EN & SH Properties, LLC v. Milton Gristo ( 2023 )

COURT OF APPEALS OF VIRGINIA
UNPUBLISHED
Present: Judges Humphreys, Ortiz and Senior Judge Annunziata
Argued at Fairfax, Virginia
EN & SH PROPERTIES, LLC, ET AL.
MEMORANDUM OPINION* BY
v. Record No. 1421-22-4 JUDGE ROBERT J. HUMPHREYS
OCTOBER 24, 2023
MILTON GRISTO
FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION
J. David Griffin (Winchester Law Group, P.C., on briefs), for
appellants.
Jose Caballe (Daniel P. Barrera; The Barrera Law Firm, on brief), for
appellee.
EN & SH Properties, LLC, and its insurer, Flagship City Insurance Company,
(appellants) appeal an order of the Workers’ Compensation Commission entering an award
against them for Milton Gristo’s (claimant) temporary total disability wage loss and medical
benefits. Asserting res judicata, appellants assign error to certain findings of the Commission
that they claim are contrary to findings made by a deputy commissioner in a final opinion
resolving a show cause order. Appellants also assert that the Commission erred in failing to find
that claimant engaged in willful misconduct, in awarding lost time benefits without sufficient
evidence of disability, and in finding sufficient evidence to award an average weekly wage.
Lastly, appellants allege that the Commission erred in finding EN & SH Properties was the
statutory employer yet stripping its ability to pursue subrogation against claimant’s employer.
*
This opinion is not designated for publication. See Code § 17.1 413(A).
BACKGROUND
On appeals from the Commission, “we review the evidence in the light most favorable to
the prevailing party”; here, the claimant. R.G. Moore Bldg. Corp. v. Mullins, 10 Va. App. 211,
212 (1990). On August 22, 2018, claimant was working for his brother-in-law, Elder Miguel
Espina, who owned Miguel’s Carpentry. EN & SH Properties hired Miguel’s Carpentry to do
framing for the construction of Valley Extended Suites hotel.
Around lunchtime on August 22, claimant was walking around the construction site and
talking on his cell phone. He was talking to Espina, who was home for lunch, telling him that
one of the workers wanted to quit and this was impacting their ability to finish the job. While
they were talking, claimant walked on an inclined “2x12” board that was a makeshift walkway
from the ground to an upper level of the building they were constructing. Claimant fell off the
board, about eight to ten feet into the foundation of the hotel. After the fall, an ambulance took
claimant to Augusta Health Hospital. From there he was transported to UVA Medical Center.
Claimant sustained injuries to his left knee and right ankle and underwent three surgeries during
his hospital stay at UVA, from August 22, 2018, through September 9, 2018.
Claimant filed a claim for benefits on March 9, 2020, against Miguel’s Carpentry.
Miguel’s Carpentry was not covered with workers’ compensation insurance. The Commission
also ordered Miguel’s Carpentry to show cause why it should not be fined for failure to insure its
liability for workers’ compensation benefits. The Commission held a hearing on the show cause
order on December 9, 2020. In an opinion dated January 14, 2021, Deputy Commissioner
Culbreth found that Miguel’s Carpentry was not required to carry insurance under the Workers’
Compensation Act. According to the opinion, Espina testified that he had only one employee,
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Ruven Lorenzo Garcia,1 he rarely had enough work for more than one employee, and he
sometimes brought on other subcontractors to assist him for larger jobs. Espina stated that “he is
primarily a framer and anyone else he would bring to assist would only be brought on a job to
assist with framing.” He testified that he has never had more than three employees. He also
testified that he was aware of claimant’s injury when he was being paid to collect garbage at a
worksite.
The January 2021 opinion stated the issue as, “Whether a fine is appropriate for failure to
insure.” It noted that an employer must have three or more employees to come under the
jurisdiction of the Act. The deputy commissioner found that “where, as in the present case, the
addition of workers could best be classified as sporadic or occasional rather than recurrent, the
employer cannot be said to come under the jurisdiction of the Act and thereby required to have
insurance.” Espina was not fined, and the show cause was quashed. The order was not
appealed.
