Michalak v. Liberty Northwest Ins. Corp.

• Decision Date: 03 January 2008
• Docket Number: No. DA 07-0208.,DA 07-0208.
• Citation: 2008 MT 3,175 P.3d 893,341 Mont. 63
• Parties: Curtis M. MICHALAK, Petitioner and Appellee, v. LIBERTY NORTHWEST INSURANCE CORPORATION, Respondent/Insurer. and Appellant.
• Court: Montana Supreme Court

175 P.3d 893

2008 MT 3

341 Mont. 63

Curtis M. MICHALAK, Petitioner and Appellee, v. LIBERTY NORTHWEST INSURANCE CORPORATION, Respondent/Insurer. and Appellant.

No. DA 07-0208.

Supreme Court of Montana.

Submitted on Briefs November 28, 2007.

Decided January 3, 2008.

For Appellant: Larry W. Jones, Law Offices of Larry W. Jones, Missoula, Montana.

For Appellee: Sydney E. McKenna and Justin Starin, Tornabene & McKenna, PLLC, Missoula, Montana.

Justice W. WILLIAM LEAPHARTdelivered the Opinion of the Court.

¶ 1 Liberty Northwest Insurance Corporation (Liberty) appeals from the judgment of the Workers' Compensation Court (WCC). We affirm.

¶ 2 We restate the issues as follows:

¶ 3 Did the WCC err when it concluded that Michalak's injury occurred during the course and scope of his employment?

¶ 4 Did Michalak abandon his employment by participating in reckless behavior?

BACKGROUND

¶ 5 On July 23, 2005, Curtis M. Michalak (Michalak) suffered an injury while riding a wave runner at his employer's annual company picnic at Flathead Lake. At the time of his injury, Michalak worked for Felco Industries, Ltd. (Felco) in Missoula, Montana, and Liberty provided Felco's workers' compensation insurance.

¶ 6 Since approximately 1980, John Felton (Felton), Felco's president and owner, has hosted a company picnic at his lakeside home. Felco generally invites its employees and their families, friends, and vendors to the company picnic. In 2005, Felco rented wave runners for the annual picnic. While riding one of the wave runners, Michalak suffered serious injuries, including several vertebrae fractures, and he was unable to return to his employment with. Felco.

¶ 7 Michalak filed a workers' compensation claim for his injury. Liberty denied Michalak's claim on the basis that the injury did not occur within the course and scope of his employment. Michalak then filed a claim with the WCC seeking compensation for his injuries.

¶ 8 The WCC issued findings of fact and conclusions of law after considering Michalak's trial testimony and the deposition testimony of Michalak, his co-workers, and other witnesses. The WCC found that Felco notified its employees of the 2005 picnic by placing a notice within the employees' pay stubs and by displaying notices within the plant, The WCC found that Felco paid for all the picnic supplies, including the wave runner rentals. The WCC found that Michalak had the duty of overseeing the wave runners during the picnic, and it found credible Michalak's testimony that he bore responsibility for supervising the wave runners' operation, including providing riders with safety instructions, monitoring the wave runners' fuel and oil levels, instructing others on how to ride the wave runners, and enforcing time limits on the wave runners' use. The WCC further found that, "during the performance of his duties," Michalak took a ride on one of the wave runners and was injured.

¶ 9 The WCC next applied the four "course and scope" factors set forth in Courser v. Darby School Dist. No. 1 and concluded that Michalak was within the course and scope of his employment when he suffered his injury. 214 Mont. 13, 16-17, 692 P.2d 417, 419 (1984). Liberty appeals the WCC's holding and challenges both the WCC's findings of fact and its conclusions of law.

STANDARD OF REVIEW

¶ 10 We review the WCC's findings of fact to determine whether they are supported by substantial credible evidence, and we review the WCC's conclusions of law to determine whether they are correct. Simms v. State Compensation Ins. Fund, 2005 MT 175, ¶ 11, 327 Mont. 511, ¶ 11, 116 P.3d 773, ¶ 11. Substantial credible evidence to support a finding of fact may be somewhat less than a preponderance of evidence but must be more than a mere scintilla. Simms, ¶ 11. We apply the Workers' Compensation Act (the Act) effective at the time an employee suffers an injury. Wilson v. Liberty Mut. Fire Ins., 273 Mont. 313, 316, 903 P.2d 785, 787 (1995). The 2005 version of the Act governed when Michalak was injured on July 23, 2005.

DISCUSSION

¶ 11 I Did the WCC err when it concluded that Michalak's injury occurred during the course and scope of his employment?

