COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Decker , Judges Beales and Russell Argued by teleconference

STEVE RAY DIVINO

v. Record No. 1990

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UNINSURED EMPLOYER’S FUND, CAVALIER LAND IN C., HARLEYSVILLE INS URANCE COMPANY, JAMES M c QUITTY, JR., JIMMY M c QUITTY HARDWOOD FLOO RS AND MULT . MISC. PROPERTIES A SSOCIATES, LC
MEMORANDUM OPINION * BY HEALTHSMAR T CASUALTY CLAIMS SO LUTIONS JUDGE RANDOLPH A. BEALES AND UNINSURED EMPLOYER’S FUND JULY 14, 2020

v. Record No. 2036

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STEVE RAY DIVINO, CAVALIER LAND INC., HARL EYSVILLE INSURANCE C OMPANY, JAMES M c QUITTY, JR., JIM MY M c QUITTY HARDWOOD FLOORS AND MULT. M ISC. PROPERTIES ASSOCIATES, LC

FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION
W. Mark Broadwell ( Forbes & Broadwell , on brief s ), for Steve Ray Divino. Esther King (Jessica Hacker Trivizas; McCandl ish Holton, PC, on briefs), for Healt

h S mart Casualty Claims Solutions and Uninsured Employer’s Fund

. Adam E. Strauchler (Teumer & Drash, on brief), for Cavalier Land Inc. and Harleysville Insurance Company

. Brian N. Casey (Taylor Walker , P.C., on brief), for Mult. Misc. Properties Associates, LC

.

* Pursuant to Code § 17.1

- 413, this opinion is not designated for publication. UNPUBLISHED- 2

- No brief or argument for J ames McQuitty, Jr. and Jimmy McQuitty Hardwood Floors

. In this c onsolidated appeal, claimant Steve Ray Di vino contends that the Workers’ Compensation Commission (“Commission”) erred in denying him benefits for an injury he
received while installing laminate flooring. He argues that the Commission erred in finding that
his employer was not subject to the Workers’ Compensation Act (the “ Act”) because it had regularly in service l ess than three employees . Divino also contends that the Commission erred
in find ing that the owner and the property mana ger of the building where he was working when he was injured were not his statutory employers under the subcontracted

- fraction te st of
Code § 65.2

- 302(B) . The Uninsured Employer’s Fund and Hea l th S mart Casualty Claims
Solutions ( collectively, “ UEF ” ) also appealed the Commission’s decision, and, like Divino,
claim that the Commission erred in unani mously finding that the owner and the property
manager were not Divino’s statutory employers.
I. B ACKGROUND On appeal, we view the evidence in the ligh t most favorable to the appellees , as we must, because they prevailed before the Commission. See Osborne v. Forner , 36 Va. App. 91, 95 (2001)

. So viewed, the record before us establishes that o n June 22, 2017, Divino was injured while working o n a laminate flooring project in the Time Building in Norfolk . The Time Building was owned by Mult. Misc. Properties Associates, LC (“ MMPA ”) and managed by
Cavalier Land , Inc. (“Cavalier”) pursuant to a verbal contract

. Prior to Divino’s injury, Cavalier had entered into a lease agreement on behalf of MMPA
with CoreVelo, one of the Time Building’s existing tenant s . The terms of the lease provided that
CoreVelo , which operates a Pilates and cycling studio, would lease both its current spa ce and an adjoining vacant space . Pursuant to an amendment to the lease, MMPA was required to perform certain work on the adjoining space, identified in the lease amendment as the “Landlord’s- 3

-

W ork, ” to make it suitable for CoreVelo’s use. Cavalier, acting on behalf of MMPA , hired Jim McQuitty Hardwood Flooring Co. (“McQuitty”) , a flooring installation company, to perform the flooring installati on required by the lease amendment

. Divino, an employee of McQuitty , was injured while performing this work.
Divino submitted a claim for benefits to the Commission . During the proceedings , Divino claimed that McQuitty was liable under the Worke rs’ Compensation Act as his actual employer

. He also claimed that MMPA and Cavalier were liable under the Act as his statutory employers

. A fter conducting two hearings, the deputy commission er denied the claims, finding

non e of the alleged employers l iab le under the Act. Upon review, the full C ommission affirmed the deputy commissioner’s decision , without dissent, and Divino and the UEF timely appealed to this Court

