Court Opinion

ID: 9897984
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:27:35.217938+00
Date Added: 2024-06-11T09:16:19.400662
License: Public Domain

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                  IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

       SUBCONTRACTING CONCEPTS CT,
       INC., a Delaware corporation,                          No. 83748-6-I

                              Appellant,                      DIVISION ONE

                      v.                                      PUBLISHED OPINION

       FERNANDA LEMOS DUARTE MANZI
       and LEONARD MANZI, and the marital
       community comprised thereof,

                              Respondents.

              MANN, J. — RCW 51.04.060 prohibits workers or employers from executing a

       contract that waives benefits under the Industrial Insurance Act (IIA), Title 51 RCW.

       Any contract or agreement to the contrary is “pro tanto void.” After Fernanda Manzi

       (Manzi) was injured while working, she named Subcontracting Concepts CT, Inc., (SCI),

       as a possible employer in her claim for IIA benefits. SCI sued Manzi for breach of

       contract based on an employment agreement Manzi signed that purported to waive her

       right to IIA benefits. 1 The trial court dismissed SCI’s lawsuit finding the agreement was

       void under RCW 51.04.060. The trial court awarded Manzi her attorney fees and costs

               1 SCI also sued Fernanda Manzi’s husband Leonard Manzi. For clarity, we refer to Fernanda as

       Manzi throughout the rest of the opinion.
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       No. 83748-6-I/2

       under the frivolous lawsuit statute, RCW 4.84.185. SCI appeals. Finding no error, we

       affirm and award Manzi’s attorney fees on appeal. 2

                                                           I.

               Manzi was looking for work and in August 2015 learned from an acquaintance

       about a potentially available delivery route with OnTrac. 3 Manzi spoke with an OnTrac

       driver who gave Manzi’s contact information to his boss, Khalid Nazir. Manzi then

       spoke to and met with Nazir. Unbeknownst to Manzi, Nazir did not work for OnTrac.

       Instead, Nazir ran a separate company, Axis Nexus, with a warehouse directly next to

       an OnTrac warehouse in Kent, Washington. When they met, Nazir took Manzi into the

       OnTrac warehouse and introduced her to an OnTrac employee who would train Manzi.

               After the meeting, Manzi was e-mailed a link to CBDriver.com to complete an

       application to work for Nazir. Manzi’s native language is Brazilian Portuguese. The

       website and forms were in English. Once she set up an account, there were several

       contracts and documents for Manzi to complete. The documents were created by SCI.

       Manzi never met with anyone from SCI and “did not understand what [SCI] was.” SCI is

       a third-party administrator that provides payroll, insurance, and other administrative

       services to delivery companies.

               The SCI forms included an owner/operator agreement (Agreement). The

       Agreement is 5 pages long, typed in small font, and made up of 27 numbered

       paragraphs, including the sixth paragraph at issue:

               The Owner/Operator agrees that no employer/employee relationship is
               created under this Agreement as a result of the relationship between SCI
               2 The Department of Labor and Industries submitted an amicus brief in support of the trial court’s

       decision finding that RCW 54.04.060 prohibits workers or employees from contracting out of IIA benefits.
               3 Express Messenger Systems, Inc., dba OnTrac.

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       No. 83748-6-I/3

              and the Owner/Operator or its Customers . . . Owner/Operator further
              understands and agrees that the Owner/Operator . . . is not covered under
              any unemployment, disability or workers’ compensation insurance policy
              of SCI or the Owner/Operator’s customers.

       Manzi electronically signed the Agreement. Manzi also electronically signed an

       independent contractor acknowledgment form that stated: “You are not entitled to

       workers’ compensation.” The forms were written in English, and were not

       explained to Manzi.

              After she completed the forms, Nazir asked Manzi to obtain a taxpayer

       identification number from the IRS. Manzi returned to Nazir’s warehouse, where Nazir

       had another employee drive Manzi to a Washington State Department of Revenue

       (DOR) office. That employee told DOR that Manzi was another OnTrac driver and

       helped Manzi obtain a Universal Business Identifier number for her own business—

       Manzi Delivery.

              Nazir then gave Manzi a driver ID badge with the OnTrac logo. The badge

       allowed Manzi to open the OnTrac warehouse door. Manzi began making deliveries

       from the OnTrac warehouse using her own vehicle. Manzi’s paychecks were issued by

       SCI.

