Opinion
117706/04.
Decided December 14, 2007.
This case has a complex history involving both litigation in the Bronx and appeals to the Appellate Division First Department. However, it is not necessary to review that history in order to determine the issue presented in this bench trial. Was Jose Guzman (Guzman) employed by Mike's Pipe Yard and Building Supply Corp. (Mike's) or Gunner Group Inc. (Gunner)? If Gunner employed Guzman, the Court must determine if Mike's was Guzman's "special employer," thereby limiting Guzman's remedies to benefits previously received or currently received through Gunner's Workers' Compensation coverage.
FACTS
It is undisputed that on June 12, 2003, Jose Guzman (Guzman) was injured while working as a laborer at 2816 Boston Road, Bronx, New York. The question is, for whom did he work? Both Mike's and Gunner are located at the single Bronx address, with Gunner paying rent to Mike's, but maintaining separate offices and telephones. They are two distinct New York corporations with the same principal, Milton Rainford (Rainford). Mike's sells plumbing supplies. Gunner does construction and demolition. They carry separate insurance policies, but, indicating that Mike's has no employees, only Gunner was in compliance with the Worker's Compensation Law and in good standing with workers' compensation insurance carriers. At times, Quan Smith (Smith) would direct Guzman to do clean up and other chores at Mike's. But Guzman was also sent by Gunner to work at other sites on an ad hoc basis, with Gunner paying Guzman cash on a daily basis. Quarterly tax returns filed by Gunner identify Gunner as the employer, but they do not reflect Guzman as an employee, though it is agreed that he worked for at least one of the entities. Nor did Guzman ever receive from either corporations a W-2 or 1099 form in conformity with the United States Internal Revenue Code and New York State and City tax laws, severely testing Rainford's credibility. Moreover, for reasons not explained, subpoenaed payroll records for the week of the accident are handwritten while there is a computerized format for other weeks all leading a reasonable finder of facts to question the authenticity of those records. The contradictory testimony as to the provision of tools and safety gear is reduced to Guzman carrying his own tools, and being provided gloves and garbage receptacles when he cleaned the yard at 2816 Boston Road.
FINDINGS
Guzman's testimony and knowledge of the facts are essentially that he was paid by Gunner and that he was injured.
The veracity of Rainford, an interested witness as the owner of both businesses, is compromised by his lapses of compliance with state and federal requirements as relates to insurance and taxes. Furthermore, while Rainford testified that he works at this establishment seven days a week, his familiarity with certain basic, relevant aspects of these small businesses was less than satisfying or convincing, suggesting to the Court that what he did not know at trial, he did not know by choice.
Rainford's wife and bookkeeper are in charge of the Gunner payroll. Though available to Mike's, neither was called as a witness, and they are therefore deemed missing witnesses. Since no explanation was offered for their absence, the Court draws the inference that their testimony would not have supported Mike's position in this action. The payroll records are suspect because inter alia there is no explanation for the gap in the relevant week, nor any explanation as to why that week's entries are handwritten as opposed to the others being in computerized business format, leading the Court to find them unworthy of belief and leading to the imposition of the doctrine of Falsus in Uno.
The Court finds the payroll records and Rainford's testimony to be untrustworthy and unreliable and entitled to considerably diminished weight.
Smith would normally be considered an interested witness. However, he now lives in Georgia, and nothing was elicited that would tend to show that he has an ongoing interest in either Gunner or Mike's or the outcome of this litigation. While Smith is a diligent and competent individual, he was impeached with his own prior affidavit in which he stated that it was Gunner who employed Guzman and that work was being done by Gunner for Mike's, obviously the central issue in the case. The affidavit contradicted his trial testimony, a serious detriment to Mike's already fragile ability to meet its burden of proof. The affidavit is more logical and believable than the trial testimony, because, in fact, Gunner paid both Guzman and Smith, and Mike's presents no indicia of being an employer.
LAW
Special Employment
At the time of trial, the issue of special employment was raised. That is, it was argued, that even if Workers' Compensation insurance was provided by Gunner, and Gunner did employ Guzman, Guzman was performing work for Mike's in the nature of "special employment." The fallacy in that argument, however, is that Guzman's general employer is Gunner, and the only way special employment (other than the de minimus act of Mike's providing gloves and garbage receptacles on the date of the accident [TR at 52, 66, 126]) could conceivably be established is through Smith, if and only if it had been established that Smith was employed by Mike's. But this was not established, and on this central point, Smith's testimony and credibility were impeached by his prior sworn statement.
General employment is always presumed to continue absent clear demonstration of surrender of control by the general employer to a special employer ( see Thompson v Grumman Aerospace Corporation, 78 NY2d 553). That has not been shown here. In this case, there is nothing to show that Mike's, rather than Gunner, had control or supervision over Guzman. Clearly, this was not accomplished through Smith, because it has not been demonstrated that Smith worked for Mike's. In fact, the evidence is that Smith worked for Gunner.