. Jim McQuitty Hardwood Floor Company Prior to the hearings before the deputy commissioner, the parties stipulated that Divino

“ was an employee of Jim McQuitty Har dwood Floor Co. and/or Jimmy McQuitty in the sense that McQuitty controlled the means and methods by which t he Claimant per formed h is work, (i.e., he was not an independent contractor). ” McQuitty did not have workers’ compensation
insurance and was not present ( or represented ) at eit her of the hearings.
Divino testified that he had worked for McQuitty f or approximately thirty years. His job was to “[p]ut down floors, sand and finish floors, and whatever needed to be done.” He testified that in 2016, McQuitty had five employees but then the “business changed.” He stated that b y late 2016, the company n o longer had an office, and it had started storing all of its materials in various places

– including in Divino’s home. Divino testified that in 2017, the company only had two employees in addi tion to Mr. McQuitty, whom Divino described as “the head man

– president.”- 4

-

Divino submitted into evidence the Articles of Incorporation and the Certificate of Incorporation of “Jim McQuit ty Hardwood Floor Co.” filed with the Virginia State Corporation
Commission (SCC)

. The effective date of the Certificate of Incorporation was August 18, 1997.
Divino also submitted into evidence W

- 2s for 2015 and 2016

. Divino stated that, when the
accid ent occurred, he was working twenty to thirty hours a week for McQuitty and was making $13 per hour. That year, unlike prior years, he was not given a W

- 2. He was paid by cash or check and had no records of his earnings.
The deputy commissioner concluded that Divino failed to prove that McQuitty was an employer subject to the Workers’ Compensation Act because Divino did not prove that the company had three or more employees regularly in service

. The deputy commissioner stated tha t “[t]here is no evidence of record to support a conclusion that Employer was still operating as a corporate entity at the time of Claimant ’s injury in 2017.” The deputy commissioner instead found that Mr. McQuitty was a sole proprieto r “who regularly employed only two employees at the time of Claimant’s injury.”
The full Commission affirmed the decis ion of the deputy commissioner although it noted
that the deputy commissioner had erroneously placed the burden on Divino to prove that McQuitty had three or more employees

. The Commission explained that once an empl oyee has
proven his injury occurre d while employed in Virginia, the employer has the burden of producing suff

icient evidence that it has less than three employees regularly in service in Virginia . Even though no representative of McQuitty appeared at the hearings, th e C ommission

state d that it was still required to “ determine whether a preponderance of the evidence established Jim McQuitty Hardwood Floor Co. was not subject to the Act.”
The Com mission found that Divino’s testimony that McQuitty “typically had three persons, including [Mr.] McQuitty, working in 2017” was undisputed and, therefore, the issue of- 5

-

whether the company was liable under the Act turned on whether Mr. “ McQuitty himself wa s an employee. ” The Commission noted that the term “employee” under the Workers’ Compensation
Act “ include s every executive officer elected or appointed in accordance with the charter and bylaws of a corporation. Va. Code § 65.2

- 101 .” The Commission also stated that “[ s ] ole proprietors who elect to be included as an employee under workers’ compensation coverage are also considered employees under the Act.” To determine if McQuitty was a corporation or a sole proprietorship, the C ommission

s earched for t he company ’s name on the Virginia SCC’s website and found that the company’s

status was listed as “P urged. ” In its opinion, t he Commission e xplained that the SCC’s website states that when an “entity’s status is ‘Purged,’ then it s existence or registration has been canceled, revoked, terminated or withdrawn for a period of more than 5 years and, under Virginia law, the entity is not eligible fo r reinstatement or restoration.” The Commission acknowledged that this evidence was not presented by the parties but noted its ability to take administrative notice of public records prepared by government agencies. Based on this
information and the evid ence presented, th e Commission concluded that when Divino was injured, “ McQuitty was acting as a sole proprietor

. ” The Commission also found that there was

no evidence that Mr. McQuitty had elected to be treated as an e mployee , and thus “the preponderatin g evidence established that Jim McQuitty Hardwood Floor Company only had two employees regularly in service at the time of the accident.” Accordingly, the Commission
concluded that McQuitty “ was not an employer subject to the Act.”
Cavalier Land
Marc Pout asse, the P resident of Cavalier, testified that Cavalier managed t he Time Building, MMPA ’s other properties , and a number of other commercial and residential buildings