Meanwhile, the Uninsured Employers Fund (“UEF”) discovered that EN & SH Properties
could be the statutory employer, and EN & SH Properties and its insurer were added as
defendants. On December 11, 2020, the Commission entered an agreed order resolving that
EN & SH Properties is the statutory employer and dismissing the UEF. The order expressly
preserved any defenses of EN & SH Properties.
On May 12, 2021, the parties appeared before the deputy commissioner for a hearing on
claimant’s claim seeking an award of medical benefits and temporary total disability benefits
from August 22, 2018, through September 9, 2018. The parties stipulated that claimant sustained
injuries to his left knee and right ankle on August 22, 2018, and that EN & SH Properties was
1
The transcript of the show cause hearing is not in the record. These statements of
Espina’s testimony are taken from the January 2021 opinion on the show cause matter.
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claimant’s statutory employer. There was no agreement as to the average weekly wage of
claimant.
Claimant called Espina to testify as an adverse witness. Espina testified that his work is
primarily “framing work.” He stated that claimant worked for him since 2016 and “he would
help me do framing, but most of the time was picking up garbage.” He also testified that
“sometimes I would give [claimant] a job” and pay him $10 per hour, or $100 per day. Espina
testified that he told claimant what time to be at work, provided tools to claimant for work,
corrected his work, and directly supervised claimant. When asked if he could fire claimant,
Espina replied, “No, no. He was just helping me temporarily.”
For the framing of the second and third floors of the hotel, Espina testified that he had
four workers helping with the framing project, including claimant. Espina worked on the Valley
Extended Suites project for three months, and at the very end, only one employee was working
for him there. Espina did not recall anyone from EN & SH Properties telling him that the board
from which claimant fell could not be used as a walkway. Espina testified that the workers were
all trying to get themselves and their tools from the ground up to the floor where they were
working and that the board “was to cross.”2
Claimant testified that he began working at the Valley Extended Suites project on the first
day that Espina started working there and that he was working as a framer on the day of the
accident. He did not know how long the job was supposed to last. He stated that Espina paid
him $100 per day in cash, set his hours including arrival and departure time, supervised him,
corrected him, and provided tools for his work. He also said Espina could have fired him. On
cross-examination, claimant testified that he does a lot of painting for work, but on the day of the
accident he was working as a framer. Claimant stipulated that he had no pay records, receipts of
2
The testimony took place with the assistance of an interpreter.
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payments, or tax returns to document his average weekly wage. He also stipulated that there
were no “direct slips” saying he was out of work but noted that he limited his claim to temporary
total disability benefits to the time medical records show he was hospitalized.
The defense called witnesses Daniel Mansour and Ed Mansour, who manage EN & SH
Properties. They both testified that they saw claimant fall off the board and that when he fell, he
was talking on his cell phone. Ed testified that before claimant’s fall, he had told Espina and all
of Espina’s employees that using the board as a bridge or walkway was not allowed and to walk
around the building and use the stairs, but he noted that the employees did not understand
English well. He also testified that he told Espina that if his workers continued to use the board
as a walkway, he would not be allowed to finish the job. Ed also stated that he took the board off
the site and had his son cut it in half in order to prevent its use, but the workers would get
another board a couple days later and use it the same way. The 2x12 boards were job site
materials, and workers continued to use it as a walkway/bridge for six to eight weeks, despite
Ed’s warnings and taking down the board. The workers stopped using the board for ingress and
egress only after claimant’s accident.
The deputy commissioner issued an opinion on August 12, 2021. He found that claimant
was not an employee for the purposes of the Act—he was, “at best, a casual employee.” He
denied an award to claimant. Claimant appealed to the full Commission.
The full Commission issued an opinion on the record on February 2, 2022. The
Commission found that claimant was not just a casual employee but was employed in the usual
course of the trade, business, and occupation of Miguel’s Carpentry and that claimant was an
employee of the statutory employer, EN & SH Properties. Thus, the Commission ordered the
August 2021 opinion reversed and remanded the case to the deputy commissioner to address the
employer’s remaining defenses.
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Accordingly, on April 8, 2022, the deputy commissioner issued an opinion addressing the
employer’s remaining defenses, finding no willful misconduct, that medical evidence proved
claimant was hospitalized for the period claimed of total disability so the award period was
appropriate, and the issue of marketing was moot. EN & SH Properties appealed. On August
29, 2022, the full Commission affirmed the award against EN & SH Properties and Flagship City
Insurance Company of $333.34 per week during the period of temporary total disability
beginning August 29, 2018, through September 9, 2018, and medical benefits for as long as
necessary. EN & SH Properties appealed to this Court.
