Le Parc Community Ass'n v. W.C.A.B.

• Decision Date: 25 July 2003
• Docket Number: No. B164873.,B164873.
• Citation: 2 Cal.Rptr.3d 408,110 Cal.App.4th 1161
• Court: California Court of Appeals Court of Appeals
• Parties: LE PARC COMMUNITY ASSOCIATION, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, Tim Curren et al., Respondents.

2 Cal.Rptr.3d 408

110 Cal.App.4th 1161

LE PARC COMMUNITY ASSOCIATION, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, Tim Curren et al., Respondents.

No. B164873.

Court of Appeal, Second District, Division 7.

July 25, 2003.

Review Denied October 22, 2003.

Graves, Roberson & Bourassa and Marshall W. Graves, Thousands Oaks, for Petitioner.

No appearance for Respondent Workers' Compensation Appeals Board.

Finestone, Schumaker, Cocquyt & Ongania and David L. Pollak for Respondent Tim Curren.

John M. Rea, Chief Counsel, Steven A. McGinty, Assistance Chief Counsel and Stella Owens-Murrell for Real Party in Interest Director of Industrial Relations as Administrator of the Uninsured Employers Fund.

PERLUSS, P.J.

Le Pare Community Association (Le Pare) seeks review of the decision by the Workers' Compensation Appeals Board (Board) granting Tim Curren's petition for reconsideration, rescinding the workers' compensation administrative law judge's order dismissing Curren's workers' compensation case against Le Pare and returning the matter to the hearing level for further proceedings.

The essential issue presented is whether Curren's dismissal with prejudice of his superior court action for negligence against Le Pare, pursuant to the terms of a settlement agreement that was not submitted to the Board for approval, precludes further prosecution of his claim against Le Pare in the workers' compensation forum. We hold that a civil action for negligence by an injured employee against an illegally uninsured employer pursuant to Labor Code section 3706,¹ as a matter of law, is not based on the same cause of action as an application for compensation filed with the Board pursuant to sections 3600 and 3715 and that principles of res judicata and collateral estoppel do not bar Curren's pursuit of his workers' compensation remedy. Accordingly, we affirm the Board's order.

FACTUAL AND PROCEDURAL BACKGROUND

Isaac Martinez, doing business as Advance Property Maintenance (Martinez) was retained by Le Pare to perform roof repairs, tree trimming and other maintenance activities at Le Parc's properties in Simi Valley. Curren, an employee of Martinez, was injured² by a fall from a roof while cleaning gutters at one of the Le Pare properties on August 23, 2000. Neither Martinez nor Le Pare maintained workers' compensation insurance. Although it is conceded that Martinez was not licensed as a general contractor, the parties dispute whether a contractor's license was required for the work performed by Martinez for Le Pare and whether Martinez (and derivatively Curren) was an independent contractor or an employee of Le Pare.

The Application for Workers' Compensation Benefits

Curren filed an application for workers' compensation benefits against Martinez and Le Pare and thereafter joined the Uninsured Employers Fund in the proceeding (§ 3710 et seq.).³ Le Pare was named, pursuant to section 2750.5,⁴ on the theory that it was presumed to be Curren's employer because Martinez was required to, but did not, have a contractor's license to perform the repair and maintenance services for which he had been retained and was illegally uninsured for workers' compensation. (See, e.g., State Compensation Ins. Fund v. Workers' Comp. Appeals Bd. (1985) 40 Cal.3d 5, 13, 219 Cal.Rptr. 13, 706 P.2d 1146 [unlicensed contractor injured during remodel is employee of homeowner under § 2750.5]; Rinaldi v. Workers' Comp. Appeals Bd. (1987) 196 Cal.App.3d 571, 242 Cal.Rptr. 895 [unlicensed subcontractor and subcontractor's injured employee are employees of licensed general contractor].) Le Pare has denied it was Curren's employer.

2. The Personal Injury Action

Curren also filed (through separate counsel) a civil lawsuit against Martinez and Le Pare in Ventura County Superior Court pursuant to section 3706, which authorizes an injured employee to file an action at law against an uninsured employer "If any employer fails to secure the payment of compensation, any injured employee or his [or her] dependents may bring an action against such employer for damages, as if this division did not apply." The complaint, filed August 10, 2001, alleged a single cause of action for negligence and personal injury. In the complaint Curren alleged that Martinez and Le Pare were presumed negligent under section 3708⁵ and, in addition, that Martinez and Le Pare were negligent by virtue of their directions to Curren to perform the roof work in an unsafe and dangerous manner, their failure to provide safety equipment and training and their failure to provide safe working conditions.