              In early December 2015, Manzi was injured while delivering packages. Manzi

       filed for workers’ compensation benefits with the Department of Labor and Industries

       (Department) under the IIA. Because Manzi was under the impression that she worked

       for OnTrac, Manzi listed OnTrac as her employer. The Department later assigned Axis

       Nexus as the employer for Manzi’s claim. Axis Nexus denied that it was Manzi’s

       employer and appealed to the Board of Industrial Appeals (Board).

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       No. 83748-6-I/4

              Manzi moved to join SCI and OnTrac, claiming “there are three potential

       employers in this case, owing in large part to the intentionally convoluted system of

       logistics contracting utilized by [OnTrac].” The Board granted Manzi’s motion.

       Following joinder, the parties stipulated to an order allowing Manzi’s claim and

       designating Axis Nexus as Manzi’s employer. The Board then issued a decision

       allowing Manzi’s workers’ compensation claim against Axis Nexus and entitling Manzi to

       medical treatment and other benefits.

              SCI then sued the Manzi and her husband for breach of contract. SCI alleged

       Manzi materially breached the sixth paragraph of the Agreement and independent

       contractor acknowledgment form by seeking to join SCI as a purported employer in her

       workers’ compensation claim.

              Manzi moved for summary judgment arguing, in part, that the sixth paragraph of

       the Agreement was void because RCW 51.04.060 prohibits employers or workers from

       contracting out of IIA benefits. Manzi asserted that RCW 51.04.060 applies to workers,

       employers, and third parties and voids any contract if the contract attempts to

       circumvent the provisions of the IIA. The trial court agreed with Manzi, granting

       summary judgment and concluding that “Manzi’s contract with Plaintiff Subcontracting

       Concepts is partially void under RCW 51.04.060.”4

              The trial court awarded Manzi reasonable attorney fees under the frivolous

       lawsuit statute, RCW 4.84.185.

              SCI appeals.

              4 The trial court orally granted Manzi’s motion for summary judgment and awarded Manzi

       reasonable attorney fees on June 9, 2021. A final judgment was entered on February 11, 2022.

                                                     -4-
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       No. 83748-6-I/5

                                                    II.

              SCI argues that RCW 51.04.060 only applies when there is an employment

       relationship between an employer and a worker. SCI asserts that because there was

       no employment relationship between SCI and Manzi, the IIA does not apply. We

       disagree.

              We review summary judgment decisions de novo. Int’l Marine Underwriters v.

       ABCD Marine, LLC, 179 Wn.2d 274, 281, 313 P.3d 395 (2013). “Summary judgment is

       proper only where there is no genuine issue of material fact and the moving party is

       entitled to judgment as a matter of law.” Int’l Marine Underwriters, 179 Wn.2d at 281.

       We “must view the evidence, and all reasonable inferences from the evidence, in the

       light most favorable to the nonmoving party, and the motion should be granted if a

       reasonable person could reach only one conclusion.” Dunnington v. Virginia Mason

       Med. Ctr., 187 Wn.2d 629, 638, 389 P.3d 498 (2017).

              We also review issues of statutory interpretation de novo. Dep’t of Ecology v.

       Campbell & Gwinn, LLC, 146 Wn.2d 1, 9, 43 P.3d 4 (2001). We begin with “the plain

       language enacted by the legislature, considering the text of the provision in question,

       the context of the statute in which the provision is found, related provisions,

       amendments to the provision, and the statutory scheme as a whole.” Lenander v. Dep’t

       of Ret. Sys., 186 Wn.2d 393, 403, 377 P.3d 199 (2016).

              In enacting the IIA, the legislature directed “sure and certain relief for workers,

       injured in their work.” RCW 51.04.010. The purpose of the IIA is captured in the

       legislative findings in RCW 51.04.062:

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       No. 83748-6-I/6

             Washington state’s workers’ compensation system should be designed to
             focus on achieving the best outcomes for injured workers. Further, the
             legislature recognizes that controlling pension costs is key to a financially
             sound workers’ compensation system for employers and workers. To
             these ends, the legislature recognizes that certain workers would benefit
             from an option that allows them to initiate claim resolution structured
             settlements in order to pursue work or retirement goals independent of the
             system, provided that sufficient protections for injured workers are
             included.

       The IIA “shall be liberally construed for the purpose of reducing to a minimum the

       suffering and economic loss arising from injuries and/or death occurring in the course of

       employment.” RCW 51.12.010. The liberal construction of the IIA demands that all

       doubts be resolved in favor of coverage. Dep’t of Labor & Indus. v. Lyons Enters., Inc.,

       185 Wn.2d 721, 734, 374 P.3d 1097 (2016).

             Under RCW 51.04.060, neither a worker nor employer can contract out of

       coverage under the IIA, and employers cannot hamper efforts of workers to access the

       protections:

             No employer or worker shall exempt himself or herself from the burden or
             waive the benefits of this title by any contract, agreement, rule or
             regulation, and any such contract, agreement, rule or regulation shall be
             pro tanto void.

