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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Trudell v. Hibbert (2/17/2012) sp-6652
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
LAWRENCE TRUDELL, )
) Supreme Court No. S-13608
Appellant, )
) Superior Court No. 3KN-06-01053 CI
v. )
) O P I N I O N
JOHN BRENT HIBBERT, DEBRA )
HIBBERT, and AAA ALASKA ) No. 6652 - February 17, 2012
CAB, INC., )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Kenai, Charles T. Huguelet, Judge.
Appearances: Michael W. Flanigan, Walther & Flanigan,
Anchorage, for Appellant. Peter J. Maassen, Ingaldson,
Maassen & Fitzgerald, P.C., Anchorage, for Appellees.
Before: Carpeneti, Chief Justice, Fabe, Winfree, and
Stowers, Justices. [Christen, Justice, not participating.]
CARPENETI, Chief Justice.
STOWERS, Justice, dissenting in part.
I. INTRODUCTION
The employee of a contractor was injured while repairing a building; the
contractor did not have workers' compensation insurance. The employee filed suit for
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workers' compensation benefits against his employer and against the owners of the
building, alleging that the owners were "project owners" as defined in the Alaska
Workers' Compensation Act and thus liable for securing workers' compensation. The
employer then filed for bankruptcy. The owners denied liability on the basis that they
were not "project owners." After a bench trial solely about whether the building owners
were "project owners" or the injured worker's employers, the superior court decided that
they were neither and that they were not liable to pay worker's compensation to the
injured worker, and awarded attorney's fees against the employee. Because it was error
to interpret "project owners" as excluding the building owners, we reverse the superior
court's decision.
II. FACTS AND PROCEEDINGS
Lawrence Trudell was injured on June 13, 2006, when he fell while trying
to descend a ladder from the roof of a structure on which he was working. At the time
he was employed by Phillips Construction Co. (Phillips), a construction contracting
company principally owned by Clayton Phillips and Trish Dorman.1 Phillips did not
have workers' compensation insurance, even though it was licensed by the State of
Alaska.2 The structure Trudell was working on was owned by John Brent Hibbert
(Brent) and Debra Hibbert.
1 Dorman was Phillips's girlfriend and part owner of the company; she was
not a party to this action.
2 AS 08.18.101(a) requires a construction contractor to provide proof of
workers' compensation insurance when registering or renewing a contractor's license.
Phillips was licensed in 2006. If Phillips had no employees when it got its contractor's
license, it did not need to secure workers' compensation insurance, but whenever it had
employees, it was required to have workers' compensation insurance. AS 23.30.045(a),
.239(a).
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The Hibberts own and operate AAA Alaska Cab, Inc. (AAA Cab) in Kenai.
The company is incorporated, with Brent Hibbert acting as president and Debra Hibbert
acting as secretary-treasurer. Brent Hibbert is the sole shareholder. The Hibberts also
own several pieces of property in the Kenai area and have what the superior court
described as a "modest rental business." They own all of their real property as
individuals. The cab company leases its office and "shop" from the Hibberts.
The building from which Trudell fell serves as both the Hibberts' residence
and the cab company's business office.3 The office is in a converted "mud room"
measuring about 10 feet by 15 feet; it has some office equipment and a radio on which
the Hibberts can monitor and communicate with the cab drivers. The cab company takes
job applications in the office and has notices about drug testing there. Cab drivers come
to the office to deposit cash and exchange tokens or credit slips they receive as part of
some accounts for cab service. Across the street from the home office is a garage or
"shop" for the cab business.
The cab company and the Hibberts signed a lease agreement dated
January 1, 2006. The lease agreement did not separate rent paid for the office from rent
for the shop; it provided that the cab company "lease[d] the shop (1380 Nighthawk Ln)
and office (1385 Nighthawk Ln) space" and required the cab company to pay utilities
and taxes. It also required that any "damage to the building and supplies" be "fixed or
repaired by tenant." The lease did not have a fixed rent. The trial court found that the
"rental amount . . . is apparently the amount of the home mortgage and utilities." The
trial court "could not . . . determine[]" if the cab company "absorbed all home utilities."
3 The office address was the address on the workers' compensation insurance
the Hibberts got after Trudell's injury.
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In May 2006 the Hibberts contracted with Phillips to repair the office-
residence. The repair work initially consisted of re-siding the building, repairing the
foundation under the cab office space, and installing soffit and fascia. The contract was
later expanded to include roof repair on the office-residence and installation of eaves on
the shop. The Hibberts paid cash for the job and got a discount for doing so. There was
a dispute at trial as to who initiated the cash payment discussion.
