Rodriguez v. Leesburg Business Park

Present: All the Justices

CECILIA RODRIGUEZ, ADMINISTRATOR
OF THE ESTATE OF UBALDO RODRIGUEZ
OPINION BY
v. Record No. 122029 CHIEF JUSTICE CYNTHIA D. KINSER
FEBRUARY 27, 2014
LEESBURG BUSINESS PARK, LLC, ET AL.

FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
James H. Chamblin, Judge

The circuit court sustained a plea in bar and dismissed

this wrongful death action on the basis that the plaintiff's

exclusive remedy is under the Virginia Workers' Compensation Act

(the Act), Code §§ 65.2-100 through -1310. The primary issue is

whether an employee of a general contractor, hired by an owner

to construct warehouse buildings, was engaged in the "trade,

business or occupation" of the owner under Code § 65.2-302(A)

when the employee suffered fatal injuries in the course of

employment. We conclude that the employee's work at the time of

the accident was not part of the owner's trade, business, or

occupation and will therefore reverse the circuit court's

judgment.

FACTS AND PROCEEDINGS

Leesburg Business Park, LLC (LBP) contracted with E.E. Reed

Construction, LP (Reed) to construct warehouse buildings on a

parcel of undeveloped land owned by LBP and known as Leesburg

Business Park (Park). Ubaldo Rodriguez (Ubaldo) was an employee

of Reed. Ubaldo was fatally electrocuted when building
materials being moved by another Reed employee came into contact

with overhead electrical power lines. The Virginia Workers'

Compensation Commission entered an award of benefits to Ubaldo's

statutory beneficiaries under the Act.

Cecilia Rodriguez (Rodriguez) is the widow of Ubaldo and

the administrator of his estate. In her capacity as

administrator, Rodriguez filed a wrongful death action under

Code § 8.01-50, alleging that LBP caused Ubaldo's death by

negligently failing to keep its premises reasonably safe for

invitees such as Ubaldo. 1 LBP filed a plea in bar, arguing that

Ubaldo was the "statutory co-employee of LBP under [the Act],"

and therefore Rodriguez' claim was barred by Code § 65.2-307.

At an evidentiary hearing on the plea in bar, the circuit

court heard testimony from William H. Lauer, LBP's initial

manager and sole member. LBP, Lauer testified, is a "single

source" entity, with no employees, which was created to own and

develop a parcel of real estate and then lease or sell

warehouses constructed on the parcel. LBP's operating agreement

states that it was "formed for the purposes of acquiring,

holding, improving, managing, leasing and selling real property

in Virginia and elsewhere, and engaging in any other business

agreed to by the members of the LLC and permitted under the laws

1
Rodriguez named other entities as defendants in the
amended complaint, but they are not parties to this appeal.

2
of the Commonwealth of Virginia." Lauer described LBP's

operation as follows: "[A]s owner and developer, we create the

opportunity, we build it, we sell it, we lease it, and we manage

it." After purchasing the property through a separate entity

and determining that the property was "worthy of development,"

Lauer formed LBP and assigned the purchase contract to LBP.

LBP, through contracts with other entities, then determined the

feasibility of development and conducted various preliminary

steps to enable development of the land. Those steps included

architectural, engineering, legal, and financing work.

After considering a number of general contractors, LBP

contracted with Reed to construct warehouse buildings on the

property. Reed was "solely responsible for doing all of the

components to build the building" and was "fully in charge" of

construction. Under its contract with LBP, Reed was not

responsible for obtaining building permits, paying utility fees,

"[m]oving . . . the power lines," or providing "signage for the

project." These responsibilities, and the responsibility of

overseeing the construction process to ensure the work was done

properly and according to specifications, were contracted to a

consultant, or "owner's rep[resentative]." LBP had no role in

the actual construction of the buildings. As Lauer stated, it

did not "move earth[,] lay any rebar[,] pour any concrete [or]

3
install windows, plumbing [or] electrical." LBP made its money

from the sale and lease of the warehouses.

The circuit court found that "LBP was in the trade,

business or occupation of purchasing, developing, constructing,

selling and leasing warehouse buildings on" its parcel.

"[C]onstruction of the warehouses," the court stated, "was a

part of the trade, business or occupation of LBP." Accordingly,

the court concluded that Ubaldo "was a statutory co-employee of

LBP" and that Rodriguez' recovery was limited to the Act. On

August 10, 2010, the court entered an order sustaining the plea

in bar and dismissing the amended complaint with prejudice.

