Estate of Wesolowski v. Industrial Com'n of Arizona, s. 1
| Decision Date | 03 March 1998 |
| Docket Number | Nos. 1,CA-IC,s. 1 |
| Citation | 965 P.2d 60,192 Ariz. 326 |
| Parties | , 264 Ariz. Adv. Rep. 7 ESTATE OF Adolph WESOLOWSKI, Mary Downing-Mollere, Personal Representative, Petitioner Employer, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Robert Clem, Respondent Employee, Adolph Wesolowski & Barbara Wesolowski, dba Worldwide Artifacts, Respondent Employer, Special Fund Division/No Insurance Section, Respondent Party in Interest. NO INSURANCE SECTION/SPECIAL FUND SECTION, Petitioner, Party in Interest, v. The INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Robert G. Clem, Respondent Employee, Adolph Wesolowski, dba Worldwide Artifacts, Respondent Employer, Estate of Adolph J. Wesolowski, M. Downing-Mollere, Personal Representative, Respondent Employer, Barbara Wesolowski, Respondent Employer. 97-0006, 1 97-0009. |
| Court | Arizona Court of Appeals |
¶1 When Adolph J. Wesolowski died, Robert G. Clem, an existing household employee, was retained in employment by Wesolowski's estate to maintain the residence and put it in condition to be sold. During the time Clem performed household maintenance for Wesolowski, Wesolowski was not obliged to provide him workers' compensation coverage; employers of "domestic servants" are exempt from the obligation faced by most employers to provide workers' compensation coverage for their employees. See Ariz.Rev.Stat. Ann. ("A.R.S.") § 23-902(A) (1995 & Supp.1997). The dispositive question in this proceeding is whether the estate was entitled to the "domestic servant" exemption when it employed Clem to continue to maintain the residence and prepare it for sale.
¶2 On July 19, 1994, Claimant Robert G. Clem was engaged in maintenance on the roof of a house when he descended to answer a telephone call, slipped from the ladder to the ground, and sustained the injury that gives rise to these proceedings. From September 1992 until March 1994, Clem had been employed by Adolph J. Wesolowski, the owner, to maintain and repair the house in exchange for lodging and an hourly wage. Clem also provided occasional services for Worldwide Artifacts, a business that Adolph Wesolowski operated from the house; these services included answering business telephone calls.
¶3 Adolph J. Wesolowski died on March 14, 1994. Barbara Wesolowski, his widow, testified that she had been married to Adolph less than three years, that they had a prenuptial agreement, and that she had "no interest in any of the estate or [in] Worldwide Artifacts." She believed that all of Adolph's assets went into the estate after his death.
¶4 The house needed considerable work before it could be sold. Accordingly, in April 1994, Adolph's "heirs" 1 and Barbara engaged Clem in a written agreement providing that he would paint the house for a specified sum, payable "when there is an account established from which to pay the estate's obligations," and that, in exchange for performing maintenance and security services, Clem could continue to live at the house until it was sold. Clem was performing this agreement when he fell.
¶5 In a timely Workman's Report of Injury, Clem claimed that he was injured while working for either the Wesolowski estate or Worldwide Artifacts. Because both were uninsured, the Special Fund Division of the Industrial Commission processed the claim. See generally A.R.S. § 23-907(B) (1995 & Supp.1997).
¶6 The Special Fund denied compensability on behalf of the estate, Mary Downing-Mollere, personal representative, and on behalf of an entity that it designated as Adolph and Barbara Wesolowski, husband and wife, dba Worldwide Artifacts. Clem protested these denials, and the Industrial Commission, after conducting hearings, accepted Clem's claim against the estate and dismissed his claim against Adolph Wesolowski, dba Worldwide Artifacts, and Barbara Wesolowski. 2 After exhausting the administrative review process, the Special Fund and the estate petitioned for appellate review. 3
¶7 We first consider the Special Fund's assertion that, because Clem filed a probate claim in superior court against the estate, his workers' compensation claim is jurisdictionally barred by A.R.S. § 23-1024(B) (1995). We find instead that the Special Fund has waived this non-jurisdictional affirmative defense by failing to assert it at a timely stage of Commission proceedings.