Trudell worked on the repairs, tearing off the old siding, soffit, and fascia.
He also helped install an entryway door for the office and worked on the foundation
underneath the office. On June 13, 2006, he fell when he stepped onto a ladder
belonging to Phillips; the ladder began to collapse and then fell with Trudell on it. At
the time of the accident, Trudell was working on the roof of the office-residence
installing an ice and water shield. Trudell fell about 25 feet to the ground and sustained
serious injuries: He broke his back, became paralyzed from the waist down, lost most
of his hearing, suffers extreme vertigo, and must use a catheter. He spent several months
in the hospital. Phillips apparently did not file a report of injury with the Alaska
Workers' Compensation Board (the Board) as required by AS 23.30.070.
Trudell sued Clayton Phillips d/b/a Phillips and the Hibberts d/b/a AAA
Cab in November 2006.4 He also filed a lien on the Hibberts' property to secure
payment of workers' compensation. He sought to foreclose on the lien he had filed,
claiming that the Hibberts were responsible for payment of workers' compensation
because they were "project owners" as defined in AS 23.30.045 and thus liable for
securing workers' compensation. Phillips filed for bankruptcy in February 2007, and the
4 AAA Cab was not separately served with a summons, but in March 2007
an attorney entered an appearance on its behalf. The cab company did not participate
actively in the litigation.
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case against him was stayed on March 20, 2007. A discharge was entered in the
bankruptcy case on May 29, 2007.
The Hibberts filed their answer and simultaneously moved for summary
judgment, arguing that AS 23.30.045 should be construed so that they did not fall within
the definition of "project owner." Superior Court Judge Anna Moran denied the
Hibberts' summary judgment motion on July 8, 2008. Relying on legislative history,
Judge Moran decided that "[t]he term 'project owners' was intended to include all
business entities, including investment groups, limited liability companies (LLCs), and
other groups with no regular employees." She thought that Trudell's proposed
interpretation of "project owner" was consistent with the statute and decided that there
was "a question of fact as to whether [the Hibberts] were hiring [Trudell] to perform
repairs and renovations while engaged in the course of their cab business."
After receiving additional discovery, Trudell filed an amended complaint,
alleging in the alternative that he was the Hibberts' employee when the accident
happened because, in addition to their cab company, the Hibberts also ran a property
rental business. The Hibberts denied the new allegations.
The parties stipulated that the trial would be solely on the issue of the
Hibberts' status as project owners or employers, and, if Trudell were successful, the case
would then go before the Board for a determination of workers' compensation benefits.
Based on Benson v. City of Nenana,5 the superior court ordered a bench trial.
5 725 P.2d 490, 492 (Alaska 1986) (holding that worker injured while
working on city project not entitled to jury trial on issue of whether he was a city
employee or independent contractor under workers' compensation act).
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The case went to trial in November 2008 before Superior Court Judge
Charles T. Huguelet.6 Trudell and the Hibberts were the only witnesses. The court also
visited the cab company's office. Trudell testified about his relationship with Phillips,
stating that he began working for Phillips sometime in November 2005. The following
month another worker fell and broke his leg and ankle. Phillips did not have workers'
compensation insurance at the time. Phillips did not pay Trudell regularly, and Trudell
was living off his savings part of the time he worked for Phillips. Trudell estimated that
Phillips owed him about $30,000 in wages and said that Phillips paid him about $2,000
from the money the Hibberts paid Phillips. Phillips "hinted" to Trudell that he would
make Trudell a business partner at some point but never did. Trudell said that he never
made an investment in Phillips and considered himself Phillips's employee even though
Phillips was not paying him regularly.
In early 2006 Phillips drew up paperwork to have Trudell become an
independent contractor, but the papers were never filed. According to Trudell, Phillips
told him that Phillips would get workers' compensation coverage. Phillips secured some
type of insurance that paid a small part of Trudell's hospitalization after the accident.
At least two other people besides Trudell and Phillips worked for Phillips on the
Hibberts' job.
Trudell also testified about the contract between Phillips and the Hibberts.
He indicated that the Hibberts agreed to pay cash in exchange for a discount on the job
and gave Phillips more than $10,000 in cash in one payment.7 Trudell described the
6 The case was assigned to Judge Huguelet sometime after the denial of
summary judgment.
7 In his deposition, Brent Hibbert testified that the cash for the repair work
came from his "savings" but that it was not withdrawn from any account. There was thus
(continued...)