We awarded Rodriguez an appeal. In an unpublished order,

we held there was no evidence that Ubaldo and LBP were statutory

co-employees. Rodriguez v. Leesburg Business Park, LLC, Record

No. 102127, slip op. at 4 (Jan. 6, 2012) (per curiam)

(unpublished). We noted that the term "statutory co-employee"

is "not synonymous with the term 'statutory employee' as

contemplated under Code § 65.2-302(A) in the context of the

relationship between an alleged statutory employee and statutory

employer." Id. We reversed the judgment of the circuit court

and remanded the case for further proceedings. Id.

On remand, LBP moved to reconsider its plea in bar based on

the evidence presented at the original hearing. LBP argued that

the evidence established it was Ubaldo's statutory employer and

4
that Rodriguez' action against LBP was barred by the exclusivity

provision under Code § 65.2-307(A). Rodriguez objected that the

circuit court could not reconsider its ruling on the plea in bar

because more than 21 days had elapsed since the court entered

its order sustaining the plea and awarding final judgment.

Thus, according to Rodriguez, Rule 1:1 divested the court of

jurisdiction to modify its order. She also argued that the

evidence did not establish that LBP was Ubaldo's statutory

employer.

At a hearing, the circuit court first rejected Rodriguez'

argument concerning Rule 1:1 and its jurisdiction to reconsider

the plea in bar. The court then again found that LBP "was in

the trade, business or occupation of purchasing, developing,

constructing, selling and leasing warehouse buildings on" its

parcel, and "the construction of the warehouses was a part of

the trade, business or occupation of LBP." The court concluded

that "LBP was the statutory employer of Ubaldo and that

[Rodriguez'] recovery is limited to Workers' Compensation

benefits only." It entered an order sustaining the plea in bar

and dismissing the amended complaint with prejudice.

We awarded Rodriguez this appeal.

ANALYSIS

The primary issue on appeal is whether at the time of his

fatal accident, Ubaldo was engaged in work that was part of

5
LBP's trade, business, or occupation, thus making LBP Ubaldo's

statutory employer under Code § 65.2-302(A). Determining

whether work is part of the trade, business, or occupation of an

owner is a mixed question of law and fact. Carmody v. F.W.

Woolworth Co., 234 Va. 198, 201, 361 S.E.2d 128, 130 (1987).

The Court views the facts and any reasonable inferences raised

by the evidence in the light most favorable to the prevailing

party below, LBP, and determines whether the circuit court

correctly applied the law to those facts. Id. Here, because

the essential facts are undisputed, we are presented only with a

question of law regarding the circuit court's application of the

law to those facts and therefore apply a de novo standard of

review. See Hilton v. Martin, 275 Va. 176, 180, 654 S.E.2d 572,

574 (2008).

Answering the question before us "is not a simple,

straightforward exercise," Henderson v. Central Tel. Co., 233

Va. 377, 382, 355 S.E.2d 596, 599 (1987); it "depends upon the

facts and circumstances of the particular case [and] 'does not

readily yield to categorical or absolute standards.'" Johnson

v. Jefferson Nat'l Bank, 244 Va. 482, 485, 422 S.E.2d 778, 780

(1992) (quoting Bassett Furniture Indus., Inc. v. McReynolds,

216 Va. 897, 902, 224 S.E.2d 323, 326 (1976)).

The Act's exclusivity provision, Code § 65.2-307(A),

mandates that the rights and remedies provided in the Act

6
"exclude all other rights and remedies" of a covered employee or

his beneficiaries for injuries sustained in the course of

employment. An employee cannot maintain a common law tort

action against his employer or a fellow employee for such

injuries. Hudson v. Jarrett, 269 Va. 24, 29, 606 S.E.2d 827,

829 (2005). Likewise, an employee is barred from bringing such

an action against a party who is not the employee's common law

employer if that employer is nevertheless a "statutory employer"

under Code § 65.2-302(A). Id. at 29-30, 606 S.E.2d at

829; cf. Clean Sweep Prof'l Parking Lot Maint., Inc. v. Talley,

267 Va. 210, 213, 591 S.E.2d 79, 81 (2004) ("The only exception

to [the] exclusivity provision is provided in Code § 65.2-309(A)

permitting an action to be maintained against an 'other party.'

To be an 'other party,' a defendant must have been a stranger to

the trade, occupation, or business in which the employee was

engaged when he was injured.") (internal quotation marks

omitted).

