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Graves v. Hopper

Court of Appeals of Arkansas, Division II

March 7, 2018



          Worley, Wood & Parrish, P.A., by: Jarrod S. Parrish, for appellants.

          David A. Hodges, for appellee.

          WAYMONDM.BROWN, Judge.

         Appellants Luther F. Graves and FirstComp Insurance Company (collectively "Graves") appeal from the Arkansas Workers' Compensation Commission's (Commission) January 13, 2017 opinion affirming and adopting the administrative law judge's (ALJ) June 7, 2016 opinion in favor of appellee. On appeal, Graves argues that (1) appellee's claim is time-barred by Arkansas Code Annotated section 11-9-702(a); and (2) the Commission erred in finding that he is estopped from asserting the statute-of-limitations defense because appellee had actual notice of the existence of a workers' compensation policy. We affirm.

         I. Facts

         On August 26, 2013, appellee fell from a ladder and was injured while working on a construction crew assembled by Graves. Appellee initially filed a complaint in the Phillips County Circuit Court against Ray Dawson, Jr., and Dixie Planting Company (Dixie)[1] on May 14, 2014.[2] Dixie filed a motion to dismiss and brief in support on June 3, 2015, asserting that the Commission has sole jurisdiction of the factual issue of whether appellee was an employee or an independent contractor. At some point, the matter was brought before the Commission for a determination of the employment relationship between Dixie and appellee.[3] The circuit court entered an order on July 8, 2015, staying the matter pending "the disposition of [appellee's] workers' compensation claim."

         Appellee filed a complaint against Graves in the Phillips County Circuit Court on August 31, 2015, alleging that he was Graves's employee and not an independent contractor, and that Graves was negligent and failed to provide workers'-compensation insurance. Graves answered the complaint on September 28, 2015, denying all allegations in the complaint in material part and seeking dismissal of the same. Graves also filed a motion to dismiss and brief in support on the same date alleging that the circuit court lacked jurisdiction as the Commission has exclusive, original jurisdiction to determine employment relationships; appellee responded October 8, 2015.

         In Dixie's September 3, 2015 prehearing information, [4] it listed the employer-employee relationship as the only issue, claiming that appellee was not its employee, but was "an independent contractor or the employee of an independent contractor." On the same date, appellee submitted his prehearing questionnaire in which he listed the issues to be litigated, among other irrelevant items to this appeal, as (1) whether he was an employee of Dixie; (2) whether he sustained a compensable injury on August 26, 2013; (3) whether he was entitled to reasonable and necessary treatment; and (4) whether he was entitled to temporary and/or permanent total-disability benefits.

         On October 13, 2015, appellee responded to Graves's motion to dismiss, asserting that Graves breached the duties of his workers'-compensation insurance policy-including his obligation to report appellee's claim-"thereby making it unenforceable and not effective under these circumstances." On November 9, 2015, the ALJ entered an order joining Graves and his workers'-compensation insurance carrier, FirstComp Insurance Co., as parties to the proceedings. He did so "pursuant to a motion filed herein by Dixie Planting Co."[5] and "based on information growing out [sic] disclosure to the attorney for the claimant regarding employment and workers' compensation insurance status[.]"

         In Graves's December 7, 2015 response to the prehearing questionnaire, he denied that "any employment or contractor/subcontractor relationship" existed at the time of appellee's injury, asserting that appellee was "an independent contractor for Dixie Planting Co., or one of the entities owned by Ray Dawson." He alternatively asserted a statute-of-limitations defense and that there was a lack of notice until November 9, 2015. On December 17, 2015, Graves notified the ALJ in correspondence that while his prehearing questionnaire indicated employment relationship and compensability as issues to be litigated, he was also asserting a lack-of-notice and statute-of-limitations argument for the hearing. This was acknowledged by the ALJ in his correspondence dated December 21, 2015.

         On March 1, 2016, Dixie filed a motion to dismiss, alleging that appellee originally filed a claim against them "under the assumption" that Graves had no insurance; however, it had been discovered that Graves was insured. Dixie then stated that Graves had admitted that appellee was his employee on all applicable dates on February 29, 2016; therefore, there was no "uninsured sub-contractor" situation. Dixie argued, accordingly, that it should be dismissed because it was not responsible for the claim since Graves was insured.

          On March 7, 2016, appellee submitted his brief in opposition to Graves's statute-of-limitations defense, asserting that Graves's failure to disclose that he had workers'-compensation insurance and his statement "misrepresent[ing] the issue of insurance by telling his employees that he did not have insurance" showed that he failed to follow the notice provisions of Arkansas Code Annotated sections 11-9-403 and 11-9-407. He argued that the statute-of-limitations defense provided by Arkansas Code Annotated section 11-9-702(f)(1) was tolled by Graves's actions. On the same date, appellee also responded in opposition to Dixie's motion to dismiss; Graves never responded to the motion. Also on March 7, 2016, Graves responded to appellee's "request to interject new issues[, ]" specifically fraud and estoppel. Finally, also on the same date, Graves confirmed that he had accepted the employer/employee relationship between himself and appellee and identified the issues to be litigated as compensability, entitlement to benefits, statute of limitations, notice, and attorney's fees.

