State ex rel. Wsi v. Jfk Raingutters

• Decision Date: 07 June 2007
• Docket Number: No. 20060196.,20060196.
• Citation: 733 N.W.2d 248,2007 ND 80
• Court: North Dakota Supreme Court
• Parties: STATE of North Dakota by WORKFORCE SAFETY & INSURANCE, Plaintiff and Appellee v. JFK RAINGUTTERS, a Limited Liability Company, and Frank Whitecalfe, Individually, Defendants and Appellants.

733 N.W.2d 248

2007 ND 80

STATE of North Dakota by WORKFORCE SAFETY & INSURANCE, Plaintiff and Appellee v. JFK RAINGUTTERS, a Limited Liability Company, and Frank Whitecalfe, Individually, Defendants and Appellants.

No. 20060196.

Supreme Court of North Dakota.

June 7, 2007.

Lawrence E. King, Special Assistant Attorney General, Bismarck, N.D., for plaintiff and appellee.

Thomas M. Disselhorst, Disselhorst Law Office, Bismarck, N.D., for defendants and appellants.

VANDE WALLE, Chief Justice.

[¶ 1] JFK Raingutters, LLC ("JFK"), and Frank Whitecalfe appealed from a judgment awarding Workforce Safety and Insurance ("WSI") $93,414.28 in unpaid worker's compensation premiums, penalties, and interest. We conclude the district court had subject matter jurisdiction over WSI's action, and the court did not err in granting summary judgment. We affirm.

I

[¶ 2] Frank Whitecalfe is an enrolled member of the Three Affiliated Tribes and lives on the Fort Berthold Indian Reservation. In 1999, Whitecalfe filed with the Secretary of State articles of organization for JFK, a limited liability company which engaged in the business of constructing and installing rain gutters. To be eligible for Indian preference in employment under the Three Affiliated Tribes Tribal Employment Rights Ordinance ("TERO") in effect at the time, JFK was required to qualify as a "Certified Indian Contractor." TERO of the Fort Berthold Reservation, Chapter 7 (March 11, 1993). Under Chapter 7, Section 3(D) of the TERO, "Certified Indian Contractor" status would not be granted unless "[t]he firm . . . provide[s] documentation, that all the required employer requirements; of unemployment insurance, workmen's compensation, withholding of federal tax and any other required taxes and insurances's [sic] are in effect, to be in operation in a lawful manner." The Three Affiliated Tribes do not have a workers compensation scheme.

[¶ 3] Whitecalfe applied to WSI for workers compensation coverage for JFK and listed himself as the sole owner of the company on the application. Whitecalfe reported that the business performed rain gutter installation on the Fort Berthold Reservation as well as other locations in North Dakota and neighboring states. Although Whitecalfe originally paid JFK's quarterly workers compensation premiums, he eventually claimed that JFK had no employees and no payroll, and began paying the minimum quarterly payment to keep the account open.

[¶ 4] In July 2002, Job Service North Dakota received an application for unemployment benefits from a person who listed JFK as his former employer in Bismarck. Job Service ultimately determined that JFK had 16 workers employed and was liable for unemployment insurance contributions. Based on Job Service's information, WSI contacted Whitecalfe and requested JFK's annual payroll report. Whitecalfe eventually submitted a payroll report listing no employees from October 1, 2001, through September 30, 2002. WSI informed Whitecalfe that Job Service had identified 16 employees and he needed to submit further documentation or it would assume those 16 workers were employees. After Whitecalfe failed to respond, WSI informed him of his personal liability for the unpaid premiums. In response, Whitecalfe claimed JFK was exempt from paying workers compensation insurance premiums because its workers were not employees, but were independent contractors under tribal law who were referred to him by the TERO office. Whitecalfe also claimed most of JFK's work was performed within the exterior boundaries of the reservation or on trust lands, and that WSI had no jurisdiction and could not collect premiums for those projects. Whitecalfe conceded that some of JFK's work was performed off the reservation.

[¶ 5] In 2003, after WSI issued a noncompliance order finding that JFK and Whitecalfe owed unpaid workers compensation premiums, penalties, and interest, Whitecalfe requested an administrative hearing. He argued that JFK was not responsible for premiums on work performed by independent contractors and that WSI did not have jurisdiction over work performed on the reservation or on trust lands. Whitecalfe did not dispute that JFK was subject to North Dakota's workers compensation laws relating to work performed off the reservation. WSI sought discovery of JFK's payroll records and information on all projects performed by JFK during the relevant time period. Whitecalfe failed to comply with WSI's discovery requests, even after being ordered to do so by the administrative law judge ("ALJ"), and WSI moved for sanctions. The ALJ granted the motion for sanctions, holding that all workers used by JFK would be deemed employees rather than independent contractors and that Whitecalfe would be barred from presenting evidence at the administrative hearing that any of the work had been performed on the reservation or on trust lands. Following the administrative hearing, the ALJ found JFK and Whitecalfe were liable for the unpaid premiums, and WSI adopted the ALJ's recommendation. JFK and Whitecalfe appealed WSI's final order to the district court. When JFK and Whitecalfe took no further action, including failure to file a certified record, the district court dismissed the appeal. A final judgment was entered, and JFK and Whitecalfe did not appeal from that judgment.

