Opinion
No. CV 01 0094707 S
April 17, 2003
MEMORANDUM OF DECISION
The plaintiff in the instant action is Nationwide Mutual Insurance Company (hereinafter "Nationwide"). The defendants are James Allen, d.b.a. Allen Landscaping (hereinafter "Allen") and William Shaw (hereinafter "Shaw").
A trial of this matter took place on January 7, 2002. The Court received the plaintiff's Trial Brief on January 7, 2003. The Court granted the parties permission to file Post-Trial Briefs. This Court received the defendant Shaw's and Allen's Post-Trial Briefs on January 30, 2003, and the plaintiff's Post-Trial Brief on February 20, 2003.
The plaintiff Nationwide issued an insurance policy to the defendant Allen. Said policy contained commercial general liability coverage. Said policy also excludes coverage for bodily injury to an employee of the insured arising out of and in the course of employment by the insured or performing duties related to the conduct of the insured's business.
The defendant Shaw is seeking to have the plaintiff Nationwide to provide a defense and to pay any damages awarded to the plaintiff Shaw in the underlying tort action pursuant to the aforementioned insurance policy. The plaintiff Nationwide is currently defending the underlying tort action under a reservation of rights. Nationwide alleges that Shaw, at the time of his injuries was working as an employee of Allen or in the course of performing duties related to the conduct of Allen's business. Nationwide further asserts that the injuries claimed by Shaw are excluded from coverage under the employer's liability exclusion of the subject insurance policy.
Facts
The Court finds the following facts to be proven by a fair preponderance of the evidence.
The Plaintiff provided insurance coverage to the defendant Allen for a policy period of June 1, 1998 to June 1, 1999.
The defendant James Allen is a sole proprietor of a business known as Allen Landscaping. Said business provides landscaping services to customers for a fee.
The defendant William Shaw is an individual who performed landscaping. In exchange for said work the defendant Allen would pay him.
The defendant Shaw brought a lawsuit sounding in tort action against the defendant Allen in the Superior Court for the Judicial District of Middlesex, at Middletown. Said lawsuit bears the docket number CV 99 0090717 S.
The defendant Shaw was injured while operating a commercial riding mower that was purchased by James Allen dba Allen Landscaping. On June 16, 1999, Shaw filed a claim for workers' compensation benefits in the Eighth District against Allen for his injuries. The Notice of Claim provides in pertinent part that:
. . . [N]otice is hereby given that the undersigned, who while in the employ of Allen Landscaping, Rockfall, CT, on May 25, 1999 sustained injuries arising out of and in the course of his employment as follows . . .
While on a landscaping job, claimant was operating a lawn mower, the front end of which came of the ground and caught his pant leg, causing the mower to fall on top of him. Claimant's left pinkie finger was severed as was the tip of his left ring finger, and his left wrist was broken. He also sustained injuries to his groin and his left knee.
(Emphasis added.)
Neil Johnson, Esq. signed the Notice of Claim, as the attorney of Mr. Shaw, however the defendant Shaw authorized attorney Johnson to file the Claim. Furthermore Shaw agrees with the description in the Workers' Compensation Claim that the accident occurred in the course of his employment with Allen Landscaping.
See page 25 of transcript of the deposition of William Shaw, November 30, 2001.
See page 26 of transcript of the deposition of William Shaw.
There are no written contracts of any kind between the defendant Allen and the defendant Shaw.
Although Allen disputes it, the credible and convincing evidence proves that Shaw worked steadily for Allen during the spring, summer and fall from early May 1997, until May 25, 1999, the time of the accident. Despite the fact that he did not work for Allen during the winter months, Shaw believes that his work for Allen was not temporary in nature.
See pages 6 and 7 of transcript of the deposition of William Shaw.
See page 28 of transcript of the deposition of William Shaw.
Allen drove Shaw to all of the job sites where Allen was performing landscaping services.
Shaw worked an averaged fifty (50) hours per week. Allen provided all landscaping tools and equipment used by Shaw at the work site. All of the work sites were chosen exclusively by the defendant Allen. Shaw never interacted with the owners of the properties nor did he ever speak to any of them. None of the property owners paid the defendant Shaw. All monies paid for the landscaping services were paid to the defendant Allen. All money that Shaw received as a result of his work came directly from Allen.
The defendant Allen paid Shaw at the hourly rate of ten dollars ($10.00) per hour. Despite this fact he did not give Shaw W-2s, 1099s or any other tax forms to report the financial transactions between the defendants.
