Linda Daugherty v. Plant Peddlers, Inc.

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

Injury No.: 14-083378

Employee: Linda Daugherty

Employers/Insurers: Plant Peddlers, Inc./Uninsured

Plants Express, LLC/Missouri Employers Mutual Insurance

Split Oak Logistics, LLC/Missouri Employers Mutual Insurance

Gary Morris/Uninsured

Doris Morris/Uninsured

Additional Party; Treasurer of Missouri, as the Custodian of the 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 reviewed the evidence, read the briefs, heard the parties' arguments, and considered the whole record, we find that the award of the administrative law judge denying compensation is supported by competent and substantial evidence and was made in accordance with the Missouri Workers' Compensation Law. Pursuant to $\S 286.090$ RSMo, we affirm the award and decision of the administrative law judge with this supplemental opinion.

Employee alleges the administrative law judge erred in failing to pierce the corporate veil as to Gary and Doris Morris and to find them to be employee's actual employer pursuant to Missouri Law. ${ }^{1}$

As stated in Walls v. Allen Cab Co., 903 S.W.2d 937, 942 (Mo. App. 1995):

For workers' compensation purposes, in order to 'pierce the corporate veil,' a claimant must show: 1) control, not mere majority or complete stock control, but complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the nominal company had at the time of the injury no separate mind, will, or

[^0]

[^0]: ${ }^{1}$ Employee's application for review alternatively argues that the administrative law judge erred in failing to find employee a statutory employee of Split Oak Logistics, LLC (Split Oak Logistics), Plants Express, LLC (Plants Express) and Gary and Doris Morris, pursuant to $\ 287.040 RSMo. Employee's brief does not address the issue of statutory employment, nor did employee's attorney raise it in oral argument before the Commission. By his conduct, we consider employee to have abandoned the issue of statutory employment and therefore do not address it in this award. See Lawson v. Emerson Electric Co., 809 S.W.3d 121 (Mo. App. 1991).

Injury No.: 14-083378

Employee: Linda Daugherty

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existence of its own; 2) such control must have been used to commit fraud or wrong, to perpetuate the violation of a statutory duty, or dishonest and unjust act in contravention of claimant's legal rights; and 3) the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. 'Piercing the corporate veil' is a viable doctrine under the Missouri Workers' Compensation Law. [citations omitted]

Collet v. American Nat'l Stores, Inc., 708 S.W.2d 273, 284 (Mo. App. 1986) further states:

[W]hen one corporation shows such domination and control over another that the latter corporation becomes a mere adjunct or the "alter ego" of the first [and] when the formal corporate separateness and the arrangements between the two corporations is devised or used to accomplish a fraud, injustice, or some unlawful purpose, then the separate formal corporate structures will be ignored. Id.

In 1983, at age 21, Gary Morris graduated from trucking school, bought a truck, and began working for several different trucking companies. Around 1994, he acquired a brokerage license and formed Tracy's Transportation, a brokerage business named after his first wife. Initially, Tracy's Transportation remained inactive because Gary Morris believed the newly established business would not attract customers. Around 1996, Gary Morris acquired his own Department of Transportation authority and incorporated Plant Peddlers to engage in hauling freight as an individual truck owner/operator. Gary Morris testified that when he first started Plant Peddlers "[It] was me and a truck" and he had no employees.

By 1999, Gary Morris had divorced and was planning to remarry. Respectful of his intended's wish that he no longer work as a truck driver, he decided to use his knowledge of the transportation business by working through a brokerage. Around that time, Gary Morris activated Tracy's Transportation, and hired several truck owner/operators to work for Plant Peddlers. In 2004 Tracy's Transportation was renamed Plants Express.

Gary Morris explained that he maintained Plants Express as a separate entity from Plant Peddlers because brokerages have liability exposures distinct from those of a trucking company. He further explained that, unlike a trucking company, a brokerage is legally required to maintain a bond. As a brokerage, Plants Express owns no trucks or equipment. It further has no dispatchers or safety director. As a trucking company, Plant Peddlers has no authority to broker any loads; Plants Express brokers all of Plant Peddlers' loads. Gary Morris testified alleging that Plant Peddlers "has never been truly profitable [at] any level" but serves to meet Plants Express' overflow needs. He further cited his reluctance to terminate the employment of a number of Plant Peddler's longtime employees, stating, "[It's just that] personally I like them, I don't want to tell them to

2 Transcript, 688.

3 Id. 680.

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go away or nothing." Gary Morris testified he created Split Oak Logistics in approximately 2005 to meet a need for warehousing and other freight-related activities, including a courier service.

Pursuant to Gary Morris' credible testimony, we find Plant Peddlers, Plants Express and Split Oak Logistics to be authentically separate corporate entities. There is no evidence that Gary or Doris Morris devised these entities with a dishonest, unjust or fraudulent purpose or used them to avoid their responsibilities as employers under the workers' compensation law in contravention of this or any other employee's legal rights. There is no legal basis to pierce the corporate veil to find Gary and Doris Morris personally liable for employee's claim.