.- 6

-

Poutasse explained that , as the property manager, Cavalier market ed, entered into lease agreements , maintained properties, collect ed rent s, and paid expenses on behalf of MMPA

. For the project on which Divino was injured, Cavalier had negotiated a lease on behalf of
MMPA for an existing tenant, CoreVelo, to take over a space in the Time Building adjoinin g its

current space
. As part of t he terms of the new lease, MMPA agree d to perform some work
referred to in the lease as the “Landlord’s W ork,” which included removing walls and ceiling tiles, installing recessed lighting, installing a shower and water heater, slick finishing the plaster ceiling, and installing laminate flooring to match the adjoining unit as close ly as possible

. Cavalier hired contractors to perform th is work on behalf of MMPA , including McQuitty

. Poutasse also testi fied Cavalier had six employees that hel ped with preparing units for
new tenants and with maintenance requests. He stated that these employees do not do floori ng work except for repairing small flooring issues or laying vinyl flooring in small spaces, such as
in closets. For this project, he stat ed that Cavalier employees did not do any of the flooring work although they did some cleaning up on the project site and some hauling o ff of old flooring

. The deputy c ommissioner concluded that Cavalier was exempt from statutory emplo yer liability under Code § 65.2

- 302(D)’s pro perty management exception , and the full Commission
affirmed. T he full Commission also concluded that “[e]ven if Cavalier Land were not exempt from liability as a property manage r, the subcontracted

- fraction test [of Code § 65.2

- 302(B) ] would not apply to impose liability in this case.” The Commission found that Cavalier “did not contract with the owner, Mult. Misc. Properties, t o perform renovations on the [T]ime [B] uilding.” Instead, it found that MMPA and the tenant agreed that MMPA “ would have the work performed.” The Commission also found that M MPA “did not hire a general contractor,
but instead dir ectly hired individual contractors to perform different portions of the work ” and
that “Cavalier Land merely acted as Mult. Misc. Properties’ agent in reaching the agreement with- 7

-

the tenant and in finding and hiring the various contractors, including Jim M cQuitty Hardwood
Floor Company.” Consequently, the Commission found that Cavalier was not liable under the Workers’ Compensation Act as Divino’s statutory employer.
MMPA Vincent Mastracco, one of two owners of MMPA , testified that MMPA was a “passive real estate owner” with no employees. He agr eed that MMPA “made money from holding, operating, and developing real property.” He also agreed that Cavalier had full authority to select the contractors it wanted to perform the work here and that he had no involvement in the day

- t o
- day running of the buildings that MMPA owned, such as the Time Building

. The full Commi s sion unanimously found that MMPA was not Divino’s statutory employer under the subcontracted

- frac tion test of Code § 65.2

- 302(B)

. It found that M MPA was the owner

– not a co ntractor. The Commission made findings of fact that MMPA was “a passive real estate investor,” that it had no employees, and that it was “not engaged in the busine ss of flooring installation.” Because the Commi ssion concluded that MMPA was not a contractor, it
also concluded that McQuitty was not a subcontractor. Ther efore, it held that MMPA was not l iable under Code § 65.2

- 302(B).
II. A NALYSIS This appeal requires us to determine which, if any, of the purported employers are liable to Divino under the Act. We address each purported employer in turn.

A. Whether McQuitty is L iable to Divino under the Act On appeal to this Court, Divino argues that the Commission erred in finding that McQuitty was not subject to the Act because the Commission improperly reli e ved McQuitty of
the burden of proving that it had regularly in service less than t hree employees. He claims that
the Commission improperly “produced evidence sua sponte ” while McQuitty “produced no- 8

-

evidence at all.” He contends that the Commission deprived him of his right to due process
when , without giving the parties an opportunity to respond, “ it took administrative notice, sua sponte , of ‘records’ from the Virginia State Corporation Commission and in particular, an ‘explanation’ from the Virginia S tate Corporate Commission Clerk’ s office website regarding the meaning of the term ‘purged

