Preview:

RENDERED: April 16, 1999; 2:00 p.m. NOT TO BE PUBLISHED

C ommonwealth O f K entucky C ourt O f A ppeals
NO. 1997-CA-003111-WC

RONALD BRUCE YANTIS v. PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD CLAIM NO. WC-94-43148

APPELLANT

DAVID HALL and VICTOR HALL, d/b/a HALL & HALL CONSTRUCTION CO.; OLD REPUBLIC INSURANCE COMPANY; IRENE STEEN, Administrative Law Judge; and WORKERS' COMPENSATION BOARD AND: NO. 1997-CA-003314-WC

APPELLEES

DAVID HALL and VICTOR HALL, d/b/a HALL & HALL CONSTRUCTION CO.; and OLD REPUBLIC INSURANCE COMPANY v.

CROSS-APPELLANTS

CROSS-PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD CLAIM NO. WC-94-43148

RONALD BRUCE YANTIS; IRENE STEEN, Administrative Law Judge; and WORKERS' COMPENSATION BOARD

CROSS-APPELLEES

OPINION VACATING AND REMANDING NO. 1997-CA-OO3111-WC AND

DISMISSING NO. 1997-CA-003314-WX ** ** ** ** ** ** ** BEFORE: BUCKINGHAM, GUIDUGLI and HUDDLESTON, Judges. The issue we are called upon to decide is

HUDDLESTON, Judge.

whether the Administrative Law Judge erred when she determined that Ronald Bruce of Yantis David was Hall not and a "loaned servant" d/b/a or Hall "special & Hall

employee"

Victor

Hall,

Construction Co. (Hall), on September 1, 1994, when he fell from the roof of a house under construction and was seriously injured, resulting in a finding by the ALJ that he is totally occupationally disabled, and whether the Workers' Compensation Board erred in affirming the ALJ's decision. Hall and its insurer, Old Republic

Insurance Company, have filed a protective cross-appeal. Yantis was employed by Thomas Hamilton, doing business as Silverton Hill Farm, as a general farm laborer on Hamilton's 750acre farm and two other farms. as a "jack-of-all-trades." Yantis was described by the Board

He fed cattle and dogs, assisted with

the building of farm roads and small bridges, cut and put up hay, and, occasionally, assisted in building barns and repairing roofs. Yantis has a limited education and is unable to read or write.

In 1993, Hamilton orally contracted with Hall to build a large house on property adjacent to his farm. Hamilton agreed to

pay Victor and David Hall $20.00 per hour for their labor and to 2

pay Hall's employee expenses.

Hall was to furnish all required

tools and pay its own liability insurance premiums, while Hamilton agreed to reimburse Hall for workers' compensation insurance

premiums paid for coverage for Hall's employees.

In addition, it

was agreed that Hamilton would make several of his farm employees available to work on the house when their services were not otherwise being utilized to carry out farm-related tasks. During the summer of 1994, Yantis devoted from 60% to 80% of his time1 to the construction of the house, with the balance devoted to farm work. Yantis was paid directly by Hamilton for his

work on the house as well as for his farm work, but while at the construction site took his orders from David Hall. Hamilton

retained ultimate control over Yantis, instructing him when he was to report to the construction site and when he was to engage in farm work, and he alone had the power to discharge Yantis. Yantis' injury occurred on September 1, 1994, while he was assisting David Hall in the construction of the roof of the house. While holding a chalk line, Yantis stepped backward into a

chimney hole normally covered by plywood and fell two stories onto a concrete basement floor. As a result of the fall, Yantis

sustained multiple facial fractures, a cervical cord contusion,

Yantis testified that he spent approximately 70% to 80% of his time working at the construction site. Hamilton, on the other hand, testified that Yantis spent approximately 60% of his time working on the house. In any event, Yantis was instructed that his first priority was his farm-related duties. 3

1

fractures to the thoracic discs at the T2, T3 and T4 levels, and a fracture of the right patella. Following an administrative hearing before the ALJ, Yantis settled his workers' compensation claim against Hamilton for $50,000.00, reserving his right to proceed against Hall. The Board held that Hall was not a "statutory employer" under the loaned employee doctrine2 because there was not an implied contract for hire between Yantis and Hall Construction. The Board said that "[al]though it is not necessary for a contract of hire to be in writing, all of the elementary ingredients of a contract must be present." Moreover, the most basic requirement[,] that is, a

meeting of the minds, is simply not present under the factual circumstances in this case. Yantis never

intended to become employed by or enter into a contract of hire with Hall . . . [and Hall] never intended or considered Yantis as one of its employees. The Board, however, determined that Yantis satisfied the other essential criteria of the loaned employee doctrine.3 issue on appeal is whether the Board and the ALJ The only correctly

determined that there was not an implied contract of hire between Referred doctrine.
3 2

to

in

earlier

cases

as

the

"loaned

servant"

That determination, challenged in Hall's cross-appeal, will be addressed in due course. 4

Yantis and Hall.

We believe, contrary to the ALJ's opinion and the

Board's decision, that the record compels such a finding. It has long been recognized under Kentucky workers' compensation law that whenever a general employer sends a worker to assist a special employer that worker may become a "loaned

employee" of the special employer.

In such cases, the special

employer becomes the "statutory employer" within the meaning of Ky. Rev. Stat. (KRS) 342.700. See Allied Machinery, Inc. v. Wilson, See also United Engineers and

Ky. App., 673 S.W.2d 728 (1984).