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nature of the work performed for the Hibberts, which included redoing the foundation
underneath the office area in the house. Phillips also repaired the roof of the entire
structure, including installation of an ice and water shield. Trudell described the accident
and his resulting injuries.
Debra Hibbert testified about how she used the office space in the house.
She also testified about the couple's property rentals, indicating that even though they
owned and rented several pieces of property, they never bought property with the
intention of renting it out. She testified that the cab company carried workers'
compensation insurance when it had other office employees but did not carry workers'
compensation insurance to cover the Hibberts.8 The cab company did not have workers'
compensation coverage in 2006.
Debra Hibbert was also the bookkeeper for the cab company, and she
testified about its income and rent payments. She testified that the cab company had
gross receipts of $613,000 in 2006, with a net income of $138,212. The cab company
paid her and her husband together $84,856 in salaries in 2006. She agreed that the cab
company paid them $15,563 in rent in 2006 and that this amount of rent was "just a few
cents off" of the amount they paid for the home mortgage. She testified that when the
couple contracted with Phillips, they were doing so in their individual capacity and not
as the cab company. She also testified that the issue of workers' compensation insurance
was not discussed with Phillips before the accident.
7 (...continued)
apparently no way to trace the source of the money.
8 AS 23.30.240(a) permits the executive officers of a corporation to waive
workers' compensation coverage, subject to approval of the director of the division of
workers' compensation. Taxicab drivers with certain types of contracts are not covered
by workers' compensation. AS 23.30.230(a)(7).
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Brent Hibbert testified that he was the president of AAA Cab and described
his duties in the cab business. He testified that he occasionally did minor repair work on
the couple's rental units and had once or twice hired others to repair the buildings.
According to Brent Hibbert, the repair work done by Phillips was part of a series of
property improvements on the office-residence that began in 2005 and ended in 2007.
Brent Hibbert said that Phillips introduced Trudell as his partner. Brent Hibbert testified
that he had solicited other bids for the job but chose Phillips because the other bidders
could not do the necessary foundation work under the office. Both of the Hibberts
testified that Phillips offered them a discount on the construction job if they paid cash,
which they agreed to do.
In his decision Judge Huguelet found that the Hibberts were not project
owners or employers and therefore not liable for workers' compensation payments to
Trudell. Judge Huguelet "respectfully disagree[d]" with Judge Moran's construction of
AS 23.30.045, although he said that the differences in interpretation of the statute would
not affect the outcome of Trudell's case. Judge Huguelet wrote that "[p]roject owner
liability must be viewed in a manner that [was] consistent with the body of Alaska
workers' compensation law." Quoting Gaede v. Saunders,9 he wrote that "[t]he project
owner's business must be a 'profit-making enterprise which ought to bear the costs of
injuries incurred in the business' to fall within the [Alaska Workers' Compensation]
Act." He also said that "[a]nalysis of project owner liability should reflect principles
used to determine if there is an employer under the Act." He decided that what he called
the Larson test ("project owner liability requires finding that a business has contracted
out its usual work to others") was "reasonable and consistent with Alaska law." The
court found that the construction project was mainly a home improvement project and
9 53 P.3d 1126, 1127 (Alaska 2002).
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that "[a]ny effect on the Hibberts' taxicab or rental business was incidental - not a factor
in the decision to upgrade the home." Acknowledging that Trudell was "in a very
difficult position," the trial court decided that the Hibberts were "also blameless" and that
"holding them liable for [Trudell's] considerable injuries would be unjust and contrary
to workers' compensation law."
The Hibberts then moved for an award of Alaska Civil Rule 82 attorney's
fees as the prevailing party. Trudell opposed on the ground that under Alaska workers'
compensation law, costs and attorney's fees generally cannot be awarded against an
injured worker. The court awarded the Hibberts the Rule 82 attorney's fees they
requested, as well as costs, for a total judgment of $16,081.49. Trudell appeals.
III. STANDARD OF REVIEW
We interpret a statute using our independent judgment.10 We interpret a
statute "according to reason, practicality, and common sense, taking into account the
plain meaning and purpose of the law as well as the intent of the drafters."11 Our goal
in interpreting a statute is "to give effect to the legislature's intent, with due regard for
the meaning the statutory language conveys to others."12 "We may apply a legal doctrine
to undisputed facts without giving deference to the superior court."13
10 Nickels v. Napolilli, 29 P.3d 242, 246-47 (Alaska 2001) (citing Cook v.
Botelho, 921 P.2d 1126, 1129 (Alaska 1996)).
