Hamilton Trucking/Hamilton Terminal Corp. v. Springer

• Decision Date: 28 August 1990
• Docket Number: No. 1015-89-4,1015-89-4
• Citation: 396 S.E.2d 379,10 Va.App. 710
• Parties: HAMILTON TRUCKING/HAMILTON TERMINAL CORPORATION and United States Fidelity and Guaranty v. James E. SPRINGER. Record
• Court: Virginia Court of Appeals

Page 379

396 S.E.2d 379

10 Va.App. 710

HAMILTON TRUCKING/HAMILTON TERMINAL CORPORATION and

United States Fidelity and Guaranty

v. James E. SPRINGER.

Record No. 1015-89-4.

Court of Appeals of Virginia.

Aug. 28, 1990.

Philip E. Landrum (Landrum and Strong, on brief), for appellant.

John H. Klein (Rutter & Montagna, on brief), for appellee.

Present: KOONTZ, C.J., and JOSEPH E. BAKER and BARROW, JJ.

JOSEPH E. BAKER, Judge.

This unusual appeal from a decision of the Industrial Commission of Virginia (commission), although jointly made in the name of Hamilton Trucking Company, a division of Hamilton Terminal Corporation (Hamilton), is in fact an appeal made on behalf of Hamilton's insurance carrier, United States Fidelity and Guaranty (insurer). The issue presented is whether the record contains sufficient facts to support the commission's finding that James E. Springer (claimant) was an employee of Hamilton, and not an independent contractor, at the time of his injury. The commission found that he was an employee and made an award of benefits in his favor for an injury he sustained on August 20, 1988.

When this matter was presented to the deputy commissioner (deputy), Hamilton and its insurer were not in agreement as to whether claimant was an independent contractor or an employee. The record discloses that Hamilton intended to extend its insurance coverage for workers' compensation benefits to claimant. For that reason, Hamilton does not join in this appeal. In consideration of the issue presented by this appeal we are guided by the principle that employers cannot simply designate persons as employees or independent contractors; the actual contract of employment determines whether the service is being performed by an employee or an independent contractor. The Workers' Compensation Act (Act) leaves the determination of the nature of the relationship to the common law. See Crowder v. Haymaker, 164 Va. 77, 79, 178 S.E. 803, 804 (1935).

We need not recite the details of the injury as the parties agree that if the record establishes that claimant was an employee within the meaning of the Act the award of the commission must be affirmed. Stated in a light most favorable to claimant, who prevailed below, the record discloses that Hamilton's business "is the inland haulage of full containers" from the Norfolk area to other parts of the United States. Hamilton owns trailers but no tractors with which to perform this service. It contracts with individuals who own tractors to pull the trailers loaded with containers Hamilton has contracted with third parties to haul to other areas. These individuals are known as owner-operators and the contracts are referred to as "lease-agreements." From time to time the number of separate agreements with individual owner-operators varied from as few as five to a maximum of eighteen. Every lease-agreement at Hamilton was between "Hamilton Trucking and the owner-operator for his services and his vehicle" and "covers the employ of that owner-operator." The owner-operator could reject all loads if he wanted to; however, if he did so consistently, the agreement would be terminated because he would not be providing the service Hamilton required. The lease further provided that Hamilton would deduct from the sums due the owner-operator "a certain percentage" to cover him "with workmen's compensation insurance" as it was Hamilton's "intent ... to give him workmen's compensation coverage." John Vitolo, Hamilton's comptroller, testified that a prospective owner-operator would be told that "Hamilton Trucking, Division of Hamilton Terminal Corporation, will deduct a certain percentage of your pay on a weekly basis, and we will supply you with workmen's compensation insurance through our insurance company ... (but) only while you're in our dispatch."

Fred Hockenjos, a witness for claimant, identified himself as an insurance account executive from Madison, New Jersey. His job was to service the "property and casualty insurance for the parent company (Hapag-Lloyd America, Staten Island) of Hamilton Terminal Corporation." He stated that in May 1984, Hapag-Lloyd America "wanted to provide the workers' compensation for the owner-operators, and were deducting monies from the monies paid to those drivers to pay for that insurance." The parent company previously was insured by Travelers Insurance Company; however, on April 1, 1988, Travelers cancelled the policy because of the high loss ratio. Upon being cancelled, Hamilton applied to the Virginia assigned risk insurance program for a company to provide its insurance requirements. As a result of that application, insurer was required to cover Hamilton with the workers' compensation insurance. Insurer denies that coverage was extended to the owner-operators. The policy issued pursuant to the Virginia assigned risk program was effective only to the Virginia operation. The parent company was assigned separate policies by each of the other states in which Hamilton has terminals. Hockenjos was not acting as agent for insurer when insurance coverage was issued by insurer as required by the Virginia assigned risk program.

Claimant testified that he was an owner-operator of a truck "working with, if not for, Hamilton Division of Hamilton Terminal Corporation" on August 20, 1988 when he was injured. He stated that at the time he "was an independent owner-operator ... who was employed by Hamilton Trucking as an individual--as a truck driver, as well as ... my tractor."

On each work day claimant would call Hamilton's terminal manager to see if there was a container for him to haul "anywhere in the United States." If so, he would "pick up the dispatch papers and the load, and deliver it." When claimant would pick up a load at the Norfolk terminal he would not report to a supervisor. He would go only to the terminal manager, obtain his load and papers, and proceed to his destination point or, at his own option he could reject the assignment. In fact, he did not have to call in, although if Hamilton was overloaded with containers to carry "they would be calling" him. Claimant further stated: "Hamilton Trucking is not under forced dispatched; which means that we have the option to either say yea, or nay, or no period." Beyond a twenty-five mile radius of Norfolk claimant was paid $.72 per mile, more per mile for hazardous material loads. He was paid weekly, on Fridays. Hamilton made no deductions from claimant's pay for social security; did not withhold state or federal income tax; and made no deduction for hospitalization insurance or insurance for his tractor. Any advance made to claimant and "workmen's compensation" would be deducted from his pay. Each owner-operator paid his own liability and comprehensive insurance on his tractor; however, if a third-party claim was made against him while on Hamilton's business Hamilton's insurance would cover him. Claimant testified that if he was injured, his "workmen's compensation supposedly is supposed to cover that" because on the back of his contract "it states that Hamilton Trucking would take out a certain percent of my pay to insure that I would have workers' compensation on me." ¹ When on the road he had to pay his own personal expenses, as his compensation was based solely on trip mileage. When he was hauling for Hamilton, he alone selected the route he would take. Hamilton provided the destination and expected time of arrival but no en route supervision or instruction as to how he was to achieve the result he contracted to perform.

Hockenjos, Hamilton's insurance agent, testified that claimant was not an employee of Hamilton and that the question was a matter of contract. The general...