Romero v. Shumate Constructors, Inc.

• Decision Date: 21 October 1994
• Docket Number: 15426,Nos. 15325,s. 15325
• Citation: 119 N.M. 58,888 P.2d 940,1994 NMCA 137
• Parties: Eloy R. ROMERO, Worker-Appellant, v. SHUMATE CONSTRUCTORS, INC. and Transamerica Insurance Group, and Fay's Painting Company, and United States Fidelity & Guaranty Company, Respondents-Insurers-Appellees.
• Court: Court of Appeals of New Mexico

Page 940

888 P.2d 940

119 N.M. 58

Eloy R. ROMERO, Worker-Appellant, v. SHUMATE CONSTRUCTORS, INC. and Transamerica Insurance Group and Fay's Painting Company, and United States Fidelity & Guaranty Company Respondents-Insurers-Appellees.

Nos. 15325, 15426.

Court of Appeals of New Mexico.

Oct. 21, 1994.

Certiorari Granted Jan. 9, 1995.

[119 N.M. 61] Donald M. Pinnock, Will Ferguson & Associates, Albuquerque, for worker-appellant.

Gary J. Cade, Civerolo, Wolf, Gralow & Hill, P.A., Albuquerque, for Shumate Constructors, Inc. and Transamerica Ins. Group.

Manuel Garcia, Jr., Albuquerque, for Fay's Painting Co.

Thomas R. Mack, Miller, Stratvert, Torgerson & Schlenker, P.A., Albuquerque, for U.S. Fidelity Guar. & Co.

OPINION

BIVINS, Judge.

We consolidated these appeals to consider NMSA 1978, Section 52-1-22 (Repl.Pamp.1991), sometimes referred to as the "statutory-employer" or "contractor-under" provision of the Workers' Compensation Act, NMSA 1978, Section 52-1-1 to -70 (Repl.Pamp.1991). In the first case on appeal, Romero v. Shumate Constructors, Inc., a workers' compensation case, the Administrative Law Judge (ALJ) granted summary judgment in favor of the general contractor, Shumate Constructors, Inc. (Shumate), and its carrier. The ALJ determined that Romero's immediate employer, Fay's Painting Company (Fay's), was an independent contractor, and therefore Shumate was not liable to pay compensation benefits to Romero. Romero appeals that ruling. In the second case on appeal, Harger v. Structural Services, Inc., a common law tort action, Harger sued Jaynes Corporation (Jaynes), the primary contractor, and Structural Services, Inc. (SSI), a subcontractor, for personal injuries suffered while Harger was working for another subcontractor, Superior Mechanical Contractors, Inc. (Superior). The district court of Bernalillo County granted summary judgment in favor of Jaynes and SSI. The court determined Jaynes to be a statutory employer and thus immune from suit. SSI was determined to be a co-employee of Harger and also immune. Because different results occurred under similar facts in these two cases and because of the confusion emanating from the statutory-employer provision, we consolidated these appeals in order to revisit this enigmatic section of the Workers' Compensation Act.

FACTS

In Romero, Shumate was the general contractor in the construction and renovation of several primary clarifier units at the City of Albuquerque's wastewater treatment plant. Shumate hired and entered into a written contract with Fay's to sandblast and apply protective coatings to those clarifier units. Shumate never engages in sandblasting or coating on wastewater treatment projects, but rather uses subcontractors to do such work when necessary.

Romero was an employee of Fay's. He alleges that he was injured in the course and scope of his employment. Shumate required Fay's to carry workers' compensation insurance and other insurance for its workers. Fay's provided Shumate with a certificate of insurance, but Romero alleges that Fay's did not actually carry workers' compensation insurance. The question of whether Fay's carried workers' compensation insurance was unresolved at the time Shumate was granted summary judgment, and we have not been informed of any subsequent resolution of this issue.

While Shumate made a lump-sum payment of $84,708 to Fay's and did not specify how many workers there would be or how much each worker would be paid, the contract required Fay's to pay a certain scale of wages and to use any payment by Shumate to pay for labor and materials before spending it elsewhere. In addition, the contract required Fay's to use only its own equipment unless it received permission from Shumate. The contract also required Fay's to follow Shumate's safety policy, which included the requirement to leave safety equipment in place. Shumate also reserved the right to clean up the project site if Fay's failed to do so, and it could charge Fay's if it had to do the cleanup.

In Harger, Jaynes was the general contractor on the construction of a school in Zuni, New Mexico. Superior subcontracted with Jaynes to perform mechanical work on the school, and SSI was Jaynes's structural steel subcontractor on the project. Harger was employed by Superior and was injured in the course of his employment by a steel beam that SSI was moving at the time. Jaynes required Superior to carry workers' compensation insurance, and Superior did so. At the time Jaynes and Superior entered their contract, Superior already had workers' compensation insurance.

