Snook v. Joyce Homes, Inc.

• Decision Date: 05 February 2009
• Docket Number: No. 07CA2352.,07CA2352.
• Citation: 215 P.3d 1210
• Parties: Kenneth G. SNOOK, Plaintiff-Appellant, v. JOYCE HOMES, INC., a Colorado corporation, Defendant-Appellee.
• Court: Colorado Court of Appeals

215 P.3d 1210

Kenneth G. SNOOK, Plaintiff-Appellant, v. JOYCE HOMES, INC., a Colorado corporation, Defendant-Appellee.

No. 07CA2352.

Colorado Court of Appeals, Div. VI.

February 5, 2009.

Leventhal, Brown & Puga, P.C., Benjamin Sachs, Lorraine E. Parker, Leslie J. Stratton, Denver, Colorado, for Plaintiff-Appellant.

Wood, Ris & Hames, P.C., Mark R. Davis, Andrew D. Peterson, Denver, Colorado, for Defendant-Appellee.

Opinion by Judge MÁRQUEZ.^*

In this negligence action, plaintiff, Kenneth G. Snook, appeals the trial court's judgment holding that defendant, Joyce Homes, Inc., was his statutory employer, rejecting his constitutional challenge to section 8-41-401(3), C.R.S.2008, of the Workers' Compensation Act (Act), concluding that Snook's claims were limited to $15,000, and dismissing his claims with prejudice. We affirm.

I. Background

Joyce Homes is a home builder that constructed a home in Highlands Ranch. Snook was a sole proprietor and an independent contractor who did trim work on the home under a contract between Snook and a subcontractor, Total Interior Trim Systems (Total Interior), which had agreed to do the work for Joyce Homes. Although Snook's contract with Total Interior required him to obtain workers' compensation insurance, he neglected to do so.

While performing the trim work, Snook fell from scaffolding, injuring his right leg, ankle, and foot. He commenced this action against Joyce Homes and others, alleging that the scaffolding had been negligently constructed, causing it to fall.

Joyce Homes filed a C.R.C.P. 56(h) motion for determination of a question of law, asking the trial court to determine whether it was Snook's statutory employer, and, if so, whether Snook's damages were capped at $15,000 by operation of section 8-41-401(3). The trial court concluded that Joyce Homes was Snook's statutory employer; it was undisputed that Snook, a sole proprietor, had elected not to obtain workers' compensation insurance; and pursuant to section 8-41-401(3) any recovery by Snook was limited to $15,000.

By a separate order, the trial court rejected Snook's constitutional challenges to section 8-41-401(3), holding that the statute does not violate the Colorado Constitution's prohibition against special legislation and does not deny him substantive due process. The court reasoned that the damages cap chosen was not arbitrary or capricious and that the provision is reasonable and rational because it recognizes that sole proprietors have a choice of whether to be covered. The trial court granted Joyce Homes' motion to dismiss Snook's claims against it upon its tender of $15,000 into the trial court's registry. The trial court certified that Snook was entitled to entry of final judgment under C.R.C.P. 54(b).

II. Constitutional Challenge

Snook contends that section 8-41-401(3) violates the Colorado Constitution's prohibition against special legislation; and the statute's damages cap violates his right to equal protection and due process under the law. We are not persuaded.

A. Standard of Review

We review a trial court's assessment of the constitutionality of a statute de novo. E-470 Pub. Highway Auth., 91 P.3d 1038, 1041 (Colo.2004). We presume that a statute is constitutional until shown otherwise. Culver v. Ace Elec., 971 P.2d 641, 646 (Colo.1999). "The party asserting the unconstitutionality of the statute bears the burden of proving its invalidity beyond a reasonable doubt." Id.

B. Prohibition Against Special Legislation

Colorado Constitution article V, section 25 prohibits the enactment of special legislation:

The general assembly shall not pass ... special laws ... for limitation of civil actions ... [or] granting to any corporation, association or individual any special or exclusive privilege, immunity or franchise whatever. In all other cases, where a general law can be made applicable no special law shall be enacted.

"The prohibition against special legislation was enacted, in part, `for the purpose of preventing class legislation — that is, legislation that applies to some classes but not to others without a reasonable basis for distinguishing between them.'" People v. Canister, 110 P.3d 380, 382 (Colo.2005) (quoting City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181, 1190 (Colo.1987)). The provision tests whether "legislation is `general and uniform in its operation upon all in [a] like situation.'" City of Greenwood Village v. Petitioners for Proposed City of Centennial, 3 P.3d 427, 440-41 (Colo.2000) (quoting Am. Water Dev., Inc. v. City of Alamosa, 874 P.2d 352, 370 (Colo.1994)). A statute violates the prohibition against special legislation if it creates an illusory class or one "that is drawn so that it will never have any members other than those targeted by the legislation." Canister, 110 P.3d at 384.

