Vega v. SD

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

ANTONIO VEGA, Petitioner,

v.

THE INDUSTRIAL COMMISSION OF ARIZONA,
Respondent,

SD CONTRACTING, LLC*, MCBRIDE CONSTRUCTION**,
Respondent Employers,

TRAVELERS**, Respondent Carrier,

SPECIAL FUND DIVISION/NO INSURANCE SECTION*,
Respondent Party in Interest.

No. 1 CA-IC 16-0072
FILED 11-16-2017

Special Action - Industrial Commission

ICA Claim No. 20150-060062
Carrier Claim No. 127-CB-EIU1897K**

J. Matthew Powell, Administrative Law Judge

AWARD AFFIRMED

COUNSEL

Snow, Carpio & Weekley, PLC, Phoenix
By Dennis R. Kurth
Counsel for Petitioner
Industrial Commission of Arizona, Phoenix
By Jason M. Porter
Counsel for Respondent

Lester, Norton & Brozina, PC, Phoenix
By Christopher S. Norton
Counsel for Respondent Employer SD Contracting, LLC

Lundmark, Barberich, La Mont & Slavin, PC, Phoenix
By R. Todd Lundmark
Counsel for Respondent Employer McBride Construction Company and
Respondent Carrier Travelers

Industrial Commission Special Fund Division/
No Insurance Section, Phoenix
By Scott J. Cooley
Counsel for Respondent Party in Interest

MEMORANDUM DECISION

Judge Margaret H. Downie (retired) delivered the decision of the Court, in
which Presiding Judge Michael J. Brown and Judge Jennifer B. Campbell
joined.

D O W N I E, Judge:

¶1 This is a special action review of an Industrial Commission
of Arizona (“ICA”) award and decision upon review for a
noncompensable claim. For the following reasons, we affirm the award.

FACTS AND PROCEDURAL HISTORY

¶2 On December 18, 2014, petitioner Antonio Vega was
working on a roof when he fell through a skylight and injured his back.
Vega filed a workers’ compensation claim, naming SD Contracting, LLC
(“SD”) as his employer. The Special Fund Division/No Insurance Section
(“Special Fund”) denied the claim, and Vega requested a hearing. On
motion of the Special Fund, McBride Construction Company (“McBride”)
and its insurance carrier were joined as respondents.

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¶3 An administrative law judge (“ALJ”) held a hearing and
received testimony from Vega, Siti Ng — co-owner of SD, Stephen
McBride — vice president of McBride, and Nathan McBride — former
project manager for McBride. The hearing evidence established that Ng
and Danny Gonzales formed SD in 2014.1 SD subcontracted only with
McBride and, according to Ng, had performed at least 20 jobs for McBride
before the date of Vega’s injury. At the time of Vega’s injury, SD was
working as McBride’s subcontractor at a condominium complex project.
Nathan McBride testified that the condominium project required four
types of subcontractors: demolition, air conditioning, plumbing, and
roofing. McBride selected SD based on its ability to perform both the
demolition and air conditioning work.

¶4 The master subcontractor agreement between SD and
McBride stated that SD was an independent contractor and would
“furnish all labor, materials, equipment, [and] services.” Gonzales signed
an “Exemption of Workers Compensation Coverage” on behalf of SD,
which stated, in pertinent part:

I am an independent contractor and I am doing business and
performing work as:

S.D. Contracting, LLC

I am not an employee of McBride Construction Co. Inc.

I and my employees shall not be entitled to workers’ compensation
coverage from McBride Construction/McBride Roofing and
Restoration. I understand that if I do have any
employees/subcontractors working for me, I must maintain
workers’ compensation coverage for them.

¶5 Vega testified that SD contacted him, offering demolition
work that paid $150 a day. Vega had worked for SD twice before on one
or two-day jobs. On those prior occasions, Gonzales met Vega at the job
site, told him what work to complete, and then left him to perform the
work. For the condominium roof job, Gonzales texted Vega the address, a
picture of the job site, and the start time. Gonzales also asked Vega to
bring another worker with him.

1 Repeated attempts to have Gonzales participate in the proceedings
— including by subpoena — were unsuccessful.

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¶6 Vega met Gonzales and another worker, Aldo, at the job site.
The workers spent the first two hours assembling scaffolding based on
instructions given by Gonzales and Nathan McBride. Gonzales then
showed Vega and Aldo the roof areas marked for demolition. Gonzales
left the job site, and Vega and Aldo removed shingles and stucco for six to
seven hours using their own tools. Vega testified they had just finished
the demolition work when he slipped and fell through a skylight,
sustaining a vertebral fracture. Vega believed he was SD’s employee, and
he expected to continue working for SD.

¶7 Nathan McBride testified he was at the job site before work
began on December 18 to inspect it, speak with the clients, and drop off
scaffolding McBride had rented for its subcontractors’ use. McBride also
rented a dumpster for the project. The demolition crew was responsible
for assembling the scaffolding, and Nathan watched them assemble the
first sections to ensure it was done correctly. Nathan also went onto the
roof with Gonzales to spray-paint areas where shingles and stucco were to
be removed. Although he expected demolition to take one or two days,
Nathan testified he did not tell the subcontractors when or how to do their
work, and he offered only “a rough time line” for the project. Nathan did
not know Vega and was not present when he was injured. He learned of
the injury from Gonzales. Nathan reported the injury to his superiors at
McBride and testified that his only other involvement was to visit the job
site the next day to ascertain what repairs were necessary.

