation of the report regarding the lack of fall protection expanded into an investigation of workers compensation coverage. WSI ultimately concluded that two of Brendel Construction's subcontractors, Alfredo Frias and Daniel Alvidrez, were uninsured and not providing North Dakota workers compensation coverage for their employees. WSI requested, but did not receive, information from Brendel Construction regarding the subcontractors' income.

[¶3] WSI sent Alvidrez and Frias Notices of Decision by regular mail which identified them as employers who required insurance coverage in North Dakota. WSI also sent Brendel Construction and Randy Brendel the Notice of Decision regarding both subcontractors. The subcontractors did not respond to the notices. In the absence of information to confirm the subcontractors' income, WSI calculated the premiums due from Alvidrez and Frias using the wage cap method provided in N.D.C.C. § 65-04-19(3). Because WSI was unable to secure service of the required pleadings on the subcontractors, WSI's collection actions against the subcontractors were unsuccessful.

II

[¶4] In August 2018, WSI issued an administrative order assessing the liability of Brendel Construction and Randy Brendel, personally, for the unpaid premiums and penalties assessed against Alvidrez and Frias. On October 17, 2019, following an administrative hearing, an ALJ determined the following: it affirmed WSI's decision holding Brendel Construction liable as a general contractor for Frias' unpaid premiums and ordered payment of $44, 574.40; it affirmed WSI's decision to hold Randy Brendel personally liable for the unpaid workers compensation premiums; and it reversed WSI's decision holding Brendel Construction liable for Alvidrez's unpaid premiums.

[¶5] Brendel Construction filed a petition for reconsideration of the ALJ's decision to impose liability on Brendel Construction for Frias' unpaid premiums and the amount of the premiums. Additionally, in the event the imposition of liability against Brendel Construction was appropriate, Brendel Construction requested reconsideration of the imposition of personal liability against Randy Brendel. WSI did not file a petition for reconsideration of the decision rejecting the imposition of liability for Alvidrez. The ALJ denied the petition for reconsideration on November 19, 2019.

[¶6] Brendel Construction appealed the ALJ's determination of liability for Frias' premiums to the district court. WSI cross-appealed the ALJ's decision to not hold Brendel Construction liable for Alvidrez's premiums.

[¶7] WSI's cross-appeal was filed more than thirty days after the ALJ's October 17, 2019 decision, but within thirty days of the ALJ's November 19, 2019 decision denying Brendel Construction's request for reconsideration. Brendel Construction moved to dismiss WSI's cross-appeal asserting it was untimely because, in the absence of a request for reconsideration, WSI's appeal was required to be filed within thirty days after the ALJ's October 17, 2019 decision. The court dismissed WSI's cross-appeal as being untimely.

[¶8] The district court affirmed the ALJ's decision holding Brendel Construction liable for Frias' unpaid workers compensation premiums and WSI's calculation of premiums and penalties. The court also affirmed the imposition of liability against Randy Brendel.

[¶9] On appeal, Brendel Construction argues the imposition of liability for Frias' unpaid premiums and penalties on Brendel Construction and Randy Brendel is erroneous and the method used by WSI to calculate the premiums is a misapplication of the law. On cross-appeal, WSI argues the court erred in dismissing its cross-appeal on the basis the appeal was untimely filed.

III

[¶10] Our limited review of a decision of an administrative agency is governed by the Administrative Agencies Practice Act, N.D.C.C. ch. 28-32. Bishop v. N.D. Workforce Safety & Ins., 2012 ND 217, ¶ 5, 823 N.W.2d 257. This Court reviews the decision of the ALJ and not that of the district court. Beam v. N.D. Workforce Safety & Ins. Fund, 2020 ND 168, ¶ 13, 946 N.W.2d 486;

see also N.D.C.C. § 28-32-49. This Court must affirm an order of an administrative agency unless: 1. The order is not in accordance with the law.

2. The order is in violation of the constitutional rights of the appellant.

3. The provisions of this chapter have not been complied with in the proceedings before the agency.

4. The rules or procedure of the agency have not afforded the appellant a fair hearing.

5. The findings of fact made by the agency are not supported by a preponderance of the evidence.

6. The conclusions of law and order of the agency are not supported by its findings of fact.

7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.

8. The conclusions of law and order of the agency do not sufficiently explain the agency's rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.

N.D.C.C §§ 28-32-46 and 28-32-49.

[¶11] This Court has stated: When reviewing an appeal from a final order issued by an independent ALJ, courts apply the same deferential standard of review to the ALJ's factual findings as used for agency decisions. Recognizing the ALJ had the opportunity to observe witnesses and the responsibility to assess the credibility of witnesses and resolve conflicts in the evidence, in reviewing the ALJ's findings of fact we do not make independent findings or substitute our judgment for that of the ALJ; we determine only whether a reasoning mind reasonably could have determined the findings were proven by the weight of the evidence from the entire record. We do not, however, give deference to an independent ALJ's legal conclusions, and questions of law are fully reviewable on appeal.

Beam, 2020 ND 168, ¶ 14, 946 N.W.2d 486 (internal citations and quotations omitted).

IV

[¶12] Individuals employed by a subcontractor may be deemed to be the employees of a general contractor, and the general contractor may be held liable for any unpaid premiums and penalties associated with the subcontractor's failure to secure insurance coverage for those employees. N.D.C.C. § 65-04-26.2(1). Brendel Construction challenges the ALJ's findings of fact that Frias was a subcontractor of Brendel Construction; the employees of Frias could be deemed to be employees of Brendel Construction; and the resulting imposition of liability against Brendel Construction for unpaid premiums and penalties determined to be owed by Frias.

[¶13] As findings of fact, we review the record to determine whether those findings are supported by a preponderance of the evidence. In reviewing the findings, we consider whether a reasoning mind reasonably could have determined the findings were proven by the weight of the evidence from the entire record.

[¶14] Based on our review of the record in this case, WSI presented evidence that Randy Brendel did not deny knowing Frias during a telephone conversation with a WSI representative. There were Occupational Safety and Health Administration ("OSHA") reports which referenced Frias as Brendel Construction's subcontractor. Randy Brendel sent information to OSHA regarding Frias in October 2016, and OSHA documents confirmed Brendel Construction was the general contractor and Frias was a subcontractor on the same job.

[¶15] In April 2017, OSHA inspected a worksite in Bismarck. OSHA records showed Frias obtained the bid on the project through Brendel Construction, and Randy Brendel admitted that particular project was subcontracted. In a second OSHA inspection report, Frias was identified as the employer on the construction site located on 35th Street in Bismarck, North Dakota, with the notation that "[t]he owner, Alfredo Frias, obtained the bid on the project through Brendel Construction."

[¶16] Brendel Construction argues that there is a lack of evidence showing an employer-employee relationship with Frias because there are no checks payable to Frias by Brendel Construction. However, OSHA documents show Brendel Construction used a "pay-by-cash" system with Frias which...

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