Judicial review of a statute under article V, section 25 "focuses on whether legislation creates valid classifications, and, if so, whether the classifications are reasonable and rationally related to a legitimate public purpose." City of Greenwood Village, 3 P.3d at 441. If the classification is reasonably related to a legitimate government purpose, the statute does not violate article V, section 25. In re Interrogatory on H.B. 91S-1005, 814 P.2d 875, 886 (Colo.1991); see also City of Greenwood Village, 3 P.3d at 441. Moreover, if there is a distinguishing factor, then the General Assembly may properly adopt the classification, even if some inequality may result. Yarbro v. Hilton Hotels Corp., 655 P.2d 822, 828 (Colo.1982).

1. Classification

Snook contends that section 8-41-401(3) is special interest legislation that arbitrarily and unreasonably benefits and grants special privileges or immunities to a specific class, namely corporations that contract out their regular business, while subjecting individual independent contractors and sole proprietors who are negligently injured to significant physical and fiscal disadvantages and risks. We do not agree.

Snook does not contend that the class is an illusory class of one, as it could comprise numerous individuals. We assume that the classification here is genuine and therefore must determine whether the classification is reasonable and rationally related to a legitimate government purpose. See In re Interrogatory on H.B. 91S-1005, 814 P.2d at 885.

The "workers' compensation scheme was intended, in part, to create predictable expenses for employers in light of the planning difficulties that accompany common law tort liability." Pulsifer v. Pueblo Prof'l Contractors, Inc., 161 P.3d 656, 663 (Colo.2007). The purpose of section 8-41-401(3) is to encourage participation in the workers' compensation system and limit the exposure of those contractors who obtain coverage from lawsuits or claims brought by uncovered independent contractors who are injured on the job. See Stampados v. Colo. D & S Enters., Inc., 833 P.2d 815, 819 (Colo. App.1992) ("the purpose of [section] 8-41-401(3) was to ... bar[ ] claims by independent contractors who choose to reject coverage, thereby encouraging them to obtain coverage").

The limitation [on damages] was premised on the belief that when an individual "chooses to opt out of Work[ers'] Comp. [he or she] can't have the best of both worlds." House Hearing on H.B. 1215 (Mary Ann Tebedo, R., El Paso, Bill sponsor). That is, an individual rejecting coverage to save money on the premiums cannot then come back and sue the employer under the common law for work related injuries. The bill proponents explained "[w]e provided a no-fault insurance plan for you [employers], and we really want you to take advantage of it." Id. The cap on tort recovery was intended so that "businesses would know what their liability will be, and can plan for that in any business decision." Id.

Kelly v. Mile Hi Single Ply, Inc., 890 P.2d 1161, 1164-65 (Colo.1995) (footnote omitted). Thus, "[t]he General Assembly has shifted the risk of work-related injuries costing more than fifteen thousand dollars to individuals who have the choice to participate in the workers' compensation system." Pulsifer, 161 P.3d at 663.

Pulsifer and other cases that have examined section 8-41-401(3) have not specifically addressed the statute's constitutionality. Nonetheless, the court in Pulsifer noted that, "absent constitutional infirmities," courts were obliged to follow the legislature's "expressed intent," "harsh though it may seem to those subject to the statute's limits." Pulsifer, 161 P.3d at 663. This suggests that constitutional irregularities in the statute had not been identified.

We conclude that section 8-41-401(3) creates a class that is rationally and reasonably related to the legitimate government purposes of encouraging participation in the workers' compensation system and protecting the interests of compliant employers. See In re Interrogatory on H.B. 91S-1005, 814 P.2d at 885.

2. Amount of the Damages Cap

Snook nevertheless argues that the amount of the cap is unreasonably low, arbitrary, and not rationally related to the purpose of encouraging participation in the workers' compensation system. We reject this argument.

The existence of a cap on damages is not, per se, unconstitutional. Other legislative caps on damages have been upheld. See Garhart ex rel. Tinsman v. Columbia/Healthone, L.L.C., 95 P.3d 571, 582 (Colo.2004) (upholding damages cap imposed by the Health Care Availability Act (HCAA)); Scholz v. Metro. Pathologists, P.C., 851 P.2d 901, 907 (Colo.1993) (the limitations on damage awards imposed by the HCAA do not violate the guarantee of equal protection or a party's right to due process of law); Scharrel v. Wal-Mart Stores, Inc., 949 P.2d 89, 95-96 (Colo.App.1997) (upholding the statutory cap on noneconomic damages).

Here, the legislative history included in the record reveals that the amount of the cap was reached by compromise. First Conference Committee on H.B. 1215, 56th Gen. Assemb., 1st Sess. (May 12,...