Ramirez Bros v. Special fund/ortega/diaz

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
RAMIREZ BROS LANDSCAPING DBA RAMIREZ BROS
LANDSCAPING, FERNANDO RAMIREZ, Petitioner Employer,
v.
THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent,
MARIO ORTEGA, LUIS I DIAZ, Respondent Employees,
SPECIAL FUND DIVISION/NO INSURANCE SECTION, Respondent Real
Party in Interest.
No. 1 CA-IC 21-0011
FILED 11-16-2021
Special Action - Industrial Commission
ICA Claim No. 20190-0590269
Claim No. 20200-910025
Carrier Claim No. NONE
The Honorable Marceline A. Lavelle, Administrative Law Judge
AWARD AFFIRMED
COUNSEL
Zazueta Law, PLLC, Scottsdale
By Fabian Zazueta (argued), Garrett Respondek
Counsel for Petitioner Employer
Industrial Commission of Arizona, Phoenix
By Gaetano J. Testini
Counsel for Respondent
Nunez Law Firm, PLLC, Phoenix
By Jason H. Forcier
Counsel for Respondent Employees
Industrial Commission of Arizona, Phoenix
By Scott J. Cooley
Counsel for Respondent Real Party in Interest
MEMORANDUM DECISION
Judge Paul J. McMurdie delivered the Court’s decision, in which Presiding
Judge Peter B. Swann and Judge David D. Weinzweig joined.
M c M U R D I E, Judge:
¶1 Fernando Ramirez (“Ramirez”), doing business as Ramirez
Bros. Landscaping (“Ramirez Bros.”), brings this special action review
challenging an Industrial Commission of Arizona (“ICA”) Award that
found Ramirez Bros. subject to Arizona workers’ compensation liability.
Because the evidence shows that Ramirez Bros. regularly employed
workers in conducting its business, we affirm the award.
FACTS AND PROCEDURAL BACKGROUND
¶2 We view the facts in a light most favorable to sustaining the
Award. Salt River Project v. Indus. Comm’n, 128 Ariz. 541, 544–45 (1981).
Ramirez Bros. is a sole proprietorship of Fernando Ramirez that provides
landscaping maintenance and other landscaping-related services to clients.
Ramirez sometimes hired workers to help Ramirez Bros.
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¶3 In February 2019, Mario Ortega and Luis Diaz traveled in a
pickup truck to work for Ramirez when they were involved in an auto
accident. They went to the emergency room afterward, but the men
suffered no serious injuries. Later, they received treatment from a
chiropractor. They both filed workers’ compensation claims. Ramirez
denied liability under workers’ compensation law, arguing that he did not
regularly hire employees and was, therefore, not an employer subject to
workers’ compensation liability.
¶4 The ICA held a hearing to determine whether Ramirez was an
employer as prescribed in A.R.S. § 23-902(A), which provides that
[e]mployers subject to this chapter are . . . every person who
employs any workers or operatives regularly employed in the
same business or establishment under contract of hire
. . . . For the purposes of this subsection, “regularly
employed” includes all employments, whether continuous
throughout the year, or for only a portion of the year, in the
usual trade, business, profession or occupation of an
employer.
An employer is not subject to the Workers’ Compensation Act if it “hires
only occasionally and unpredictably.” Donahue v. Indus. Comm’n, 178 Ariz.
173, 179 (App. 1993).
¶5 The administrative law judge (“ALJ”) needed to decide
whether Ramirez hired only occasionally and unpredictably, not regularly.
Both Ortega and Diaz testified at the hearing, explaining that Ramirez had
consistently hired them from September 2018 until the accident, and they
worked full time for Ramirez Bros. They repaired irrigation systems,
planted vegetation, and installed pavers. They were paid weekly in cash.
