Smith v. Larry Rice Const., 97-3265.

• Citation: 730 So.2d 336
• Decision Date: 10 March 1999
• Docket Number: No. 97-3265.,97-3265.
• Parties: Ralph D. SMITH, Appellant/Cross-Appellee, v. LARRY RICE CONSTRUCTION; Don Stine Construction and Florida Preferred Risk, Appellees, and Sunshine Companies and Compensation Benefits, Inc., Appellees/Cross-Appellants.
• Court: Court of Appeal of Florida (US)

730 So.2d 336

Ralph D. SMITH, Appellant/Cross-Appellee, v. LARRY RICE CONSTRUCTION; Don Stine Construction and Florida Preferred Risk, Appellees, and Sunshine Companies and Compensation Benefits, Inc., Appellees/Cross-Appellants.

No. 97-3265.

District Court of Appeal of Florida, First District.

March 10, 1999.

Rehearing Denied April 27, 1999.

Susan W. Fox of Macfarlane Ferguson & McMullen, Tampa, and H. Guy Smith of Smith & Feddeler, P.A., Lakeland, for Appellant/Cross-Appellee.

C. Robert Pickett of Waddell and Ready, P.A., Auburndale, for Appellee Larry Rice Construction.

David A. McCranie of McCranie & Lower, P.A., Jacksonville, for Appellees Don Stine Construction and Florida Preferred Risk.

Timothy A. Miller of Riden, Earle & Kiefner, P.A., St. Petersburg, for Appellees/Cross-Appellants Sunshine Companies and Compensation Benefits, Inc.

BENTON, J.

Ralph D. Smith appeals the denial of workers' compensation benefits he sought on account of a construction accident that left him paralyzed. The judge of compensation claims concluded that Mr. Smith was not a covered "employee," even though his certificate of exemption from workers' compensation coverage had expired by the time the accident occurred. On cross appeal, too, Sunshine Companies (Sunshine), who leased employees to a subcontractor, and Compensation Benefits, Inc. (CBI), Sunshine's workers' compensation insurer, contend that the prime contractor, Don Stine Construction (Stine), is liable for benefits as Mr. Smith's statutory employer. Agreeing with this contention, we reverse the order under review and remand for further proceedings.

Mr. Smith's claim for workers' compensation benefits against Stine as a so-called statutory employer arises under section 440.10(1)(b), Florida Statutes (1995), which provides:

In case a contractor sublets any part or parts of his contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment; and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

Mr. Smith contends that he did not have a valid exemption from workers' compensation coverage when he was injured while engaged on contract work Stine had sublet.

Stine contracted to build a Taco Bell store in Tampa, then subcontracted with Larry Rice Construction (Rice) to do the framing. Instead of finishing the job itself, Rice agreed to pay Mr. Smith $4,500 if he and his crew would frame and deck the roof and install the soffit and fascia. The judge of compensation claims found that Mr. Smith was not engaged as an employee either of Rice or of Sunshine. On November 28, 1995, Mr. Smith and his crew—Billy, Ed, and Peanut—started work alongside Rice. Until after the fact, neither Stine nor Sunshine had any knowledge of Mr. Smith's agreement with Rice and neither knew Mr. Smith was working. The following day, when Mr. Smith and his crew had the site to themselves, Mr. Smith fell from the roof and suffered the injuries that rendered him paraplegic.

Mr. Smith had filed with the Division of Workers' Compensation two¹ notices of election to be exempt as a sole proprietor. The certificate that issued upon the second filing stated that the exemption was valid for a period of only two years from November 19, 1993. The certificate expired ten days prior to the industrial accident.² Mr. Smith never procured workers' compensation coverage for himself, or for Billy, Ed or Peanut, whom he paid on an hourly basis.³ Stine's workers' compensation carrier is Florida Preferred Risk (Preferred). Rice leased all of its employees from Sunshine. Sunshine obtained workers' compensation insurance for these employees from CBI. Rice secured no workers' compensation benefits for anybody. CBI has already expended in excess of $230,000 providing Mr. Smith medical and indemnity benefits.

