Danuser v. J.A. Thompson and Son, Inc.

• Decision Date: 21 December 1982
• Docket Number: No. 8068,8068
• Citation: 3 Haw.App. 564,655 P.2d 887
• Parties: Richard DANUSER, Claimant-Appellee, v. J.A. THOMPSON AND SON, INC. and Industrial Indemnity Company, Employer, Insurance Carrier-Appellant, and Hi-Way Construction and Contracting and Argonaut Insurance Company, Employer, Insurance Carrier-Appellee, and Special Compensation Fund, Appellee.
• Court: Hawaii Court of Appeals

Page 887

655 P.2d 887

3 Haw.App. 564

Richard DANUSER, Claimant-Appellee, v. J.A. THOMPSON AND SON, INC. and Industrial Indemnity Company, Employer, Insurance Carrier-Appellant and Hi-Way Construction and Contracting and Argonaut Insurance Company, Employer, Insurance Carrier-Appellee and Special Compensation Fund, Appellee.

No. 8068.

Intermediate Court of Appeals of Hawai'i.

Dec. 21, 1982.

Syllabus by the Court

1. A Board determination will not be overturned on appeal unless clearly erroneous, arbitrary, capricious or an abuse of discretion. Hawaii Revised Statutes § 91-14(g) (1976).

2. A finding is clearly erroneous where there is no substantial evidence in the record to support the finding or where the court is left with definite and firm conviction that a mistake has been made.

3. HRS § 386-1 (1976) makes control of the employee the predominant consideration in determining workers' compensation liability between a lending and borrowing employer.

4. "Borrowing" employer may be deemed special employer of "lent" employee if the employee was lent for the purpose of furthering borrowing employer's trade, business, occupation, or profession and control of employee was transferred to borrowing employer.

John A. Roney, Honolulu (Stubenberg & Roney, Honolulu, of counsel), for carrier-appellant.

Jeffrey S. Portnoy, Honolulu (Kristin Brandsma, Honolulu, with him on the brief; Cades, Schutte, Fleming & Wright, Honolulu, of counsel), for employer, insurance carrier-appellee.

Before BURNS, C.J., and HEEN and TANAKA, JJ.

HEEN, Judge.

Employer J.A. Thompson and Son, Inc. and its insurance carrier Industrial Indemnity Co. (collectively Thompson), appeal from the May 1, 1980 decision and order of the Labor and Industrial Relations Appeals Board (Board) which found that Thompson was a special employer of claimant Richard Danuser (Danuser) and was therefore required to pay Workers' Compensation benefits to Danuser. The only issue on appeal is whether the Board erred in that finding. We find no error and affirm.

In 1973, Thompson was engaged, as a general contractor, in the construction of the Interstate Highway H-2 project between Kipapa Gulch and the Waiahole Ditch. The construction required soil to be moved from one area to another in order to level the ground. This was accomplished by use of a Catscraper.

Although Thompson owned several Catscrapers, it had to rent two Catscrapers, together with operators from Hi-Way Transportation and Contracting Co., Ltd. (Hi-Way) in order to complete the project within the contract period. Hi-Way was a construction contractor, but also rented out its equipment and operators. Thompson agreed to pay Hi-Way an hourly rate. Hi-Way maintained the equipment and paid the operators. The operator's hours, pay, vacations, lunch breaks, and other related matters were set by a union contract with Hi-Way. Thompson could not terminate the operators but did have the power to send an operator back and request another if the operator did not produce satisfactory results.

Hi-Way's operators were instructed to report to Thompson's job site beginning in March of 1973. Each day, they, along with Thompson's operators, received general instructions regarding their assignments. They were not instructed as to the basic operation of their Catscrapers. Danuser was one of those operators sent over from Hi-Way.

In April of 1973 Danuser sustained a lower back injury while working on the Thompson project. He filed a workers' compensation claim with the Department of Labor and Industrial Relations. Hi-Way and Thompson disagreed as to who was liable for Danuser's workers' compensation benefits. On June 21, 1978, the Director of the Department of Labor and Industrial Relations issued a Decision and Order holding Thompson solely liable for the payments. Thompson appealed to the Board. On May 1, 1980, the Board issued its Decision and Order finding that Thompson was the special employer of Danuser and holding that Thompson was solely liable. Thompson's motion for reconsideration was denied by the Board. This appeal followed.

Thompson contends that the Board erred in finding that it was the special employer of Danuser and, hence, liable for all of the workers' compensation payments.

The Board's determination will not be overturned on appeal unless the record reveals it to be clearly erroneous, or arbitrary, capricious or an abuse of discretion. HRS § 91-14(g) (1976); Yoshino v. Saga Food Service, 59 Haw. 139, 577 P.2d 787 (1978); De Victoria v. H & K Contractors, 56 Haw. 552, 545 P.2d 692 (1976).

Under the clearly erroneous standard, this court cannot set aside the findings of an administrative agency except where there is not substantial evidence in the record to support those findings or we are left with the definite and firm conviction that a mistake has been made. DeFries v. Association of Owners, 999 Wilder, 57 Haw. 296, 555 P.2d 855 (1976); De Victoria v. H & K Contractors, supra. A review of the record shows substantial evidence and has not left us with the definite and firm conviction that a mistake has been made.

Neither do we find the board's determination to be arbitrary or capricious, Hayes v. Yount, 87 Wash.2d 280, 552 P.2d 1038 (1976); Stempel v. Department of Water Resources, 82 Wash.2d 109, 508 P.2d 166 (1973); Petras v. Arizona State Liquor Board, 129 Ariz. 449, 631 P.2d 1107 (Ariz.App.1981); Dolan v. Rust, 195 Colo. 173, 576 P.2d 560 (1978), or an abuse of discretion, Title Guaranty Escrow Services, Inc. v. Powley, 2 Haw.App. 265, 630 P.2d 642 (1981); Hawaii Automotive Retail Gasoline Dealers Assn., Inc. v. Brodie, 2 Haw.App. 99, 626 P.2d 1173 (1981); GLA Inc. v. Spengler, 1 Haw.App. 647, 623 P.2d 1283 (1981).

Hawaii Revised Statutes (HRS) § 386-1 (1976) defines employee for workers' compensation purposes:

"Employee" means any individual in the employment of another person.

Where an employee is loaned or hired out to another person for the purpose of furthering the other person's trade, business, occupation, or profession, the employee shall, beginning with the time when the control of the employee is transferred to the other person and continuing until the control is returned to the original employer, be deemed to be the employee of the other person regardless of whether he is paid directly by the other person or the original employer.

Under HRS § 386-1, a borrowed employee may be regarded as the employee of the borrowing employer for purposes of workers' compensation benefits notwithstanding the fact that the employee is...