With the relevant parties from this case interpolated in

brackets, Code § 65.2-302(A) states:

When any person (referred to in this section
as "owner") [LBP] 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") [Reed] 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

7
 [LBP] 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 the worker had been immediately
employed by him. 2

The provisions of Code § 65.2-101, however, provide

that "nothing in [the Act] shall be construed to make the

employees of any independent contractor the employees of

the person or corporation employing or contracting with

such independent contractor." Thus, in accordance with

Code § 65.2-101, "the mere fact a business owner engages an

independent contractor does not make that independent

contractor's employees statutory employees of the

owner." Henderson, 233 Va. at 381, 225 S.E.2d at 598.

Code § 65.2-302(A), however, makes clear that an owner such

as LBP can contract out all its work yet remain liable

under the Act. Id.

The two statutes read together mean that an owner

cannot escape liability under the Act by merely contracting

away work that is part of the owner's trade, business, or

occupation. Id. at 381, 225 S.E.2d at 598-99. "'[I]f the

work performed by an employee of the contractor or

subcontractor is part of the owner's trade, business, or

occupation,'" the owner is the statutory employer of the
2
Code § 65.2-302(B) and (C) apply the same standard to
situations in which a contractor contracts with a subcontractor,
or a subcontractor contracts with another subcontractor.

8
employee and "'is liable for compensation as though the

worker were his own employee.'" Cinnamon v. IBM Corp., 238

Va. 471, 478, 384 S.E.2d 618, 621 (1989) (quoting Smith v.

Horn, 232 Va. 302, 305-06, 351 S.E.2d 14, 16 (1986)).

However, if the work is not part of the trade, business, or

occupation of the owner, and the owner hires an independent

contractor to perform the work, the contractor is liable to

the employee under the Act, not the owner. Sykes v. Stone

& Webster Eng'g Corp., 186 Va. 116, 122, 41 S.E.2d 469, 472

(1947).

As the Court has stated numerous times,

[t]he purpose of [Code § 65.2-302] is to
bring within the operation of the Act all
persons engaged in work that is a part of
the trade, business, or occupation of the
party who undertakes as owner or who
contracts as contractor to perform the work,
and to make liable to every employee engaged
in the work every such owner contractor, or
subcontractor above such employee.

Pfeifer v. Krauss Constr. Co., 262 Va. 262, 266, 546 S.E.2d 717,

719 (2001) (internal quotation marks and footnote omitted).

Under these principles, it is thus necessary to determine

whether construction was part of LBP's trade, business, or

occupation. We begin that analysis by identifying "the nature

of the particular owner." Nichols v. VVKR, Inc., 241 Va. 516,

521, 403 S.E.2d 698, 701 (1991). Unlike a governmental entity

or public utility, see Henderson, 233 Va. at 383, 355 S.E.2d at

9
599, a private entity, such as LBP, "has broad discretion to

choose its business activities." Nichols, 241 Va. at 521, 403

S.E.2d at 701. For this reason, the Court has generally applied

the "normal work test" as enunciated in Shell Oil Co. v.

Leftwich, 212 Va. 715, 187 S.E.2d 162 (1972):

[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 . . . is whether this
indispensable activity is, in that
business, normally carried on through
employees rather than independent
contractors. 3

3
The test does not apply when the "the work is obviously a
subcontracted fraction of a main contract." Shell Oil, 212 Va.
at 722, 187 S.E.2d at 167 (internal quotation marks omitted).

In the context of the construction business,
[this test] 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 . . . obviously a
subcontracted fraction of [that] contract
and . . . 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.

Cinnamon, 238 Va. at 476, 384 S.E.2d at 620 (internal quotation
marks omitted).

10
Id. at 722, 187 S.E.2d at 167 (internal quotation marks

omitted). This test, however, is "only a corollary guide,

sometimes useful but not indispensable, in applying the literal

language of the statutes to the facts in a particular

case." Cinnamon, 238 Va. at 478, 384 S.E.2d at 621.

For example, in Nichols, the Greater Roanoke Transit

Company (GRTC) owned a "construction/rehabilitation project

designed to provide public mass transportation facilities,

downtown parking facilities, retail and office space facilities,

and revitalization and urban development" of a commercial

shopping district. 241 Va. at 518, 403 S.E.2d at 699-700.

Addressing a defendant's argument that the normal work test did

not apply because GRTC had no employees, the Court stated:

[T]his argument "misses the mark." . . . .
The key issue here is whether construction
and rehabilitation of a transportation and
retail facility was part of GRTC's business
purpose of providing mass transportation
services. This purpose is established in
its articles of incorporation.

Id. at 522, 403 S.E.2d at 702 (quoting Carmody, 234 Va. at 205,

361 S.E.2d at 132); see Evans v. Hook, 239 Va. 127, 132, 387

S.E.2d 777, 779 (1990) (stating that "a defendant's business

structure and number of employees have never been considerations

in deciding whether [it] is entitled to the [A]ct's immunity").

