Trudell v. Hibbert

Decision Date05 April 2012
Docket NumberNo. S–13608.,S–13608.
Citation272 P.3d 331
PartiesLawrence TRUDELL, Appellant, v. John Brent HIBBERT, Debra Hibbert, and AAA Alaska Cab, Inc., Appellees.
CourtAlaska Supreme Court

OPINION TEXT STARTS HERE

Michael W. Flanigan, Walther & Flanigan, Anchorage, for Appellant.

Peter J. Maassen, Ingaldson, Maassen & Fitzgerald, P.C., Anchorage, for Appellees.

Before: CARPENETI, Chief Justice, FABE, WINFREE, and STOWERS, Justices.

OPINION

CARPENETI, Chief Justice.I. INTRODUCTION

The employee of a contractor was injured while repairing a building; the contractor did not have workers' compensation insurance. The employee filed suit for workers' compensation benefits against his employer and against the owners of the building, alleging that the owners were “project owners” as defined in the Alaska Workers' Compensation Act and thus liable for securing workers' compensation. The employer then filed for bankruptcy. The owners denied liability on the basis that they were not “project owners.” After a bench trial solely about whether the building owners were “project owners” or the injured worker's employers, the superior court decided that they were neither and that they were not liable to pay worker's compensation to the injured worker, and awarded attorney's fees against the employee. Because it was error to interpret “project owners” as excluding the building owners, we reverse the superior court's decision.

II. FACTS AND PROCEEDINGS

Lawrence Trudell was injured on June 13, 2006, when he fell while trying to descend a ladder from the roof of a structure on which he was working. At the time he was employed by Phillips Construction Co. (Phillips), a construction contracting company principally owned by Clayton Phillips and Trish Dorman. 1 Phillips did not have workers' compensation insurance, even though it was licensed by the State of Alaska.2 The structure Trudell was working on was owned by John Brent Hibbert (Brent) and Debra Hibbert.

The Hibberts own and operate AAA Alaska Cab, Inc. (AAA Cab) in Kenai. The company is incorporated, with Brent Hibbert acting as president and Debra Hibbert acting as secretary-treasurer. Brent Hibbert is the sole shareholder. The Hibberts also own several pieces of property in the Kenai area and have what the superior court described as a “modest rental business.” They own all of their real property as individuals. The cab company leases its office and “shop” from the Hibberts.

The building from which Trudell fell serves as both the Hibberts' residence and the cab company's business office.3 The office is in a converted “mud room” measuring about 10 feet by 15 feet; it has some office equipment and a radio on which the Hibberts can monitor and communicate with the cab drivers. The cab company takes job applications in the office and has notices about drug testing there. Cab drivers come to the office to deposit cash and exchange tokens or credit slips they receive as part of some accounts for cab service. Across the street from the home office is a garage or “shop” for the cab business.

The cab company and the Hibberts signed a lease agreement dated January 1, 2006. The lease agreement did not separate rent paid for the office from rent for the shop; it provided that the cab company “lease[d] the shop (1380 Nighthawk Ln) and office (1385 Nighthawk Ln) space” and required the cab company to pay utilities and taxes. It also required that any “damage to the building and supplies” be “fixed or repaired by tenant.” The lease did not have a fixed rent. The trial court found that the “rental amount ... is apparently the amount of the home mortgage and utilities.” The trial court “could not ... determine[ ] if the cab company “absorbed all home utilities.”

In May 2006 the Hibberts contracted with Phillips to repair the office-residence. The repair work initially consisted of re-siding the building, repairing the foundation under the cab office space, and installing soffit and fascia. The contract was later expanded to include roof repair on the office-residence and installation of eaves on the shop. The Hibberts paid cash for the job and got a discount for doing so. There was a dispute at trial as to who initiated the cash payment discussion.

Trudell worked on the repairs, tearing off the old siding, soffit, and fascia. He also helped install an entryway door for the office and worked on the foundation underneath the office. On June 13, 2006, he fell when he stepped onto a ladder belonging to Phillips; the ladder began to collapse and then fell with Trudell on it. At the time of the accident, Trudell was working on the roof of the office-residence installing an ice and water shield. Trudell fell about 25 feet to the ground and sustained serious injuries: He broke his back, became paralyzed from the waist down, lost most of his hearing, suffers extreme vertigo, and must use a catheter. He spent several months in the hospital. Phillips apparently did not file a report of injury with the Alaska Workers' Compensation Board (the Board) as required by AS 23.30.070.

Trudell sued Clayton Phillips d/b/a Phillips and the Hibberts d/b/a AAA Cab in November 2006.4 He also filed a lien on the Hibberts' property to secure payment of workers' compensation. He sought to foreclose on the lien he had filed, claiming that the Hibberts were responsible for payment of workers' compensation because they were “project owners” as defined in AS 23.30.045 and thus liable for securing workers' compensation. Phillips filed for bankruptcy in February 2007, and the case against him was stayed on March 20, 2007. A discharge was entered in the bankruptcy case on May 29, 2007.

