W. C. & A. N. Miller Development Co. v. Honaker

• Decision Date: 17 July 1978
• Docket Number: No. 1412,1412
• Citation: 40 Md.App. 185,388 A.2d 562
• Parties: W. C. & A. N. MILLER DEVELOPMENT COMPANY v. Dallas A. HONAKER et ux.
• Court: Court of Special Appeals of Maryland

Page 185

40 Md.App. 185

388 A.2d 562

W. C. & A. N. MILLER DEVELOPMENT COMPANY v. Dallas A. HONAKER et ux.

No. 1412.

Court of Special Appeals of Maryland.

July 17, 1978.

Wade J. Gallagher, Rockville, with whom were William H. Clarke, W. Barry Wraga and Galiher, Clarke, Martell & Donnelly, Rockville, on the brief, for appellant.

Ferdinand J. Mack, Rockville, for appellees.

Argued before MASON, WILNER and COUCH, JJ.

COUCH, Judge.

This case arises out of an injury received by a workman in the course of construction of a house in Montgomery County. A suit, alleging negligence, was brought against appellant, the general building contractor, by the workman and his wife. The workman was an employee of a subcontractor. Appellant pleaded the general issue and raised the defense of immunity under Art. 101, § 15 of the Maryland Workmen's Compensation law. A motion for summary judgment was filed by appellant and granted by the circuit. This decision was reversed by the Court of Appeals, which remanded the case. See Honaker v. W. C. & A. N. Miller Development Co., 278 Md. 453, 365 A.2d 287 (1976). After curing what it perceived to be the defect causing the prior reversal, appellant again moved for summary judgment, which the trial court denied. The case proceeded to trial and the parties agreed to have the jury determine the issues of negligence and damages while the court would determine the main issue presented here; I. e., was appellant the statutory employer of appellee within the meaning of Art. 101, § 62, Annotated Code of Maryland (1964 Repl.Vol.). The court denied appellant's motion for a directed verdict and the jury found appellant negligent and awarded damages. Thereafter the court denied appellant's motion for judgment n. o. v. The effect of the trial court's ruling was that appellant was held not to be the statutory employer of Mr. Honaker. This appeal followed, where appellant raises two questions:

(1) Was the defendant (appellant) the "statutory employer" of Mr. Honaker?

(2) If Mr. Honaker was a statutory employee of appellant may his wife maintain an action for loss of consortium against his statutory employer?

Judge Orth, with reference to the facts in Honaker, revealed:

"The facts are not complicated. Miller was erecting a house on property it owned in Montgomery County, Maryland. It entered into a contract with Orndorff and Spaid, Inc. (Orndorff) whereby Orndorff agreed to furnish all labor and materials to install a roof on the house, gutters and downspouts, and a fireproof garage door, for a specified sum. Honaker was an employee of Orndorff. While working on the installation of the roof, Honaker sustained an accidental personal injury, alleged to be due to the negligence of Miller. Orndorff was covered by Workmen's Compensation insurance on the date of the accident under a policy issued by the State Accident Fund of Maryland. Honaker received workmen's compensation benefits from Orndorff through the Fund as a result of his injury."

With respect to the primary issue here, we find guidance from Honaker where Judge Orth also stated:

"It is manifest on the face of Sec. 62 of Art. 101, ¹ that in order to invoke its provisions there must be:

(1) a principal contractor (footnote omitted)

(2) who has contracted to perform work

(3) which is a part of his trade, business or occupation; and

(4) who has contracted with any other party as a subcontractor for the execution by or under the subcontractor of the whole or any part of such work."

That Court found there was no evidence that Miller had contracted to perform work in the first instance, thus the contract between Miller and Orndorff was not a subcontract. They held Miller was not a "principal contractor", Orndorff was not a subcontractor, and since the conditions prescribed by the statute did not exist, Miller did not become the statutory employer of Honaker. In short, Miller did not enjoy the immunity provided by § 15 of the Article. ²

Upon remand of the case to the trial court, appellant filed a second motion for summary judgment, attaching thereto certain affidavits and exhibits, including a "custom building contract" between it and Mr. and Mrs. DeJanikus, for whom the house was being built. Appellees, in opposing this motion, filed as an exhibit the building permit issued by the Montgomery County Department of Inspections and Licenses which showed appellant to be the owner-contractor. As noted above, appellant's motion was denied and the matter proceeded to trial.