11 Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003) (quoting Native Vill.
of Elim v. State, 990 P.2d 1, 5 (Alaska 1999)).
12 Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783, 787 (Alaska 1996)
(quoting Tesoro Alaska Petroleum, Co. v. Kenai Pipe Line Co., 746 P.2d 896, 905
(Alaska 1987)).
13 Guttchen v. Gabriel, 49 P.3d 223, 225 (Alaska 2002) (citing Foss Alaska
Line, Inc. v. Northland Servs., Inc., 724 P.2d 523, 526 (Alaska 1986)).
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IV. DISCUSSION
A. The Usual Business Rule Does Not Limit Project Owner Status.
The central issue in this case is the interpretation of "project owner" in
AS 23.30.045(f)(2). The legislature amended the Alaska Workers' Compensation Act
in 2004, adding project owners to the entities potentially liable for workers'
compensation benefits and extending the exclusive liability provision of the act to them.14
In Schiel v. Union Oil Co. of California,15 we held that those amendments did not violate
an injured worker's equal protection or due process rights under the Alaska
Constitution.16 InAnderson v. Alyeska Pipeline Service Co.,17 we refused to construe the
phrase "project owner" according to common usage and held that Alyeska fell within the
definition of "project owner" in the statute.18 In this case we consider whether the phrase
"in the course of the person's business" in the statutory definition of "project owner"
limits project owner liability to instances when a business contracts out its usual work
to others. We hold that it does not.
Alaska Statute 23.30.045 provides in pertinent part:
(a) An employer is liable for and shall secure the payment to
employees of the compensation payable under AS 23.30.041,
23.30.050, 23.30.095, 23.30.145, and 23.30.180 - 23.30.215.
If the employer is a subcontractor and fails to secure the
payment of compensation to its employees, the contractor is
liable for and shall secure the payment of the compensation
14 Ch. 80, §§ 1-3, SLA 2004.
15 219 P.3d 1025 (Alaska 2009).
16 Id. at 1037.
17 234 P.3d 1282 (Alaska 2010).
18 Id. at 1287-88.
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to employees of the subcontractor. If the employer is a
contractor and fails to secure the payment of compensation to
its employees or the employees of a subcontractor, the project
owner is liable for and shall secure the payment of the
compensation to employees of the contractor and employees
of a subcontractor, as applicable.
. . . .
(f) In this section,
(1) "contractor" means a person who undertakes by
contract performance of certain work for another but does not
include a vendor whose primary business is the sale or
leasing of tools, equipment, other goods, or property;
(2) "project owner" means a person who, in the course of
the person's business, engages the services of a contractor
and who enjoys the beneficial use of the work;
(3) "subcontractor" means a person to whom a contractor
sublets all or part of the initial undertaking.
Trudell argues that the plain meaning of the statute and the legislative
history show that the legislature intended to define "project owner" broadly to cover any
business that engages contractors for business purposes. Trudell notes that the
legislature only exempted two groups from coverage: homeowners and vendors that
primarily provide goods rather than services. He claims that this was a deliberate choice
because the legislature was concerned about uninsured employers and wanted to provide
an incentive to project owners to make sure the contractors they hired had workers'
compensation insurance.
The Hibberts contend that the trial court properly interpreted the statute as
limited to those situations in which an employer contracts out its own usual work to
another. They argue that "in the course of the person's business" limits the scope of
project owners to those situations in which a business contracts out "work that the
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business would ordinarily be expected to do itself." Like the appellant in Anderson ,19 the
Hibberts assert that broadly construing "project owner" would have "dire consequences,"
exposing many small businesses to potential liability for workers' compensation.
1. Statutory language and legislative history
In construing a statute, we look at the meaning of the words used and the
legislative history.20 We interpret a statute in light of its purpose.21 If a word in a statute
has more than one relevant meaning, we consider the context in which the word is used
and the legislature's purpose in enacting the statute.22 "Statements made by a bill's
sponsor during legislative deliberations are relevant evidence when the court is trying
to determine legislative intent."23
Alaska Statute 23.30.045(f)(2) defines "project owner" as "a person who,
in the course of the person's business, engages the services of a contractor and who
enjoys the beneficial use of the work." Unlike statutes in other states, the statutory
language does not use the word "usual" or "regular" to limit the business to which the
statute applies;24 it simply says "in the course of the person's business."25 The relevant
19 Id. at 1287-88.
20 Alaskans for a Common Language, Inc. v. Kritz , 170 P.3d 183, 192 (Alaska
2007) (citing State v. Alex, 646 P.2d 203, 208 n.4 (Alaska 1982)).
