Pilgrim v. Eaton

• Decision Date: 15 December 2010
• Docket Number: No. 4767.,4767.
• Citation: 703 S.E.2d 241,391 S.C. 38
• Court: South Carolina Court of Appeals
• Parties: Danny R. PILGRIM, Respondent,v.Billy EATON and Rufus Revis, and S.C. Workers Compensation Uninsured Employers' Fund, Defendants,of whom Billy Eaton and Rufus Revis are Appellants,andS.C. Workers Compensation Uninsured Employers' Fund is also Respondent.

391 S.C. 38

703 S.E.2d 241

Danny R. PILGRIM, Respondent,

v.Billy EATON and Rufus Revis, and S.C. Workers Compensation Uninsured Employers' Fund, Defendants,of whom Billy Eaton and Rufus Revis are Appellants,andS.C. Workers Compensation Uninsured Employers' Fund is also Respondent.

No. 4767.

Court of Appeals of South Carolina.

Heard May 19, 2010.Decided Dec. 15, 2010.

Thomas Bailey Smith, of Mt. Pleasant, for Appellants.Amy V. Cofield, of Lexington; Ernest Caskey Trammell, of Anderson, for Respondents.FEW, C.J.

This appeal presents two questions related to workers' compensation. The first is the factual question of whether Rufus Revis is the statutory employer of the claimant, Danny Pilgrim. The answer to this question determines the jurisdiction of the workers' compensation commission. The second is whether the commission committed an error of law in its method of calculating Pilgrim's average weekly wage. We affirm the commission on the first question, but reverse and remand on the second.

I. Facts and Procedural History

Danny Pilgrim worked for years as a maintenance worker at an apartment complex but lost that job in January, 2005. On January 25, 2005, Pilgrim began working for Sean Kern. Kern had contracted with Billy Eaton to provide carpenters for Eaton's unincorporated business Just Garages Plus. Pilgrim's first job assignment for Kern was to work on the roof of a garage Eaton was building for a customer.¹ On January 28, Pilgrim fell from the roof and seriously injured his back. The commission determined that Pilgrim sustained a work-related injury and awarded him temporary total disability benefits.

The commission found that both Eaton and Rufus Revis were Pilgrim's statutory employers. Revis had been the sole owner and operator of the garage business until selling an interest in it to Eaton in 2002. Revis contends that he sold the entire business to Eaton, and therefore he is insulated from workers' compensation liability. The commission found that Eaton and Revis continued to operate the business together as a “joint effort,” and that both are liable to Pilgrim as his statutory employers. Revis appeals this finding. As to the second question, both Eaton and Revis argue the commission erred in its calculation of Pilgrim's average weekly wage. The circuit court affirmed the commission on both issues. We affirm the finding that Revis was Pilgrim's statutory employer. We reverse the determination of average weekly wage, and remand to the commission. On remand, the commission shall calculate Pilgrim's average weekly wage in compliance with section 42–1–40 of the South Carolina Code (Supp.2009), and set the compensation rate for his benefits accordingly.

II. Statutory Employer Determination

The question of whether Revis is Pilgrim's statutory employer is considered “jurisdictional” because its answer determines the jurisdiction of the commission under the Workers' Compensation Act. See Glass v. Dow Chem. Co., 325 S.C. 198, 201–02, 482 S.E.2d 49, 51 (1997). The commission's finding that Revis is a statutory employer means that Pilgrim's claim against him is subject to the exclusivity provision of the Act. See Glass, 325 S.C. at 201, 482 S.E.2d at 50 n. 1.² As to these jurisdictional facts, an appellate court must make its own findings according to the preponderance of the evidence after a thorough review of the entire record. Glass, 325 S.C. at 202, 482 S.E.2d at 51.

The parties do not dispute that Just Garages Plus qualifies as Pilgrim's statutory employer under section 42–1–410 of the South Carolina Code (1985). Eaton concedes that he is an owner ³ and operator of the business, and is thus liable for benefits as determined by the commission. We agree with the commission that Revis is also liable to Pilgrim. We find that Revis remained an owner and operator of Just Garages Plus at least until the time of Pilgrim's injury, and is therefore jointly liable with Eaton to Pilgrim as his statutory employer.