ANALYSIS
I. Res judicata
Appellants argue res judicata principles preclude the Commission from having
jurisdiction over claimant’s claim. “Whether a claim or issue is precluded by res judicata
principles is a question of law which we review de novo.” Levy v. Wegmans Food Mkts., Inc., 68
Va. App. 575, 579 (2018).
First, appellants assert that the deputy commissioner found in the January 2021 opinion
that claimant’s employer, Miguel’s Carpentry, did not fall within the jurisdiction of Virginia’s
Workers’ Compensation Act and therefore it had no jurisdiction to award benefits to claimant.
Appellants state Code § 65.2-101(2)(h) excludes from the Act’s coverage employees of a person
or company that has regularly in service less than three employees. Appellants also argue that
the deputy commissioner found that claimant’s work was “sporadic or occasional rather than
recurrent,” and based on this finding he is a “casual employee” who is not covered by the Act,
citing Code § 65.2-101(2)(e).3
3
Code § 65.2-101(2)(e) states that “‘Employee’ shall not mean: . . . Casual employees.”
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Appellants’ conclusion overlooks the Act’s provisions regarding “statutory employer[s]”
found in Code § 65.2-302. “In 1991, . . . the General Assembly enacted Code § 65.2-302, which
created a new category of employment relationship called ‘Statutory employer.’” Jeffreys v.
Uninsured Emp.’s Fund, 297 Va. 82, 90 (2019). Code § 65.2-302(B) provides:
When any person (referred to in this section as “contractor”)
contracts to perform or execute any work for another person which
work or undertaking is not a part of the trade, business or
occupation of such other person and contracts with any other
person (referred to in this section as “subcontractor”) for the
execution or performance by or under the subcontractor of the
whole or any part of the work undertaken by such contractor, then
the contractor shall be liable to pay to any worker employed in the
work any compensation under this title which he would have been
liable to pay if that worker had been immediately employed by
him.
“Thus[,] the subcontractor’s employees are employees of the contractor for purposes of
liability.” Smith v. Weber, 3 Va. App. 379, 381 (1986) (interpreting now repealed Code
§ 65.1-30). “Since they are the contractor’s employees for purposes of determining liability,
reason dictates that they should also be considered employees for determining applicability of
the Act.” Id. Therefore, the fact that Miguel’s Carpentry was found to have less than three
employees did not decide the question of whether claimant may be covered under the Act.
Regarding the res judicata claim that jurisdiction over EN & SH Properties is precluded,
the January 2021 opinion was issued after a hearing to resolve a show cause order where the only
issue was whether Miguel’s Carpentry should be fined for failure to insure with workers’
compensation coverage. The deputy commissioner found that Miguel’s Carpentry was not
required to have a policy of insurance under the Act because Miguel’s Carpentry had less than
three employees. Res judicata includes the distinct concepts of issue preclusion and claim
preclusion. County of Henrico v. O’Neil, 75 Va. App. 312, 322 (2022). “Issue preclusion, also
referred to as ‘collateral estoppel,’ precludes the same parties from re-litigating ‘any issue of fact
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actually litigated and essential to a valid and final personal judgment in the first action.’” Id.(quoting Brock v. Voith Siemens Hydro Power Generation, 59 Va. App. 39, 45 (2011)). This
Court has held that the principles of res judicata apply to workers’ compensation cases, yet res
judicata may have to give way when in irreconcilable conflict with more important public
policies such as reaching equitable results in workers’ compensation cases. Id. at 322-23.
Here, issue preclusion or collateral estoppel does not demand a finding that claimant was
only a casual employee and thus not covered by the Act. Although the January 2021 opinion
stated that “the addition of workers could best be classified as sporadic or occasional rather than
recurrent” with regard to Miguel’s Carpentry, the issue of whether claimant was an employee of
Miguel’s Carpentry was not a fact actually litigated that was essential to the show cause
dismissal.