The Court stated that although GRTC clearly required a facility

"from which their business is conducted," the actual

11
construction or adaptation of the facility "is not itself the

trade, business, or occupation of the owner." Nichols, 241 Va.

at 522, 403 S.E.2d at 702.

We have considered construction or repair of
such a facility not to be the trade,
occupation, or business of an owner for
purposes of determining whether a statutory
employee or employer relationship
exists unless those activities are normally
carried out directly by the owner or are
part of [its] normal activities.

Id. at 522, 403 S.E.2d at 702 (emphasis added).

In determining whether Ubaldo's construction work was part

of LBP's trade, business, or occupation, we therefore do not

simply examine whether LBP engaged in construction. Nor is the

fact that LBP had no employees determinative. Rather, we must

determine whether Ubaldo's construction work at the time of his

fatal accident was part of LBP's business. See Carmody, 234 Va.

at 205, 361 S.E.2d at 132; see also Floyd v. Mitchell, 203 Va.

269, 274, 123 S.E.2d 369, 372 (1962) ("The test is not whether

the owner, by engaging an independent contractor to perform some

part of his business, thereby engages in the business of the

independent contractor. It is whether the independent

contractor is performing work that is part of the trade,

business or occupation of the owner.").

According to Lauer, LBP was created for a single purpose:

to develop the Park so that LBP could ultimately lease or sell

12
the finished warehouses. It necessarily engaged in many

preliminary steps or activities to accomplish its business

purpose of selling or leasing the warehouses. The development

of the property, including the construction of the warehouses,

was obviously essential, just as a plant is to a

manufacturer. See Cinnamon, 238 Va. at 478, 384 S.E.2d at 621

("'Every manufacturer must have a plant, but this fact alone

does not make the work of constructing a plant a part of the

trade or business of every manufacturer who engages a contractor

to construct a plant.'") (quoting Raines v. Gould, Inc., 343

S.E.2d 655, 659 (S.C. Ct. App. 1986)). While many activities

may be important or even "indispensable" to the success of a

business, those activities do not necessarily constitute the

trade, business, or occupation of the owner. Cinnamon, 238 Va.

at 475; 304 S.E.2d at 620; see Shell Oil, 212 Va. at 722-23, 187

S.E.2d at 167-68 (holding that retail sale of gasoline was

indispensable activity to Shell Oil Company but nevertheless not

part of its trade, business, or occupation). As a private

entity, LBP had the "broad discretion to choose its business

activities." Nichols, 241 Va. at 521, 403 S.E.2d at 701.

The circuit court dismissed this wrongful death action on

LBP's plea in bar. A plea in bar presents a distinct issue

that, if proven, bars a plaintiff's right of recovery. Hilton,

275 Va. at 179, 654 S.E.2d at 574. LBP, as the moving party,

13
had the burden of proving that Ubaldo's construction work at the

time of the accident was part of LBP's trade, business, or

occupation. See id. at 179-80, 654 S.E.2d at 574. We conclude,

as a matter of law, that LBP did not carry that burden.

Establishing that LBP contracted with Reed to construct the

warehouses and sought to ensure that the work was "done

properly" is not sufficient to establish that construction is

part of LBP's trade, business or occupation. Henderson, 233 Va.

at 381, 225 S.E.2d at 598 ("[T]he mere fact a business owner

engages an independent contractor does not make that independent

contractor's employees statutory employees of the

owner."); Cinnamon, 238 Va. at 479, 384 S.E.2d at 622

(overseeing construction by employees does not compel the

conclusion that construction is the trade, business or

occupation of the owner). LBP may have demonstrated that the

construction of warehouses was indispensable to the success of

its business, but it did not prove that Ubaldo's construction

work was part of LBP's trade, business, or

occupation. See Cinnamon, 238 Va. at 475, 384 S.E.2d at 620.

In arguing that Ubaldo's construction work was part of its

trade, business, or occupation, LBP relies principally

on Pfeifer. There, as here, a company with no employees,

Linkhorn Bay Associates, L.L.C., contracted all work on a

project to subcontractors. 262 Va. at 265, 546 S.E.2d at 718.