¶8 In the course of the hearings before the Commission, the Special Fund's counsel elicited testimony from Mary Downing-Mollere, the estate's personal representative, to the effect that Clem had "filed a homeowner's claim for his injuries against the estate." An injured employee of an uninsured employer may sue the employer or file a workers' compensation claim. See A.R.S. § 23-907(A)-(B). But if the employee "exercises any option to institute a proceeding in court against his employer," the employee "waives any right to compensation." A.R.S. § 23-1024(B).
¶9 When the Special Fund's counsel presented evidence about Clem's probate claim, he was not asserting the defense of preemption pursuant to A.R.S. § 23-1024(B). Instead, counsel represented that his purpose was to establish Clem's bias towards Ms. Downing-Mollere. At no time before the hearings concluded did the Special Fund assert that Clem's probate claim had triggered a preemption pursuant to A.R.S. § 23-1024(B). Indeed, though twice during the hearings the ALJ reviewed the scope of the issues with all counsel, on neither occasion did the Special Fund assert the issue of preemption. Preemption was not asserted until after the ALJ had issued her post-hearing award. Then, in requesting administrative review, the Special Fund moved to dismiss, invoking A.R.S. § 23-1024(B) and attaching exhibits to document Clem's probate claim against the estate. Clem objected to the introduction of post-hearing evidence, and the ALJ sustained the objection and affirmed the award.
¶10 This ruling was correct. Section 23-1024(B) provides an "election of remedies defense." See Spear v. Industrial Comm'n, 114 Ariz. 601, 603-05, 562 P.2d 1099, 1101-03 (App.1977). The defense is lost if not asserted before an award for a compensable claim is entered. Id. at 603, 562 P.2d at 1101. Election of remedies is similarly treated in other areas of law. See 28A C.J.S. Election of Remedies § 31, at 670 (1996) ().
¶11 The Special Fund waived § 23-1024(B) as an affirmative defense by neglecting to raise it during the hearing process. See Spear, 114 Ariz. at 603-05, 562 P.2d at 1101-03; cf. Magma Copper Co. v. Industrial Comm'n, 139 Ariz. 38, 45-49, 676 P.2d 1096, 1103-07 (1983) ().
¶12 The Special Fund asserts that, because Ms. Downing-Mollere signed the April 1994 employment contract as an heir rather than as personal representative of the estate, the estate was not a party to the contract. We disagree. Although Ms. Downing-Mollere testified that she signed the contract only as an heir and denied that she held herself out to be the personal representative, her testimony was contradicted by Clem. Clem's testimony was corroborated by the testimony of Barbara Wesolowski, who was present for the signing. Clem's testimony was also bolstered by the contract's identification of the house as an asset of the estate and by the contract's promise to pay Clem from the assets of the estate. The ALJ had discretion to resolve credibility issues, and expressly did so in Clem's favor. We defer to the ALJ's credibility finding.
¶13 The Special Fund points out that Ms. Downing-Mollere's appointment as personal representative had not yet been accomplished when she signed the April 1994 agreement; she was not formally appointed personal representative until June 1994. By statute, however, a personal representative's powers
relate back in time to give acts by the person appointed which are beneficial to the estate occurring prior to appointment the same effect as those occurring thereafter.... A personal representative may ratify and accept acts on behalf of the estate done by others where the acts would have been proper for a personal representative.
A.R.S. § 14-3701 (1995). Clem's maintenance of the house was clearly intended at the time of signing to benefit the estate, Ms. Downing-Mollere's appointment as personal representative was pending, and Ms. Downing-Mollere held herself out to be signing as the personal representative of the estate. We conclude that, even though Ms. Downing-Mollere had not yet achieved that formal status in April 1994, she bound the estate as a party to the April 1994 agreement with Mr. Clem.
¶14 We next consider the argument that Clem's employment by the estate was not subject to the Workers' Compensation Act because Clem was a casual employee and because the estate was a nonbusiness entity incapable of employing anyone "in the usual course of business." The Special Fund derives this argument from A.R.S. § 23-901(5), which defines a covered "employee" as
(b) Every person in the service of any employer subject to the provisions of this chapter, including aliens and minors legally or illegally permitted to work for hire, but not including a person whose employment...
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