Mid-Continent Casualty Co. v. Andregg Contracting, Inc. and Bacilio Zapata ( 2012 )

AFFiRM; )pinion issued Noveniber 9, 2012.
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No. 05-1 1-00637-CV
Ml 1)-CONTINENT CASUALlY CoMPANY, Appellant
ANI)RIZCG CONTRACTING, INC. AND BACILO ZAPA1A, Appellees
On Appeal from the 366th 1)istrict Court
Coilin County, Texas
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Court Cause No. 366-02241-2008
OPINION
Before Justices Bridges, Richter, and Lang
Opinion By Justice Richter
This case arises out of an injury suffered by Bacilio Zapata while performing tree
cutting services for Andregg Contracting, Inc.(”Andregg”). The trial court concluded
Zapata was an independent contractor, and therefore, under a commercial general liability
(CGL”) policy issued to Andregg. by Mid-Continent Casualty Company (“MCC”), MCC
owed a duty to indemnify Andregg for the injury. in two issues on appeal, MCC contends
the trial court erred in its determination because Zapata was not an independent contractor,
but rather an employee for whom coverage was excluded under the policy. Concluding
appellant’s arguments are without merit, we affirm the trial court’s judgment.
BACKGROUND
Andregg is a general contractor that performs primarily excavation and demolition
work. For the eighteen years it has been in business. Andrcgg has used subcontractors for
100% of its work.
Beginning in 2003 and through the relevant time period, Andregg was insured by
MCC under a CGL policy. The policy contains two coverage exclusions to which the policy
does not apply. The first exclusion applies to a loss that is covered by or should be covered
by worker’s compensation. The second exclusion applies to bodily injury sustained by an
employee while acting in the course and scope ofemployment.’ Evezyyeai, MCC performed
a premium audit of Andregg, and each year the audit report stated that “the insured uses all
subs for their work. All subs reviewed with insured.”
Andregg hired Zapata to work on two demolition jobs within walking distance of
each other. For a three week period, Zapata performed a variety of manual labor tasks.
Toward the end ofthe second project, Zapata was injured while working to take down a tree.
Zapata filed suit against Andregg for personal injuries (the “underlying lawsuit”).
The underlying lawsuit was tried to a jury, and the jury found Andregg liable to Zapata for
negligence. The final judgment in the underlying lawsuit awarded Zapata $362,987.48.
MCC subsequently filed a declaratory judgment action against Andregg and Zapata
seeking a declaration of whether it owed a duty to indemnify Andregg for the finaljudgment
‘According to MCC, the two exclusions work in tandem. Thus, lithe trial court had found Zapata to be an employee.
both exclusions would have applied to preclude coverage.
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in the underlying lawsuit. ‘Ube case was tried to the bench, and the trial court found that
MCC owed a duty of indemnity to Andregg. The trial court subsequently signed findings of
fact and conclusions of law. The court’s conclusions — that Zapata was an independent
contractor rather than an employee, and as a result, MCC owed Andregg a duty of indemnity
under the CGL policy — form the basis ofthis appeal.
ANALYSIS
In two issues, MCC asserts the trial court’s findings are not supported by the
evidence and the trial court failed to properly apply the controlling law. Because the trial
court entered findings of fact and conclusions of law following a bench trial, we afford the
findings of fact the same force and effect as jury findings. See Buckeye Ret Co.. LLC Ltd
v. Bank of Am., MA., 239 S.W.3d 394, 399 (L’ex. App.—Dallas 2007, no pet). To
successfully challenge the factual sufficiency of an adverse finding, MCC “must
demonstrate the adverse finding is against the great weight and preponderance of the
evidence.” Id. In reviewing such a challenge, we consider and weigh all ofthe evidence, and
set aside a verdict only if the finding is so against the great weight and preponderance ofthe
evidence that it is “clearly wrong and unjust” Id. To successfully challenge the legal
sufficiency of the trial court’s findings, MCC must show that “the evidence establishes, as
a matter of law, all vital facts in support of the issue.” Id. Within this framework, we
consider MCC’s assertions of error.
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The crux of MCC’s argument is that Zapata was not an independent contractor.
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worker’s status as an employee or independent contractor depends on whether the employer
has “the right to control the progress, details, and methods of operations of the work.”
Limestone Products Distribution, Inc. v. McNamara, 71 S.W.3d 308, 312 (Tex. 2002).
“Control” as would define a relationship as one of employer/employee is control over the
details of the work itself and the worker’s physical conduct, not simply the end result.”
United States Fit & Guar. Co. v. Goodson, 568 S.W.2d 443, 447 (Tex. Civ.
App.—Texarkana 1978, writ reid n.r.c.). The employer must control not merely the end
sought, “but also the means and details of its accomplishment.” Limestone, 71 S.W.3d at
312. Examples include when and where to begin and stop work, the regularity ofhours, the
amount of time spent on particular aspects of the work, the tools and appliances used to
perform the work, and the physical method or manner of accomplishing the end result
Thompson v. Traveleni Indemnity Company of Rhode Island. 789 S.W.2d 277, 278—79
(Tex. 1990).