. ’” I n addition, Divino argues that the Commission never determined whether, at the time of the accident, McQuitty’s “ established mode of performing business regularly r e quired less than three or more employees. ” This Court is barred from reaching these arguments because they were not preserved
below for this Court’ s review. “ The contemporaneous objection rule, embodied in Rul e 5A:18 in the Court of Appeals . . . is based on the principle that a litigant has the r esponsibility to afford [the Commission] the opportunity to consider and correct a perceived error before such error is brought to the appellate court for review.” Wi l liams v. Gloucester Sheriff’ s Dept. , 266 Va. 409, 411 (2003) (quoting Reid v. Baumgardner , 217 Va . 769, 773 (1977)) ; see also Hodnett v. Stanco Masonry, Inc. , 58 Va. App. 244, 253 (2011)

. The rule exists to protect the tribunal below “ from appeals based upon undisclosed grounds, to prevent the setting of traps on appeal, ” to allow the
tribunal to “ rule intelligently, and to avoid unnece ssary reversals and mistrials.” Williams , 266
Va. at 411 (quoting Reid v. Boyle , 259 Va. 356, 372 (2000)). Divino’s assignments of error stem from the Commission’s consultation of the SCC ’s website . Because that alleged error did not

occur until the case was under review by the full Commission, Divino needed to file a motion for
reconsideration once the Commis sion stated in its decision that it was relying on information
from the SCC in order to give the full Commission the opportunity to correct the alleged error
and also so that Divino could preserve that argument for appeal

. See id. at 411

- 12 (holding that appellant was required to file a motion for reconsideration or rehearing to preserve argument for- 9

-

appellate review where the basis for the full Commission’s decision was not raised, litigated, or considered in the case prior to the full C ommission’s decision).
L ikewise, we cannot consider Divino’s contention that the full Commission erred in finding that McQuitty wa s not subject to the Act when the Commission never determined whether, at the time of the accident, McQuitty’s “ established mode of performing business regularly r equired less than three or more employees. ” T he deputy commissioner’ s opinion does

not actually state that McQuitty ’s established way of performing business regularly involved less
than three e mployees , a nd Divino did not ask the full Commission to review that issue. Divino
also never filed a motion for reconsideration before the full Commission to alert it to the fact that
it also had not actually made that determination . As a result, Divino’s argument is barred under
Rule 5A: 18. See Hodnett v. Stanco Masonry, Inc. , 58 Va. App. 244, 253 (2011) (holding that appellant failed to preserve an issue for a ppeal where he did not ask the C ommission to review the deputy commi ssioner’s decision on the issue and did not file a motion for reconsideration). Consequently, given that we cannot consider these argument s because they were not preserved for appeal, we affirm the Commission’s conclusion that McQuitty was not an employer subject
to the Act.
B. Whether Cavalier and MMPA are Divino’s Statutory Employers Under the Act On appeal, both Divino and the UEF argue that the Commission erred when it failed to
find that Cavalier and MMPA were Divino’s statutory employer s. “ The Workers’ Compensation Act requires an employment relationship of some kind to exist between a claimant and the party allegedly liable for compensation. The usual scenario is a true employer

- employee relationship in which the employer controls the employee’s jobsite conditions, employment tasks, and working hours. ” Jeffreys v. Uninsured Employer’ s Fund , 297 Va. 82, 90 (2019) . In addition, an employment relationship is created if a party is the employee’s “statutory employer” under- 10

-

Code § 65.2

- 302. “ The issue whether a person is a statutory employee presents a mixed question of law and fact which must be resolved in light of the facts and circumstances of each

case. ” Cooke v. Skyline Swannanoa, Inc. , 226 Va. 154, 156 (1983) . “F actual fin dings by the commission that are supported by credible evidence are conclusive and bind ing upon this Court on appeal.” Haley v. Springs Glob. U.S., Inc. , 54 Va. App. 607, 612 (2009) (quoting Southern Iron Works, Inc. v. Wallace , 16 Va. App. 131, 134 (1993) )

. However, “[a] n issue
of statutory interpretation is a pure question of law which we review de novo.” Booker v.
Commonwealth , 60 Va. App. 35, 42 (2012) (quoti ng Kozmina v. Commonwealth , 281 Va. 347,
349 ( 2011) )

