Joseph Hamilton v. Gregory and Toni Palm

(Affirming Award and Decision of Administrative Law Judge with Supplemental Opinion)

Injury No.: 09-111071

Alleged Employee: Joseph Hamilton

Alleged Employers: Gregory and Toni Palm

Alleged Insurer: Unknown

Additional Party: Treasurer of Missouri as Custodian of Second Injury Fund

This workers' compensation case is submitted to the Labor and Industrial Relations Commission (Commission) for review as provided by $\S 287.480$ RSMo. Having read the briefs, reviewed the evidence, heard the parties' arguments, and considered the whole record, we find that the decision to deny compensation is supported by competent and substantial evidence. Pursuant to $\S 286.090$ RSMo, we affirm the award and decision of the administrative law judge with this supplemental opinion.

The administrative law judge concluded that Joseph Hamilton (hereinafter "worker") is barred from litigating the issue whether Gregory and Toni Palm were his employers owing to the doctrine of collateral estoppel. We disagree. We believe collateral estoppel is inapplicable in this case. The courts have made clear that four questions must be answered in the affirmative before collateral estoppel applies:

(1) Was the issue in the prior adjudication identical to the one in the present litigation?

(2) Has the prior adjudication resulted in a judgment on the merits?

(3) Is the party against whom collateral estoppel is asserted the party (or a party in privity with the party) to the prior adjudication?

(4) Did the party have a full and fair opportunity to litigate the issues previously adjudicated?

Tatum v. St. Louis Metro Delivery, 887 S.W.2d 679, 683 (Mo. App. 1994).

We believe that collateral estoppel is not applicable here because the answer to both (1) and (4) above is "no." The dispositive issue before the district court was whether worker proved an employment relationship in the context of his civil lawsuit. To resolve that issue, the district court applied common law principles derived from The Restatement (Second) of Agency and Missouri cases discussing the "master-servant relationship." See Transcript, pages 669-73. On the other hand, the issue in this workers' compensation case is whether Gregory and Toni Palm are "employers" under either $\S \S 287.030$ or 287.040 RSMo. To answer that question, we must consult the language of Chapter 287 and apply the relevant Missouri case law interpreting that language. Clearly, the analysis applied by the district court differs from that applied in

This workers' compensation case, even if some of the same evidence is relevant. It follows that the district court did not consider or resolve an issue that is identical to the one now before this Commission, and that worker did not have a full and fair opportunity to litigate issues under $\S \S 287.030$ and 287.040 before the district court.

Because we disagree with the administrative law judge that the doctrine of collateral estoppel is dispositive, we turn now to the question whether worker proved that Gregory and Toni Palm were his "employers" for purposes of the Missouri Workers' Compensation Law, and render the following supplemental findings of fact and conclusions of law.

Gregory Palm is a sales and marketing manager. His wife, Toni Palm, is a homemaker. Neither are engaged in the construction or roofing industry. In early 2009, the Palms decided to make some improvements to the barn on their residential property. Specifically, they decided to replace the roof, extend the eaves, and put a little porch on the front. Mr. Palm defers to Ms. Palm as to arranging for such improvements and other projects at their home.

Ms. Palm called Michael Hamilton to discuss the project. Michael Hamilton had previously performed some jobs around the Palm residence; Ms. Palm originally learned of Michael Hamilton's services from a friend whose kitchen Michael Hamilton had installed. Ms. Palm also contacted two other construction companies for quotes on the project. Ms. Palm ultimately decided to hire Michael Hamilton. Ms. Palm reviewed with Michael Hamilton some sketches she'd prepared to demonstrate how she wanted the barn to look. Michael Hamilton created a written agreement for the project from a form he purchased from a stationery store.

Ms. Palm authorized Michael Hamilton to make purchases of materials and equipment using her credit card, with the understanding that they would settle up at the end of the job. Michael Hamilton reimbursed Ms. Palm for any tools that he purchased for the job but that he ended up keeping for himself. Michael Hamilton consulted with Ms. Palm throughout the project to make sure she approved of various details, such as how far to extend the eaves on the barn. Ms. Palm was interested in the ultimate result in terms of what looked best to her, but she did not instruct Michael Hamilton as to the details of how to perform the work or accomplish the desired result. Michael Hamilton believes that Ms. Palm was present at the job site more than a typical customer. Ms. Palm got involved in such tasks as purchasing supplies, arranging for the delivery of materials, and cleaning up the worksite. Ms. Palm made multiple trips to the hardware store to buy things as they were needed.

Michael Hamilton was engaged in performing jobs for other customers besides Ms. Palm at the time. Ms. Palm was flexible regarding the time frame of accomplishing the work, and did not set Michael Hamilton's hours. Michael Hamilton had a general liability insurance policy, which he believes was called a "contractor's package." Michael Hamilton made his own decisions about who to hire to help him on jobs. Michael Hamilton hired worker to help on the job because of worker's experience in tin roofing. Michael Hamilton

took worker's advice on how to perform the tin roofing aspects of the job. Michael Hamilton brought his own tools to the job site. He drove his own truck and paid for his own gas.

