Raboin v. North Dakota Workers Compensation Bureau

• Decision Date: 02 December 1997
• Docket Number: No. 970105,970105
• Citation: 571 N.W.2d 833
• Parties: Jim RABOIN, Plaintiff and Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Defendant and Appellee. Civil
• Court: North Dakota Supreme Court

Page 833

571 N.W.2d 833

1997 ND 221

Jim RABOIN, Plaintiff and Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Defendant and Appellee.

Civil No. 970105.

Supreme Court of North Dakota.

Dec. 2, 1997.

Jim Raboin, Fargo, pro se.

Lawrence E. King (argued), Special Assistant Attorney General, Bismarck, for defendant and appellee.

NEUMANN, Justice.

¶1 Jim Raboin appealed from a judgment affirming a Workers Compensation Bureau order holding him personally liable under N.D.C.C. § 65-04-26.1 for $16,824.91 in unpaid workers compensation premiums owed by American Classics Corporation (Classics), plus penalty and interest. We conclude the Bureau misapplied the law and improperly assessed personal liability against Raboin for Classics' past due premium debt. We reverse.

¶2 Classics was a North Dakota corporation engaged in the kit car brokering business in Fargo. Its officers and directors included Raboin, president; Joel Skjei, vice president; and Gary Burchill, secretary/treasurer. On July 10, 1990, the Bureau received an application for workers compensation insurance signed by Raboin. Based upon the application estimating wages of $10,200 for the year, the Bureau billed a prepaid premium of $35.70 for the June 28, 1990 through June 30, 1991 payroll period. Classics did not bring the account current until October 8, 1990, when it paid the Bureau $62.12 for the premium plus statutory penalties under N.D.C.C. § 65-04-23.

¶3 On August 1, 1991, the Bureau received a payroll report from Classics, listing an actual gross payroll higher than previously estimated. The Bureau billed Classics an actual premium of $759.85 for the June 28, 1990 through June 30, 1991 payroll period. The actual premium was offset by the $35.70 paid previously, leaving a balance due of $724.15 for the June 28, 1990 through June 30, 1991 payroll period. Classics was also billed an estimated prepaid premium of $1,034.36 for the July 1, 1991 through June 30, 1992 payroll period. Classics never made any payments.

¶4 On April 21, 1992, the Bureau received a final payroll report from Classics, signed by Burchill as secretary/treasurer, listing the payroll from July 1, 1991 through November 21, 1991, when Classics went out of business. Classics was ultimately placed in receivership at the request of the Attorney General's office in May 1992. Based on the report, the Bureau billed an actual premium for that period of $12,731.39. Making adjustment for the previous prepaid premium, the Bureau computed a total balance owing of $13,726.73. Classic's failure to pay resulted in an assessment of $233.94 per month in statutory penalties.

¶5 Because Classics had become a defunct corporation, the Bureau attempted to collect the deficiency from corporate officers Raboin, Skjei and Burchill in their personal capacities under authority of N.D.C.C. § 65-04-26.1. When the Bureau informally determined that Raboin was personally liable, he requested an administrative hearing.

¶6 The Administrative Law Judge (ALJ) found Raboin, Skjei and Burchill "had control of or supervision over the filing of and responsibility for filing premium reports or making payment of premiums" as required to impose personal liability under N.D.C.C. § 65-04-26.1(1). However, because Burchill did not personally have the statutorily required equity interest in Classics to impose liability, he was dismissed from the proceeding. Raboin and Skjei did have the required equity interest, owning 25 percent and 24 percent of Classics, respectively.

¶7 The ALJ found the total balance due from Classics as of the date of the hearing, including statutory penalties, to be $24,279.03. Of this amount, $724.15 was the balance owing before July 1, 1991, which was the effective date of the authorizing legislation, N.D.C.C. § 65-04-26.1. The Bureau did not object to the ALJ deducting this amount from the total owed by Classics, leaving a balance of $23,554.88. The ALJ found Raboin personally liable for $16,824.91, a proportionate fraction of the full amount corresponding to the 15-week period after July 1, 1991 until Raboin was removed as president of Classics on October 7, 1991. The ALJ found Skjei personally liable for $23,554.88, the full amount owing from Classics from July 1, 1991 until November 21, 1991, when the business ended. The Bureau adopted the recommended findings and conclusions of the ALJ. Only Raboin appealed the order to district court, which affirmed the Bureau's decision.

