Intermodal Services, Inc. v. Smith

364 S.E.2d 221, 234 Va. 596, 4 Va. Law Rep. 1560, 1988 Va. LEXIS 4

Opinions

COMPTON, J.,

delivered the opinion of the Court.

In this tort action seeking damages for personal injuries, the defendants filed a plea to the jurisdiction asserting that the plaintiffs exclusive remedy was under the Virginia Workers’ Compensation Act (the Act). The dispositive question on appeal is whether the trial court correctly ruled that the Act did not apply because the plaintiff was an independent contractor, not an “employee.”

In 1981, appellee Gary Daniel Smith, the plaintiff below, was injured in Alexandria on the premises of appellant Intermodal Services, Inc. (the Services Company), a defendant below. The injuries resulted from a collision between a motor vehicle owned and operated by the plaintiff and a motor vehicle owned by the Ser vices Company and operated by appellant Steve Clark, its agent and the other defendant below.

In 1983, the plaintiff filed this damage suit, alleging defendants’ negligence caused his injuries. In 1984, the defendants filed a motion to dismiss, asserting that the trial court lacked subject matter jurisdiction and that the claim was within the exclusive jurisdiction of the Industrial Commission of Virginia under the Act. Following an ore tenus hearing, the court denied the motion. The court, in a letter opinion, ruled that “the plaintiff was not an ‘employee,’ but rather an independent contractor, not subject to the provisions of [the Act].” Accordingly, the court held, the plaintiff could maintain his common-law negligence action against the defendants.

In a 1984 jury trial, the plaintiff recovered a verdict and judgment against the defendants in the amount of $100,000. We awarded the defendants this appeal to consider the correctness of the trial court’s ruling on the jurisdictional plea.

Under familiar principles of appellate review, we will view the facts, many of which are conflicting, in the light most favorable to the plaintiff who prevailed below. The plaintiff was a self-employed truck driver who owned several pieces of heavy equipment including a tractor-trailer unit. He operated from his home in the Northern Virginia area as a sole proprietor under the name, “Smith’s Fleet Service.”

At the time of the accident in question, the plaintiff had leased the tractor portion of his tractor-trailer unit to Intermodal Transportation Services, Inc. (the Transportation Company), an Ohio-based corporation with an office in Alexandria.

Footnotes

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* The Transportation Company was in the long-haul trucking business. Under the contract with the Transportation Company, the plaintiff moved freight between Alexandria and points in the Northeast, as well as in the local Alexandria area, using his tractor to pull trailers not owned by him. The plaintiffs assignments for the Transportation Company were made by that Company’s Alexandria dispatcher who worked from a location within a city block of the property of the Services Company.

The Services Company was a Georgia corporation that had a contract with the Southern Railway Company to operate a rail- highway exchange facility in Alexandria. The Services Company was engaged in the loading and unloading of trailers on and off railroad cars from a “piggyback yard” adjacent to railroad tracks. The Railway Company supplied the ramp for the process and the Services Company provided “the people and the equipment to run the ramp.” The Services Company had the responsibility to shift the trailers around the yard and to assure they were properly parked or “spotted.”

At times, the piggyback yard became filled with trailers. The Railway Company had leased a vacant parcel of land to receive the overflow. This satellite yard was one-tenth of a mile along a public highway from the piggyback yard. The Services Company used its own yard tractor for work within the piggyback yard but, because that unit was not insured for use on a public highway, obtained properly licensed and insured tractors to pull trailers from the piggyback yard, along the public highway, to the satellite yard.

On the day of the accident, the plaintiff had reported to the Transportation Company’s dispatcher in the morning and announced that he was ready to be assigned a trip to haul freight with his tractor. A train had just been unloaded at the piggyback yard and the plaintiff wished to be sent on a trip to Boston. Because there would be a delay due to “paperwork” before the dispatcher could release the plaintiff for the out-of-state trip, the dispatcher asked the plaintiff if he would be willing in the meantime to drive to the piggyback yard to move trailers to the satellite yard “rather than sit around the office” until he could leave for Boston. The plaintiff agreed and, upon inquiry, the dispatcher indicated that the plaintiff would be paid at the “flat” rate of $10 to $12 per trailer moved. Previously, as was the custom, the terminal manager for the Services Company had advised the dispatcher for the Transportation Company of the need for “road drivers” to move trailers along the public highway from the piggyback yard to the satellite yard.