The record reveals that evidence was presented directly, or by stipulation, to show that appellant was in the construction and building business trade, undertaking to construct completed buildings and to give prices to its customers based on completed buildings. There was evidence that appellant would subcontract some of the work, including the roofing work, and include the cost of any subcontractors in the total contract price. It was also brought out that appellant was the owner of the lot upon which the house was to be built. It was further shown that there was a good deal of negotiation as to what the house would contain, including the provision for a slate roof, between appellant and Mr. and Mrs. DeJanikus before the execution of the contract; additionally, there were some 26 "extra work orders" accepted by appellant in writing as work progressed. There was uncontradicted evidence that appellant had not done any roofing work on residential homes for approximately twenty years, nor did it have the employees or equipment to install slate roofs. Appellee also produced evidence that tended to show that no general contractor in the Washington area was equipped to do slate roofing, and that they all had to subcontract this work.

The thrust of appellant's argument on the basic issue is simply that it has supplied, on remand, that evidence which the Court of Appeals found missing in Honaker ; I. e., a contract between it and the DeJanikuses requiring it to perform work, a part of which it subcontracted out to appellee's employer. Appellant also contends that the Court of Appeals "implicitly" recognized that the work covered by the contract between appellant and appellee's employer was part of appellant's "trade, business or occupation" as required by Art. 101, § 62.

To these contentions appellee counters by arguing that the work subcontracted was not part of appellant's business, nor did the Court of Appeals so hold. Appellee also raises a sub-issue that as appellant was the owner of the land, and had not contracted to construct the house but was a seller, appellant could not be a "principal contractor" as contemplated by Art. 101, § 62.

Before beginning an analysis of the questions posed, we observe that by § 63 of Art. 101 the Legislature has provided a guidepost for all who would be called upon to interpret the article. Section 63 provides:

"The rule that statutes in derogation of the common law are to be strictly construed shall have no application to this article; but this article shall be so interpreted and construed as to effectuate its general purpose."

This Court, as well as the Court of Appeals, has stated in the past that the Workmen's Compensation Act should be construed as liberally in favor of injured employees as its provisions will permit in order to effectuate its benevolent purposes. Keene v. Insley, 26 Md.App. 1, 337 A.2d 168 (1975); Bayshore Industries, Inc. v. Ziats, 232 Md. 167, 192 A.2d 487 (1963). We recognize that in giving this provision a liberal construction there will be instances where, as in this case, the employee will be found to be entitled only to workmen's compensation, excluding any possible common law recovery.

Keeping this principle in mind, we now examine the threshold question of whether a lot owner/builder/seller may be a principal contractor. That question arises, of course, because of the evidence that appellant was the owner of the lot upon which the house was to be built and appellees claim that appellant only contracted to sell a completed house.

The evidence clearly shows appellant to be a builder of residential homes and as far as the DeJanikuses are concerned, a house built to the customer's specifications. The mechanism used, a "custom building contract" which included the terminology "memorandum of sale", does not, under the facts of this case, seem to require a conclusion that appellant could not qualify as a principal contractor under the Workmen's Compensation Act. There appears to be no case involving the precise issue previously decided in Maryland, and the few cases in other jurisdictions which have dealt with the issue land on both sides of the question. 2 A Larson, Workmen's Compensation, § 72.31. We believe the better logic requires a finding, on the facts presented here, that appellant is not disqualified from being a principal contractor merely because it owned the lot.

With respect to the main question, we conclude that the subcontracted work was a part of appellant's trade, business or occupation. There can be no question but that appellant was a builder of houses, nor can it be doubted that it always subcontracted out the roof installations; indeed, it had been doing so for some twenty years, and had neither the employees nor the equipment to furnish a slate roof. Appellee argues that before a contractor can be deemed a statutory employer, so as to enjoy immunity from a common law suit by an injured employee of a subcontractor, it must be shown that the subcontracted work was part of the contractor's trade, business or occupation, and the statute so requires. Appellee argues the relevant test in determining if the work is part of the contractor's trade or business is whether the subcontracted work was such as would ordinarily be done by the principal employer's own employees. See 1 A Larson, The Law of Workmen's Compensation, § 49.12, pages 9-12 (1973), wherein Professor Larson stated:

"With a...