. In addition, a s the claimant seeking benefits, Divin o ( and the UEF , which takes the same position ) had the burden of proof to show that Cavalier and MMPA were his statutory employers. See Jeffreys , 297 Va. at 97

. Code § 65.2

- 302 is comprised of four subsections . The first three subsections (A, B, and C) identify relationships where a party may be liable as a statutory employer under the Act

. Code § 65.2

- 302(A)

- (C) states:

A. When any person (referred to in this section as “owner”) undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as “subcontractor”) for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him. B. When any person (referred to in this section as “contractor”) contracts to perform or execute any work for another person which work or undertaking is not a part of the trade, business or occupation of such other person and contracts with any other person (referre d to in this section as “subcontractor”) for the execution or performance by or under the subcontractor of the whole or any part of the work undertaken by such contractor, then the contractor shall be liable to pay to any worker employed in the work any co mpensation under this title which he would have been- 11

- liable to pay if that worker had been immediately employed by him.
C. When the subcontractor in turn contracts with still another person (also referred to as “subcontractor”) for the performance or exec ution by or under such last subcontractor of the whole or any part of the work undertaken by the first subcontractor, then the liability of the owner or contractor shall be the same as the liability imposed by subse ctions A and B of this section.

“ Subsect ion A addresses the scenario in which ‘any person’ contracts with an independent contractor to perform work within the ‘trade, business or occupation’ of that ‘any person.’” Jeffreys , 297 Va. at 91

. When examining subsection A, Virginia courts generally apply the “normal

- work test,” which requires this Court to ask “ whether the activity in which the independent contractor engages is ‘ normally carried on through employees rather than independent contractors.’” Id. Subsection A would apply, for example, “ when a roofing company hires an independent contractor to repair a roof. ” Id. Because the roofing company hired the independent contractor to perform work that would normally be performed by the roofing company ’s employees , the roofing company is the statutory employer of the independent contractor’s employees.
Unlike the two

- tiered scenario of s ubsection A, “ Subsection B i nvolv es a three

- tiered scenario[.]” Id

. The Virginia Supreme Court explained that under s ubsection B:

A “person” hires a contractor to perform work outside the scope of that person’s “trade, business or occupation.” Code § 65.2

- 302(B). The contractor then hires a subcontractor to do some or all of that work. In this scenario, we have applied what has become known as the subcontracted

- fraction test. See Cooke v. Skyline Swannanoa, Inc. , 226 Va. 154, 158

- 59 (1983). An example of this sc enario would be where a banker

— whose business is b anking rather than construction

— enters into a contract with a general contractor to build a home, and the general contractor in turn relies on subcontractors (e.g., firms employing framers, brick masons , electricians, etc.) to complete the job. The general contractor, not the banker, becomes the statutory employer- 12

- of the subcontractors’ employees. See , e.g. , Cinnamon v. Int’ l Bus. Machs. Corp. , 238 Va. 471, 474

- 79 (1989).
Id. at 91

- 92 (footnotes omitted) (emphasis in original)

. 1. Cavalier Land
Divino and the UEF ask this Court to apply the subcontracted

- fractio n test of
Code § 65.2

- 302(B) to find that both MMPA and Cavalier are Divino’s statutory employers.
Divino argues that Cavalier is “any person (referred to in [Code § 65 .2

- 302(B)] as ‘contractor’ ) ” who agreed to perform w ork for “another person” ( MMPA ) “which work or undertaking is not a part of the trade , business or occupation” of “ such other person” (M MPA ). He contends that
Cavalier then contracted with “any other person (referred to in [Code § 65.2

- 302( B)] as ‘subcontractor’)” ( McQuitty) “for the execution or performance ” of a part of Cavalier’s contract
with MMPA.
The UEF frames the argument slightl y differently. It contends that MMPA is “any person (referred to in [Code § 65.2

- 302(B)] as ‘contractor’ ) ” who contracted through the lease to perform the “ La ndlord’s W ork ” “for another person” ( CoreVelo) and that the work is “not a part
of the trade, business or occupation ” of “such other person” ( CoreVelo). 1 T he UEF contends
that MMPA then entered into a subcontract with Cavalier to perform all of the “ Landlord’s
W ork, ” making Cavalier the “subcontractor” under Code § 65.2

