Henderson v. Central Telephone Co. of Virginia

• Decision Date: 24 April 1987
• Docket Number: No. 840204,840204
• Citation: 355 S.E.2d 596,233 Va. 377
• Parties: Raley H. HENDERSON v. CENTRAL TELEPHONE COMPANY OF VIRGINIA Record
• Court: Virginia Supreme Court

Page 596

355 S.E.2d 596

233 Va. 377

Raley H. HENDERSON v. CENTRAL TELEPHONE COMPANY OF VIRGINIA

Record No. 840204.

Supreme Court of Virginia.

April 24, 1987.

Charles F. Midkiff (Louis R. Monacell, Richmond, Edwin B. Baker, Tyler E. Williams, III, Keysville, Christian, Barton, Epps, Brent & Chappell, Richmond, Baker & Williams, Keysville, on briefs), for appellant.

William A. Perkins, Jr. (McGuire, Woods & Battle, Charlottesville, on brief), for appellee.

Present: CARRICO, C.J., and COCHRAN, ^* POFF, COMPTON, STEPHENSON, RUSSELL and THOMAS, JJ.

THOMAS, Justice.

Raley H. Henderson, an employee of Continental Communications Construction Company (Continental), was injured on March 31, 1980, when he fell from a rolling ladder while supervising the addition of trunk lines to the No. 5 Crossbar ¹ located in the Charlottesville office of Central Telephone Company of Virginia (Centel). On October 11, 1979, Centel entered into a contract with Continental for the "installation and/or maintenance of Central Office Equipment." At the time he was injured, Henderson, was acting pursuant to the contract.

In January 1982, Henderson sued Centel and others. On March 1, 1982, Centel filed a Special Plea challenging the trial court's jurisdiction. Centel contended therein that it was Henderson's statutory employer and that Henderson's exclusive remedy was under the Workers' Compensation Act (the "Act"). Centel asked that it be dismissed from the suit. The matter was heard on November 10, 1982. On December 3, 1982, the trial court rejected the Special Plea, concluding, in effect, that Centel was not Henderson's statutory employer. Centel filed a motion for reconsideration. Upon reconsideration, the trial court changed its initial decision, granted the Special Plea, and dismissed Centel as a defendant. Henderson appealed.

The sole issue in this appeal is whether, at the time of his injury, Henderson was engaged in work that was part of Centel's trade, business, or occupation. If so, Centel was Henderson's statutory employer and the trial court was correct in dismissing Centel from the suit. In our opinion, the trial court correctly decided this issue; therefore, we will affirm its judgment.

The pertinent facts are as follows: Centel is a public utility regulated by the laws of the Commonwealth and subject to the administrative control of the State Corporation Commission (Commission). Centel is required by statute to provide "adequate service and facilities." Code § 56-234. Moreover, pursuant to Code § 56-35, the Commission issued a document entitled "Operating Service Criteria For Virginia Telephone Utilities." That document contains the following requirement: "Each telephone company shall provide the necessary equipment and plant facilities within its certificated areas to handle the local and toll traffic so that" certain conditions of service will be met.

Centel supplied all the materials for the job on which Henderson was working. Continental supplied the labor. None of Centel's employees worked with Continental's employees on the installation. Nor did Centel supervise Continental's work. However, the Continental workers were subject to Centel's control regarding working hours, access to the facility, and preventing interruptions of existing service. In addition, Centel received progress reports on Henderson's work. Centel also inspected Continental's work and noted instances where the specifications were not met. Centel considered compliance with the specifications to be its responsibility. Centel admitted that the work Continental was doing was not a subcontracted portion of a larger contract. On the date he was injured, Henderson was "working as a telephone equipment installer."