         A hearing was held on the matter on March 9, 2016. Appellee testified that "he was working with [Graves] when [he] got hurt, for Ray Dawson." Graves hired him. He had worked for Graves "about six or seven years, maybe a little longer" at the time of the accident. He received a hat with "L.F. Graves Construction" printed on it and he understood that phrase "to refer to the five guys, the crew[, ]" which included him. Appellee testified that Graves "would get the jobs and we would do them and then the people that we worked for gave us a check." As far as hours and instructions on what was to be done, Dawson "mainly" told Graves "who then told Teddy [Hopper], who then told [them]."

          Appellee never told Dawson what his rate of pay was or how he wanted to be paid; that was negotiated by Graves. He received a raise twice during his years of work; both "came from Graves." He testified that Dawson gave him checks up until he was injured. They were always paid by the individual on whose property they were working; Graves would tell him that he was an employee of the person who writes the checks. Graves never paid him, never deducted any Social Security, and never took out any withholding taxes. Graves told him when he hired him that "there's no workman's comp, no insurance, no nothing. In those exact words." When Graves would see workers "going up high, he'll say [to appellee] to remind [the worker] that there ain't no workman's comp and there ain't no insurance and there ain't no nothing." Not having taxes taken out was a "fairly common" arrangement in the Phillips County area. He thought he was "working for Dawson because [Dawson] provided [him] with the checks and paid for the work [they] did." Dawson gave appellee his 1099 at the end of the year.

         Though appellee did not have any contact with Graves after August 26, 2013, Graves was there on the day he fell off the ladder and knew he was injured. Appellee never submitted medical bills to or asked for "off-work pay" from Graves and never contacted Graves to request benefits or pursue a claim, but that was because he thought he was working for Dawson. He did not ask Graves about workers' compensation after his injury and did not investigate whether Graves had any on his own. Graves never told appellee that he could not file a workers'-compensation claim or that he did not have a workers' compensation policy after his August 26, 2013 injury, but Graves "always told them there ain't no insurance"-as he had told "everybody on the job"-so he "assumed [Graves] didn't have any." He knew Graves had workers'-compensation insurance "towards the end of 2014" but did not do anything with the information because he thought they were working for Dawson. He received the information about Graves having workers' compensation insurance as a rumor from someone on another crew; Graves never told him. He never saw any notice posted that Graves had workers'-compensation insurance and never knew he had the same. If they were working a "big job[, ]" he worked under Graves's license.

         Teddy Hopper, brother of appellee, also worked on the crew with appellee and he testified below. He stated that "[w]hoever [they] worked for paid [them], " not Graves, and that that had been the arrangement for "about ten years." He identified Graves as the general contractor and overseer of the jobs, which Graves would get. Graves would then call the crew of five guys whom Teddy considered to be Graves's crew. Dawson would typically give their checks to Graves, who would pass them out, though Dawson would hand them out sometimes; it was the same with other jobs for other people. Graves never wrote Teddy a check in the ten years he worked for Graves. If a customer wanted something specific, he or she would go to Graves first. He confirmed appellee's testimony that Graves told them that he did not have insurance when they were hired-Graves "never said anything about having worker's comp insurance"-and that "whoever [they] work for is supposed to take care of all that stuff." He confirmed hearing rumors that Graves had a workers'-compensation policy. Graves never told him he did not have workers' compensation after the rumors, but he also never told him that he had workers' compensation insurance thereafter. He confirmed that Graves was on the site the day appellee was injured and "went over and saw that he was hurt." Graves would call and check with him about "how [appellee] was getting along."

         Ninety-five-year-old Graves testified that he was "just a crew member like the rest of them" and was paid hourly, though he was paid "a little more than the guys did because [he] was the one who would go out and get the jobs." He has been working in construction for probably thirty years and had always had "this type of crew" where someone would call for a project, he would assemble the crew, and the owner would pay the salary. He asserted that the crew would turn in their time by the hour and "would be working for the owner." He paid his own taxes, including Social Security, and told each guy that "[he] hired" that he had to pay his own taxes. The decision to have everyone paid hourly was not done to "try and avoid taxes or liability." It is just the way things are done and "works out cheaper for the owner" because "he didn't have to pay nothing extra." He could fire a crew member if he did not like or need the person. He had "pretty much the same crew."

         Graves testified to getting a workers'-compensation insurance policy in February 2013 because they[6] "had come up with a law that you had to have workers' comp to get a state license"; he never had a policy before that time. He obtained the policy from Hargraves Insurance Company (Hargraves), but asserted that his insurance provider "never told me what to do or anything." Graves never said anything about the policy to appellee because Graves thought he was dealing with Dawson. He "had no idea" what made a person an employee under Arkansas workers' compensation law because he "had never been told." He went to Hargraves immediately after being served with the complaint. Nobody asked him about workers'-compensation insurance as "[t]hey were working for [Dawson] and he was paying them and they thought [Dawson] would be ...

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