Nunn v. C.C. Midwest

• Decision Date: 21 December 2004
• Docket Number: No. WD 64027.,WD 64027.
• Parties: Richard NUNN; Respondent Treasurer of the State of Missouri-Custodian of the Second Injury Fund, Defendant, v. C.C. MIDWEST, Appellant.
• Court: Missouri Court of Appeals

151 S.W.3d 388

Richard NUNN; Respondent Treasurer of the State of Missouri-Custodian of the Second Injury Fund, Defendant, v. C.C. MIDWEST, Appellant.

No. WD 64027.

Missouri Court of Appeals, Western District.

December 21, 2004.

Elizabeth C. Carver, St. Louis, MO, for Appellant.

John R. Stanley, Overland Park, KS, for Respondent.

Before LISA WHITE HARDWICK, P.J., ROBERT G. ULRICH and THOMAS H. NEWTON, JJ.

THOMAS H. NEWTON, Judge.

Mr. Richard Nunn was a truck driver for C.C. Mid West. He was injured while making a delivery and claimed workers' compensation benefits. C.C. Mid West asserted that he was not entitled to those benefits because he was an owner-operator of his truck and an independent contractor. The Labor and Industrial Relations Commission (Commission) found that Mr. Nunn was not an owner-operator and was an employee, not an independent contractor. Because he leased the truck, and used it under a lease-purchase agreement, we find that he did not own the truck. Also, under the right to control test, we find that Mr. Nunn was an employee rather than an independent contractor. Therefore, we affirm the Commission's decision.

I. FACTUAL AND PROCEDURAL BACKGROUND

C.C. Mid West, Inc. is a for-hire or contract motor vehicle carrier operating under certificates issued by the federal Department of Transportation (DOT). C.C. Mid West is a wholly-owned subsidiary of Central Transport International, Inc., which is a wholly-owned subsidiary of CenTra, Inc.

Mr. Nunn is a truck driver, and on November 15, 2000, he met with C.C. Mid West's Kansas City, Missouri, terminal manager, Mr. Patrick Hilke, to discuss driving for C.C. Mid West. Mr. Nunn claims that he completed employment applications at this meeting. C.C. Mid West maintains that he was being hired as an independent contractor. He actually only filled out a Contractor Data Sheet, which specifically stated that he "confirm[ed] that I am representing myself as an Independent Contractor.... I acknowledge that I am not applying for, nor, am I being offered employee status by this data sheet." Mr. Hilke told Mr. Nunn that he needed to get a DOT drug screen and a physical, and told him what clinics were DOT certified.

During the November 15, 2000, meeting, Mr. Nunn told Mr. Hilke that he did not have a vehicle appropriate for the type of hauling that he would be doing for C.C. Mid West. Just before applying with C.C. Mid West, Mr. Nunn had been an independent contractor/owner-operator truck driver for USF Distribution, but after he left USF someone else took over the payments on and ownership of his truck. Mr. Hilke informed Mr. Nunn about a truck leasing company called GLS Leasco, Inc., which might have a truck available for Mr. Nunn to lease-purchase. GLS Leasco is a wholly-owned subsidiary of CenTra, Inc. Mr. Nunn expressed interest in getting a truck from GLS Leasco, and a lease was arranged. The lease was sent to C.C. Mid West's office in Kansas City for Mr. Nunn to sign and a copy of the lease was placed in Mr. Nunn's file.¹ C.C. Mid West maintains that Mr. Nunn could have gotten a truck from anywhere, and that Mr. Hilke simply made this suggestion because Mr. Nunn expressed a need for a truck. Mr. Nunn claims that he was given no choice in which truck he eventually received and that he never saw the truck until after the lease was signed on January 2, 2001. Because GLS Leasco did not have a truck available right away, C.C. Mid West arranged for Mr. Nunn to go to St. Louis to temporarily rent a truck. Once GLS Leasco had a truck for Mr. Nunn, C.C. Mid West arranged for him to go to Chicago to retrieve it.