The contract between Jaynes and Superior specifically referred to Superior as an independent contractor. It also required Superior to furnish its own labor, materials, and equipment for its work on the project. The contract price was a lump sum of $227,262. Furthermore, Harger alleges that Superior had control over its own employees, had the power to hire and fire Harger, and paid Harger an hourly salary. On the other hand, the contract required Superior to clean up the site. If Superior failed to do so, Jaynes was permitted to do the cleanup and charge Superior for the work. The contract also required Superior to complete its work according to a schedule set and modifiable by Jaynes and to coordinate its activities with Jaynes and all other employees and subcontractors of Jaynes. As was the case with Shumate in Romero, Superior was contractually required to follow safety measures established by Jaynes and those mandated by state and federal law. Finally, if Superior "fail[ed] to supply enough properly skilled workers, proper materials, or maintain the Schedule of Work, or it fail[ed] to make prompt payment for its workers, ... disregard[ed] laws, ordinances, rules, regulations or orders of any public authority having jurisdiction,"," Jaynes could supply workers or other subcontractors to perform a portion of Superior's work or terminate the contract after expiration of a period of time within which Superior could cure its default. If Jaynes chose to terminate the contract, it could use Superior's equipment and materials to complete the project.

DISCUSSION

The questions we consider here are: (1) whether the concept of "casual employment" as referred to in Section 52-1-22 is relevant to the disposition of these cases; (2) whether summary judgment as to the existence or non-existence of a statutory-employment relationship was proper in either Romero or Harger; and (3) whether summary judgment that SSI was Harger's co-employee was proper.

I. Casual Employment

Section 52-1-22, captioned "Work not casual employment," provides:

As used in the Workers' Compensation Act [this article], unless the context otherwise requires, where any employer procures any work to be done wholly or in part for him by a contractor other than an independent contractor and the work so procured to be done is a part or process in the trade or business or undertaking of such employer, then such employer shall be liable to pay all compensation under the Workers' Compensation Act to the same extent as if the work were done without the intervention of such contractor. The work so procured to be done shall not be construed to be "casual employment." (Emphasis added.)

Shumate argues that the work done by Romero was casual employment as to Shumate, and that Romero was therefore not a statutory employee of Shumate. Part of the confusion in applying this section arises, we believe, because of the caption and the last sentence of Section 52-1-22. Ignoring that caption and sentence for the moment, the remaining language of the section (one sentence) deals with circumstances in which an employer of a subcontractor shall become liable to pay workers' compensation benefits under the Workers' Compensation Act. As we stated in Quintana v. University of California, 111 N.M. 679, 681, 808 P.2d 964, 966 (Ct.App.), cert. denied, 111 N.M. 678, 808 P.2d 963 (1991), "it is the relationship between the general contractor and the employer of the claimant [worker] that is dispositive [of whether the general contractor is a statutory employer] and not the relationship between the general contractor and the claimant." See also Rivera v. Sagebrush Sales, Inc., 118 N.M. 676, 680, 884 P.2d 832, 836 (Ct.App.1994). "Casual employment," in contrast, ordinarily deals with the relationship between the claimant's alleged immediate employer and the claimant. See generally Sec. 52-1-16(A) and -23; 1C Arthur Larson, The Law of Workmen's Compensation Sec. 51.00-51.23 (1993).

As we see it, the purpose of the sentence on casual employment is to make clear that, once the two key requirements of statutory employment under Section 52-1-22 are met, i.e., that (1) the subcontractor in question is not an independent contractor and (2) the subcontractor's work is "part or process in the trade or business or undertaking" of the general contractor, see Quintana, 111 N.M. at 681, 808 P.2d at 966, such work will not be deemed casual employment as to the general contractor for purposes of Sections 52-1-16(A) and -23. In case the reader had any doubt about the consistency of the statutory-employer provision and the rest of the Act, that doubt should be laid to rest by the sentence on casual employment. In the two appeals before us, therefore, we need not be concerned with casual employment, but rather with the above-mentioned two requirements of the statutory-employer provision.

II. Statutory-Employer Provision

The parties in the respective cases seem to agree that Romero was an employee of Fay's and that Harger was an employee of Superior. In Romero, Worker seeks compensation benefits from Shumate, the general contractor and employer of Fay's. Romero sued Shumate because Fay's may not have carried workers' compensation insurance. In Harger, Worker obtained compensation benefits from his principal employer, Superior, and now seeks damages through a tort action...