Ms. Palm paid Michael Hamilton at the end of the project when he gave her a "verbal bill." Ms. Palm had always paid Michael Hamilton by the job or task rather than by the hour, and this project was no different.

Ms. Palm believed Michael Hamilton was an independent contractor, and testified that she has never hired an employee. Ms. Palm testified, "I hire someone that works for themselves, that tells me they can do a job for me and that they're capable of doing the job." We credit Ms. Palm's testimony as to her understanding of the work relationship between herself and Michael Hamilton.

Section 287.030 RSMo defines an "employer", as follows:

1. The word "employer" as used in this chapter shall be construed to mean:

(1) Every person, partnership, association, corporation, limited liability partnership or company, trustee, receiver, the legal representatives of a deceased employer, and every other person, including any person or corporation operating a railroad and any public service corporation, using the service of another for pay;

(3) Any of the above-defined employers must have five or more employees to be deemed an employer for the purposes of this chapter unless election is made to become subject to the provisions of this chapter as provided in subsection 2 of section 287.090, except that construction industry employers who erect, demolish, alter or repair improvements shall be deemed an employer for the purposes of this chapter if they have one or more employees.

Gregory and Toni Palm undoubtedly used worker's services for pay. But worker points to no evidence that, at the time he suffered his injuries, Gregory and Toni Palm employed five or more persons, or made an election to become subject to Chapter 287 by purchasing a workers' compensation insurance policy, or should be considered "construction industry employers" where Toni Palm is a homemaker and Gregory Palm is a sales manager. After reviewing the transcript, we can find no such evidence. Accordingly, we conclude that Gregory and Toni Palm were not "employers" for purposes of $\S 287.030$.

Worker argues that Gregory and Toni Palm were statutory employers for purposes of § 287.040.1 RSMo, which provides, as follows:

1. Any person who has work done under contract on or about his premises which is an operation of the usual business which he there carries on shall be deemed an employer and shall be liable under this chapter to such contractor, his subcontractors, and their employees, when injured or killed on or about the premises of the employer while doing work which is in the usual course of his business.

(emphasis added).

[A] putative employer's "usual business" as used in section 287.040 [are] those activities (1) that are routinely done (2) on a regular and frequent schedule (3) contemplated in the agreement between the independent contractor and the statutory employer to be repeated over a relatively short span of time (4) the performance of which would require the statutory employer to hire permanent employees absent the agreement.

Bass v. National Super Mkts., 911 S.W.2d 617, 621 (Mo. 1995).

We have found that Gregory and Toni Palm are not engaged in the construction or roofing industry. Worker points to no evidence that would demonstrate Gregory and Toni Palm would need to hire permanent employees to perform the work involved in this case in the absence of the arrangement with worker. It follows that Gregory and Toni Palm are not statutory employers because worker was not injured while doing work that was in the usual course of their business.

Section 287.040.2 RSMo also specifically exempts the owner of a premises upon which improvements are being altered or repaired by an independent contractor, and shifts liability to the independent contractor:

1. The provisions of this section shall not apply to the owner of premises upon which improvements are being erected, demolished, altered or repaired by an independent contractor but such independent contractor shall be deemed to be the employer of the employees of his subcontractors and their subcontractors when employed on or about the premises where the principal contractor is doing work.

The courts have described the foregoing section as creating an "improvements exception," applicable "to construction-type situations -- i.e., the property owner who hires a contractor to build him a house or such like improvement, to tear one down or make alterations or repairs upon one." Sell v. Carlisle Power Transmission Prods., 298 S.W.3d 541, 545 (Mo. App. 2009). That is precisely the situation here. Gregory and Toni Palm hired Michael Hamilton to make alterations to their home and barn. Michael Hamilton in turn hired worker to perform the tin roofing aspects of the job. At oral argument in this matter, worker's counsel argued that Michael Hamilton was not actually an independent contractor, but rather an employee of the Palms. We are not persuaded. Given our findings with respect to the work arrangement, we conclude that Michael Hamilton was an independent contractor. This is because the overwhelming evidence reveals that the

Palms were only interested in the results of the work to be accomplished, and did not retain the right to control the manner and means of accomplishing that work. See DiMaggio v. Johnston Audio/D\&M Sound, 19 S.W.3d 185, 188 (Mo. App. 2000)(noting that " $[t]$ he pivotal question in determining the existence of an employer-employee relationship is whether the employer had the right to control the means and manner of the service, as distinguished from controlling the ultimate results of the service.")

Given the foregoing supplementary findings and conclusions, we conclude that Gregory and Toni Palm were not statutory employers at the time worker suffered his injuries.

Gregory and Toni Palm request an award of costs under $\S 287.560$ RSMo, on the basis that worker pursues this claim without reasonable grounds. The courts have cautioned the Commis