COURT OF APPEALS OF VIRGINIA
Present: Judges Bray, Annunziata and Frank
UNINSURED EMPLOYER'S FUND
MEMORANDUM OPINION*
v. Record No. 0008-00-3 PER CURIAM
JUNE 20, 2000
HILLTOP LUMBER COMPANY, INC.,
BITUMINOUS FIRE & MARINE INSURANCE COMPANY,
ERNEST LUTHER SOWERS, III, and
CALVIN T. ANGUS
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
(Mark L. Earley, Attorney General; John J.
Beall, Jr., Senior Assistant Attorney
General; Robert L. Walker, Assistant Attorney
General, on briefs), for appellant.
(S. Vernon Priddy, III; Sands, Anderson,
Marks and Miller, on brief), for appellees
Hilltop Lumber Company, Inc. and Bituminous
Fire & Marine Insurance Company.
No brief for appellees Ernest Luther
Sowers, III and Calvin T. Angus.
The Uninsured Employer's Fund (the Fund) contends that the
Workers' Compensation Commission (commission) erred in finding
that Hilltop Lumber Company, Inc. (Hilltop) was not the
statutory employer of Ernest Luther Sowers, III (claimant),
pursuant to either Code § 65.2-302(A) or Code § 65.2-302(B).
Upon reviewing the record and the briefs of the parties, we
* Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
conclude that this appeal is without merit. Accordingly, we
summarily affirm the commission's decision. See Rule 5A:27. 1
"'The issue whether a person is a statutory employee
presents a mixed question of law and fact . . . .' Where, as
here, the facts relevant to the resolution of the . . . issue
are not in dispute, we must determine whether the [commission]
correctly applied the law to those facts." Cinnamon v.
International Business Machines Corp., 238 Va. 471, 474, 384
S.E.2d 618, 619 (1989) (citation omitted).
A review of the parties' briefs and the commission's
opinion shows that with respect to this issue, the material
facts are not in dispute. Thus, this is a question of whether
the commission correctly applied the law to the facts.
Hilltop operated a sawmill, but it did not have employees
who went into the woods to cut trees. Hilltop entered into a
Timber Sale Agreement with Kenneth C. Howell ("the landowner").
The Timber Sale Agreement allowed Hilltop the rights to certain
trees on the landowner's property, but it did not obligate
Hilltop to harvest the trees. Rather, it provided that Hilltop
would waive its right to cut the trees if they were not "cut and
removed on or before the First day of January 1998."
1
Because we summarily affirm the commission's decision, we
find it unnecessary to rule upon Hilltop's motion to dismiss and
decline to do so.
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Hilltop then entered into a Logging Contract and Agreement
with Calvin Angus wherein Angus agreed to "harvest all standing
timber" on the landowner's property, and it required that "[a]ll
logging must be completed by January 1, 1998." The logging
contract provided various schedules of payment for cut logs
delivered to Hilltop and also the respective shares of payment
for other logs delivered to other mills "agreeable to both
parties."
Claimant, an employee of Angus, suffered an injury by
accident arising out of and in the course of his employment,
when he was pinned under a skidder during logging operations on
the landowner's property. Claimant filed a claim for benefits,
naming Angus as his employer.
The commission found that claimant was an employee of
Angus, who was uninsured for workers' compensation. The
commission also ruled that Hilltop was not claimant's statutory
employer. The Fund appeals from that ruling.
Code § 65.2-302(A)
Code § 65.2-302(A) provides as follows:
When any person (referred to in this
section as "owner") undertakes to perform or
execute any work which is a part of his
trade, business or occupation and contracts
with any other person (referred to in this
section 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 worker
employed in the work any compensation under
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this title which he would have been liable
to pay if the worker had been immediately
employed by him.
In ruling that Hilltop was not claimant's statutory
employer pursuant to Code § 65.2-302(A), the commission held
that the evidence failed to prove that Angus' business of
cutting the timber was part of Hilltop's trade, business, or
occupation. The commission found that no evidence showed that
Hilltop, which received the logs and processed them into
manufactured timber, was ever involved in the cutting and
harvesting of the timber.
In Shell Oil Co. v. Leftwich, 212 Va. 715, 187 S.E.2d 162
(1972), the Supreme Court set forth the test this Court must use
in determining whether claimant was engaged in Hilltop's trade,
business, or occupation:
"[T]he test is not one of whether the
subcontractor's activity is useful,
necessary, or even absolutely indispensable
to the statutory employer's business, since,
after all, this could be said of practically
any repair, construction or transportation
service. The test (except in cases where
the work is obviously a subcontracted
fraction of a main contract) is whether this
indispensable activity is, in the business,
normally carried on through employees rather
than independent contractors."
Id. at 722, 187 S.E.2d at 167 (citation omitted) (emphasis
added). Here, credible evidence proved that Hilltop did not
have any employees who normally carried out the type of work
which caused claimant's injury, i.e., the cutting and harvesting
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of standing timber. This work, although necessary to Hilltop's
business, was done by independent contractors, such as Angus.
Therefore, the commission did not err in finding that Angus'
activity was not part of Hilltop's trade, business, or
occupation and that Hilltop was not claimant's statutory
employer pursuant to Code § 65.2-302(A).
Code § 65.2-302(B)
Code § 65.2-302(B) provides as follows:
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.
In F. Richard Wilton, Jr., Inc. v. Gibson, 22 Va. App. 606,
471 S.E.2d 832 (1996), we discussed the subcontracted-fraction
test and the method to be used to analyze statutory employer
status under Code § 65.2-302(B) as follows:
"In the context of the construction
business, [the subcontracted-fraction prong]
relates to a general contractor, the party
obligated by the main contract with the
owner to complete the whole project. If the
work out of which the accident arose was, in
the language of Shell Oil, 'obviously a
subcontracted fraction of [that] contract'
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and, in the language of the statute, 'not a
part of the trade, business or occupation
of' the owner, the general contractor who
engaged the subcontractor to perform that
fraction is the statutory employer of the
injured worker, whether directly employed by
the primary subcontractor or by a secondary
subcontractor."
Id. at 610, 471 S.E.2d at 834-35 (quoting Cinnamon, 238 Va. at
476, 384 S.E.2d at 620).
In holding Code § 65.2-302(B) inapplicable to this case,
the commission found as follows:
Hilltop entered into a contract with a
private landowner for timber rights. The
landowner is not in the same trade, business
or occupation as Hillside. There is no
evidence that Hillside contracted to perform
or execute any work for another person. All
it purchased was land rights to cut timber.
It could elect to cut the timber or not cut
the timber with the rights reverting back to
the landowner at the end of the contract
period. We cannot find, based on the
evidence, that Hilltop contracted to perform
any work or undertaking for the owner.
Hilltop sold the rights to cut this timber
to Calvin Angus and agreed to pay for
certain logs delivered at the rate of
$120.00 per 1000 board feet. Other logs
were paid per pound. Based on the evidence
that the Hilltop was not in the trade,
business or occupation of cutting logs, and
the terms of the contract, we cannot find
that § 65.2-302(B) is applicable in this
case.
Credible evidence supports the commission's findings.
Pursuant to the Timber Sale Agreement, Hilltop was not obligated
to the landowner to cut timber from the landowner's property.
Thus, because the work out of which the accident arose was not
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an "obviously subcontracted fraction" of the Timber Sale
Agreement, the commission did not err in finding that Hilltop
was not claimant's statutory employer pursuant to Code
§ 65.2-302(B).
For these reasons, we affirm the commission's decision.
Affirmed.
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