14
An employee of one subcontractor sued another subcontractor,

Krauss Construction Company of Virginia, Inc. (Krauss) for

personal injuries sustained while Krauss employees were

installing natural gas lines. Id. As a statutory co-employee

case, the determinative issue was whether Krauss' "installation

of the gas line was a part of the trade, business, or occupation

of Linkhorn Bay, making Krauss [the plaintiff's] statutory co-

employee." Id. at 267, 546 S.E.2d at 719. The Court held that

it was: "Linkhorn Bay had been formed solely to build and

develop these condominiums [and] had no other function[;] the

installation of the gas lines was part of Linkhorn Bay's

construction project covered by the terms of [the parties']

contract." Id. at 268, 546 S.E.2d at 720.

Contrary to LBP's argument, Pfeifer does not control here.

Determining whether work is part of the trade, business, or

occupation of an owner "depends upon the facts and circumstances

of the particular case." Johnson, 244 Va. at 485, 422 S.E.2d at

780. Linkhorn Bay had been formed "solely to build and develop

. . . condominiums." Pfeifer, 262 Va. at 268, 546 S.E.2d at 720

(emphasis added). Its trade, business, or occupation was not

disputed, and installing the natural gas lines and connecting

them to the condominium units were obviously part of its

business purpose to build the condominiums.

15
 CONCLUSION

For these reasons, we conclude that LBP was not Ubaldo's

statutory employer under Code § 65.2-302(A) at the time of his

fatal accident. As a matter of law, the circuit court erred by

granting LBP's plea in bar. We will reverse the circuit court's

judgment and remand the case for further proceedings consistent

with this opinion. 4

Reversed and remanded.

4
In light of our holding, we need not address Rodriguez'
other assignments of error except for her argument that, under
Rule 1:1, the circuit court lacked jurisdiction over the case to
reconsider the plea in bar after this Court's first remand.
Rodriguez' argument is without merit.
Upon Rodriguez' timely appeal from the circuit court's 2010
judgment sustaining the plea in bar, this Court obtained
jurisdiction over the case. Ghameshlouy v. Commonwealth, 279
Va. 379, 390, 689 S.E.2d 698, 703 (2010). By reversing the
circuit court's order and remanding the case, we vacated the
circuit court's August 2010 order. See Nassif v. Board of
Supervisors, 231 Va. 472, 480, 345 S.E.2d 520, 525 (1986) ("When
this Court rules that the judgment of a trial court is erroneous
. . . it is no longer viable. Unless we say otherwise, the
slate is wiped clean, with the result that on remand the parties
begin anew."). Although the circuit court made the same
findings of fact on remand and concluded that LBP was Ubaldo's
statutory employer, it did not simply modify its prior order.
Instead, it entered a new order. That action, therefore, did
not implicate Rule 1:1.

16
JUSTICE McCLANAHAN, with whom JUSTICE POWELL joins, concurring
in part and dissenting in part.

Today the majority terminates the ability of injured workers

to seek workers' compensation from developers like LBP, contrary

to the remedial purposes of the Virginia Workers' Compensation

Act (the Act). At the same time, the majority exposes such

developers to common law tort liability that is completely at

odds with applicable statutory and case law. The majority

offers no discernible rationale for effecting these results. We

are provided only the majority's conclusory assertion – contrary

to the facts and law - that LBP failed to prove that Ubaldo, as

Reed's employee, was performing work that was part of LBP's

trade, business or occupation at the time of his work-related

accident.

On the undisputed facts in this case, the circuit court

correctly concluded that LBP was Ubaldo's statutory employer

based on its finding that Reed's construction of the warehouses

at Leesburg Business Park (the Park) was a part of LBP's trade,

business or occupation. I would therefore affirm the judgment

of the circuit court sustaining LBP's plea in bar pursuant to

the Act's exclusive remedy provision. 1

1
In light of this conclusion, as explained in Part II
below, I would also address, but would reject, Rodriguez'
 Accordingly, I dissent from the majority's conclusion that

LBP was not Ubaldo's statutory employer and its reversal of the

circuit court's judgment. However, I concur in the majority's

rejection of Rodriguez' jurisdictional argument based on Rule

1:1. 2

I. LBP'S STATUTORY EMPLOYER STATUS

A. Controlling Statutes and Remedial Purpose

By the terms of the Act's exclusive remedy provision, Code

§ 65.2-307(A), 3 the rights and remedies provided in the Act are

exclusive of all other rights and remedies that a covered

employee and his beneficiaries might otherwise possess as a

result of the employee's job-related accident. Under this

statute, an injured employee and his beneficiaries are precluded

from maintaining a common law action against the employee's

immediate employer for an injury sustained in the course of

alternative argument that, even if LBP was Ubaldo's statutory
employer, LBP waived its defense of immunity under the Act
because LBP did not purchase workers' compensation insurance or
qualify as a self-insurer.
2
The majority discusses and disposes of Rodriguez'
jurisdictional argument in footnote 4 of its opinion.
3
Code § 65.2-307(A) states:

The rights and remedies herein granted to an employee when
his employer and he have accepted the provisions of this title
respectively to pay and accept compensation on account of injury
or death by accident shall exclude all other rights and remedies
of such employee, his personal representative, parents,
dependents or next of kin, at common law or otherwise, on
account of such injury, loss of service or death.

