Thornbury v. Allen

• Decision Date: 28 October 1999
• Docket Number: No. 98CA1658.,98CA1658.
• Citation: 991 P.2d 335
• Parties: Barbara THORNBURY and Bob Thornbury, Plaintiffs-Appellees, v. Jack C. ALLEN, Defendant-Appellant.
• Court: Colorado Court of Appeals

991 P.2d 335

Barbara THORNBURY and Bob Thornbury, Plaintiffs-Appellees, v. Jack C. ALLEN, Defendant-Appellant.

No. 98CA1658.

Colorado Court of Appeals, Div. I.

October 28, 1999.

Law Office of Lynne Sholler, P.C., Lynne M. Sholler, Breckenridge, Colorado, for Plaintiffs-Appellees.

Dunn, Abplanalp & Mauriello, P.C., John W. Dunn, Carrie Hendon O'Neil, Jerry W. Hannah, Vail, Colorado, for Defendant-Appellant.

Opinion by Judge DAVIDSON.

Defendant, Jack C. Allen, appeals from the judgment entered on a jury verdict in favor of plaintiffs, Barbara Thornbury (Thornbury) and Bob Thornbury (husband). We remand with directions.

Thornbury was injured when a glass shelf fell on her foot while she was supervising the cleaning of Allen's condominium at Beaver Run. It is undisputed that Allen rented out the property and that it was not his private residence. Thornbury received workers' compensation benefits for the injuries through the insurance of her employer, Village Resorts, Inc. (VRI). VRI is a management company that contracted with Allen to provide service to him as an owner of a condominium in the Beaver Run Homeowners' Association (Association), including housekeeping services.

Thornbury and her husband thereafter brought this civil action against Allen, VRI, and the Association, asserting claims described as negligence. VRI and the Association were dismissed from the case as the subcontractor and statutory employer having immunity under the Workers' Compensation Act (Act), § 8-40-101, et seq., C.R.S.1999. Allen also filed a motion to dismiss, arguing that the Act provided Thornbury's exclusive remedy and that he was entitled to immunity on the same basis as the Association and VRI. After considering Thornbury's response, the trial court denied Allen's motion.

Allen later filed a motion, which was initially granted, to join VRI as a third-party defendant, seeking contribution and indemnity based upon his contract with VRI. Although VRI supported Allen's exclusivity argument, it argued that there was no contractual basis for indemnity and no legal basis for contribution. VRI moved for, and was granted, dismissal of the third-party complaint.

The matter proceeded to a jury trial, and identical verdicts on the issues of premises liability and negligence were returned. Thornbury was awarded $2800 for non-economic losses and $121,850 for economic losses. Husband was awarded $10,000 for loss of consortium. The jury assessed 45% comparative negligence to Thornbury, and the awards were accordingly reduced. Allen's post-trial motion was denied.

I.

Allen first contends that the exclusivity provisions of the Act apply and that, therefore, the trial court erred in refusing to dismiss the civil action against him. He argues that he is in the rental business and, therefore, was Thornbury's statutory employer and immune from civil suit. We conclude that remand for reconsideration and further findings is necessary for resolution of this issue.

So long as the insurance provisions of the Act have been complied with, workers' compensation recovery is an employee's exclusive remedy against an employer for a work-related injury. Bailey v. C.P. Construction, Inc., 837 P.2d 277 (Colo.App.1992). Unless there is an actual employment relationship, an employer must be a "statutory employer" as contemplated by the Act to be afforded immunity from common law liability. Finlay v. Storage Technology Corp., 764 P.2d 62 (Colo.1988).

A.

Section 8-41-402(1), C.R.S.1999, provides that any person, company, or corporation owning any real property or improvements thereon that contracts out any work done on and to that property to any contractor, subcontractor, or person who hires or uses employees in the doing of such work shall be deemed an employer under the provisions of the Act.

Generally, that subsection of the statute protects landowners from common law liability if their contractors are insured. University of Colorado v. Graham, 807 P.2d 1204 (Colo.App.1990).