- 302(B). Then, Cavalier, in turn,
subcontracted a fraction of that contract

– the f looring work

– out to McQuitty, making both MMPA and Cavalier Divino’s statutory employers under Code § 65.2

- 302 (B) an d (C). These arguments fail with respect to Cavalier for several reasons. First, t hese theories require MMPA to have entered into a contract with Cavalier to have Cavalier perfor m the

1 No party disputes that construction and flooring work were not a part of CoreVelo’s trade, business or occupation.- 13

-

“Landlord’s W ork.” Second, these theories r equire Cavalier to have entered into a subcontract with McQuitty to perform the flooring work. However, the Commission made findings of fact
that no such contracts existed. The Commission found, “Cavalier Land did not contract with the owner, Mult. Misc. Prope rties, t o perform renovations on the [T]ime [B] uilding .” The Commission also found, “ Cavalier Land merely acted as Mult. Misc. Properties’ agent in reaching the agreement with the tenant and in finding and hiring the various contractors, including Jim McQ uitty Hardwood Floor Company.” These findings of fact are supported by
credible evidence in the record. Poutasse testified that Cavalier was a property manager that acted as an agent of MMPA and entered into a contract with McQuitty on M MPA ’s behal

f

. Be cause the contract for the flooring work was actually directly between MMPA and McQuitty , and Cava lier itself did not contract to perform the work, we cannot say the Commission err ed in concluding that Cavalier was not Divino’s statutory employer. 2
2. MMPA
Divino and the UEF ar gue that M MPA was Divino’s statutory employer under Code § 65.2

- 302(B). They argue that M MPA is “any person” who contracted through the lease to “perfo rm or execute” the “ Landlord’s Wo rk ” “for another person” (CoreVelo) and that the work is “ not a part of the trade , business or occupation” of “such other person” (Co reVelo)

. Divino

2 In addition to finding that Cavalier was not a statutory employer, the Commission also found that Cavalier was not liable to Divino under the Act as a statutory employer because it met the exception for persons engaged in “the business of property management” under Code § 65.2

- 302(D). Because we agree that Cavali er was not a statutory employer and because that is the best and narrowest grounds for our decision, we do not reach this additional reason given by the Commission. See Levick v. MacDougall , 294 Va. 283, 302 (2017) (“ Following the traditional d octrine of judicial restraint, we ‘decide cases “ on the best and narrowest grounds available.’” ” ( quoting Commonwealth v. White , 293 Va. 411, 419 (2017) ) )

.- 14

-

contend s that MMPA then contracted with “any other person” (McQuitty) to perform “any part of the work undertaken by” M MPA (i.e., the flooring). 3
Divino and the UEF object to the Commission’s position that , because MMPA is an “owner” and not a “contractor , ” MMPA cannot be liable under Code § 65.2

- 302 (B) . The y argue that i t is irrelevant that MMPA was not a contractor because the statu te only requires that MMPA be “any person .” They also claim that the question of whether construction is MMPA ’s trade, business, or occupation is not the relevant inquiry under the statute because the only requirement
under subsection B is that the work is not the trade, business or occupation of “another person”

– i.e. , CoreVelo. In response , MMPA argues that the “subcontracted

- fraction test only applies where there is a general contractor hired by an owner to perform a project whose work is not a part of the

tra de, business or occupa tion of the owner.” MMPA contends that it “ is not a general contractor who contracted to do work for an owner and then subcontracted a part or fraction of the work to
a subcontractor. ” Rather, MMPA argues that it is an owner who hired independent contractors to perform work on its own b uildings so that it could lease units in those buildings, such as the Time Building, to tenants. Therefore, M MPA contends that it “ does not, and did not, contract to
pe rform flooring installation for another person” as Code § 65.2

- 302(B) requires

. The arguments presented require us to examine the language of Code § 65.2

- 30 2.