Texas courts generallyconsider five factors when analyzing whetheran employerhas
a right to control a person’s work: (1) the independent nature of the worker’s business; (2)
the worker’s obligation to fbrnish the necessaiy tools, supplies, and materials to perform the
job; (3) the worker’s right to control the progress of the work except about final results; (4)
the time for which the worker is employed; and (5) the method of payment, whether the
worker is paid by unit oftime or by the job. Limestone, 71 S.W.3d at 312 (citing Pitchfork
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T herc is no dispute that the policy excludes coverage for employees.
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[(1,1(1 & Cult/c’ ( ompunv i. King. 346 SAV2d 59g. 603 (1 96 I )): see also IIoc’cIist (‘e/anese
( olporulton i’. Compton. $‘)9 S.W.2d 2 1 5, 220 (Tex. App.-- I louston 14th [)ist. I 994, writ
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denied) (same). “It is not necessary that each of the above factors be present to find that the
worker is an independent contractor.” Thompson, 789 S.W.2d at 278—79. It is seldom that
any one of these elements is decisive of the question. See Farrell v. Greater Houston
Transp. (‘.. 9O S.W.2d I 3 (Tex. App.—---I-louston [1St Dist.] I 995, writ denied). An
,
employer may give direction as to the specifications ofa job, details such as the position of
a structure, or the character of materials and workmanship, and still maintain an independent
contractor relationship. Goodson, 568 S.W,2d at 447,
Consideration of the first and third Limestone factors — the independent nature of
the worker’s business and the worker’s right to control the progress of his work —— supports
the conclusion that Zapata was an independent contractor. The trial court found that Zapata
was hired to perform clean up work on two excavation job sites over a three week period.
The evidence adduced at trial reflects, and the trial court found that no one supervised the
details of the cleanup work Zapata performed. At the beginning of the project, Mark
Andregg explained the results he wished to accomplish. Then, Zapata was free to determine
how he would separate the trash, where he would put the piles, how he would move the
trash, and whether he would bring his own equipment and tools to separate the trash. Zapata
was also afforded discretion to distinguish between items to be salvaged and those to be
hauled away to a trash dump. Zapata established his own hours, and would usually show up
when his bus arrived near the job site. Zapata was not required to wait for Mark Andregg
or anyone else to arrive, and typically, there was no one present when Zapata arrived and
began worlc
Zapata was assisting with the removal ofa tree when he was injured. Although MCC
argues Andregg asserted additional control over this particular task, the record supports the
trial court’s rejection of this argument The trial court found that while Mark Andregg
provided guidance on how to make certain cuts, Zapata was free to cut the tree as he pleased.
Mark Andregg was operating an excavator at the time Zapata was injured.
The trial court also found that Andregg used independent contractors for almost all
of its work and this was standard in the industzy. Moreover MCC was aware that Andregg
used contract labor in accordance with the industry standard. The evidence reflects that
MCC perfonned four premium audits of Andregg beibre the underlying suit was filed. The
MCC auditor testified that most of MCC’s insureds use sub-contractors. The auditor also
testified about his audit reports, whicb state that Andregg uses “all subs” for their work and
list the subcontractors by name. The audit immediately before the underlying lawsuit
specifically identifies Zapata among the Andregg subcontractors.
The second Limestone factor requires consideration of the worker’s obligation to
furnish the tools, supplies, and materials necessary to perform the job. The trial court found
that most of the work Zapata performed did not require tools; Zapata’s work was primarily
performedwith his hands. Nonetheless, the trial court found thatZapata “borrowed” a ladder
and a chainsaw from Andregg for the tree removal. While there is no dispute that Andregg
supplied the ladder and the chainsaw, MCC challenges this finding as against the great
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weirhi and preponderance of the evidence because the court characterized the too Is as
horrowcd” rather than provided.” This semantic distinction, however. is one without a
difference, Even if Andregg “provided” toots for this isolated, single task, the fact remains
that tools were not required for the majority of the tasks Zapata performed. Therefbre, this
lactor adds very little to the analysis of Zapata’s status.
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Next we consider the length of time Zapata was employed and the method by which
he was paid. The trial court found and the record reflects that Zapata was hired for a short-
term contract to perform clean up work on two properties Andregg was excavating. Both
Zapata and Andregg intended this to be a short—term project, and Zapata was not promised
any more work after the two projects ended. Neither Zapata nor Andregg intended that
Zapata would work on any projects other than the two excavation job sites for which he had
been hired. Zapata testified that he planned to take ajob in the restaurant industry when the
project was over. When Zapata was injured, he was on the last day of the short-term project
that lasted less than five weeks.
The record also supports the trial court’s findings regarding the financial relationship
between Andregg and Zapata. Zapata was paid the industry rate for contract labor.