18
employment when the employee and the employer have accepted the

Act's provisions. See Hudson v. Jarrett, 269 Va. 24, 29, 606

S.E.2d 827, 829 (2005); Pfeifer v. Krauss Const. Co., 262 Va.

262, 266, 546 S.E.2d 717, 719 (2001). An exception, however, to

the Act's exclusive remedy provision is set forth in Code §

65.2-309(A), which permits the employee to bring a common law

action against a third-party tortfeasor, provided the tortfeasor

is an "other party" within the meaning of the Act. Crocker v.

Riverside Brick & Supply Co., 273 Va. 235, 238-39, 639 S.E.2d

214, 216 (2007); Anderson v. Dillow, 262 Va. 797, 799-800, 553

S.E.2d 526, 527 (2001).

An owner such as LBP, which is not the injured employee's

immediate employer, is nonetheless "under the canopy of the

[A]ct and entitled to the immediate employer['s] statutory

immunity from common-law actions" if the owner qualifies as the

injured employee's statutory employer, thereby negating "other

party" status. Evans v. Hook, 239 Va. 127, 131, 387 S.E.2d 777,

779 (1990). The test for determining whether an owner becomes a

statutory employer is set forth in Code § 65.2-302(A) 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

19
 pay to any worker employed in the work any compensation
under this title which he would have been liable to pay if
the worker had been immediately employed by him.

The project owner is thus deemed to be the statutory employer of

the independent contractor's employees if those employees are

engaged in work that is a part of the owner's trade, business,

or occupation. 4 If so, the owner is rendered liable to those

employees for workers' compensation benefits.

The purposes of Code § 65.2-302(A) are to afford protection

to "'the employees of [independent contractors] who are not

financially responsible,'" Bassett Furniture Industries, Inc. v.

McReynolds, 216 Va. 897, 902, 224 S.E.2d 323, 326 (1976)

(quoting Sears, Roebuck & Co. v. Wallace, 172 F.2d 802, 810 (4th

Cir. 1949)), and to "prevent an owner from escaping liability

under the Act by the simple expedient of subcontracting away

work which is part of its trade, business, or

occupation." Henderson v. Central Tel. Co. of Va., 233 Va. 377,

381, 355 S.E.2d 596, 598-99 (1987).

These purposes are reflective of the "highly remedial"

nature of the Act, id. at 382, 355 S.E.2d at 599; Board of

Supervisors of Amherst County v. Boaz, 176 Va. 126, 134, 10

S.E.2d 498, 501 (1940), which is to be construed to effect its

fundamental purpose of providing workers with statutory

4
The employees, in turn, become the "statutory employees"
of the owner. Crocker, 273 Va. at 238-39, 639 S.E.2d at 216.

20
compensation for accidental injuries resulting from the hazards

of their employment. Henderson, 233 Va. at 382, 355 S.E.2d at

599; Feitig v. Chalkley, 185 Va. 96, 98, 38 S.E.2d 73, 75

(1946). Accordingly, in this case, even though Rodriguez does

not seek workers' compensation benefits from LBP, "our

consideration of this appeal is nevertheless governed by the

principles that apply in a case where coverage is

sought." Henderson, 233 Va. at 382, 355 S.E.2d at 599.

B. LBP's Trade, Business or Occupation

The undisputed facts, material to the analysis of whether

Reed's construction of the Park warehouses was part of LBP's

trade, business, or occupation under the terms of Code § 65.2-

302(A), are as follows. LBP, a Virginia limited liability

company, was organized by Lauer, its owner and sole member, for

the purpose of "acquiring, holding, improving, managing, leasing

and selling real estate," as set forth in its operating

agreement. 5 LBP was specifically organized to effect that

purpose through the Park property project. Upon its acquisition

of the Park property, LBP was, in fact, responsible for the

property being commercially developed, and for the sale and

lease of the warehouse units that were constructed on the

5
In this context, Black's Law Dictionary defines the word
"improve" to mean: "To develop (land) . . . ." Black's Law
Dictionary 826 (9th ed. 2009).

21
property. LBP received its income from the sale and lease of

those warehouse units.