        “Thus, no employer or employee may ‘exempt himself [or herself] from the burdens

       which [the Act] imposes, nor by contract waive the benefits thereof in the sense that he

       can bar himself from the right to claim its benefits.’” Mandery v. Costco Wholesale

       Corp., 126 Wn. App. 851, 854, 110 P.3d 788 (2005) (quoting Shaughnessy v. Northland

       S.S. Co., 94 Wash. 325, 329, 162 P. 546 (1917)).

             The parties concede that there was no employment relationship between SCI

       and Manzi. But nothing in the plain language of RCW 51.04.060 requires that there be

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       No. 83748-6-I/7

       an employment relationship for the statute to apply. The statute prohibits an employer

       or worker from contracting or agreeing to waive benefits. SCI concedes that it is an

       employer for various people in its payroll business. And there is no dispute that Manzi

       was a worker. Manzi’s claim as a worker was allowed when Axis Nexus was

       designated as her employer. Under a plain reading of RCW 51.04.060, Manzi was a

       worker and could not exempt herself from the burdens or benefits of the IIA. Any

       contract that purported to exempt Manzi from the IIA was pro tanto void. Thus, the trial

       court did not err when it voided the sixth paragraph of the Agreement. And because

       SCI’s breach of contract claim was based on that provision, the trial court properly

       dismissed SCI’s lawsuit on summary judgment.

             This analysis is in alignment with other cases analyzing RCW 51.04.060. For

       instance, in Mandery, Susan Mandery signed an employment contract with Warehouse

       Demo Services, Inc., (WDS)—a company that provided services to Costco. 126 Wn.

       App. at 852. The contract included a clause prohibiting Mandery from looking to any

       third parties for relief if she was injured on the job. Mandery, 126 Wn. App. at 852.

       After Mandery was injured while working at Costco, she sought and obtained workers’

       compensation benefits under the IIA. Mandery then filed a third-party suit against

       Costco seeking recovery for her injuries. Mandery, 126 Wn. App. at 853. Costco

       argued that Mandery had waived her negligence claim by signing the employment

       agreement. Mandery, 126 Wn. App. at 853. The court disagreed, holding that “under

       the express terms of RCW 51.04.060, Mandery cannot waive by contract her right to

       pursue these potential statutory benefits.” Mandery, 126 Wn. App. at 855. Thus, the

       contract provision was void. Mandery, 126 Wn. App. at 855.

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       No. 83748-6-I/8

              The Board also consistently interprets RCW 51.04.060 as prohibiting a worker

       from waiving benefits he or she is, or may be, entitled to. See In re Martinez, No. 14-

       12018, 2015 WL 4153109, at *5 (Wash. Bd. of Indus. Ins. Appeals June 25, 2015) (a

       worker could not waive benefits he was entitled to no matter what his resignation letter

       said); In re Johnson, No. 17-12304, 2018 WL 3413620, at *3 (Wash. Bd. of Indus. Ins.

       Appeals May 29, 2018) (a worker who signed a volunteer services agreement

       acknowledging that she would not receive wages could not exempt herself under RCW

       51.04.060). Similarly, Manzi could not waive by contract her right to pursue potential

       statutory benefits.

              This outcome also reflects the policy behind the IIA to provide “sure and certain

       relief” for injured workers. RCW 51.04.010.

              It is out of accord with the spirit and purpose of the compensation law that
              an employee when injured be put to the task of guessing who his
              employer is to whom he must look for compensation, and be bandied
              about from one to another, so that in the end all may escape.

       Jackson v. Harvey, 72 Wn. App. 507, 519, 864 P.2d 975 (1994) (citing Lee v. Oreon E.

       & R.G. Scott Realty Co., 96 S.W.2d 652, 654-55 (Mo. Ct. App. 1936)). Because the

       broad policy behind the IIA is to protect workers, it would be incongruous to allow for a

       breach of contract claim against a worker for signing a provision that is pro tanto void.

              SCI relies mainly on Robinson v. Dep’t of Lab. & Indus., 181 Wn. App. 415, 326

       P.3d 744 (2014), to support its claim that the IIA does not apply to a nonemployment

       contract. In Robinson, a free-agent football player who was injured while participating in

       a minicamp tryout for the Seattle Seahawks, sought workers’ compensation coverage

       under the IIA. 181 Wn. App. at 417. Under the IIA, a claimant must “prove he is a

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       No. 83748-6-I/9

       ‘worker injured in the course of his or her employment’” to be eligible for benefits.