On December 6, 2000, Mr. Nunn and C.C. Mid West entered into a Non-Exclusive Operating Agreement with Independent Contractor (Agreement). C.C. Mid West claims that this Agreement 1 specifically disclaims any employer- employee relationship. Mr. Nunn claims that he was being hired as an employee of C.C. Mid West and he did not read the Agreement before signing it. The Agreement states that C.C. Mid West is "Company" and Mr. Nunn is "Contractor" and a corporation. The Agreement then states that he owns the equipment described in Schedule A, which was the truck that he eventually leased from GLS Leasco, although he had not yet signed that lease when he signed the agreement. The first numbered paragraph of the Agreement was titled "Independent Contractor" and it stated:

Contractor shall furnish Contractor's services as an Independent Contractor and not as an employee of Company or any subsidiary or affiliate of Company. Contractor and its employees or agents shall not be considered an agent, representative, associate, assignee or employee of Company at any time, for any purpose or reason whatsoever. Contractor, its employees, representatives, agents, assignees, associates, or affiliates (whomever has some relation with Contractor) have no power or authority to act for, represent, or bind Company or any subsidiary or affiliate of Company in any manner whatsoever. Contractor and its employees or agents are not entitled to any medical coverage, life insurance, participation in Company's savings plan, and/or other benefits afforded to Company's regular or irregular employees, or those of any subsidiary or affiliate of Company....

The Agreement also requires the Contractor not to engage in any business that conflicts with the Company's interests. The Agreement states that it is non-exclusive with the Contractor, stating that the Company will, on a non-exclusive basis, tender to Contractor various loads of freight for pick-up, hauling, and delivery, but is not obligated to do so. The Agreement requires Contractor to furnish a vehicle, keep it in good operating condition, and pay for all maintenance. It states that Contractor has the sole right to hire and terminate all its employees and exercises all control over those employees, and that Company has no right to exercise any control or supervision over those employees except to the ultimate completed pick-up or delivery. The Agreement can be terminated at Company's sole and only discretion for any reason whatsoever. Either party can cancel with thirty days written notice and in the first ninety days of the Agreement the Company can cancel without any notice. With respect to workers' compensation insurance, the Agreement states that:

It is further mutually understood and agreed by the parties that Contractor shall provide evidence for worker's compensation insurance in effect covering all employees and agrees to hold Company harmless and indemnify it for and against any loss, cost or expense, including but not limited to, court costs and attorney's fees, arising out of or with respect to injury to, or death of, including but not limited to, Contractor or any of its employees, agents, associates, representatives, or servants.

The Agreement also set out the rate of pay in an attached schedule: payment based on the weight of what was hauled and the mileage driven.

Mr. Nunn signed the Tractor² Lease with GLS Leasco on January 2, 2001, receiving the truck mentioned in the Agreement. The lease states that unless the Lessee (Mr. Nunn) exercises his right-to-purchase option, "at all times during the term of the Lease, no title to Tractor shall vest in Lessee." Lessee must also affix to the truck in a conspicuous place, decals or signs showing Lessor (GLS Leasco) as the owner and lessor of the truck. The lease requires Lessee to inform Lessor in writing of any subleases and if the truck will be used outside of Kansas or Missouri. The Lessee may not make any changes to the truck without prior written consent of the Lessor and the Lessee must keep the truck in good repair at his own expense through the duration of the lease, including bearing the entire risk of loss. The lease is called a lease-purchase agreement because Mr. Nunn had an option to purchase the truck:

Lessee shall, upon thirty (30) days prior written notice to Lessor, have the option to purchase Tractor from Lessor by paying to Lessor in cash the Stipulated Value as of the date of closing and title transfer.... Unless Lessee shall have purchase [sic] Tractor as provided herein, Tractor shall be returned to Lessor in accordance with Section 10 hereof.

And the Lessor has the right to cancel the lease upon seven days' prior written notice to Lessee.

Mr. Nunn began driving for C.C. Mid West and on a typical day he would arrive at the C.C. Midwest terminal at 6:30 or 7:00 am. He would be given a list of stops for the day and his truck would be loaded with all the goods for delivery. Mr. Nunn claims that Mr. Hilke decided how to load the trucks, resulting in him setting out the route that would be followed. Mr. Hilke, on the other hand, claims that each truck driver determined how he wanted his truck loaded based on the deliveries for that day and the truck was loaded accordingly. C.C. Mid West had no policy requiring the drivers to call in during the day, but the drivers could call in if they wished to find out about any pick-ups while they were out or more deliveries at the terminal. The drivers were also not required to wear any uniforms, but they were encouraged to wear a uniform and would receive a bonus incentive for doing so. The drivers filled out daily worksheets tracking their deliveries for the day, including their time spent on each delivery. These worksheets were how the drivers invoiced C.C. Mid West and Mr. Hilke stated that the time portion was filled in only for billing the customer, which in no way influenced how the drivers were paid.

Mr. Nunn believed that he was not allowed to haul for any other companies and that he was required to report to C.C. Mid West every day and could not decline a haul unless there was someone else to cover it. C.C. Mid West maintains that Mr. Nunn was free to haul for anyone else and that he was always free to decide whether or not to accept a haul. C.C. Mid West points to various parts of the...