Mr. Smith filed requests for assistance followed by petitions for benefits against Stine, Rice, and Sunshine. CBI and Sunshine filed motions for reimbursement, contribution, indemnification, or exoneration against Stine, Preferred, and Rice. Consolidated for hearing,⁴ these petitions and motions were all denied. Deciding a question of law, the judge of compensation claims ruled that Mr. Smith's accident was not compensable on the ground that he was an independent contractor, not an employee.

Reviewing de novo, we are persuaded this ruling reflects a misapprehension of the pertinent statutory categories.⁵ In Arruda v. Gold Crest Kitchens, 642 So.2d 624, 625 (Fla. 1st DCA 1994), we said Under the factors articulated in Cantor v. Cochran, 184 So.2d 173 (Fla.1966), Arruda would be appropriately considered an independent contractor, as the JCC concluded.... The JCC correctly found Arruda's work status to be that of a sole proprietor.... [S]ection 440.02(13)(d)(5) states that a sole proprietor actively engaged in the construction industry is not an employee if he or she "elects to be exempt from the provisions of this chapter." (Emphasis added.) No evidence was submitted that Arruda had elected to be excluded or exempted from chapter 440. We therefore conclude that Arruda is an employee of Gold Crest, rather than an independent contractor.

We reject the assertion of appellee, Casto Homes, Inc., the general contractor, that section 440.02(13)(d)(1), which provides that an independent contractor is not an employee, should apply to Arruda, because it is more specific than section 440.02(13)(c). On the contrary, the more specific language of sections 440.02(13)(c) and 440.02(13)(d)(5) appears to have been added to the definitional statute to ensure that sole proprietors in the construction trade are not considered "independent contractors," unless they make an affirmative decision to come within such category. In the absence of an election to be exempt that was effective when the industrial accident occurred, the statute treats Mr. Smith, like Mr. Arruda, as an employee for workers' compensation purposes.

A person who is in fact an employee (rather than a corporate officer, a partner, or a sole proprietor) does not have the legal ability to elect to be exempt from chapter 440. The judge of compensation claims found, as a matter of fact, that Mr. Smith was a sole proprietor actively engaged in the construction industry. He therefore had the legal capacity to elect to be exempt from workers' compensation coverage. But he did not have a valid certificate of election to be exempt at the time of the industrial accident. As a matter of law, section 440.02(13), Florida Statutes (1995), deems such a person a statutory employee.

Section 440.02(13)(c), Florida Statutes (1995), provided that "sole proprietor[s] ... actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the division as provided in s. 440.05." At the time Mr. Smith filed his notice of election to be exempt, section 440.05, Florida Statutes (1993), provided, in pertinent part:

(3) Every sole proprietor ... who is actively engaged in the construction industry and who elects an exemption from the provisions of this chapter or who, after electing such exemption, revokes that exemption, shall mail a written notice to such effect to the division on a form prescribed by the division. The notice of election to be exempt from the provisions of this chapter must be notarized and under oath.... Upon receipt of the notice of the election to be exempt and a determination that the notice meets the requirements of this subsection, the division shall issue a certification of the election to the sole proprietor, partner, or officer.... A new certificate of election must be obtained each time the person is employed by a new sole proprietorship, partnership, or corporation that is not listed on the certificate of election.... The certification of the election is valid for 2 years or until the sole proprietor, partner, or officer revokes his election, whichever occurs first.

Mr. Smith filed his second notice of election to be exempt long before he started working for Rice. Ten days before the industrial accident, moreover, the resulting certificate expired by statute.

The judge of compensation claims predicated denial of the motions for reimbursement, contribution, indemnification or exoneration, as well as denial of Mr. Smith's petition for benefits from Stine, on the erroneous conclusion that Mr. Smith was not an employee as defined by statute. But the lack of a valid certificate of election to be exempt from workers' compensation coverage—given the finding that Mr. Smith was not an employee of Sunshine (or of Rice who, in any event, had secured no benefits)—requires the conclusion that Mr. Smith was Stine's statutory employee. We therefore...