In the second assignment of error, appellants assert that the deputy commissioner found
in the January 2021 opinion that claimant was not engaged in the carpentry trade and thus the
Commission was estopped from later finding that claimant was employed as a carpenter within
the usual course of trade of Miguel’s Carpentry. Appellants cite the definition of “Employee” in
Code § 65.2-101, excluding “one whose employment is not in the usual course of the trade,
business, occupation or profession of the employer.” However, the deputy commissioner made
no determination in the show cause opinion about whether claimant was engaged in the carpentry
trade. We note the deputy commissioner’s summary of Espina’s testimony: “[Espina] was aware
of an incident where his brother-in-law was being paid to collect garbage at a worksite . . . .”
This, however, is a summary of testimony and not a finding regarding the nature of claimant’s
work that was litigated and essential to final judgment on the show cause. Thus, this statement
would not preclude the Commission from finding that claimant was engaged in carpentry or
framing work at the time of his injury.
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In their third assignment of error, appellants again assert that res judicata bars the
Commission from finding that claimant was an “employee” under the Act after the deputy
commissioner’s determination that Espina’s testimony at the show cause hearing was “credible.”
While it is true that the deputy commissioner stated in its January 2021 opinion that Espina’s
testimony was “credible” and found that he did not have three or more employees to bring his
company under the jurisdiction of the Act, the deputy commissioner did not make a finding that
Claimant was a casual employee or otherwise not covered by the Act.
In sum, nothing in the January 2021 opinion expressly addresses whether claimant falls
within the statutory definition of employee or was a “worker” for the statutory employer within
Code § 65.2-302(B), or states that the Commission has no jurisdiction over his claim. Even if
the text of the opinion could arguably bear the construction appellants assert in these assignments
of error, “the full commission nonetheless ‘is entitled to interpret its own orders in determining
the import of its decisions’ for purposes of res judicata.” Brock, 59 Va. App. at 48. Here, the
full Commission declined to interpret the January 2021 opinion resolving a show cause order as
deciding that claimant was not entitled to workers’ compensation coverage. We find no error in
the Commission’s conclusion.
II. Evidence supports the Commission’s findings
Next, appellants assert that the Commission erred in its factual findings regarding
whether claimant willfully violated a safety rule, proved temporary total disability, and proved
average weekly wage. “If there is evidence, or reasonable inferences can be drawn from the
evidence, to support the commission’s findings, they will not be disturbed on review, even
though there is evidence in the record to support a contrary finding.” Advance Auto and Indem.
Ins. Co. of N. Am. v. Craft, 63 Va. App. 502, 520 (2014) (internal quotation marks omitted)
(quoting Amelia Sand Co. v. Ellyson, 43 Va. App. 406, 408 (2004)).
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A. Violation of a safety rule
Appellants argue the Commission erred when it found that claimant did not violate a
safety rule.4
Code § 65.2-306(A)(5) states that no compensation shall be awarded to the employee for
an injury caused by the employee’s “willful breach of any reasonable rule or regulation adopted
by the employer and brought, prior to the accident, to the knowledge of the employee.” The
person or entity asserting this defense has “the burden of proof with respect thereto.” Code
§ 65.2-306(B). “To establish this defense, the employer must prove: (1) the rule was reasonable;
(2) the employee knew of the rule; (3) the rule was for the employee’s benefit; and (4) the
employee intentionally performed the forbidden act.” Dan River, Inc. v. Giggets, 34 Va. App.
297, 302 (2001); see also Layne v. Crist Elec. Contractor, Inc., 64 Va. App. 342, 349-50 (2015).
“[T]he employee may rebut the defense by showing that the rule was not kept alive by bona fide
enforcement or that there was a valid reason for his inability to obey the rule.” Buzzo v.
Woolridge Trucking, Inc., 17 Va. App. 327, 332 (1993).
The Commission found that neither the statutory employer nor the direct employer
adopted a safety rule prohibiting the use of the 2x12 board as a walkway and that the evidence
does not establish that any such rule was known to claimant. Only the Mansours testified to the
safety rule and that they told Espina and claimant not to use the board. Ed Mansour stated that
he took the board down multiple times only to find it replaced by the workers. He testified that
he told Espina that they could not continue working there if the workers continued to use the
4
Code § 65.2-306 provides employers’ defenses based on employee’s conduct. Within
this statute, the Commission only addressed whether claimant committed a willful violation of a
safety rule as defined in Code § 65.2-306(A)(5), and not whether he committed willful
misconduct as defined in Code § 65.2-306(A)(1), because it found that appellants had waived
any argument on the later violation. Therefore, we only address appellants’ willful violation of a
safety rule defense.