¶8 After the parties filed post-hearing memoranda, the ALJ
entered an award finding Vega’s injury noncompensable because he was
an independent contractor. Vega timely requested review, but the ALJ
affirmed the award. Vega next brought this appeal. We have jurisdiction
pursuant to Arizona Revised Statutes (“A.R.S.”) sections 12-120.21(A)(2),
23-951(A), and Arizona Rule of Procedure for Special Actions 10.

DISCUSSION

¶9 We consider the evidence in the light most favorable to
upholding the award. Lovitch v. Indus. Comm’n, 202 Ariz. 102, 105, ¶ 16
(App. 2002). In reviewing ICA awards, we defer to the ALJ’s factual
findings. Young v. Indus. Comm’n, 204 Ariz. 267, 270, ¶ 14 (App. 2003).
However, we make an independent determination of whether a worker is
an employee or an independent contractor. Anton v. Indus. Comm’n, 141
Ariz. 566, 569 (App. 1984). That determination is governed in the first
instance by A.R.S. § 23-902, which provides, in pertinent part:

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...

B. When an employer procures work to be done for the
employer by a contractor over whose work the employer
retains supervision or control, and the work is a part or
process in the trade or business of the employer, then the
contractors and the contractor’s employees, and any
subcontractor and the subcontractor’s employees, are, within
the meaning of this section, employees of the original
employer. For the purposes of this subsection, “part or
process in the trade or business of the employer” means a
particular work activity that in the context of an ongoing
and integral business process is regular, ordinary or routine
in the operation of the business or is routinely done through
the business’ own employees.

C. A person engaged in work for a business, and who while
so engaged is independent of that business in the execution
of the work and not subject to the rule or control of the
business for which the work is done, but is engaged only in
the performance of a definite job or piece of work, and is
subordinate to that business only in effecting a result in
accordance with that business design, is an independent
contractor.

...

¶10 In determining whether a claimant is an employee, courts
consider the totality of the circumstances of the work and examine various
indicia of control, Reed v. Industrial Commission, 23 Ariz. App. 591, 593
(1975), including “the duration of the employment; the method of
payment; who furnishes necessary equipment; the right to hire and fire;
who bears responsibility for workmen’s compensation insurance; the
extent to which the employer may exercise control over the details of the
work, and whether the work was performed in the usual and regular
course of the employer’s business.” Home Ins. Co. v. Indus. Comm’n, 123
Ariz. 348, 350 (1979).

¶11 The ALJ applied the correct analytic framework. In
discussing the relevant factors, he found that removing shingles and
stucco “are usual and regular components” of SD’s business, but
nonetheless concluded Vega was an independent contractor based on

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other indicia of control that “tip[] the balance.” The other indicia included
the fact that SD hired and paid Vega on a job-by-job basis, with no
withholding or tax forms. Vega used his own tools for the work.
Gonzales met Vega at the job site, described the work to be done, and then
left him alone to complete it. Vega testified he did not need instructions
about how to perform the work. The ALJ’s finding that Vega “was left
alone to determine for himself the best method for effectuating the final
result” is supported by the record.

¶12 Contrary to Vega’s suggestion, Anton does not compel a
finding that he was SD’s employee. In Anton, a pulpwood contractor
engaged woodcutters to cut firewood according to specifications
imposed by the company to which the contractor sold the wood. 141
Ariz. at 568. The woodcutters set their own hours and used their own
equipment. Id. at 570. The contractor did not withhold taxes. Id.
Because of their skills and competence, the woodcutters required little
supervision. Id. In concluding that the woodcutters were employees of
the contractor, this Court noted that rather than contracting for
“performance of a definite job or piece of work,” the contractor had
“contracted out the very heart” of his enterprise, necessarily
demonstrating his right to control. Id. at 571, 574.

¶13 In this case, although removing shingles and stucco “are
usual and regular components” of SD’s business, as the ALJ found, those
activities are only a part of SD’s business. Evidence established that SD
also did drywall repairs, painting, roof repairs, carpentry, “texture,” and
block wall repairs. Moreover, the scope of SD’s work on the
condominium project was substantially broader than the demolition work
Vega performed. SD’s contract with McBride required SD to, among other
things: remove existing stucco, wire, and foam; haul debris; “[d]etach and
reset AC unit;” replace “ductwork transitions;” install new metal frames;
and “[i]nstall electrical disconnect boxes. . . . [and] new condensation
drain lines.” Unlike Anton, SD acted as more than a conduit for a finished
product achieved by Vega. See id. at 574 (Noting that the contractor
served “as little more than a conduit” of the woodcutters’ finished
product and that “supplying pulpwood . . . was not merely in the regular
course of [the contractor’s] business, it was [the contractor’s] business.”).
The evidence supports the conclusion that SD contracted with Vega for
“performance of a definite job or piece of work,” as opposed to
contracting out “the very heart” of its enterprise. Id.

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¶14 Finally, because the ALJ properly concluded that Vega was
not SD’s employee, McBride was not Vega’s statutory employer as a
matter of law. See A.R.S. § 23-902(B) (employer who procures work to be
done by a contractor over whose work the employer retains supervision
or control is the statutory employer of employees of the contractor and
subcontractors under certain circumstances).

CONCLUSION

¶15 For the foregoing reasons, we affirm the award.

AMY M. WOOD • Clerk of the Court
FILED: AA

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