       Robinson, 181 Wn. App. at 426 (quoting RCW 51.30.010). Because Robinson was not

       an employee of the Seahawks, we concluded that he was not eligible for IIA benefits.

       Robinson, 181 Wn. App. at 434. Thus, Robinson holds only that a claimant must be an

       employee to obtain IIA benefits. Robinson did not cite or discuss the meaning of RCW

       51.04.060 and whether the statute allows a worker to enter a contract waiving coverage

       under the IIA. Robinson provides no support for SCI’s position.

              Because the plain language of RCW 51.04.060 prohibits an employee or

       employer from entering a contract that waives workers’ compensation benefits under

       the IIA, the trial court did not err in granting summary judgment for Manzi.

                                                    III.

              After finding SCI’s breach of contract claim was frivolous under RCW 4.84.185,

       the trial court awarded Manzi $64,900.50 for attorney fees and $1,301.67 for costs

       incurred opposing SCI’s claim. SCI argues that the trial court erred because its breach

       of contract claim against Manzi was not frivolous and that the trial court failed to make

       appropriate findings. We disagree.

                                                    A.

              A trial court may award attorney fees in a civil action if the award is authorized by

       statute, agreement of the parties, or a recognized equitable ground. In re Marriage of

       Greenlee, 65 Wn. App. 703, 707, 829 P.2d 1120 (1992). RCW 4.84.185 authorizes a

       trial court to award reasonable attorney fees incurred in opposing an action found

       “frivolous and advanced without reasonable cause.” The statute requires that a lawsuit,

       in its entirety, must be frivolous. Biggs v. Vail, 119 Wn.2d 129, 133, 830 P.2d 350

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       No. 83748-6-I/10

       (1992). The purpose of the statute is to “discourage frivolous lawsuits and to

       compensate the targets of such lawsuits for fees and expenses incurred in fighting

       meritless cases.” Biggs, 119 Wn.2d at 137. Before awarding attorney fees under RCW

       4.84.185, the court must make written findings that the entire lawsuit is frivolous and

       advanced without reasonable cause. State ex rel. Quick-Ruben v. Verharen, 136

       Wn.2d 888, 901, 969 P.2d 64 (1998). “Complaints which are grounded in fact and

       warranted by existing law or a good faith argument for the extension, modification, or

       reversal of existing law are not [frivolous or] baseless claims.” Bryant v. Joseph Tree

       Inc., 119 Wn.2d 210, 219-20, 829 P.2d 1099 (1992).

              We review sanctions awarded for frivolous actions for abuse of discretion. Kilduff

       v. San Juan County, 194 Wn.2d 859, 874, 453 P.3d 719 (2019).

              The trial court granted Manzi’s request for an award of attorney fees and litigation

       costs under RCW 4.84.185. In doing so, the trial court found that “RCW 51.04.060

       clearly and unambiguously voids any contractual terms which would vitiate a worker’s

       rights or lessen an employer’s burdens under the [IIA].” The trial court explained:

              SCI’s claims cannot be supported by any rational argument on the law or
              facts because RCW 51.04.060 clearly and unambiguously voids
              contractual terms which alter the parties’ rights under Title 51. SCI’s sole
              claim of breach of contract stems from Ms. Manzi’s joinder of SCI to the
              Board proceedings regarding her workers’ compensation claim. To hold
              Ms. Manzi in breach of contract would require the court to interpret the
              contract in a manner which would effectively punish Ms. Manzi for
              exercising her rights under the Industrial Insurance Act.

              Because we agree that RCW 51.04.060 is unambiguous, we cannot conclude

       that the trial court abused its discretion in finding SCI’s lawsuit frivolous.

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       No. 83748-6-I/11

              SCI cites Collinson v. John L. Scott, 55 Wn. App. 481, 488, 778 P.2d 534 (1989),

       Jeckle v. Crotty, 120 Wn. App. 374, 387, 85 P.3d 931 (2004), and Granville Condo.

       Homeowners Ass’n v. Kuehner, 177 Wn. App. 543, 557, 312 P.3d 702 (2013), for the

       proposition that attorney fees and costs are not appropriate under RCW 4.84.185 in a

       case of first impression. SCI’s reliance is misplaced. In both Collinson and Granville,

       the trial courts exercised their discretion not to award sanctions and the appellate court

       agreed. But here, the trial court exercised its discretion to award fees after concluding

       that RCW 51.04.060 plainly barred SCI’s lawsuit against Manzi. We will not disturb the

       trial court’s exercise of discretion.