On July 16, 2002 Curren and Le Pare, as well as Le Parc's general liability insurance carrier, settled the civil action. In return for payment of $20,000 Curren and his counsel signed a document entitled "Settlement Agreement & Release of All Claims," which released Le Pare from all claims in any way related to the injuries Curren suffered on August 23, 2000. In addition to releasing Le Pare, Curren agreed to indemnify Le Pare and hold it harmless against any action, claim or demand by Curren himself or by any other person for damages or compensation resulting in any way from the August 23, 2000 incident. The indemnity provision specifically stated, "[t]his includes, but is not limited [to], any subrogation actions, claims or demands from any employer or workers' compensation insurance carrier or agency, including, but not limited to, Isaac Martinez, Wood Ranch Management Co., the Uninsured Employers Fund and/or the State Compensation Insurance Fund."

Pursuant to the terms of the settlement agreement, Curren filed a request for dismissal with prejudice in the Ventura County Superior Court action on July 29, 2002. The dismissal was entered on August 7, 2002.

3. Le Parc's Motion to Dismiss the Workers' Compensation Case

On September 25, 2002 Le Pare moved to dismiss Curren's workers' compensation claim on the ground the settlement agreement resolved all of Curren's claims against Le Pare, including the application for workers' compensation benefits. In response, Curren argued it had not been his intent to release his workers' compensation rights and that the motion to dismiss should be denied or a hearing held to determine the true intent of the parties. The workers' compensation administrative law judge granted the motion without a hearing and without opinion, ordering the case dismissed "without prejudice, with jurisdiction reserved nevertheless with respect to lien claims on file as of the date hereof [October 18, 2002]."

4. Curren's Petition for Reconsideration and the Board's Decision

Curren filed a petition for reconsideration with the Board, arguing that the settlement agreement and release of claims did not bar the continued prosecution of his application for workers' compensation because the agreement had not been approved by the Board, as required by section 5001.⁶ In addition, Curren contended his due process rights had been violated by the workers' compensation administrative law judge's issuance of a decision without conducting a hearing regarding the parties' intent.

The workers' compensation administrative law judge filed a report on the petition for reconsideration, recommending the petition be denied. His report explained that the issue whether Le Pare was Curren's employer was an essential element of both the superior court action and the workers' compensation claim and asserted that Curren's voluntary dismissal with prejudice of the civil action "constitutes a retraxit and a determination on merits involving principles of res judicata and collateral estoppel, which bar the litigation of those issues in any other proceeding." Accordingly, the report concluded that under the holding of a similar case, Ghanbar v. Workers' Comp. Appeals Bd. (2002) 67 Cal.Comp.Cases 1499, Curren was barred from proving the fact of employment in the workers' compensation proceeding and, therefore, was not entitled to relief as a matter of law.

Following the filing of the report from the workers' compensation administrative law judge, Le Pare filed its own answer to the petition for rehearing. Le Pare now argued, "the applicant's position that the settlement cannot resolve a workers' compensation case without the Appeals Board approving a settlement is irrelevant. It is not the settlement itself which bars the applicant from proceeding against Le Pare as a claimed employer in the workers' compensation matter, it is the voluntary dismissal with prejudice. Retraxit means that any and all of the applicant's claims against the defendant, Le Pare, are merged and that that dismissal bars any further action against the defendant."

The Board granted Curren's petition for reconsideration and rescinded the order dismissing the action because it was "not persuaded that the dismissal with prejudice in the civil action bars litigation of applicant's workers' compensation claim." The Board noted that the parties in the two proceedings were not the same (several of the parties to the workers' compensation case were not named in the civil action) and found that the issues in the two proceedings were not identical. In particular, the Board held that the issue of employment was not an essential element in the civil action because common law negligence had been pleaded as an alternative theory of recovery. In addition, the Board stated the issue of employment was not "actually litigated and necessarily decided by the dismissal with prejudice." Finally, the Board noted that the settlement agreement had not be submitted to it for approval, as required by section 5001. The Board returned the matter to the trial level for further proceedings.

On Le Parc's petition, we issued a writ of review.

CONTENTIONS

Le Pare contends that the dismissal of Curren's civil action operates as a retraxit and bars further litigation on the same subject matter between the parties and that Curren is collaterally estopped from...