“ The Virginia Su preme Court has long held that ‘ when analyzing a statute, we must

assume that “ the legislature chose, with care, the words it used

. . . and we are bound by those words as we interpret the statute. ”’” Doulgerakis v. Commonwealth , 61 Va. App. 417, 420 (2013) (alteration in original) ( quoting City of Virginia Beach v. ESG Enters. , 243 Va. 149, 153

3 The UEF continues to assert that MMPA contracted with Cav alier to perform all of the “Landlord’s Work” and then Cavalier subcontracted the flooring work out to McQuitty.- 15

-

(1992)). “Consequently, we ‘ apply[ ] the plain meaning of the words unless they are ambiguous or [doing so] wo uld lead to an absurd result.’” Eley v. Commonwealth , 70 Va. App. 158, 164 (2019) (alterations in original) (quoting Wright v. Commonwealth , 278 Va. 754, 759 (2009) ). In our review, we are also cognizant that “[t]he Act makes clear

. . . that these scenarios [in Code § 65.2

- 302] are exceptions to the general rule that ‘nothing in [the Act] shall be construed to make the employees of any independent contractor the employees of the person or corporation employing or contracting with such independent contractor.’” Jeffreys , 297 Va. at 92 ( last alteration in origi nal) (quoting Code § 65.2

- 101); see also Sykes v. Stone & Webster Eng’g Corp. , 186 Va. 116, 123 (1947). “ Consequently, ‘ the mere fact a business owner engages an independent contractor does not make that independent contractor’s employees st atutory employees of the owner.’” Jeffreys , 297 Va. at 92 ( quoting Rodriguez v. Leesburg Business Park, LLC , 287 Va. 187, 194 (2014)). The Commission’s finding that M MPA is not in the business of laying laminate flooring
is not

– on its own

– fatal to appellants’ argument. Unlike subsection A, which codifies the normal work test and that specifically requires that the work contrac ted for be part of “any person[’ s]” “ trade, business or occupation,” the subcontracted

- fraction test of sub section B does not state this requirement . The Supreme Court of Virginia recently discussed this difference
between subsections A and B of Code § 65.2

- 302 in Jeffreys v. Uninsured Emplo yer’s Fund , 297 Va. 82 (2019). The Supreme Court explained , “Depending upon the circumstances, subsections A and B can overlap each other. But they do not necessarily do so. When subsection B applies, the contractor becomes the statutory employer of the subcontractor’s em ployees, and ‘ [t]his is true even if that work is not normally a part of the []contractor’s normal work, but is a
subcontracted fraction of the main contract. ’” Id. at 92 n.4 (quoting 15 Virginia Practice Series, Workers’ Compensation § 4:12, at 24 (2018 ed.)). When the subcontracted

- fraction test applies,- 16

-

“ we need not reach the question whether the business was normally carried on through employees rather than independent contractors.” Smith v. Horn , 232 Va. 302, 308 (1 986). See
also Cooke , 226 Va. at 159 (stating that the normal work test “ comes into play only where an
obvious subcontract is not first found ”).
We also agree with Divino and the UEF that the statute does not apply only to contractors and sub contractors enga ged in construction project s , as M MPA seems to suggest. The statute clearly provides that “any person” can be a statutory employer and then simply refers to that
person as “cont ractor ” for identification purposes in subsection B of the statute. Moreover, the Virginia Supreme Court has applied the subcontracted

- fraction test to situations that involve
more than the relationship between a general contractor and a subcontractor that is often seen i n construction contract s
. See Cooke , 226 Va. at 159 ( holding that a hotel licensee ’s contract with
the hotel’s restaurant operator was a subcontracted fraction of the licensee’s contract with the hotel owner, making that hotel licensee the statutory employer of the restaurant’s injured employee). Furthermore, this Court has determined that simply being an “owner” does not necessarily relieve a party from being a statutor y employer under Code § 65.2

- 302 (B) and the
subcontracted

- fraction test

. See Princess Anne Builders, Inc. v. Faucette , 37 Va. App. 102 (2001) (holding that a construction company that contracted with a buyer to complete
construction of a home and lot to then sell and deliver to the buyer was liable to the injured
claimant of a tree trimming company because the construction company’s contract with the tree trimm ing company was a subcontracted fraction of the construction company’s contract with the buyer ). However, t he Commission’s findings of fact that M MPA was an owner and a passive real
estate investor who did not engage in the business of laminate flooring o r construction contracting are very relevant to the determination of whether M MPA was a statutory employer.- 17

-

In fact, v iewed all together and consider ing M MPA ’ s relationship with CoreVe lo, these facts
establish that M MPA did not “contract [] to perform or execute any work for another person , ” as Code § 65.2