Andregg’s payments to Zapata were not made on a regular basis. Instead, Zapata was paid
as portions of the project were completed. As it did with all of the subcontractors it hired,
Andregg provided Zapata with an IRS form 1099. Andregg did not withhold any taxes or
We also reject similar semantic challenges to the trial courts findings. For example, MCC argues the court
improperly used the term ‘contract” to describe the relationship between Zapata and Andregg because there was no
evidence of a written contract. Notwithstanding the absence of a writing, the record reflects that Zapata agreed to
perform services for which Andregg agreed to compensation.
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socuil security or provide Zapata with vacation or other benefIts, and did not pay into the
Texas unemployment fund on Zapata’s behalf,
Despite the fact that the limestone flictors weigh heavily in support of the trial court’s
conclusion that Zapata was an independent contractor, MCC insists the trial court misapplied
the law. According to MCC, application of the Limestone factors to determine Zapata’s
status can only be accomplished by focusing on the specific task Zapata was performing at
the time ol the accident. Thus. MCC seeks to have us isolate the single task of tree trimming
and conduct the Limestone analysis only with reference to that task. We do not view the
jurisprudence of this state to mandate such a strained and narrow application.
MCC’s argument is premised on Ochoa v. Winerich Motor Sales, 127 Tex. 542, 94
S.W.2d 416. 418 (‘fex. 1936). This reliance on Ochoa is misplaced.
In Ochoa, the court held that an individual who occasionally dropped by a local auto
dealership to work as a mechanic was an employee rather than an independent contractor.
In so concluding, the court found the individual had no continuous employment and “each
job or task given him was separate employment” Id. The court held that “the nature of the
particular employment during the performance of which the accident occurred rather than
that of several prior employments, whether as independent contractor or as servant or
employee” was determinative of the dealership’s liability. Id.
But Ochoa does not stand for the proposition that each separate task performed
during a working relationship is subject to individual analysis. Such an unworkable
construct is not conducive to meaningful analysis, and conceivably could result in an
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individual shilling between employee and independent contractor status countless times in
a given work day, The trial court properly declined to conduct the Limestone analysis in such
a vacuum.
In addition, the facts in Ochoa are clearly distinguishable from the facts in the instant
case. Unlike Ochoa. this case does not involve several distinct periods of employment.
Instead. Zapala was retained for two projects to be performed over a single period of time.
The projects involved demolition, and the sorting and removal of demolition refuse, with
the tree removal being only one of several tasks to be accomplished in the overall scope of
the assignment.
The Fifth Circuit recently considered a similar case involving the same MCC policy
exclusions at issue here. See Mn/—Continent C’asual(v Co. v. Davis, 6S3 F.3d 651, 655 660
(5th Cir. 2012), In Davis, the family of a construction worker who fell while framing a
building brought a wrongful death action against the construction company. The
construction company had a CGL policy with MCC that contained the same worker’s
compensation and employer’s liability exclusions as in this ease. Id. at 654. MCC filed a
declaratory judgment action seeking a declaration that it had no duty to indemnify the
construction company in the wrongful death case because the worker was an employee
rather than an independent contractor. id. The district court rejected MCC’s argument, and
concluded MCC owed a duty of indemnity because the worker was an independent
contractor. id.
9.
The Filth Circuit affirmed the district court’s judgment. Id. at 660. Applying the
Limestone factors, the court concluded the worker was properly characterized as an
independent contractor, and therefore the claimed policy eNclusions (lid not apply. Id. at
655—660. Significantly, the court applied the Limestone factors to the entire relationship
between the worker and the company, rather than to the single task that occasioned the
injury. 1(1.
For the reasons stated above, we conclude the trial court properly applied the
Limes tone tactors and the evidence conclusively established that Zapata was an independent
contractor rather than an employee, Therefore, the trial court’s determination that MCC
owes Andregg a duty to indemnify it for the judgment in the underlying lawsuit is not in
error. MCC’s issues are overruled. The judgment of’ the trial court is affirmed.
Mi\RIIN RICHTER
JUSTiCE
1 10637F.P05
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JUDGMENT
MlDCONTlN ENT CASUALTY Appeal from the 36(th District Court of
COMPANY, Appellant Cohn County, Texas. (Tr.Ct.No. 366-
02241-2008).
No. 05 I I 00637CV V Opinion delivered by Justice Richter,
Justices Bridges and Lang participating.
ANDRLGC; C’ ()NTRACTING lN(’. ANt)
BACILIO ZAPATA, Appellecs
In accordance with lb is Court’s Opinion of this date, the judgment of the trial court is
AFFIRMFD. it is ORDER1) that appellees ANDREGG CONTRACTING INC. AND
BACILIO ZAI>ATA recover their costs of this appeal from appellant MID-CONTINENT
(ASUAL1Y (OMPANY
Judgment entered November 9, 2012.
Al1lNlIH1F.
JUS liCE.