And Ramirez supplied a truck to Ortega equipped with tools. Ortega kept
the truck at his house so that when Ramirez called in the mornings, Ortega
could pick up Diaz and drive to job locations. On the morning of the
accident, the truck had been kept at Ortega’s house for two weeks. After the
accident, Ramirez asked the men to do more work for him, but they
declined because they were recovering from their injuries.
¶6 Ramirez testified that he started Ramirez Bros. by himself
“[a]round two or three years ago” and usually did the work himself. He
first asked Ortega and Diaz to work for Ramirez Bros. in September 2018
because they could not find work, and he wanted to help them. Ramirez
sent Ortega and Diaz to work on an irrigation system on the morning of the
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accident. He usually hired them to install irrigation pipes and sprinklers,
which he could do himself if he wanted. He loaned his truck and tools to
Ortega to keep at his house and use when Ramirez had work for them. He
denied, however, that he regularly hired workers to help him.
¶7 The ALJ found Ortega and Diaz more credible than Ramirez.
She issued an initial award that did not address whether Ramirez was a
covered employer. Instead, the initial award found that Ortega and Diaz
were Ramirez’s employees, not independent contractors under A.R.S.
§ 23-902(B) and (C). After Ramirez requested review, directing her attention
to whether Ramirez was a covered employer, the ALJ found that Ramirez
had offered Ortega and Diaz work regularly, showing that Ramirez Bros.
regularly employed the men such that Ramirez Bros. was a covered
employer to whom workers’ compensation liability applied. This petition
for special action review followed.
DISCUSSION
¶8 The question presented, whether Ramirez is an employer
subject to workers’ compensation liability, is a mixed question of fact and
law. Donahue, 178 Ariz. at 179. We deferentially review the ALJ’s factual
findings and apply the law de novo to determine whether Ramirez is an
employer covered by the workers’ compensation law. See Grammatico v.
Indus. Comm’n, 208 Ariz. 10, 12, ¶ 6 (App. 2011).
¶9 The record contains evidence to support the ALJ’s finding
that Ramirez Bros. regularly employed Ortega and Diaz under A.R.S.
§ 23-902(A). The testimony shows that Ortega and Diaz worked and
remained “on call” for Ramirez Bros. from September 2018 until the
accident. But Ramirez Bros. argues it was not a “covered employer” under
Arizona law and relies on Donahue and Putz v. Indus. Comm’n, 203 Ariz. 146(App. 2002). Its reliance is misplaced.
¶10 In Donahue, a sole proprietor handyman, who predominately
worked alone, at times hired others to do electrical, plumbing, and air
conditioning work for his projects. 178 Ariz. at 175. He never had a regular
employee. Id. Over five years, he also hired “casual laborers” several times
a year to help him out. Id. He hired Donahue to work for a “‘couple’ of
days” on two ramadas he was building. Id. Donahue was injured on the job,
and whether the handyman was a covered employer became dispositive.
Id. at 174–75.
¶11 As noted above, we construed A.R.S. § 23-902(A) to be an
inquiry of “whether it is in the employer’s regular or customary business to
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employ workers, not . . . whether the employee in question is performing a
task in the employer’s usual trade.” Id. at 176. We concluded that the statute
renders an employer subject to the [Workers’ Compensation]
Act only when he employs at least one employee in the
regular course of his business. If the employer ordinarily does
not regularly employ any workers—if he hires only
occasionally and unpredictably—he is not subject to the
[Workers’ Compensation] Act.
Id. at 179. Applying that standard to the situation in Donahue, we found that
the handyman’s employment of others was “infrequent and
unpredictable,” putting him outside the statutory meaning of a covered
employer. Id.
¶12 Similarly, in Putz we held that a sole proprietor residential
contractor was not a covered employer after a welder helping Putz put
together a prefabricated metal building was injured. 203 Ariz. at 147, ¶¶ 1-2.
Putz worked alone and hired help only when he needed another person to
help him lift something heavy or for other two-person jobs. Id. at 147, ¶ 2.