              In Jeckle, the trial court awarded sanctions under RCW 4.84.185 after concluding

       that most of the plaintiff’s claims were frivolous. 120 Wn. App. at 387. The Court of

       Appeals reversed after concluding that one of the claims—a Consumer Protection Act 5

       claim—brought against a law firm, was not frivolous because the cases the parties

       relied on were not dispositive. Jeckle, 120 Wn. App. at 387-88. But here, the trial court

       found that RCW 51.04.060 barred SCI’s only cause of action—breach of contract. We

       agree with the trial court. While there are no reported decisions interpreting RCW

       51.04.060, the plain language of the statute clearly barred SCI’s contract action against

       the Manzis because the sixth paragraph of the Agreement was pro tonto void.

                                                   B.

              We next address SCI’s claims that the trial court failed to make sufficient findings

       in support of the amount of attorney fees and costs awarded. The amount of fees

       awarded under RCW 4.84.185 is reviewed for abuse of discretion. Highland Sch. Dist.

              5 Ch. 19.86 RCW.

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       No. 83748-6-I/12

       No. 203 v. Racy, 149 Wn. App. 307, 314-15, 202 P.3d 1024 (2009). The court

       determines reasonable attorney fees by calculation of the “‘lodestar,’ which is the

       number of hours reasonably expended on the litigation multiplied by a reasonable

       hourly rate.” 224 Westlake, LLC v. Engstrom Props., LLC, 169 Wn. App. 700, 734, 281

       P.3d 693 (2012).

              To establish the reasonableness of the fee award, the attorney’s
              documentation of the work performed must satisfy at least a minimum
              level of detail. “The court must limit the lodestar to hours reasonably
              expended, and should therefore discount hours spent on unsuccessful
              claims, duplicated effort, or otherwise unproductive time.”

       224 Westlake, LLC, 169 Wn. App. at 734-35 (quoting Bowers v. Transamerica Title Ins.

       Co., 100 Wn.2d 581, 597, 675 P.2d 193 (1983)).

              Manzi’s attorney submitted records detailing the number of hours expended on

       tasks related to this case and the hourly cost for each task. The trial court found that

       the lodestar method was the appropriate method for calculating fees in this case, and

       that the hourly rates for services sought by Manzi’s counsel were reasonable. The trial

       court also found that the time spent on the case was reasonable, however, the trial

       court declined to award fees or costs for time spent on a motion for discretionary review

       and on the previous case before the trial court that was voluntarily dismissed by SCI.

       Thus, the trial court reduced Manzi’s request for attorney fees by $6,145.50 and costs

       by $77.28. The trial court also found:

              [N]o further reduction of fees and costs would be appropriate in this case.
              Given the purpose of RCW 4.84.185—deterrence and compensation—the
              Court finds that [Manzi] should be reimbursed for all attorney fees and
              costs they seek aside from those associated with the motion for
              discretionary review to the Court of Appeals or the previous case before
              this Court voluntarily dismissed by [SCI].

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       No. 83748-6-I/13

              We find no abuse of discretion—the trial court had an objective basis for the

       award and sufficiently explained that basis.

                                                     C.

              Both SCI and Manzi request attorney fees and costs on appeal. This court has

       discretion to award attorney fees on appeal under RAP 18.1(a) where authorized by

       applicable law. RAP 18.9(a) permits an appellate court to award a party attorney fees

       as sanctions, terms, or compensatory damages when the opposing party files a

       frivolous appellate action. Reid v. Dalton, 124 Wn. App. 113, 128, 100 P.3d 349 (2004);

       RAP 18.9(a). An appeal is frivolous if, considering the entire record, the court is

       convinced that the appeal presents no debatable issues upon which reasonable minds

       might differ, and that the appeal is so devoid of merit that there is no possibility of

       reversal. Advocates for Responsible Dev. v. W. Wash. Growth Mgmt. Hr’gs Bd., 170

       Wn.2d 577, 580, 245 P.3d 764 (2010).

              As discussed above, the trial court properly found that SCI’s claim against Manzi

       was frivolous under RCW 4.84.185. On appeal, reasonable minds could not differ on

       whether the sixth paragraph of the Agreement was pro tanto void under RCW

       51.04.060. Thus, subject to compliance with RAP 18.1, we award Manzi her attorney

       fees on appeal.

              We affirm and award Manzi’s attorney fees on appeal.

                                                  -13-
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       No. 83748-6-I/14

       WE CONCUR:

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