Gonzales v. Mountain States Mut. Cas. Co.

• Decision Date: 04 November 1986
• Docket Number: No. 8855,8855
• Citation: 1986 NMCA 111,105 N.M. 100,728 P.2d 1369
• Parties: , 36 Ed. Law Rep. 476 Dorothy K. GONZALES, Plaintiff-Appellant, v. MOUNTAIN STATES MUTUAL CASUALTY CO., and Penasco Independent Schools, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

Page 1369

728 P.2d 1369

105 N.M. 100, 36 Ed. Law Rep. 476

Dorothy K. GONZALES, Plaintiff-Appellant, v. MOUNTAIN STATES MUTUAL CASUALTY CO., and Penasco Independent Schools, Defendants-Appellees.

No. 8855.

Court of Appeals of New Mexico.

Nov. 4, 1986.

[105 NM 100] James A. Burke, Santa Fe, for plaintiff-appellant.

Peter N. Ives, Campbell & Black, P.A., Santa Fe, for defendants-appellees.

OPINION

GARCIA, Judge.

This is a workmen's compensation appeal involving the computation of the disabled worker's average weekly wage, the denial of prejudgment interest and the award of attorney's fees.

FACTS

Plaintiff was an owner-operator of a school bus and, pursuant to a contract, transported school children for the Penasco Independent School System (defendant). Plaintiff suffered an injury causally related to her employment. As a result, she was found to be totally disabled by the trial court.

The owner-operator transportation contract was based on a detailed and comprehensive formula developed by the State Transportation Department and the Director of Public School Finance, covering various categories and projected expenses. The contract required that plaintiff provide, maintain and operate a bus for a specified number of days and provide transportation for school children over a designated route. In return, plaintiff would receive the total sum of $12,055.71 for the 180 day school year, payable in ten monthly installments.

The contract amount was based on the aggregate amount entered into a production worksheet. The production worksheet breaks down the amounts to be paid to the owner-operator of the bus into seven categories: (a) vehicle depreciation allowance; (b) operation and maintenance; (c) profit on operational revenue; (d) fuel allowance; (e) driver's salary and institute increment; (f) employee benefits; and (g) gross receipts tax.

In fixing plaintiff's average weekly wage, the trial court considered only that portion of plaintiff's contract within the category "driver's salary and institute increment," $4,002.73, paid in ten equal monthly installments. By multiplying that figure by twelve and dividing it by fifty-two, the court determined that plaintiff's average weekly wage was $92.37 and, pursuant to NMSA 1978, Section 52-1-41(A), her disability entitlement was set at $61.58.

During the contract year, plaintiff operated and maintained her bus at a cost far below that provided in the projected expenses and realized a net profit of $3,842.60 over and above her salary and institute increment.

Defendant has no requirement that the funds it allocates for the individual categories be actually spent. Defendant does not monitor the owner-operator's operation and maintenance records nor does defendant require that any specific amount of money be expended for any particular purpose so long as the buses operate according to applicable rules and regulations. In the event operation and maintenance costs exceed the projected expenses contained in the contract, the owner-operator is required to pay all additional expenses without reimbursement. Similarly, defendant testified "[T]he contractor [owner-operator] is paid the set contract amount and I would imagine that if the contractor has lesser expenses than those for which he or she were remunerated by their school district, that they do whatever they want with it." In this case, plaintiff kept the excess profits and utilized them for her own personal benefit. Plaintiff precisely calculated her excess profits and reported them to defendant and to the Internal Revenue Service for tax purposes.

The evidence also indicates that for social security and educational retirement purposes, defendant reported sixty percent, or $7,233.43 as "salary" on plaintiff's personnel forms. Finally, evidence was presented to indicate that for purposes of workmen's compensation premium computations, defendant reported only the driver's salary paid, including institute increments.

ISSUES

(1) Whether the trial court erred in finding that plaintiff's salary for workmen's compensation purposes was $4,002.73;

(2) Whether the trial court abused its discretion in denying plaintiff's request for prejudgment interest; and

(3) Whether the trial court abused its discretion in awarding plaintiff $8,000 as attorney fees.