Constructors, Inc. v. Branham, Ky., 550 S.W.2d 540 (1977); Rice v. Conley, Ky., 414 S.W.2d 138 (1967); Wright v. Cane Run Petroleum Co., 262 Ky. 251, 90 S.W.2d 36 (1935); and Brown v. Tennessee Gas Pipeline Co., 623 F.2d 450 (6th Cir. 1980). For the "loaned It

employee" doctrine to apply, a three-pronged test must be met. must be shown that:

(1) the worker has an express or implied

contract of hire with the special employer; (2) the work being done is essentially that of the special employer; and (3) the special employer has a right to control the details of the work. Machinery, 673 S.W.2d at 730 (citations omitted). The record before us reveals that the three-pronged test has been met. First, although Yantis and Hall did not formally Allied

agree to enter into an employer-employee relationship, Yantis unquestionably knew that he was to work under Hall's direction and control, and he assented to that arrangement by regularly appearing at the job site and carrying out the work he was assigned to do by 5

Hall.

This is sufficient to established an implied contract of As this Court said in Allied

employment between Yantis and Hall. Machinery, 673 S.W.2d at 731:

While earlier cases have attempted to narrow the scope of employer immunity by focusing the contract relationship between the employee and the employer whose work was being done at that time (Rice, supra), more recent cases have effectively broadened its scope by focusing on who had the right to control the details of the work at the time of the injury. See United Engineers and Constructors, Inc. v. Branham, [supra]; Brown v. Tennessee Gas Pipeline Co., [supra]. Indeed, Justice Palmore, expressing the opinion of a unanimous court in Branham, stated that "the main dispositive criterion" is the alleged principal/master's right to control the details of the work at the time of the injurious event. There is no question but that Yantis performed work for Hall Construction under the immediate direction and control of David Hall and that he was performing Hall's work. There is a

clear implication of assent by Hall Construction and Yantis to the establishment an employer-employee relationship. See Louisville &

N. R. Co. v. Pendleton's Adm'r, 126 Ky. 605, 104 S.W. 382, 385 (1907). The fact that Hamilton retained the ability to direct 6

Yantis when to work for Hall Construction is not a dispositive factor. In all cases, the general employer maintains the ability A

to direct the employee when to work for the special employer.

contract of hire can be implied from the fact that the employee assented to the directions given by one other than his general employer. In Branham, supra, a tort action was filed against the general contractor of a construction project. The plaintiff,

Branham, was a member of a crane operating crew leased to the general contractor along with a crane by a heavy equipment

operator.

Branham and the other member of the crane's operating At the time of the injury, the

crew were in charge of the crane.

general contractor, United, had assigned some its employees to assist the crane's operating crew in lowering the gantry of the crane. Branham was injured while disassembling the gantry.

Branham collected workers' compensation benefits from the heavy equipment company and then pursued a tort claim against the general contractor, contending that its employees' negligence caused his injuries. The Supreme Court held that United was immune from tort Significant to

liability under the "contractor-under" statute.

this case, however, was the Court's separate holding that United's employees were lent employees of the crane crew while helping to lower the gantry, and that United was immune from tort liability on that basis. lowering the Id. at 547. gantry was The Court noted that the "procedure of peculiarly 7 within the province and

expertise of the [heavy equipment company's] crew." Id.

The Court

said that "the employees of United whose negligence is said to have caused the accident were assisting the crane crew in work for which the crane crew was responsible and, in the performance of that particular work, were under the supervision of the crane crew alone, and not of [United's foreman] or United." Id. at 541. The

Court determined that United's employees had an implied contract of hire with the heavy equipment company through their assent to the directions of the crane crew. This Court relied on Branham in Allied Machinery, supra, a case which involved a tort claim filed by an employee of a coal company against Allied Machinery, a repair company. The employee,

Wilson, was required by his employer to aid the repair company's mechanic at which time he was injured. Wilson collected workers'

compensation benefits from the coal company and then brought a negligence action against Allied. a "loaned employee" of Allied's: Wilson's testimony reflects his knowledge of and assent to working under the direction of Allied's mechanic. Repair of the damage caused by the broken hydraulic pump was essentially the work of Allied. The . . . employees The Court held that Wilson was

were taking orders from Allied's mechanic during the days it took to repair the truck. criteria were met. We find that Larson's

8

Allied Machinery, 673 S.W.2d at 730. Notably, the dissent argued that because Wilson had "absolutely no opportunity to exert or assert a real choice in this matter," there could be no implied contract of hire. Id. at 732.

In the present case, the Board adopted a similar argument when it stated in its holding that "there was no informed consent by Yantis to become an employee of Hall Construction." employee is faced with a Hobson's choice.4 In most cases an

An employee can either

obey his employer's direction to work for the special employer, or refuse and, more than likely than not, find his employment

terminated.

Thus, in most cases, the employee does not have a real

choice in the matter. The Board relied on Rice v. Conley, supra, to support its determination that there was no implied contract of hire between Yantis and Hall. Rice does not control the present case. As noted

in Allied Machinery, supra, earlier cases, such as Rice, attempted to narrow the scope of employer immunity by focusing on the contract relationship between the employee and the special employer at the time of the injury. Recent cases such as Branham, supra,

and Brown v. Tennessee Gas Pipeline Co., supra, focus on who had the right to control the details of the work at the time of the

Hobson's choice is an apparently free choice that offers no real alternative. [After Thomas Hobson (1544-1631), English liveryman, from his requirement that customers take either the horse nearest the stable door or none. The American Heritage Dictionary 615 (1985).] 9

4

injury. Justice Palmore, writing for a unanimous court in Branham, said that "the main dispositive criterion is whether it is

understood that the alleged principal or master has the right to control the details of the work" at the time of the injury. Branham, 550 S.W.2d at 543. Thus, a contract of hire can be

inferred from the employee's acceptance of the special employer's control and direction. Arthur Larson and Lex Larson, Larson's See generally 82 Am. Jur. 2d

Workers' Compensation

Download 1997-ca-003111.pdf

Kentucky Law