Centel was capable of installing the equipment that Continental was installing but chose not to do so for economic reasons related to the "peaks and valleys" in demand for central office equipment installation and to certain terms in its union contract that made it more costly for it to use its own employees to do central office installation work. Centel employees have, in the past, installed central office equipment of greater complexity than that Henderson was installing. According to Centel, even without using contract labor, it could have met its statutory duty to provide adequate service and facilities. To do so, however, Centel would have had to increase its own labor force with a likely increase in its costs and the costs to its customers. When asked whether Centel employees installed central office equipment, one witness testified that Centel employees had, in the past, installed various types of central office equipment including the following:

subscriber carrier, VF repeaters, pads and transformer units, various and different kinds of signaling equipment and SFDX equipment, program amplifiers for radio stations, traffic measuring equipment, automatic transfer equipment for carrier, main frame protections, the carriers themselves, trunks, recorder announcers, touch call equipment, power saving carrier, to name just a few.

The same witness said that at the time Henderson was making his installation, Centel had six employees who "were capable of doing any of the work that Mr. Henderson was employed doing."

In 1979, 50.3% of all central office installation and removal work was done with Centel labor. However, in that same year, only 3.3% of Centel labor was spent on central office equipment construction and only .0016% on work on the No. 5 Crossbar. The balance of the overall central office labor in 1979, 49.7%, was supplied by contract labor. Historically, 60% to 75% of Centel's installation requirements were met with company employees. In 1979, 72.7% of Centel's total labor requirements were met with company labor. In 1980, the figure was 75.2%.

The record discloses that the physical plant ² necessary to provide telephone service is divided into three parts: central office equipment, outside plant, and station apparatus. All three facets of the system must work together to provide telephone service to customers. No one component by itself can provide telephone service.

According to Centel, station apparatus are installed by installer-repairmen, complex installer-repairmen, and cable splicers; outside plant network is installed by linemen and cable splicers; and central office equipment is installed by central office equipment repairmen. Centel used contract labor to work on all three facets of its physical plant. It considered outside labor as "contract augmentation" to its work force.

At least two statutory provisions bear upon the issue under consideration. Code § 65.1-5 provides as follows:

Nothing in this Act contained shall be construed to make, for the purposes of this Act, the employees of an independent contractor the employees of the person or corporation employing or contracting with such independent contractor.

Code § 65.1-29 provides as follows:

When any person [owner] undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person [subcontractor] for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay any workman employed in the work any compensation under this Act which he would have been liable to pay if the workman had been immediately employed by him.

Code § 65.1-5 provides, in essence, that the mere fact a business owner engages an independent contractor does not make that independent contractor's employees statutory employees of the owner. This means that Henderson is not necessarily Centel's statutory employee. Before the statutory employee/employer status can be established, more must be proved than that Henderson worked for Continental which in turn had a contract with Centel.

Code § 65.1-29 contemplates that an owner such as Centel can subcontract all its work yet remain liable under the Act. See Smith v. Horn, 232 Va. 302, 351 S.E.2d 14 (1986). This provision is meant to prevent an owner from escaping liability under the Act by the simple expedient of subcontracting away work which is part of its trade, business, or occupation. Such an owner will remain liable under the Act to the extent the work subcontracted is part of that owner's trade, business, or occupation.

Thus, determining Centel's trade, business, or occupation is critical. But before we can determine Centel's trade, business, or occupation, we must first settle upon the appropriate test for making that determination.

Developing the appropriate test and determining whether activities fall within or without an entity's trade, business, or occupation is not a simple, straightforward exercise. Deciding what is the trade, business, or occupation of an entity is a "mixed question of law and fact" and is a question that "does not readily yield to categorical or absolute standards." Bassett Furniture v. McReynolds, 216 Va. 897, 902, 224 S.E.2d 323, 326 (1976).

In this appeal, Henderson does not seek workers' compensation coverage from Centel. Because of this, the lawyers have referred to this as an "upside down" case. This is in contrast to the so-called "right side up" case in which the injured worker seeks workers' compensation coverage. It is significant, however, that even though Henderson does not seek coverage from Centel, our consideration of this appeal is nevertheless governed by the principles that apply in a case where coverage is sought. Those principles are as follows: The Act is highly remedial and should be liberally construed to advance its purpose. See Fauver v. Bell, 192 Va. 518, 522, 65 S.E.2d 575, 577 (1951); Bamber v. City of Norfolk, 138 Va. 26, 121 S.E. 564 (1924). Further, the fundamental purpose of the Act is to give compensation for accidental injuries resulting from the hazards of the employment. Feitig...