Shaw was never at any of the jobs that he did for Allen without Allen or someone else from Allen's business being present. Before work would start at the site, the defendants would discuss what had to be done at each job site before the job was begun.
See page 35, of the transcript of William Shaw.
Declaratory Judgment and the Standard of Review
The plaintiff in the instant action is seeking a declaratory judgment concerning the applicability of an exclusion clause in an insurance policy. "The purpose of a declaratory judgment action . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties." Mannweiler v. LaFlamme, 232 Conn. 27, 33 (1995). Declaratory judgment provides an appropriate procedural:
". . . vehicle to test the rights and liabilities under an insurance policy." Bonito v. Cambridge Mutual Fire Ins. Co., 2000 Conn.Super. LEXIS 158 (quoting) St. Paul Fire Marine Ins. Co. v. Shernow, 22 Conn. App. 377, 380 (1990). "It is the function of the court to construe the provisions of the contract of insurance . . . The interpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy . . . The policy words must be accorded their natural and ordinary meaning . . . [and] any ambiguity in the terms of an insurance policy must be construed in favor of the insured . . . A necessary predicate to this rule of construction, however, is a determination that the terms of the insurance policy are indeed ambiguous . . . The fact that the parties advocate different meanings . . . does not necessitate a conclusion that the language is ambiguous."
Springdale Donuts, Inc. v. Aetna Casualty Surety Co. of Illinois, 247 Conn. 801, 805-06 (1999).
The policy provisions of the "COMMERCIAL GENERAL LIABILITY COVERAGE FORM" between Nationwide and Allen provides as follows:
SECTION 1 — COVERAGES
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring agreement
We will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies . ..
(Plaintiff Exhibit 1, Commercial General Liability Coverage Form at page 1.)
Section 2 of the aforementioned Commercial General Liability Coverage Form concerns policy exclusions. This section provides in pertinent part that:
This insurance does not apply to:
d. Workers' Compensation and Similar Laws
Any obligation of the insured under workers' compensation, disability benefits or unemployment compensation law or any similar law
e. Employer's Liability
"Bodily injury" to
(1) An "employee" of the insured arising out of and in the course of:
(a) Employment by the insured, or
(b) Performing duties related to the conduct of the insured's business . . .
This exclusion applies:
(1) Whether the insured may be liable as an employer or in any other capacity; and
(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.
(Plaintiff's Exhibit 1, Commercial General Liability Coverage Form at page 2.)
Section V of the Commercial General Liability Coverage Form provides definitions for various words and terms of the policy. This section provides in pertinent part that:
"Employee" includes a "leased worker." "Employee" does not include a "temporary worker."
(Plaintiff Exhibit 1, Commercial General Liability Coverage Form at page 10.)
Subsection V9 defines "Leased worker" as:
"Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker."
(Plaintiff Exhibit 1, Commercial General Liability Coverage Form at page 11.)
Subsection V17 defines "Temporary worker" as:
"Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions.
(Plaintiff Exhibit 1, Commercial General Liability Coverage Form at page 13.)
The parties in the instant action disagree as to the meaning of the aforementioned language of the subject insurance policy.
Our analysis of the language of the insurance contract is governed by the well established principle of insurance law that "policy language will be construed as laymen would understand it and not according to the interpretation of sophisticated underwriters, and that ambiguities in contract documents are resolved against the party responsible for its drafting; the policyholder's expectations should be protected as long as they are objectively reasonable from the layman's point of view . . . The premise behind the rule is simple. The party who actually does the writing of an instrument will presumably be guided by his own interests and goals in the transaction. He may choose shadings of expression, words more specific or more imprecise, according to the dictates of these interests . . . A further, related rationale for the rule is that [s]ince one who speaks or writes, can by exactness of expression more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity are resolved in favor of the latter." (Internal quotation marks omitted.) Hansen v. Ohio Casualty Ins. Co., supra, 239 Conn. 544. This canon, commonly styled contra proferentem, is more rigorously applied in the context of insurance contracts than in other contracts. Id., 545.
Israel v. State Farm Mutual Automobile Ins. Co., 259 Conn. 503, 508 (2002).
The plaintiff Nationwide asserts that the defendant Shaw was an employee of the defendant Allen at the time of the subject accident. The defendant Allen asserts that the defendant Shaw was not an employee, but an independent contractor.