¶8 We review the Bureau's decision, not the decision of the district court, and we affirm the Bureau's decision unless its findings of fact are not supported by a preponderance of the evidence, its conclusions of law are not supported by its findings of fact, its decision is not supported by its conclusions of law, or its decision is not in accordance with the law. Lucier v. North Dakota Workers Comp. Bureau, 556 N.W.2d 56, 59 (N.D.1996); N.D.C.C. § 28-32-19. In evaluating the Bureau's findings of fact, we do not make independent findings or substitute our judgment for that of the Bureau, but we determine only whether the Bureau reasonably reached its factual conclusions from the weight of the evidence on the entire record. Dean v. N.D. Workers Comp. Bureau, 1997 ND 165, p 14, 567 N.W.2d 626.

¶9 At the time the premium payments at issue were due, N.D.C.C. § 65-04-26.1(1), the only statute imposing personal liability on certain officers and shareholders, provided:

"Any officer, director, or any employee having twenty percent ownership of a corporation and any manager, governor, or any employee having twenty percent ownership of a limited liability company that is an employer under this title who has control of or supervision over the filing of and responsibility for filing premium reports or making payment of premiums under this title, and who fails to file the reports or to make payments as required, is personally liable for premiums or reimbursement, including interest, penalties, and costs in the event the corporation or limited liability company does not pay to the bureau those amounts for which the employer is liable."

¶10 The record supports the ALJ's finding that, at all relevant times, Raboin had more than a 20 percent ownership interest in Classics and had control of or supervision over the filing of and responsibility for filing premium reports or paying premiums. Although Raboin contested the issue at the administrative hearing, he does not dispute this finding on appeal. Rather, Raboin contends he cannot be held liable under the statute because he was not a corporate officer at the time the corporation defaulted on the premiums. Specifically, Raboin asserts he is not liable because, although he was president of the corporation at the time the premium billing notices were received by Classics, no premium due notices had reached their due date while he was still a corporate officer.

¶11 The September 24, 1991 "Premium Billing Statement" the Bureau sent to Classics listed the premium due date as October 31, 1991. It also listed the "Optional Quarterly Payment Schedule," which called for payments of principal and interest on September 30 and November 30, 1991, and February 29 and May 31, 1992. The statement listed the premium balance for the period June 28, 1990 to June 30, 1991 as $724.15 and the prepaid premium for the period July 1, 1991 to June 30, 1992 as $1,034.36, totaling $1,758.51 as the amount due by October 31, 1991 to pay the premium in full. If Classics chose the optional quarterly payment schedule, a first quarterly payment of $982.74 was due by September 30, 1991. The statement also alerted Classics that:

"A penalty of $25 plus an additional monthly penalty of 2% of the unpaid premium will be assessed if any of the payment options listed below are in default."

¶12 A November 16, 1991 "Past Due Premium Statement" mailed to Classics also listed the premium due date as October 31, 1991 and requested payment of $1,818.68, explaining:

"Your premium was due on the premium due date shown above. 15 days have now elapsed, and your premium is now in default. Penalties have been added as provided by Section 65-04-23 of the North Dakota Century Code.

"Please pay your premium immediately to avoid legal action and the additional monthly penalty of 2% of the unpaid balance."

¶13 It is undisputed that Raboin was relieved of his duties as president of Classics on October 7, 1991 and no longer served as an officer, director, or employee of the corporation after that date. Raboin therefore argues he cannot be held personally liable because he was no longer affiliated with Classics when the premium payments were stated in the notices as becoming due on October 31, 1991.

¶14 The parties have not cited, and we have not found, any case law to assist us in analyzing corporate officer liability for past due premium payments in a workers compensation context. ¹ In support of his argument, Raboin relies primarily on N.D.C.C. § 65-04-23, which provides in part, "[w]hen an employer defaults in the payment of any premium, any installment of the premium, any penalty or interest ..., the employer at the time of default is subject to a penalty...." Raboin asserts the language "employer at the time of default" is synonymous with the corporate officer who is personally liable under N.D.C.C. § 65-04-26.1(1) and has the requisite equity interest and control of the employer who fails to pay. Because there was no "default" on the payment due October 31, 1991, while Raboin served as president of Classics, he asserts he cannot be personally liable.

¶15 The Bureau counters that N.D.C.C. § 65-04-23 is simply the general statute assessing penalties for a default in an employer's payment of premiums. Here, Classics, not Raboin, was the employer at the time of default, and under the statute, premiums and penalties were properly assessed against the corporate entity. The Bureau contends N.D.C.C. § 65-04-26.1 is the pertinent ...