With no employees or equipment, LBP implemented its

organizational objectives through Lauer, independent contractors

and consultants. LBP acquired the Park property as totally

undeveloped, raw land. In developing the property, LBP

obtained, among other things: numerous studies regarding the

financial viability of developing the Park property, the

practicality of construction, and the risk of development;

appraisals; bids from contractors; various government permits,

bonds and approvals; and construction financing.

LBP made the decision to improve the Park property by the

construction of the Park warehouses, obtained the necessary

approvals for their construction, and procured an architect to

design them. After interviewing various contractors to

construct the warehouses, LBP selected Reed. LBP and Reed then

entered into a contract making Reed solely responsible for

constructing the warehouses to the agreed specifications. LBP

hired an owner's representative to oversee the construction

process, "serving as [Lauer's] eyes and ears as to what's going

on with the project," as Lauer explained. Lauer had weekly

meetings with this representative regarding the progress of the

construction. The architect that designed the warehouses also

inspected, on LBP's behalf, Reed's work over the course of the

22
warehouses' construction. Lauer made the ultimate decision on

any construction issues.

The majority, without acknowledging it, evidently accepts

Rodriguez' central argument that because LBP did not, and could

not, construct the Park warehouses itself, Reed's construction

of the warehouses was not a part of LBP's trade, business, or

occupation; rather, LBP was merely "investing in real estate,"

placing LBP outside the purview of the definition of statutory

employer in Code § 65.2-302(A) for that part of the Park's

development.

This argument is unavailing as it conflicts with the

express terms of Code § 65.2-302(A), which imposes workers'

compensation liability on an owner, as a statutory employer,

when the owner undertakes through an independent contractor

"the whole or any part of the work" that is "a part of [the

owner's] trade, business or occupation." (Emphasis added). The

statute thus "contemplates that an owner such as [LBP] can

subcontract all its work yet remain liable under the

Act." Henderson, 233 Va. at 381, 355 S.E.2d at 598. Hence,

under our case law, "a defendant's business structure and number

of employees have never been considerations in deciding whether

[it] is entitled to the [A]ct's immunity" from a common law suit

as a statutory employer. Evans, 239 Va. at 132, 387 S.E.2d at

779.

23
 As this Court has previously explained, "an owner may

perform or execute work that is part of [its] trade, business,

or occupation through contractors or subcontractors, directly

employing no workers for the purpose." Smith v. Horn, 232 Va.

302, 305, 351 S.E.2d 14, 16 (1986) (emphasis added)

(citing Anderson v. Thorington Const. Co., 201 Va. 266, 272-73,

110 S.E.2d 396, 400-01 (1959)). But "if the work performed by

an employee of the contractor or subcontractor is [such a] part

. . . the worker is deemed the statutory employee of the owner,

and the owner is liable for compensation as though the worker

were [its] own employee." Id. at 305-06, 351 S.E.2d at 16.

LBP utilized a business model for its development of the

Park property that required no direct employees for the

construction of its Park warehouses. However, LBP should be

unable to thereby "escap[e]" statutory employer

status. Henderson, 233 Va. at 381, 355 S.E.2d at 598. "[T]he

whole [warehouse construction] work undertaken by [LBP]" was

performed by Reed, LBP's independent contractor, in a manner

contemplated by Code § 65.2-302(A). The undertaking was in

furtherance of the express purposes for which LBP was

established, and comprised the main component of the Park

property's intended development and use. From the beginning,

LBP's plan was to acquire the Park property in its unimproved

state, improve the property through the construction of the Park

24
warehouses, and then sell or lease the warehouse units. The

construction of the Park warehouses was thus necessarily an

integral part of LBP's "trade, business or occupation" under the

terms of Code § 65.2-302(A).

It is therefore inconsequential that LBP did not "make money off

of the construction [of the warehouses] itself," as Lauer

acknowledged, with Reed being paid to construct them. Even if

LBP had performed the construction with employees of its own, it

would not have made "money off of the construction itself," as

the project's owner (i.e., LBP would not have received payments

for its own construction work). In either case, LBP's income

would have been generated at the point of sale and/or lease of

the warehouse units, just like any other owner-developer of a

similar project (with or without its own construction crew). By

the very nature of commercial real estate development, the

developer generates income upon completion of the project from

the sale or lease of the developed property or some portion of

it. Nonetheless, we have never deemed the point at which income

is generated from a commercial undertaking to be dispositive in

determining an entity's trade, business or occupation under Code

§ 65.2-302(A), and I see no good reason for doing so here.

Finally, the majority's stated reasons for rejecting LBP's

reliance on Pfeifer plainly support the counter-position.