Whether Guzman was employed by Mike's in any capacity, is a factual matter ( Id.). While it is true that, "employees who are employed and paid by one person may nevertheless be employees of another with respect to a particular transaction even where the general employer is interested in the work" ( Brooks v Chemical Lines, 71 AD2d 405 [1st Dept 1979]), the determination rests upon the particular facts of the case ( Thompson v Grumman Aerospace Corporation, supra). Unlike the instant case, special employee cases may involve agencies or contractors as employers who assign participants to special employers for a particular duration of time. Thus, a temporary worker who was assigned on a daily, full-time basis, to work for the same department of a company, was a special employee of the company ( see Lane v Fisher Park Lane Co., 276 AD2d 136 [1st Dept 2000]). But Guzman was never assigned to Mike's on a daily or regular basis.
Moreover, in determining the issue, the Court must bear in mind that "the individual principals in this business enterprise, for their own business and legal advantage, elected to operate that enterprise through separate corporate entities. The structure they created should not lightly be ignored at their behest, in order to shield one of the entities they created from . . . common-law tort liability" ( Richardson v Benoit's Electric, Inc., 254 AD2d 798 [4th Dept 1998] [internal citations omitted]).
In this case, there was no surrender of control by the general employer to a special employer because, as noted above, it has not been established that Smith worked for Mike's when Guzman was injured. Therefore, Mike's fails to meet its burden that Smith supervised Guzman on behalf of Mike's, and that Mike's therefore was a special employer of Guzman. Although Smith testified he was an employee of Mike's and was the manager of Mike's (TR 25, 38), he also admitted that he actually worked for Gunner (TR 38, 42), and was paid by Gunner. His trial testimony was clearly and persuasively impeached by his affidavit in which he stated that Guzman worked for Gunner and that the work at issue was done by Gunner for Mike's (TR 39-41). Despite Rainford's shaky testimony that Mike's has employees, the evidence establishes that Mike's has never paid anyone (TR 77-78), never provided benefits to anyone, and failed to comply with any local, state or federal laws of employment. Gunner alone made payments to employees and an important indicia of employment is exchanging payment for services ( Pietras v. Board of Fire Commissioners of Farming, 180 F. 3d 468, at 473 [2nd Cir. 1999] ["we have stated that the question of whether someone is or is not an employee under Title VII usually turns on whether he or she has received direct or indirect remuneration from the alleged employer"] [internal quotations omitted]). Thus, other than Smith's testimony, which was impeached, there is only Rainford's self-serving, untrustworthy statement that Smith worked for Mike's. Moreover, as noted, any documentation demonstrating that Mike's had any employees is utterly lacking (TR 94-95). All the evidence establishes that it is Gunner that has employees and pays wages (TR 93). Thus, Plaintiff failed to show that Mike's had employees, and that Smith, specifically, was working for Mike's when the accident occurred. As Mike's failed to establish that it supervised and controlled Guzman through Smith, its theory of special employment cannot be sustained.
The cases relied upon by Plaintiff are all readily distinguishable from this case. For example, in Pisicchio v. Salem Transportation Co., Inc. ( 159 AD2d 701 [2nd Dept 1990]), the employee worked for and was paid by both relevant companies on a dual employment basis having no applicability here. Paul Levine v. Lee's Pontiac ( 203 AD2d 259 [2nd Dept 1994]), is similar to Pisicchio in that the plaintiff was both an employee of one entity (Lee's Toyota), and also assistant manager of another (Lee's Pontiac). Kudelski v. 450 Lexington Venture ( 198 AD2d 157 [1st Dept 1993]) is distinguishable because it involves an alter ego/joint venture and it was undisputed that Big Apple supervised (but did not employ) the plaintiff.
In Ayala, Jr. v. Mutual Housing Assoc., Inc., ( 33 AD3d 343 [1st Dept 2006]), a general employer relinquished control of worker to special employer whose managing agent clearly supervised the plaintiff. However, in the instant case Guzman was supervised by Quan Smith. But again, Mike's has not shown that Smith worked for Mike's. Unlike this case, in Villanueva v. Southeast Grand Street Guild Housing Development Fund, et al, ( 37 AD3d 155 [1st Dept 2007]), the general employer was the building, but the plaintiff was directly supervised by the building's superintendent and manager, who, under the management agreement, were considered employees of the special employer. Similarly, the evidence in Jose Ramirez v. Mark T. Miller ( 41 AD3d 298 [1st 2007]), totally unlike the instant case, established that the building management was a special employer, who was responsible for interviewing, hiring/firing, disciplining, arranging work schedules, monitoring job performance, computing wages, paying and withholding taxes, and providing uniforms/supplies, and thus, "controlled the daily operation of the building and the manner and details of plaintiff's work."
CONCLUSION
It must be established by a preponderance of the credible evidence that the position asserted on behalf of Mike's more nearly represents the facts, than that opposed to it. That is, it must be established to that standard that Guzman was Mike's general or special employee. However, based on lack of credibility, missing documents, interested and missing witnesses, and Guzman's extremely tenuous assignments for, and connection to Mike's, the Court must conclude that Mike's has not met its burden of proof that it had an employer-employee relationship with Guzman, whether general or special.
ACCORDINGLY, this Court concludes that Guzman was not employed by Mike's Pipe Yard either as a general or special employee.
Settle order.
This constitutes the Trial Decision of the Court.