Opinion ID: 4200111
Heading Depth: 1
Heading Rank: 3

Heading: up-the-ladder liability issues

Text: In its appeal to this Court, UEF continues to argue that either MPD, HBC, and/ or the individual Partners and their wives should bear up-the-ladder financial responsibility under KRS 342.610 and KRS 342.700 for the workrelated injuries incurred by Brock, in light of the failure of Owen and O & 0 Builders to have workers' compensation coverage at the time of his injury. 6 As the proponent of assigning up-the-ladder liability, the burden fell upon UEF to prove the essential elements of its position. Burton v. Foster Wheeler Corporation, 72 S.W.3d 925, 929 (Ky. 2002) (citations omitted). Since UEF was unsuccessful in its burden of proof before the AW, the question on appeal is whether the evidence is so overwhelming, upon consideration of the whole record, as to compel a finding in UEF's favor. Wolf Creek Collieries v. Crum, 673 S.W.2d 735, 736 (Ky. App. 1984). Compelling evidence is defined as evidence that is so overwhelming no reasonable person could reach the same conclusion as the AW. REO Mechanical v. Barnes, 691 S.W.2d 224, 226 (Ky. App. 1985). KRS 342.610(2) provides in relevant part as follows: (2) A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to the employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter. Any contractor or his or her carrier who shall become liable for such compensation may recover the amount of such compensation paid and necessary expenses from the subcontractor primarily liable therefor. A person who contracts with another: · (a) To have work performed consisting ~f the removal, excavation, or drilling of soil, rock, or mineral, or the cutting or removal of timber from land; or (b) To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person shall for the purposes of this section be deemed a contractor, and such other person a subcontractor. This subsection shall not apply to the owner or lessee of land principally used for agriculture. (Emphasis added.) 7 The purpose of KRS 342.610 is to discourage a contractor from subcontracting work that is a regular or recurrent part of its business to an irresponsible subcontractor in an attempt to avoid the expense of workers' compensation benefits. General Electric Corporation v. Cain, 236 S.W.3d 579, 585 (Ky. 2007). In the context of this provision '[r]ecurrent' simply means occurring again ot repeatedly. 'Regular' generally means customary or normal, or happening at fixed intervals. However, neither term requires regularity or recurrence with the preciseness of a clock or calendar. Id. at 586 (citation omitted). The other up-the-ladder statutory provision relied upon by UEF, KRS 342. 700(2), provides, in part, as follows: A principal contractor, intermediate, or subcontractor shall be liable for compensation to any employee injured while in the employ of any one (1) of his intermediate or subcontractors and engaged upon the subject matter of the contract, to the same extent as the immediate employer. When a contractor falls within the provisions of KRS 342.610 or KRS 342.700, he may be found liable for an injured worker's claim even though he did not directly employ the claimant. However, to be adjudged liable, an entity must fit those statutes' descriptions of a contractor, and for that to occur he must be regularly engaged in the same or similar type of work as the work the subcontractor was hired to perform. To determine this, a series of factors are taken into consideration, including the putative contractor's nature, size, and scope, as well as whether he is equipped with the skilled manpower and tools to handle the task the 8 subcontractor was hired to perform. See Cain, 236 S.W.3d at 588 (citation omitted). Here the AW undertook this examination and made a factual finding that none of the entities to which UEF would assign liability qualify as a contractor based upon the applicable factors. This finding is supported by the testimony and other evidence presented into the record. The record is replete with largely uncontested testimony regarding the nature of MPD's and BBC's business operations, and the arrangements they made with Owen for the construction of the building. Cornwell, Brewer, and Owen all testified that Owen himself originally proposed the construction of the building on the Livingston property, with the objective that he would take charge of the construction project and, upon its completion, he would then lease it for use by his new business venture. There was conflicting evidence about whether the initial payment to Owen under the construction contract came from MPD's bank account, even though HBC was the owner of the property. However, the manner in which MPD and HBC may have commingled their funds has no effect on our determination because neither entity qualifies as a contractor for purposes of up-the-ladder liability for Brock's injury. The testimony of Cornwell, Brewer, and Owen plainly established that MPD was a diesel engine repair business and that constructing a building was not a regular and recurring part of its work. The evidence established with equal clarity that HBC was in the business of leasing property, that its work did not include construction of buildings, and that it had no employees. The AW's findings to that effect were solidly supported by substantial evidence. 9 Uncontested evidence also established that Owen employed Fiers and / Brock to do the gravel work in connection with the building project, which further supports the AW's finding that Owen was the exclusive contractor on the project and that MPD and HBC did not meet the relevant statutory criteria to qualify as contractors ladened with up-the-ladder liability. Because the AW is the fact finder in a workers' compensation proceeding, we defer to his assessments of the weight, credibility, and substance of the evidence and are constrained to accept his findings because they are supported by the evidence of record. UEF argues that HBC and MPD explicitly or implicitly contracted with Owen to construct the building, and should therefore be regarded as contractors. We disagree. Entering into a contract with a building contractor does not convert one into a contractor for purposes of up-the-ladder liability. KRS 342.610(2) imposes such liability only when the work for which one contracts is a regular or recurrent part of the work of one's own trade, business, occupation, or profession. For MPD or HBC to qualify as contractors for up-the-ladder liability purposes, the same work they hired Owen to perform must be a regular or recurrent part of their work. See Cain, 236 S.W.3d at 588. The facts in evidence simply do not bear that out. We agree with the conclusions of the other tribunals that reviewed this matter. There is no statutory basis for holding MPD or HBC liable on a claim for which Owen was solely responsible. 10