He testified that in the year before the welder was injured, he had hired
others to work “a number of hours totaling approximately thirty-two
eight-hour workdays.” Id. at 147, ¶ 5. We rejected an approach that merely
compared percentages, noting that while such information may help
determine an employer’s hiring practices, such comparisons in and of
themselves do not serve the purpose of the statute, which is to provide
stability in knowing when workers’ compensation liability applies. Id. at
150, ¶¶ 18–19. Thus, we posed the issue as: “Did Putz customarily or
regularly employ at least one worker or was his hiring of extra labor only
occasional and unpredictable?” Id. at 150, ¶ 20.
¶13 We concluded the latter, noting that Putz’s need for
short-term labor was not predictable because it depended on the
requirements of each job, that most of his projects required only his labor,
which he performed himself, and his need for extra help was inconsistent.
Id. at 150, ¶¶ 22–23.
[N]o bright-line rule exists notifying self-employed
employers when they become subject to the [Workers’
Compensation] Act. The analysis . . . calls for occasional
case-by-case determinations when the facts regarding the use
of extra short-term labor are close. Thus, there is risk involved
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when those who are self-employed hire others without
purchasing workers’ compensation insurance.
Id. at 151, ¶ 25.
¶14 The facts show that Ramirez Bros. had regularly hired Ortega
and Diaz for five months before the accident. In addition, Ramirez Bros.
provided Ortega with a truck and tools, showing a lasting relationship with
ongoing expectations and responsibilities. Nor did Ortega and Diaz work
alongside Ramirez; they worked independently. Thus, unlike Donahue and
Putz, this evidence shows a plan of regular employment, placing Ramirez
Bros. within the coverage of workers’ compensation liability.
¶15 Finally, Ortega and Diaz request an award of reasonable
attorney’s fees, stating that Ramirez’s petition for special action review of
the Award is without substantial justification and was not made in good
faith. But Ortega and Diaz do not explain the contention that this special
action review has no justifiable basis.
¶16 Both A.R.S. § 12-349(A) and Arizona Rule of Civil Appellate
Procedure 25 give this court authority to impose sanctions for bringing
appeals that have no substantial justification or are frivolous. The purpose
of such a sanction is to “discourage similar conduct in the future.” ARCAP
25. We are guided in this decision by several principles. First, we note that
[f]rivolous appeals are not new or novel theories raised upon
colorable claims, nor positions on appeal that simply fail to
prevail. Instead, a frivolous appeal is one brought for an
improper purpose or based on issues which are unsupported
by any reasonable legal theory.
Johnson v. Brimlow, 164 Ariz. 218, 222 (App. 1990) (citations omitted). We are
mindful of the chilling effect these sanctions might have on other litigants.
Price v. Price, 134 Ariz. 112, 114 (App. 1982) (Courts “should not deter the
filing of appeals out of fear of reprisal.”). A meritless appeal is not
necessarily frivolous. Id. “Because the line between a frivolous appeal and
one which simply has no merit is fine, indeed, the power to punish
attorneys or litigants for prosecuting frivolous appeals ‘should be used
most sparingly[.]’” Id.¶17 In this context, we recall our ruling in Lou Grubb Chevrolet v.
Indus. Comm’n, 171 Ariz. 183 (App. 1991), where we agreed with the
claimant that the carrier’s briefs were “a jeremiad” that was “both ill
conceived and calculated to fail.” Id. at 191. Yet we still did not impose
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sanctions because we did not find “the questions that it raised or the novel
arguments that it presented [to be] frivolous.” Id. We take a similar view
here. Thus, even though the record provides little support for Ramirez’s
appeal, without any bright-line rule and the case-by-case nature of the legal
issue raised, we exercise our discretion in favor of not imposing sanctions
in this case.
CONCLUSION
¶18 Because the facts support a determination that Ramirez Bros.
regularly employed Ortega and Diaz, we agree with the ALJ’s conclusion
that Ramirez is a covered employer and affirm the Award.
AMY M. WOOD • Clerk of the Court
FILED: AA
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