Applying Code § 65.2-302 in Pfeifer, we held that an independent

25
contractor's installation of gas lines undertaken for a

condominium development project was a part of the trade,

business, or occupation of the owner-developer, Linkhorn Bay

Associates, L.L.C. (Linkhorn Bay). Much like LBP, Linkhorn Bay

was a limited liability company that was organized for the

purpose of developing condominiums, had no employees and

"subcontracted all the work to various subcontractors." Id. at

265, 546 S.E.2d at 718. In attempting to distinguish Pfeifer,

the majority points to the fact that Linkhorn Bay had been

formed solely to build and develop condominiums. The majority

then concludes that "installing the natural gas lines and

connecting them to the condominium units were obviously part of

its business purpose to build the condominiums." This

observation seems to simply ignore the fact that LBP's

development of the Park property by the construction of

warehouse units was undisputedly in furtherance of LBP's

organizational and business purpose, as set forth in LBP's

operating agreement. It would thus be completely illogical to

contemplate that somehow installation of natural gas lines to

those warehouse units would be a part of LBP's business purpose

to build those units, but the actual construction of the units

would not be a part of that purpose.

Accordingly, I would hold the circuit court correctly

concluded that LBP was Ubaldo's statutory employer because

26
Ubaldo, as Reed's employee, was performing work that was a part

of LBP's trade, business, or occupation at the time of his work-

related accident. Given the undisputed facts before it, the

circuit court's conclusion was dictated by both the express

terms of Code § 65.2-302(A) and the statute's remedial purpose. 6

II. LBP AS UNINSURED STATUTORY EMPLOYER

Rodriguez argues that even if Ubaldo was LBP's statutory

employer, pursuant to Code § 65.2-805 of the Act, LBP waived

its defense of immunity in this action because LBP failed to

purchase workers' compensation insurance covering Reed's

employees, or to qualify as a self-insurer.

6
I take issue with the majority's indication that,
initially, LBP argued and the circuit court held that "Ubaldo
and LBP were statutory co-employees," citing this Court's
unpublished order in Rodriguez' first appeal, Rodriguez v.
Leesburg Business Park, LLC, Record No. 102127, slip op. at 4
(Jan. 6, 2012) (per curiam). At no time did the circuit court
or LBP refer to LBP and Ubaldo as "statutory co-employees."
(Emphasis added.) This phrase was of Rodriguez' making, and
then attributed to LBP and the circuit court by the current
majority of this Court in its unpublished order remanding this
case for reconsideration, as well as in its instant opinion.
The circuit court actually found in its initial ruling that
"[Ubaldo] was a statutory co-employee of LBP." (Emphasis
added.) This finding no doubt derived from LBP's use of this
phrase in the context of framing the issue as a question of
"whether [Ubaldo] was a statutory employee of LBP, as well as an
employee of EE Reed." LBP otherwise referred to Ubaldo as
"LBP's statutory co-employee." LBP also referred to itself as
Ubaldo's "co-employer" and his "statutory employer." Thus,
while LBP's phraseology may have been novel for workers'
compensation law, it did not reflect a misapprehension that LBP
and Ubaldo were somehow "statutory co-employees."

27
 On the facts of this case, LBP's uninsured status is

immaterial. Under the Act, both Reed, as Ulbaldo's immediate

employer, and LBP, as Ulbaldo's statutory employer, would have

been liable to Ulbaldo and his statutory beneficiaries for his

work-related accident. Upon Ulbaldo's death, the beneficiaries

would have been entitled to benefits under the Act from either

Reed or LBP, but not from both. David White Crane Service v.

Howell, 282 Va. 323, 329, 714 S.E.2d 572, 576 (2011). The

beneficiaries pursued their rights and remedies under the Act

and obtained a full recovery of workers' compensation benefits

from Reed. Therefore, as the beneficiaries have received the

"one full recovery" they were entitled to under the Act, id.

(citation and internal quotation marks omitted), they would be

barred from pursuing "other rights and remedies" against LBP

under the Act's exclusive remedy provision. Code § 65.2-307(A).

I would thus hold the trial court correctly rejected Rodriguez'

argument that, because LBP was uninsured, it waived its immunity

to suit in this common law action.

For these reasons, I would affirm the judgment of the

circuit court in sustaining LBP's plea in bar pursuant to the

Act's exclusive remedy provision. I therefore dissent to the

majority's conclusion that LBP was not Ubaldo's statutory

employer and its reversal of the trial court's judgment. I

concur, however, in the majority's rejection of Rodriguez'

28
jurisdictional argument based on Rule 1:1, as the majority

addresses in footnote 4 of its opinion.

29