[¶ 6] In June 2005, WSI commenced this collection action seeking recovery of the unpaid premiums, penalties, interest, and costs from JFK and Whitecalfe, and seeking to enjoin JFK from employing persons in hazardous employment within North Dakota until it had fully complied with North Dakota's workers compensation laws. JFK and Whitecalfe answered, again asserting that JFK's employees were independent contractors under tribal law and that the district court lacked jurisdiction to enforce WSI's attempt to impose workers compensation premiums, penalties, and other sanctions for work JFK performed on the reservation or on trust lands. The district court granted WSI's motion for summary judgment, concluding the court had subject matter jurisdiction over the action and the other issues raised by JFK and Whitecalfe were barred by administrative res judicata.

II

[¶ 7] Summary judgment under N.D.R.Civ.P. 56 is a procedural device for the prompt resolution of a controversy on the merits if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. State ex rel. N.D. Hous. Fin. Agency v. Center Mut. Ins. Co., 2006 ND 175, ¶ 8, 720 N.W.2d 425. Summary judgment is appropriate if the issues in the case are such that the resolution of any factual disputes will not alter the result. State ex rel. Stenehjem v. FreeEats.com, Inc., 2006 ND 84, ¶ 4, 712 N.W.2d 828. Whether the district court properly granted summary judgment is a question of law that we review de novo on the entire record. Hild v. Johnson, 2006 ND 217, ¶ 6, 723 N.W.2d 389. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Peoples State Bank of Truman, Inc. v. Molstad Excavating, Inc., 2006 ND 183, ¶ 17, 721 N.W.2d 43.

III

[¶ 8] JFK and Whitecalfe argue the district court lacked subject matter jurisdiction over WSI's action to collect unpaid workers compensation premiums, penalties, and interest for any work that JFK performed on the reservation or on trust lands.

[¶ 9] "[W]henever we consider a case involving a member of an Indian tribe we are confronted with the issue of subject-matter jurisdiction." Davis v. Director, N.D. Dep't of Transp., 467 N.W.2d 420, 422 (N.D.1991). Subject matter jurisdiction is the court's power to hear and decide the general subject involved in the action. Harshberger v. Harshberger, 2006 ND 245, ¶ 15, 724 N.W.2d 148. Subject matter jurisdiction cannot be conferred by agreement, consent, or waiver, and issues involving subject matter jurisdiction can be raised by the court at any time. Id.

[¶ 10] "`Within Indian country state jurisdiction is preempted both by federal protection of tribal self-government and by federal statutes on other subjects relating to Indians, tribes, their property, and federal programs.'" Winer v. Penny Enters., Inc., 2004 ND 21, ¶ 10, 674 N.W.2d 9 (quoting F. Cohen, Handbook of Federal Indian Law 349 (1982) (footnotes omitted)). "[T]his Court has consistently held that state courts have no jurisdiction over civil causes of action involving Indians, arising within the exterior boundaries of an Indian Reservation, unless a majority of the enrolled residents of the Reservation vote to accept jurisdiction." Airvator, Inc. v. Turtle Mountain Mfg. Co., 329 N.W.2d 596, 600 (N.D.1983).

[¶ 11] The United States Supreme Court explained in Williams v. Lee, 358 U.S. 217, 220, 79 S.Ct. 269, 3 L.Ed.2d 251 (1959) (emphasis added), "absent governing Acts of Congress, the question has always been whether the state action infringed on the right of reservation Indians to make their own laws and be ruled by them." Congress has plenary authority to legislate for the Indian tribes in all matters, see United States v. Wheeler, 435 U.S. 313, 319, 98 S.Ct. 1079, 55 L.Ed.2d 303 (1978); In re A.B., 2003 ND 98, ¶ 37, 663 N.W.2d 625, and "[t]he unique and limited sovereignty that Indian tribes retain is subject to complete defeasance by Congress." State v. Hook, 476 N.W.2d 565, 567 (N.D.1991).

[¶ 12] In 1936, Congress enacted 40 U.S.C. § 290, currently codified at 40 U.S.C. § 3172, which provides:

§ 3172. Extension of state workers' compensation laws to buildings, works, and property of the Federal Government

(a) Authorization of extension. — The state authority charged with enforcing and requiring compliance with the state workers' compensation laws and with the orders, decisions, and awards of the authority may apply the...