¶ 12 Employees who receive an injury "arising out of and in the course of employment," are entitled to workers' compensation benefits. Section 39-71-407, MCA (2005). Liberty argues that § 39-71-118(2)(a), MCA (2005), removes Michalak from the definition of employee and therefore Michalak's injury is not compensable.

¶ 13 Section 39-71-118(2)(a), MCA (2005), defines "employee" and "worker" to exclude a person who is "participating in recreational activity and who at the time is relieved of and is not performing prescribed duties...." Thus, a person injured while participating in recreational activities still qualifies as an "employee" and retains workers' compensation coverage if the person is injured while performing "prescribed duties," Section 39-71-118(2)(a), MCA (2005); Connery v. Liberty Northwest Ins. Corp., 280 Mont, 115, 929 P.2d 222 (1996). Connery, traditional four-factor "course and scope" analysis determines whether a person is "performing prescribed duties." Connery, 280 Mont. at 120, 929 P.2d at 225. The factors are: (1) whether the activity was undertaken at the employer's request; (2) whether the employer, directly or indirectly, compelled the employee's attendance at the activity; (3) whether the employer controlled or participated in the activity; and (4) whether the employer and the employee mutually benefited from the activity. Connery, 280 Mont. at 121, 929 P.2d at 226. Each factor's presence or absence "may or may not be determinative," and each factor's significance "must be considered in the totality of all attendant circumstances." Connery, 280 Mont. at 121, 929 P.2d at 226 (quoting Courser, 214 Mont. at 16-17, 692. P.2d at 419). After evaluating these factors, the WCC concluded that Michalak's injury was compensable because he had not been relieved of his "prescribed duties" and thus was acting within the course and scope of his employment. We review the WCC's findings of fact to determine whether they are supported by substantial credible evidence, and we review the WCC's conclusions of law to determine whether they are correct. Simms, ¶ 11.

¶ 14 Our review of the record supports the WCC's finding, under the first Courser factor, that the picnic was undertaken at Felco's request. Felton testified that the Felco company picnic had been an annual event since 1980. Felton testified that he selects the particular date of the picnic and that he and Felco pay the picnic expenses. Felton further testified that Felco provided paddle boats and wave runners because "it's common sense that people are going to more likely come if you have something like that...." Denise Sand, Felco's secretary, testified that she notifies the employees about the picnic through notices placed around the plant and in the employees' paychecks. The notice that Sand distributed in 2005 requested a head-count and indicated that friends, family, and vendors were welcome at the Felco company picnic. Tim Yoder, a Felco supervisor in charge of Felco's safety program, testified that he received a picnic invitation in his paycheck. Michalak also testified that he received an invitation in his paycheck.

¶ 15 Regarding the second Courser factor, the WCC found that "at a minimum, Felco indirectly compelled [Michalak's] attendance at the picnic." The WCC stated that Michalak felt compelled to attend the picnic because his supervisor had asked him to oversee the wave runners. Steve Talley, Michalak's supervisor, testified that he felt responsible for instructing the picnic attendees on safety procedures relating to the wave runners. Talley testified that he asked Michalak to assist with and watch over the wave runners because Talley knew that he would be unable to continuously supervise the wave runners. Talley testified that Michalak agreed to provide assistance. Michalak testified that Talley asked him to oversee the wave runners at the picnic. Michalak indicated that he understood Talley's request to be made in his capacity as Felco's foreman, not as a personal favor to Talley. Michalak testified that he went to the office of Fish, Wildlife, and Parks and at some point obtained and reviewed a copy of the Montana boating regulations. Michalak testified that one of his daughters felt ill on the morning of the picnic, and he thought he would be unable to attend. Her condition soon improved, however, and Michalak testified that he and his family went to the picnic so that he could fulfill his obligation and respect his employer. We conclude that substantial credible evidence supports the WCC's finding that Felco compelled Michalak's attendance at the company picnic.

¶ 16 As to the third Courser factor, the WCC found that Felco controlled and participated in the picnic activities. Felton testified that he selects the date of the picnic and that he and Felco pay for the picnic expenses, including food, beverages, paddleboats, and wave runners. He further testified that Felco provides everything and has a policy against employees bringing items to the picnic. Felton testified that he hosts the company picnic at his home on Flathead Lake. Felton further testified that he believed Felco took a tax deduction for the picnic expenses. Shawn Skinner, Felco's general manager, testified that he had duties and responsibilities related to organizing the picnic, but primarily delegated the tasks associated with organizing the picnic to Ken Lockwood, an independent contractor, and Denise Sand. Sand testified that she used a Felco company credit card to purchase the picnic supplies, including the wave runner rentals. Sand further testified that Felco claimed the picnic expenses as a tax deduction. Several witnesses also testified that the annual company picnic features a horseshoe tournament, with the winner earning a spot on a...