After the plaintiff had transferred approximately a dozen trailers from one yard to the other, he was involved in the accident in question. At the time of the injury, the plaintiff was pulling a trailer on the piggyback yard en route to the satellite yard when his tractor collided with the yard tractor. The plaintiff received workers’ compensation benefits for the accident under coverage through the Transportation Company.

On appeal, the defendants contend the trial court erred in denying the jurisdictional plea. In a three-pronged argument, they contend that the plaintiff was an “employee,” as defined in § 65.1-4 of the Act, of the Services Company; or that the plaintiff was a “statutory employee,” within the provisions of § 65.1-29 or § 65.1-30 of the Act, of the Services Company; or that, even if the plaintiff was not in an employee relationship with the defendant, the defendants were not “other parties” under the Act against whom the plaintiff could maintain a tort action. We reject these contentions; the defendants have misinterpreted the settled law applicable to the facts of this case.

The Act protects “employees,” as defined in the Act. Nowhere does an independent contractor who himself is injured in an industrial accident come within the terms of the Act. Baker v. Nussman, 152 Va. 293, 302, 147 S.E. 246, 249 (1929). In other words, independent contractors or subcontractors may not be “employees” within the meaning of the Act. Stover v. Ratliff, 221 Va. 509, 511, 272 S.E.2d 40, 42 (1980). “This result obtains because the Act applies to the contractual relationship of master and servant.” Id. The Act “does not undertake to change, as between themselves, the rights of owners and independent contractors”; it “leaves that relationship as it was at common law and we must look to [the common law] in determining who is master and who is servant.” Crowder v. Haymaker, 164 Va. 77, 79, 178 S.E. 803, 804 (1935).

“What constitutes an employee is a question of law; but, whether the facts bring a person within the law’s designation, is usually a question of fact.” Baker, 152 Va. at 298, 147 S.E. at 247. The worker’s status “must be determined from the facts of the particular case in the light of well settled principles.” Brown v. Fox, 189 Va. 509, 516, 54 S.E.2d 109, 113 (1949). Thus, the initial inquiry here is whether the trial court correctly applied the law and the facts to reach the conclusion that the plaintiff was an independent contractor, not an employee. If the plaintiff was an “employee,” he was covered by the Act and his rights under the Act are exclusive. If, however, he was an independent contractor, the Act is inapplicable and maintenance of this action against defendants was proper.

Under Code § 65.1-4, as pertinent here, “every person ... in the service of another under any contract of hire or apprenticeship, written or implied,” is an “employee” for purposes of the Act. Generally, “a person is an employee if he works for wages or a salary and the person who hires him reserves the power to fire him and the power to exercise control over the work to be performed.” Richmond Newspapers v. Gill, 224 Va. 92, 98, 294 S.E.2d 840, 843 (1982) (route carrier of newspapers held to be an independent contractor not covered by the Act). The right of control is the determining factor in ascertaining the parties’ status in an analysis of an employment relationship. Virginia Employment Comm’n v. A.I.M. Corp., 225 Va. 338, 347, 302 S.E.2d 534, 539 (1983). And the right of control includes not only the power to specify the result to be attained, but the power to control “the means and methods by which the result is to be accomplished.” Gill, 224 Va. at 98, 294 S.E.2d at 843. An employer-employee relationship exists if the party for whom the work is to be done has the power to direct the means and methods by which the other does the work. “[I]f the latter is free to adopt such means and methods as he chooses to accomplish the result, he is not an employee but an independent contractor.” A.I.M. Corp., 225 Va. at 347, 302 S.E.2d at 540; Craig v. Doyle, 179 Va. 526, 531, 19 S.E.2d 675, 677 (1942). The extent of the reserved right of control may be determined by examining the performance of the parties in the activity under scrutiny.

As we shall demonstrate, there is abundant evidence in the record to support the trial court’s ruling that the plaintiff was not an employee and that the corporate defendant reserved only the power to control the result to be attained in this job assignment, and not the means and methods by which the result was to be accomplished.

When the plaintiff reported to the Services Company’s dispatcher at the piggyback yard, while passing time until departure on the trip to Boston, he asked “where the trailers were that they wanted moved across the street.” He was told where on the yard those trailers were located and he “went back there and started moving trailers.” After “hooking up” a trailer, the plaintiff would pull it to the Services Company’s “dispatch shack” near the entrance to the piggyback yard. A Services Company employee “came out and walked around it, wrote the number down and [the plaintiff] took it across the street.” Upon reaching the satellite yard, the plaintiff drove into the lot, “found an open spot, picked up a couple of [oak] boards, put them under the landing gear, unhooked and came back to get another.” The plaintiff did not see any employees of the Services Company at the satellite yard.

