Court Opinion

ID: 7877591
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:17:21.704745+00
Date Added: 2024-06-11T16:31:27.149649
License: Public Domain

YETKA, Justice
(dissenting).
I respectfully dissent. I believe that the compensation judge and the majority of the Workers’ Compensation Court of Appeals adopted an unreasonably strict construction of the term “contractor” for purposes of Minn.Stat. § 176.215, subd. 1 (1988). The result is a definition that treats municipalities more favorably than private employers simply because municipalities do not owe “contractual” obligations to third parties in the traditional sense. .
In this case, the City of St. Paul allowed L.A. Industries to use, virtually free of charge, approximately $300,000 worth of equipment such that L.A. Industries could perform an essential part of the city’s Dutch elm disease control program. If any private employer set up such a transparent relationship in order to circumvent the requirements of the Workers’ Compensation Act, this court would have no trouble piercing the formal relationship and addressing its substance. I see no reason to refrain from doing so in this case.
The proper definition of the term “contractor” as used in Minn.Stat. § 176.215, subd. 1 is a question of law. See Doe v. Minnesota State Board of Medical Examiners, 435 N.W.2d 45, 48 (Minn.1989). In enacting this statute, the legislature intended to encourage contractors to require their subcontractors to comply with the Workers’ Compensation Act. Klemetsen v. Stenberg Constr. Co., Inc., 424 N.W.2d 70, 73 (Minn.1988). Accordingly, the term “contractor” should be construed so as to effectuate this legislative intent.
In “finding” that the City of St. Paul was not a contractor, the compensation judge did not apply an accepted definition of the term “contractor.” Long ago, this court recognized that, when a person or organization is acting to improve its own property, that person may be both an owner and a contractor even in the absence of clear “contractual” obligations to a third *407party. Moorhead v. Grassle, 254 Minn. 103, 107, 93 N.W.2d 678, 681 (1958); see also Pelletier Corp. v. Chas. M. Freidheim Co., 383 N.W.2d 318, 322 (Minn.App.1986) (“there is nothing unusual * * * about a property owner acting as his or her own contractor”). The city’s role in this case is indistinguishable from that played by the partnership found to be a contractor in Moorhead. Moorhead, 254 Minn, at 109, 93 N.W.2d at 682. Both the city and the partnership delegated an essential part of a property improvement project to thinly capitalized individuals who could not reasonably be expected to carry worker’s compensation insurance and then allowed them to perform hazardous work without requiring them to prove that they had insurance.
Finally, public policy demands that the City of St. Paul take responsibility for its failure to require L.A. Industries to carry insurance. In this case, the special fund paid at least $26,514 to or on behalf of the injured worker. There is no public policy reason for imposing this cost on the special fund when it was the City of St. Paul that was in the best position to assure that L.A. Industries carried insurance.
For all of the above reasons, I would hold that the compensation judge and the Workers’ Compensation Court of Appeals abused their discretion in this case in construing the term “contractor” to require contractual obligations owed to a third party-