The administrative law judge found that employee was an employee of Plant Peddlers on August 2, 2014, the date of her alleged work injury. However, he concluded that Plant Peddlers had no liability because it was not operating under or subject to the Missouri Workers' Compensation Law. In so finding, the administrative law judge cited employee's "admission" in her initial pro se claim for compensation that "Due to the Plant Peddlers part of the company have [sic] less than 5 employees they did not have W/C coverage."

Employee testified that owner Doris Morris told that her that Plant Peddlers was not covered by workers' compensation. Employee produced a September 13, 2014, e-mail she received from Doris Morris stating, in pertinent part, "We do not have Workers Comp at this time due to the number of employees for Plant Peddlers. I am checking into adding it regardless of this. I realize you did not want to file a Workers Comp claim, but since there is no coverage, it wouldn't matter."

The statement on employee's original claim asserting that Plant Peddlers was not a covered employer resulted directly from employee's reliance on Plant Peddler owner Doris Morris' advice. The legal determination of whether or not employee is entitled to benefits under the Workers' Compensation Law is not an employer's decision to make. Plant Peddlers was under no obligation to consult with employee or explain the basis for its denial of liability. That said having undertaken such a duty it is not in a position to invoke employee's "admission" regarding its status under the law as a defense. See *McKaskle v. Industrial Comm'n*, 135 Ariz. 168 (Ariz. App. 1982).

Employee testified that as of August 2, 2014, Plant Peddlers employed drivers Daniel Reed, William Mills and Conrad Newman. She alleged that Donald Neely had worked as a part-time driver for Plant Peddlers earlier that year. Doris Morris admitted that she exclusively supervised employee's work for Plant Peddlers and that her e-mail address is dorismorris@plantped@centurytel.net. Doris Morris further testified that Renee

*Id.* 681.

*Award*, p. 14.

*Transcript*, 253.

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Alcorn, though paid by Plants Express, handled billing for Plant Peddlers at the time of employee's injury. Courts have held "the Act does not specify the period of time prior to the accident in question that is to be reviewed in counting employees against an employer, and that ... a reasonable time may be utilized for that purpose." *Breeze v. Helm & Sons Lumber Co.*, 23 S.W.3d 886,888 (Mo. App. 2000).

Based on the above evidence, we conclude that Plant Peddlers had at least five employees and was therefore subject to the provisions of the Workers' Compensation Act on August 2, 2014. We disavow the administrative law judge's finding to the contrary. For the same reason, we also reject the administrative law judge's conclusion that employee failed to provide employer timely notice of her accident, pursuant to § 287.420 RSMo.

Section 287.020.3(1) RSMo sets forth the standard for medical causation applicable to this claim and provides, in relevant part, as follows:

> An injury by accident is compensable only if the accident was the prevailing factor in causing both the resulting medical condition and disability. "The prevailing factor" is defined to be the primary factor, in relation to any other factor, causing both the resulting medical condition and disability.

#### I. Employee's Account of Medical Conditions and Disability Caused by her Work Injury

In 1995 or 1996 employee underwent a pubovaginal sling surgery due to incontinence. Approximately two years later, she had a second pubovaginal sling surgery after a recall of product used in her original surgery. Around 2001, employee had a third pubovaginal sling surgery concurrent with a hysterectomy. Two weeks prior to her August 2, 2014, work injury employee complained to a physician about what she characterized as "a little bit" of incontinence associated with a head cold and horrible coughing. Employee alleged no significant problems with incontinence after her last 2001 surgery until three days after her August 2, 2014, accident, when she left work due to a sudden, severe incontinence episode. Employee currently experiences persistent, severe incontinence every day as well as abdominal pain.

Employee had surgery for two herniated discs in her neck around 2008. Employee alleged she experienced no problems with her neck from that time until her August 2, 2014, work injury. Employee now has pain when she attempts to turn her neck and a burning sensation running along the lower part of her scalp into her neck and down her right arm. She cannot lift her arm up in the air or behind her back due to pain in her shoulder. Employee alleges mid-back pain that affects her breathing, sleep and ability.

7 Award, Findings of Fact and Rulings of Law, No. 7. p.1.

8 *Transcript*, 50.

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to drive. At hearing employee further revealed that in the past two and a half months, she has also noticed bone chips coming out of her elbows.

She summarized:

Sitting or standing for long periods of time is just—I can't do it. I can't put my, you know, elbows on the table. I cannot write with my arm up on a table properly. With the pain in my neck and my back and my right shoulder and my abdominal pain, I would not benefit any employer in any capacity.

II. Expert Medical Opinions

Employee produced the deposition and independent medical evaluation (IME) of Dr. Ted Lennard, board certified in physical medicine and rehabilitation. Dr. Lennard met with employee for approximately two hours on August 12, 2016. Dr. Lennard's IME conclude