Sousa v. Providence Subaru Co.

668 A.2d 331, 1995 WL 759016
CourtSupreme Court of Rhode Island
DecidedDecember 22, 1996
DocketNo. 93-638-M.P.
StatusPublished

This text of 668 A.2d 331 (Sousa v. Providence Subaru Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sousa v. Providence Subaru Co., 668 A.2d 331, 1995 WL 759016 (R.I. 1996).

Opinion

OPINION

MURRAY, Justice.

This case comes before us on the petition of the employee, Manuel E. Sousa (Sousa), for certiorari. Sousa seeks review of an order of the Workers’ Compensation Court’s Appellate Division (Appellate Division) affirming the trial court’s denial of Sousa’s workers’ compensation claim. Sousa challenges the Appellate Division’s finding that he was not an employee of the employer, Providence Subaru Company (Providence Subaru or Subaru), at the time his injury occurred, thereby making him ineligible for workers’ compensation benefits. We quash the order of the Appellate Division and find as a matter of law that Sousa was an employee of Subaru at the time his injury occurred and is thus entitled to workers’ compensation benefits.

The parties are in substantial agreement with respect to the facts of this case. On January 6,1989, Sousa, who had worked as a service manager for Subaru, was laid off by Subaru because of lack of business. On January 9, 1989, Sousa filed for unemployment benefits with the Rhode Island Department of Employment and Training. Four days later, and before he received any unemployment compensation benefits, Subaru called Sousa, requesting that he go to Subaru’s place of business to pick up his last paycheck. After entering Subaru’s place of business, Sousa slipped and fell down a flight of stairs leading to the office where his check was waiting, causing back and leg injuries. Subsequently Sousa filed a claim for workers’ compensation benefits with the Department of Workers’ Compensation (the department), which denied the claim on the grounds that the injuries were not sustained in the course of his employment.

Sousa appealed from the department’s denial of benefits to the Workers’ Compensation Court, which held hearings on July 21, 1989, and September 7,1989. After the submission of evidence, which included medical reports and testimony from Sousa, the trial judge entered his findings. By decree dated September 19, 1989, the trial judge denied and dismissed Sousa’s petition for workers’ compensation benefits. The trial judge re[333]*333jected Sousa’s assertion that since he had not received his last paycheck prior to the injury, the employer/employee relationship still existed on January 13, 1989, thereby entitling him to workers’ compensation benefits. The trial court found that although other jurisdictions have adopted this reasoning to determine the termination point of the employment contract, that approach represented the “outer most limits of the course of [the] employment concept.” The trial court further held that Sousa’s voluntary election to file for unemployment benefits on January 9, 1989, confirmed that he had no further earning capacity with Subaru and that he had severed the employment relationship with Subaru at the time he filed for unemployment benefits. Thus, the trial court found that Sousa had failed to prove that the injuries sustained on January 13,1989, arose out of or in the course of his employment with Subaru.-

Sousa then filed an appeal of the trial judge’s denial of benefits to the Appellate Division of the Workers’ Compensation Court. A majority of the Appellate Division entered a final decree on November 3, 1993 affirming the trial court’s decision to deny and dismiss Sousa’s workers’ compensation petition. Specifically, the Appellate Division found that the trial court was correct in not adopting the rule that the employment contract is not complete until the employee is fully paid. The Appellate Division was of the impression that the cases cited by Sousa for this proposition in other states went both ways on the issue and that the courts that did adopt the rule relied on the particular facts of those cases. Thus, on the basis of the trial court’s finding that Sousa was terminated and had applied for unemployment benefits prior to the occurrence of the injury, the Appellate Division held that the trial court did not err in reaching its decision. The Appellate Division, relying on St. Pierre v. Fulflex, 493 A.2d 817 (R.I.1985), further held that since Sousa had applied for unemployment benefits, he “clearly held himself * * * eligible for [unemployment benefits] and for being ineligible for Workers’ Compensation benefits.”

Sousa then filed a petition for the issuance of a writ of certiorari, which was granted by this court on April 12, 1994. In his petition, Sousa claims that the Appellate Division erred in determining that the employment contract between Sousa and Providence Subaru was severed by Sousa’s application for unemployment benefits. Additionally, Sousa asks this court to follow its sister states and hold that the employment contract is terminated by receipt of final payment by the employee. Sousa further asserts that although this court in St. Pierre held that one cannot collect unemployment benefits and workers’ compensation benefits simultaneously, the instant case is distinguishable from St. Pierre because Sousa applied for, but had not yet received, unemployment benefits at'the time his injury occurred. Thus Sousa asserts that his mere application for unemployment benefits is not a bar to his claim for workers’ compensation benefits.

At the outset Providence Subaru asserts that the Appellate Division was correct in determining that Sousa had severed the employment contract when he filed for unemployment benefits, thereby making him ineligible for workers’ compensation benefits. Alternatively, Subaru argues that even if this court were to hold that Sousa was an employee after filing for unemployment benefits, merely collecting his last paycheck was not within the scope of his employment because he was not furthering the interests of the employer.

Thus this court must address three issues: (1) whether the contract for employment terminates upon the employee’s filing for unemployment benefits or upon the collection by the employee of his or her final paycheck, (2) whether the collection of a paycheck by an employee who has been terminated and has filed for unemployment benefits falls within the scope of employment, and (3) whether an employee’s filing for, but not collecting, unemployment benefits bars him or her from collecting workers’ compensation benefits under this court’s holding in St. Pierre.

The issue of whether an employment contract terminates upon final payment of the employee or upon the application for unemployment benefits by the employee is a [334]*334question of first impression for this court. Sousa asks the court to adopt the position that many of our sister states have taken in holding that the employment contract is terminated upon final payment of the employee. On the basis of the unique set of facts in this ease, we are compelled to agree with Sousa and reverse the Appellate Division’s decision. We therefore hold that the employment contract between Sousa and Providence Subaru existed at the time Sousa’s injury occurred and was not severed by Sousa’s having filed for unemployment benefits. Accordingly, we hold that Sousa is entitled to workers’ compensation benefits.

In adopting this position today we are persuaded by the general proposition as stated in 1 A. Larson, The Law of Workmen’s Compensation, § 26.31 (1995), that the “contract for employment is not fully terminated until the employee is paid.” In support of this position, we note that many states have adopted some form of this' rule over the years. See Oliver v. Faulkner Wood Co., 531 So.2d 675 (Ala.Civ.App.1988); Peter Kiewit Sons’ Co. v.

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Bluebook (online)
668 A.2d 331, 1995 WL 759016, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sousa-v-providence-subaru-co-ri-1996.