- 302(B) requires. (E mphasis added). The agreement in this case to perform the
work on part of the Time Building was entered into b ecause CoreVelo was a tenant in M MPA ’s building , and CoreVelo required M MPA ’s authorization in order for the work to be performed

. Through the parties’ lease and le ase amendment, the two parties acknowledged that M MPA

– the party with the superior interest in the real estate as the owner of the building and of the improvements and renovations being made

– would select which independent contractors it
wanted to perform the work. Therefore , when M MPA signed the amendment to the lease, it was undertaking to have the “ Landlord’s W ork ” performed for itself to part of the building it owned

– and would continue to own even after all of the work was completed

. 4 MMPA hired independent contractors

– not subcontrac tors

– including McQuitty to perform the work on its building. Consequently, M MPA is not Divino’s statutory employer under Code § 65.2

- 302 (B)

. 5

4 This point distinguishes the case from Princess Anne Builders, Inc. v. Faucette , 37 Va. App. 102 (2001) , which Divino contends controls here. Although Princess An ne Builders was an “owner” because it owned the property on which it was constructing a house, Princess Anne Builders was “ engaged routinely in the business of purchasing lots from a developer, doing site work, and constructing homes on these lots pursuant to a contract with a prospective buyer. ” Id. at 104. Unlik e in this case, where MMPA would continue to own the property, Princess Anne Builders, who regularly built houses to sell, did contract to perform or execut e work for the future new owner , who was in the process of buying that property from Princess Anne Builders.

5 If MMPA were a statutory employer under Code § 65.2

- 302(B) and the facts of this case, the consequences of the logical extension of that holding would reverberate beyond even the commercial landlord scenario now before us. At oral argument before this Court , counsel for the UEF stated that Code § 65.2

- 302 (B) cou ld even apply to a homeowner who makes renovations for a tenant renting out a room in his home

. Viewing the statute as the Commission has unanimously done, however, result s in a clear, more logical holding commensurate with the General Assem bly’s intent i n Code § 65.2

- 302. The following example exemplifies what are the principles in this case and shows the problem with the UEF’s position

. A homeowner rents out a bedroom and bath room to a tenant and later agrees to renovate the bathroom to make it more appealing to the tenant to renew the lease . The homeowner hires a general contractor who, in turn, hires several subcontractors, including an electrician. If an employee of the electrician is- 18

- III. C ONCLUSION In short, we cannot say that the Commission err ed in unanimously denying Divino
benefits because Divino failed to prove that any of the allege d employers are liable for his injuries under the Workers’ Compensation Act. Divino made several arguments to this Court on appeal regarding his actual employer, McQuitty. However, this Court cannot reach his arguments regarding McQuitty because none of them were preserved for appeal

. Consequently , we affirm the Commission’s finding that McQuitty did not have at least three or more employees regularly in service in Virginia and , therefore, that McQuitty is not subject to the Act. The Commission also did not err in finding that Cavalier was not Divino’s statutory employer

. Cavalier did not contract with MMPA to perform the “ Landlord’s Work, ” and
Cavalier also did not contract with McQuitty to perform the flooring work

. T he Commission made a finding of fact below that Cavalier was merely acting as an agent for MMPA , and, as such, Cavalier could not be Divino’s statutory employer. Finally, the Commi ssion did not err in finding that MMPA was no t Divino’s statutory employer. T he lease agreement between MMPA and CoreVelo gave MMPA

– the owner of the property and the owner of the improvement s being made to it

– the right to decide which contractors would perform the work on MMPA’s own building. Therefore, those contractors were independent contractors

– not subcontractors

– as they went about the work for MMPA on
its own building.

injured while doing the work, th e homeowner would not be liable as the injured worker’s statutory employer

. Like MMPA, who continued to own the Ti me B uilding, including the rented suites undergoing the renovations t here, the homeowner ( who would continue to own the rented bathroom being renovated) did not “ contract[] to perform or execute any work for another ,” as Code § 65.2

- 302(B) requires . C onsequently , the homeowner would not be the injured worker’s statutory employer

– just as commercial landlord MMPA would not be Divino’s statutory employer.- 19

-

For all of these reasons, we affirm the decision of the Wo rkers’ Compensation
Commission.
Affirmed

.