The Hibberts filed their answer and simultaneously moved for summary judgment, arguing that AS 23.30.045 should be construed so that they did not fall within the definition of “project owner.” Superior Court Judge Anna Moran denied the Hibberts' summary judgment motion on July 8, 2008. Relying on legislative history, Judge Moran decided that [t]he term ‘project owners' was intended to include all business entities, including investment groups, limited liability companies (LLCs), and other groups with no regular employees.” She thought that Trudell's proposed interpretation of “project owner” was consistent with the statute and decided that there was “a question of fact as to whether [the Hibberts] were hiring [Trudell] to perform repairs and renovations while engaged in the course of their cab business.”

After receiving additional discovery, Trudell filed an amended complaint, alleging in the alternative that he was the Hibberts' employee when the accident happened because, in addition to their cab company, the Hibberts also ran a property rental business. The Hibberts denied the new allegations.

The parties stipulated that the trial would be solely on the issue of the Hibberts' status as project owners or employers, and, if Trudell were successful, the case would then go before the Board for a determination of workers' compensation benefits. Based on Benson v. City of Nenana, 5 the superior court ordered a bench trial.

The case went to trial in November 2008 before Superior Court Judge Charles T. Huguelet.6 Trudell and the Hibberts were the only witnesses. The court also visited the cab company's office. Trudell testified about his relationship with Phillips, stating that he began working for Phillips sometime in November 2005. The following month another worker fell and broke his leg and ankle. Phillips did not have workers' compensation insurance at the time. Phillips did not pay Trudell regularly, and Trudell was living off his savings part of the time he worked for Phillips. Trudell estimated that Phillips owed him about $30,000 in wages and said that Phillips paid him about $2,000 from the money the Hibberts paid Phillips. Phillips “hinted” to Trudell that he would make Trudell a business partner at some point but never did. Trudell said that he never made an investment in Phillips and considered himself Phillips's employee even though Phillips was not paying him regularly.

In early 2006 Phillips drew up paperwork to have Trudell become an independent contractor, but the papers were never filed. According to Trudell, Phillips told him that Phillips would get workers' compensation coverage. Phillips secured some type of insurance that paid a small part of Trudell's hospitalization after the accident. At least two other people besides Trudell and Phillips worked for Phillips on the Hibberts' job.

Trudell also testified about the contract between Phillips and the Hibberts. He indicated that the Hibberts agreed to pay cash in exchange for a discount on the job and gave Phillips more than $10,000 in cash in one payment.7 Trudell described the nature of the work performed for the Hibberts, which included redoing the foundation underneath the office area in the house. Phillips also repaired the roof of the entire structure, including installation of an ice and water shield. Trudell described the accident and his resulting injuries.

Debra Hibbert testified about how she used the office space in the house. She also testified about the couple's property rentals, indicating that even though they owned and rented several pieces of property, they never bought property with the intention of renting it out. She testified that the cab company carried workers' compensation insurance when it had other office employees but did not carry workers' compensation insurance to cover the Hibberts.8 The cab company did not have workers' compensation coverage in 2006.

Debra Hibbert was also the bookkeeper for the cab company, and she testified about its income and rent payments. She testified that the cab company had gross receipts of $613,000 in 2006, with a net income of $138,212. The cab company paid her and her husband together $84,856 in salaries in 2006. She agreed that the cab company paid them $15,563 in rent in 2006 and that this amount of...

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3 cases
  • Seal v. Welty
    • United States
    • Alaska Supreme Court
    • 28 Abril 2023
    ...who was covered by the exclusive liability provision, or an independent contractor, who was not. Benner , 874 P.2d at 952-53.30 272 P.3d 331 (Alaska 2012), vacated in part on other grounds 299 P.3d 1279 (Alaska 2013) (considering whether property owners were "project owners" under AS 23.30.......
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    ...including catering services for employees who operate and maintain the pipeline. Id. at 1288.Finally, plaintiffs cite to Trudell v. Hibbert, 272 P.3d 331 (Alaska 2012), vacated in part on other grounds on reh'g, 299 P.3d 1279 (Alaska 2013). There, "Trudell was injured on June 13, 2006, when......
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    • U.S. District Court — District of Alaska
    • 7 Marzo 2013
    ...the contractor and employees of a subcontractor, as applicable." 17. AS §23.30.045(f)(2). 18. Doc. 30-2 at p. 2. 19. Trudell v. Hibbert, 272 P.3d 331, 338-39 (Alaska 2012). 20. 798 F.2d 364, 366-67 (9th Cir. 1986). 21. Id. 22. Id. at ...

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