Here, it is undisputed that Allen owned real property and contracted out the management of that property to VRI. VRI maintained workers' compensation insurance, as required by its contract with Allen. Thus, Allen indirectly satisfied the requirement for workers' compensation insurance. See Colorado Springs v. Ellsworth, 187 Colo. 193, 529 P.2d 646 (1974) (evident purpose of predecessor to § 8-41-402 was to protect landowner from common law liability if he required his contractor to carry approved workers' compensation insurance); see also Stewart v. Industrial Commission, 163 Colo. 12, 428 P.2d 367 (1967). Accordingly, Allen was Thornbury's statutory employer under § 8-41-402, C.R.S.1999.

However, the Act does not apply to the owner or occupant, or both, of residential real property which meets the definition of a "qualified residence" under the federal Internal Revenue Code, unless the person performing the work is "otherwise an employee of the owner or occupant, or both." Section 8-41-402(1); see, e.g., Organ v. Jorgensen, 888 P.2d 336 (Colo.App.1994) ("qualified residence" is defined as principal residence and one other residence, which is selected by the taxpayer for purposes of the relevant subsection and used as a residence as defined in the Code).

Because the trial court here did not apply § 8-41-402(1) in the first instance, it did not make any findings to resolve the disputed issue whether this exemption from statutory employment applies.

Accordingly, the case must be remanded for the factual determination whether Allen is excepted as a statutory employer under § 8-41-402(1) because he is the owner of a "qualified residence," which has a specific definition under the Internal Revenue Code. The determination whether real property constitutes a "qualified residence" must be made as of the time of the injury, and the burden of proof is on the party asserting that the property meets the definition of a "qualified residence." Brown v. Muto, 943 P.2d 38 (Colo.App.1996).

B.

However, even if it is determined that Allen is the owner of a "qualified residence," Thornbury may be "otherwise an employee" of Allen, and, if so, Allen is entitled to immunity on that basis. See § 8-41-402(1) (Act does not apply to owner of qualified residence unless person performing work is "otherwise an employee" of the property owner).

Allen argued that he was entitled to immunity as a statutory employer under § 8-41-401(1)(a), C.R.S.1999. That section applies to persons or companies that conduct a business by contracting out "any part or all of the work thereof." Both the subcontractor and the subcontractor's employees are deemed "employees" under the Act. Section 8-41-401(1)(b), C.R.S.1999.

The determination whether a person or entity is a statutory employer under § 8-41-401(1)(a) is a question of fact. Finlay v. Storage Technology Corp., supra.

Here, in considering Allen's asserted statutory employer status under § 8-41-401(1)(a), the trial court found that Allen was not in privity with Thornbury and did not contract directly with her. The court also concluded that, since Allen was "simply having his condominium cleaned," he was not "engaged in or conducting any business by ... contracting out any part or all of the work thereof."

However, the point at which ownership of leased or rented property becomes a business within the Workers' Compensation Act is a question of fact. Sorenson v. Industrial Commission, 598 P.2d 362 (Utah 1979). And, the trial court here did not adequately consider in the first instance whether Allen was conducting a business by the rental of his condominium.

Secondly, in Finlay v. Storage Technology Corp., supra, the supreme court adopted a broad standard for the determination whether statutory employment exists for a person conducting a business by contracting out part of its work. That test, assuming that the employer otherwise is conducting a business, is whether the work contracted out is part of the employer's "regular business" as defined by the total business operation.

We note that, although one can demonstrate the importance of contracted services to the employer by establishing that the employer maintains control over the employee, the statutory employment relationship is not predicated on a finding of employer control. Finlay v. Storage Technology Corp., supra. Therefore, contrary to Thornbury's arguments, statutory employment was not precluded here simply because VRI was her direct employer. See M & M Management Co. v. Industrial Claim Appeals Office, 979 P.2d 574 (Colo.App.1998) (one purpose of statute is to prevent employers from avoiding responsibility under the Act by contracting out their regular work to uninsured independent contractors rather than hiring the worker directly); Stewart v. Industrial Commission, supra; see also Carpet Exchange of Denver, Inc. v. Industrial Claim Appeals Office, 859 P.2d 278 (Colo.App.1993) (independent contractors may be deemed employees under §§ 8-41-401 and 8-41-402).

Thus, if we assume, without deciding, that Allen was in the rental business, then the...