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board as a walkway, but apparently the rule and ultimate consequence were never enforced. As
for claimant’s awareness of the rule, Ed Mansour acknowledged the language barrier between
himself and the workers and that he told the Spanish speaking workers in English not to use the
board. Claimant was not asked at the hearing about his knowledge of the rule. The record
supports the Commission’s conclusion that appellants did not meet their burden of proving the
existence of a safety rule that was known to claimant.
B. Proof of disability
Appellants argue that the Commission erred in awarding claimant “lost time benefits”
because no physician ever gave him an out-of-work slip. Yet the record shows that claimant was
hospitalized from August 22, 2018, to September 9, 2018, during which time he underwent three
surgeries. The Commission was “not persuaded by EN & SH Properties’ assertion that the
claimant could have performed work under these circumstances.” While there are no
“out-of-work notes” from medical providers, other medical evidence establishes total disability
for the period that claimant was in the hospital. The Commission did not err in affirming the
award of temporary total disability from August 29, 2018, through September 9, 2018.
C. Proof of average weekly wage
Appellants contend that the Commission erred in finding evidence to support the
computation of claimant’s average weekly wage. Appellants argue that without physical
evidence of payments to claimant, the average weekly wage is only speculation and, further, that
awards based on speculation promote perjury. They cite no law that the average weekly wage
can only be proven with records or documented evidence.
The claimant bears the burden of persuading the factfinder by a preponderance of the
evidence of his average weekly wage. Thorpe v. Clary, 57 Va. App. 617, 626 (2011). Here,
claimant claimed an average weekly wage of $500. He testified that Espina paid him $100 per
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day. Espina also testified that he paid claimant $100 per day in cash. Although there was no
documentation of Espina’s cash payments to claimant, nothing in the record contradicts the
testimony that he was paid $100 per day.
Ed Mansour testified that Miguel’s Carpentry team was onsite working five days a week,
although he stated he saw claimant onsite “[a]bout twice a week. Sometimes three days a week.”
Daniel Mansour testified that Espina would sometimes pull his workers from the jobsite to go do
different jobs. Espina and claimant testified that Espina set the hours for claimant. This
evidence supports a reasonable inference that at the time of the injury claimant was working for
Espina five days a week, whether at the Valley Extended Suites project or at another jobsite, and
that claimant’s pre-injury average weekly wage was $500. We find no error in the
Commission’s finding on claimant’s average weekly wage.
III. Subrogation claim
Finally, appellants assert that “[t]he Commission erred in determining that EN & SH
Properties was the responsible statutory employer obligated to pay the Claimant yet stripping this
party of its abilities to pursue subrogation against the Employer.” Appellants add that the
Commission has determined it has no jurisdiction over this claim and therefore cannot
“resurrect” the claim to award benefits, forcing EN & SH Properties to pay claimant’s benefits
while divesting them of subrogation rights against Miguel’s Carpentry.
First, the Commission did not determine that it has no jurisdiction over the case or claim.
The deputy commissioner only found in the January 2021 opinion that the Commission had no
jurisdiction over Miguel’s Carpentry, as stated above. The Workers’ Compensation Act clearly
provides jurisdiction over EN & SH Properties as the statutory employer. See Code
§ 65.2-302(B).
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Second, there was no actual subrogation claim before the Commission.5 The
Commission addressed this argument in a footnote in the February 2022 opinion and stated that
it had made no determination regarding any subrogation rights of appellants and their argument
“raises a purely hypothetical question that is not ripe for review.” We find no error in the
Commission’s determination that the issue is not ripe for review as no subrogation claim was
before the Commission.
For the foregoing reasons, the Commission’s ruling is affirmed.
Affirmed.
5
Code § 65.2-304 provides that a principal contractor who is found liable to pay
compensation under Code § 65.2-302 or Code § 65.2-303 “shall be entitled to indemnity from
any person who would have been liable to pay compensation to the worker independently of
such sections . . . and shall have a cause of action therefor.”
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