No one instructed the plaintiff how to “hook up” the trailers. No one “checked in” the trailers at the satellite yard. No person employed by the Services Company ever discussed terms of employment with the plaintiff, or told him when to go to lunch, or told him when to begin or cease work. No one gave the plaintiff “any direction whatsoever except go get the trailers and move them across the street.”

The plaintiff never was asked by the corporate defendant to complete any forms for payroll deductions. He was paid at a “flat rate” for each trailer moved. No deductions were made from his compensation, which was not paid by the corporate defendant. The plaintiff believed he would be paid by the Transportation Company, but he received his pay from the Southern Railway Company for transferring the trailers.

In sum, the evidence shows that the plaintiff was not selected, supervised, or paid wages by the corporate defendant. Significantly, the Services Company did not reserve the right to control the means and methods by which the plaintiff performed the work; it only retained the right to control the result to be attained.

The foregoing decision ordinarily would dispose of the appeal because, as we have said, the Act does not apply to an independent contractor. Nevertheless, we must touch briefly on the defendants’ other two contentions.

Relying on a host of cases, all of which involve claims by employees of independent contractors or subcontractors, defendants contend that the plaintiff was a “statutory employee” of the corporate defendant within the meaning of § 65.1-29 or § 65.1-30 of the Act. Defendants argue that the language of the statutes demonstrates an intention by the General Assembly that independent contractors shall be considered “statutory employees,” even though they do not qualify as “employees” under the common law.

We do not agree with that contention. This Court already has ruled to the contrary in the line of cases discussed earlier in this opinion — Baker v. Nussman, Crowder v. Haymaker, Craig v. Doyle, Stover v. Ratliff, and Richmond Newspapers v. Gill. The language of the respective statutes fails to support such a conclusion.

Section 65.1-29 provides, as pertinent here, that:

“When any person (in this section . . . referred to as ‘owner’) undertakes to perform or execute any work . . . and contracts with any other person (in this section . . . referred to 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 workman employed in the work any compensation under this Act which he would have been liable to pay if the workman had been immediately employed by him.”

Section 65.1-30 contains similar language and deals with the contractor-subcontractor relationship.

Defendants urge that the proper construction of the statutory language is that “any workman employed in the work,” to whom compensation benefits are owed, includes work performed “by” a self-employed person himself, acting as a subcontractor, and not just those employees working “under” a subcontractor. The defendants misconstrue the statutory language, which was considered in detail in Baker v. Nussman. There, we said that the statutes in issue “never [were] intended to affect the status of a sub-contractor. [They] only took in a class of employees (employees of a subcontractor) and made them eligible to compensation just as the employees of the owner or contractor are eligible under the definition of employees as defined in . . . the Act.” 152 Va. at 302, 147 S.E. at 249. In other words, the phrase “workman employed in the work,” to whom compensation benefits are owed, refers to employees, not the subcontractor himself. “A sub-contractor does not, anywhere, come within the terms of the Act as entitled to compensation.” Id.

Also, defendants contend that to refuse to include independent contractors as persons covered by the Act leaves a “gap” in the statutory scheme and would permit “an owner or contractor to. escape the responsibilities of the Act by the simple expediency of positioning an individual workman as an independent contractor, even though such workman is engaged in performing part of the trade business or occupation of the owner.” Even assuming such a subterfuge could become a reality, this argument should be addressed to the General Assembly. We are unwilling to create, by judicial fiat, liability under the Act to a class of persons not presently covered by its provisions. In some states, legislative amendments have achieved this objective by specifically extending pro tection of the Act to nonemployees. 1C A. Larson, The Law of Workmen’s Compensation § 49.21 at 9-88 (1986). For example, one state has enacted legislation making newsboys under the age of 18 years the employees of the corporation that caused the papers to be delivered. Id., § 49.22 at 9-101.

Finally, defendants contend that even if the plaintiff is not deemed to be a common-law employee or a statutory employee, neither defendant is an “other party” within the meaning of § 65.1-41 of the Act against whom a tort action can be maintained. Defendants say that regardless of the plaintiffs employment status with the Services Company, at the time of the accident he was engaged in a part of the normal work activity of that company and, thus, they were not “other parties” who could be sued in tort. The obvious answer to this contention is that because the Act as a whole does not apply to the plaintiff under these circumstances, no individual section of the Act is applicable either.

For these reasons, the judgment of the trial court will be

Affirmed.

According to counsel, the term “intermodal” means a combination of rail/highway traffic.