The ultimate test of an employee-employer relationship is "the right of general control of the means and methods used by the person whose status is involved." Hanson v. Transportation General, Inc., 245 Conn. 613, 617 (1998). This "right to control" test asks whether the employer has the right to control the means and methods used by the worker in the performance of his job. Id. "An employer-employee relationship does not depend upon the actual exercise of the right to control. The right to control is sufficient." Latimer v. Administrator, 216 Conn. 237, 248 (1990). "The decisive test is who has the right to direct what shall be done and when and how it shall be done?" Id.
In the instant case, Allen lined up the jobs, made the daily schedule, determined the starting time, assigned the jobs, transported Shaw to and from the work-sites, and ensured that the jobs were completed by the end of the day. Although Shaw performed low maintenance tasks, including but not limited to lawn mowing, trimming, and tree planting, Allen retained the right to supervise the general results of Shaw's work, and the right to see that the lawns were mowed by the end of the day. Thus, Allen exercised control over Shaw's work situation.
Convincing evidence was presented at trial that indicates that Shaw held the status of an employee. For example Allen retained the right to discharge Shaw whenever he wanted to do so. "The retention of the right to discharge . . . is a strong indication that his relationship with the [worker] was one of employment." Latimer, Supra at 249. Both of the defendants testified at their respective depositions that the defendant Allen had the right to terminate the defendant Shaw's services. (Shaw deposition at p. 12, Allen deposition at p. 31.) The right to terminate an employment relationship is not consistent with the concept of an independent contract. See Milam v. Collette et al., 1997 WL 12235, Milam v. Collette, No. 536396 (Jan. 3, 1997, Hurley J.T.R.).
"Moreover, payment of a worker at an hourly rate, . . . is persuasive evidence that the status of the worker is that of an employee rather than that of an independent contractor." Latimer, Supra at 249. In Latimer the Court reasoned that employees, "unlike independent contractors, were not in a position to realized profit or suffer a loss based on the service that they provided." Id. In this case, it is undisputed that Allen paid Shaw ten dollars ($10.00) per hour for the work he performed.
Additionally Shaw did not have his own tools or equipment to perform his job functions. The fact that as a worker he did not make any significant investments in the material or tools necessary to perform his job adds additional weight to the position that he was not an independent contractor. Latimer, id.
During the trial credible evidence was presented that there were times when Shaw was not within the physical presence or being physically observed by Allen, however "[a]n employer does not need to look over his worker's shoulders every day in order to exercise control." Bonnette v. Calfornia Health and Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983). It is the "totality of factors" that must be examined. Hanson v. Transportation General, Inc., 245 Conn. 613, 625 (1998).
Based on the totality of factors in the instant action, this Court comes to the conclusion that Shaw was not an independent contractor, but an employee of the defendant Allen.
Although this Court finds that Shaw was not an employee of the defendant Allen, due to the fact that Section V of the Commercial General Liability Coverage Form specifically exempts for "temporary employees" from being included in the exclusion clause of the insurance contract, further analysis is required.
"Temporary worker" is defined in the policy as "a person furnished you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions." (Plaintiff Exhibit 1, Commercial General Liability Coverage Form, at p. 13.)
The language of this section is clear and unambiguous. A temporary worker is a person who "must be furnished" to the insured to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions. Allen did not go to a headhunter, employment agency manpower service provider or any similar service to employ and or to utilize Shaw's services. Shaw was not employed by anyone who lent or furnished him to Allen as an employee.
This Court has already discussed the doctrine of contra proferentem.
The doctrine of contra proferentem applies, however, only if we conclude that the language of the insurance policy is ambiguous. Thus, we must decide whether, reading the policy "from the perspective of a reasonable layperson in the position of the purchaser of the policy," the policy is ambiguous. Ceci v. National Indemnity Co., 225 Conn. 165, 168, 622 A.2d 545 (1993). In construing the document, we "look at the [policy] as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result." (Internal quotation marks omitted.) Hansen v. Ohio Casualty Ins. Co., supra, 239 Conn. 545-46.
Israel v. State Farm Mutual Automobile Ins. Co., supra at 508 (2002).
Whereas the subject language is unambiguous this Court will not apply the doctrine.
In light of the Court's findings and conclusions, it finds that the plaintiff Nationwide has met its burden of proof and grants its claims for relief. The Court grants the Request for a Declaratory Judgment and declares that pursuant to the terms of the subject insurance contract, Nationwide is not obligated to defend or indemnify Allen in the lawsuit brought against him by Shaw.
Richard A. Robinson, J.
April 17, 2003