ANALYSIS

Once the trial court determines that a worker is disabled and entitled to compensation benefits, its task is to determine the worker's average weekly wage. Compensation benefits paid to disabled workers are computed in accordance with the various formulae contained in NMSA 1978, Section 52-1-20. In relevant part, Section 52-1-20(A) defines wages as:

[T]he money rate at which the services rendered are recompensed under the contract of hire in force at the time of the accident, either express or implied, and shall not include gratuities received from employers or others, nor shall it include the amounts deducted by the employer under the contract of hire for materials, supplies, tools and other things furnished and paid for by the employer and necessary for the performance of such contract by the employee, but the term "wages" shall include the reasonable value of board, rent, housing, lodging or any other similar advantages received from the employer, the reasonable value of which shall be fixed and determined from the facts in each particular case[.] [Emphasis added.]

In this appeal, plaintiff contends that the trial court erred in failing to consider other portions of the contract, apart from the driver's salary and institute increment, in calculating her average weekly wage. Specifically, because plaintiff was able to earn excess profits during the contract year and gained an economic advantage, she contends that those profits, or portions thereof, should be included in the calculation. We agree.

The general rule touching on this issue is stated by Larson in his treatise on workmen's compensation. He writes:

In computing actual earnings as the beginning point of wage-basis calculations, there should be included not only wages and salary but any thing of value received as consideration for the work, as, for example, tips and bonuses, and room and board, constituting real economic gain to the employee. A car allowance is includable as wage only if it exceeds actual travel expenses.

2 A. Larson, The Law of Workmen's Compensation, Sec. 60.12 (1983).

This general rule was adopted in New Mexico in Hopkins v. Fred Harvey, Inc., 92 N.M. 132, 584 P.2d 179 (Ct.App.), cert. denied, 92 N.M. 180, 585 P.2d 324 (1978). The question in Hopkins was whether tips were wages to be considered for purposes of determining the rate of compensation. In addressing the question, Hopkins indicates that Larson's general rule is applicable to Section 52-1-20(A). The rule requires that the court consider anything of value received as consideration for work when such consideration constitutes real economic gain to the employee. The Hopkins opinion determined that the tips involved came under the general rule and concluded that those tips should have been considered in calculating wages because they were intended by the parties to be further compensation for services rendered.

While the precise issue in Hopkins differs from the issue presented in the case on appeal, we deal with the same essential principle: has plaintiff received something of value under the contract constituting real economic gain that should be included in the calculation of her wages?

For wage calculation purposes, a distinction is drawn between the "real economic gain" test for the worker and dollar-for-dollar reimbursement paid by the employer. The former may be included in the wage calculation; the latter may not. This distinction is noted in Thibeault v. General Outdoor Advertising Co., 114 Conn. 410, 158 A. 912 (1932). The court in Thibeault, in considering whether a daily allowance for board and lodging of plaintiff-employee when he was out of town should be included in his weekly earnings, set out the general test which was to guide later courts in addressing similar questions: "In each case the test to be applied is, Does the allowance represent a real and reasonably definite economic gain to the employee, reasonably within, or at least not contrary to, the fair intent of the parties?" Id. at 913.

For example, cases decided since Thibeault essentially follow the view that employer provided meals help a workman meet his personal expenses and, therefore, represent a real economic gain. Yet, when an employee is merely reimbursed for amounts he is called to spend in the course of his employment and activities which he has no occasion to pursue when not employed, the amount so paid cannot be regarded as part of his earnings. See Rusty Pelican Restaurant v. Garcia, 437 So.2d 754 (Fla.App.1983); Lavin v. Alton Boxboard Co., 431 So.2d 202 (Fla.App.1983); Rhaney v. Dobbs House, Inc., 415 So.2d 1277 (Fla.App.1982); Fairway Restaurant v. Fair, 425 So.2d 115 (Fla.App.1982); Bananno v. Employer's Mutual Liability Insurance Co. of Wisconsin, 299 So.2d 923 (La.App.1974).

The case of Moorehead v. Industrial Commission, 17 Ariz.App. 96, 495 P.2d 866 (1972) dealt with the issue...