Revis was the sole owner and operator of Just Garages until 2002 when he sold an interest in the business to Eaton, and the name was changed to Just Garages Plus. Because Revis was a licensed contractor, and Eaton was not licensed, Revis was required to stay involved in the business. South Carolina law requires that contracting work, such as the work performed by Just Garages Plus, be performed only by licensed contractors. S.C.Code Ann. § 40–11–30 (2001). A person who is not a licensed contractor may not even obtain a building permit for such work. See S.C.Code Ann. § 40–11–370(A)(B) (2001 & Supp.2009). It would have been unlawful for any person other than Revis to do the work of Just Garages Plus. S.C.Code Ann. § 40–11–370(B) (Supp.2009) (“It is unlawful to engage in construction under a name other than the exact name which appears on the license issued pursuant to this chapter.”). Therefore, in order for the business to function after Eaton became involved, Revis had to continue to act as the general contractor.

Moreover, Revis's financial interest in the sale to Eaton was the monthly installment payments he received from Eaton. Eaton was unable to make those payments without income from jobs for which Revis acted as the contractor and obtained the required permits. Thus, both Revis and Eaton depended on Revis's integral participation in the work of Just Garages Plus. Further, at least as late as April 2, 2003, Revis admitted he still operated the business. On that date, he signed an agreement with the commission under the name “Rufus Revis d/b/a Just Garages, Respondent.” The agreement states “from June 22, 2002 ..., the Respondent was operating and continues to operate....” Finally, when Revis eventually quit obtaining building permits for Just Garages Plus, Eaton stopped building garages.

Eaton, doing business as Just Garages Plus, contracted to build a garage in January, 2005. The building permit required for the job bears the name “Rufus Revis” as “Contractor.” While there is some uncertainty about whether Revis actually obtained this particular permit, we find that he did.⁴ Revis was therefore the general contractor for the job. S.C.Code Ann. §§ 40–11–30, 40–11–20(8)–(9) (2001). On January 28, 2005, Pilgrim fell from the roof of the garage and was injured. As the general contractor and the only person allowed under the law to “engage in construction” on that job, Revis was doing business as Just Garages Plus. We affirm the commission's decision that Revis was Pilgrim's statutory employer.

Our holding in this case has no impact on the liability of a seller of a business for workers' compensation benefits owed to employees of the business injured after the sale. On these unique facts, we hold that Revis did not sell the business. Rather, he remained one of its owners and operators. Just like Eaton, Revis was acting in his individual capacity, doing business as Just Garages Plus.

III. Average Weekly Wage Calculation

In making its award of temporary total disability benefits to Pilgrim, the commission set a compensation rate based on its calculation that Pilgrim's average weekly wage was $720. Eaton and Pilgrim appeal this calculation. As to this calculation, an appellate court may not reverse the commission's decision unless substantial rights of the appellant have been prejudiced because the decision is affected by an error of law, or because the factual findings are clearly erroneous in view of the reliable, probative, and substantial evidence. S.C.Code Ann. § 1–23–380(5) (Supp.2009). See Forrest v. A.S. Price Mech., 373 S.C. 303, 306, 644 S.E.2d 784, 785–86 (Ct.App.2007).

When Pilgrim was injured on January 28, 2005, he had worked only 29.5 hours for Kern, all on the job for Eaton and Revis. He was paid for this time at the rate of $18 an hour. Other than this, neither party presented any direct evidence for the commission to use in calculating average weekly wage. The commission calculated Pilgrim's average weekly wage by multiplying $18 by a forty-hour week. We believe the commission's calculation of average weekly wage amounts to an error of law and resulted in an average weekly wage that is clearly erroneous. Because we find these errors have prejudiced substantial rights of the appellant, we reverse.

The Workers' Compensation Act defines average weekly wages precisely: “ ‘Average weekly wages' means the earnings of the injured employee in the employment in which he was working at the time of the injury during the period of fifty-two weeks immediately preceding the date of the injury....” S.C.Code Ann. § 42–1–40 (Supp.2009). The section sets forth four alternative methods for the commission to use to calculate the average wage. Forrest, 373 S.C. at 308, 644 S.E.2d at 786. The primary method of calculation requires that “ ‘[a]verage weekly wage’ must be calculated by taking the total wages paid for the last four quarters ... divided by fifty-two or by the actual number of weeks for which wages were paid, whichever is less.” S.C.Code Ann. § 42–1–40. The commission must use this method unless “the employment, prior to the injury, extended over a period of less than fifty-two weeks,” or unless “for exceptional reasons” it would be unfair to do so. Id.⁵

In this case, the record shows that Pilgrim had been working at the job for Kern for less than one week. Therefore, it was not permissible for the commission to use the primary method of calculating Pilgrim's average weekly wage. Under this circumstance, the commission is required to consider which of the alternative methods for calculating average weekly wage it will use. Each alternative is preceded by a description of the conditions under which the commission may use the alternative. Id. Before the commission may use any one of these alternatives, the commission must find, or the record must clearly show, that the necessary conditions exist.

The commission failed to comply with section 42–1–40 in two important...