21 Beck v. State, Dep't of Transp. & Pub. Facilities, 837 P.2d 105, 117
(Alaska 1992) (citing Vail v. Coffman Eng'rs, Inc., 778 P.2d 211 (Alaska 1989)).
22 See Alaskans for Efficient Gov't, Inc. v. Knowles, 91 P.3d 273, 276 (Alaska
2004) (citing State, 646 P.2d at 208).
23 Beck, 837 P.2d at 117 (citingMadison v. Alaska Dep't of Fish & Game, 696
P.2d 168, 176 (Alaska 1985)).
24 Cf. MO.ANN . STAT. § 287.040(1) (West 2005) (classifying as an employer
(continued...)
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dictionary definitions of "course" could support either party's interpretation of the
statute. One definition is "[m]ovement in time: DURATION" while another is "[a] typical
or normal manner of proceeding: regular development."26 Because the statute is
ambiguous, we look to the purpose of the project owner amendment and its legislative
history to discern the scope of coverage.27
The legislative history contains some discussion of the meaning of "project
owner." As initially introduced, Senate Bill 323 did not change the definition of
"contractor" in AS 23.30.045 and defined "project owner" as "a person who, in the
course of the person's business engages the services of a contractor for the performance
of certain work and who enjoys the beneficial use of the work."28 The bill was amended
in the Senate Judiciary Committee to change the definitions of both "project owner" and
"contractor."29 Senator Ralph Seekins, the bill's sponsor, said that the amendment was
made to "clarif[y] who is a contractor and who is a project owner."30 According to
24 (...continued)
"[a]ny person who has work done under contract on or about his premises which is an
operation of the usual business which he there carries on"); 77 PA . CONS. STAT. ANN . §
52 (West 2002) (imposing compensation liability when owner permits entry on his
premises for work that is part of employer's regular business).
25 AS 23.30.045(f)(2).
26 WEBSTER 'S II NEW COLLEGE DICTIONARY 266 (3d ed. 2005).
27 Alyeska Pipeline Serv. Co. v. DeShong , 77 P.3d 1227, 1234 (Alaska 2003).
28 Senate Bill (S.B.) 323, 23d Leg., 2d Sess. (2004).
29 Committee Substitute for Senate Bill (C.S.S.B.) 323, 23d Leg., 2d Sess.
(2004).
30 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 19
(continued...)
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Pamela LaBolle, president of the Alaska Chamber of Commerce, the Chamber of
Commerce "suggested the amendments . . . for the purpose of clarification."31 The
amendment removed the phrase "for the performance of certain work" from the
definition of "project owner" and added to the definition of "contractor" the limitation
that a contractor "does not include a vendor whose primary business is the sale or leasing
of tools, equipment, other goods, or property."32
There was no further discussion of the definition of "project owner" at that
time, but Senator Scott Ogan asked how the bill "affect[ed] a homeowner building his
own house who has a sub-contractor do a few things."33 Jack Miller, attorney for the
Chamber of Commerce, answered that "it exclude[d] anyone who is a project owner who
[was] not engaged in business."34 In a later hearing, Miller said "that a residential
homeowner, not as a business, who hires an individual to do renovations in his or her
30 (...continued)
(Apr. 2, 2004) (statement of Sen. Ralph Seekins).
31 Id. (statement of Pamela Labolle).
32 C.S.S.B. 323 (JUD).
33 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 19
(Apr. 2, 2004) (statement of Sen. Scott Ogan).
34 Id. (testimony of Jack Miller). Senator Seekins occasionally asked Miller
to answer questions about the legislation. Legislators appeared to rely on Miller's
testimony to understand the legislation, so we give Miller's testimony more weight in
interpreting the statute than we would an ordinary witness. Nelson v. Municipality of
Anchorage, ___P.3d___, Op. No. 6630 at 9, 2011 WL 6450910 at *4 (Alaska, Dec. 23,
2011) (giving testimony of Miller on this legislation "greater weight" than the average
witness).
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home retains no liability under the current law or this proposed legislation."35 According
to Senator Seekins, homeowners were excluded from liability as project owners because
"they shouldn't have to rise to the same level of professional responsibility as a project
owner."36 These comments demonstrate that the legislature thought the law would apply
to any business that hired contractors to remodel or renovate structures.
Nothing in the legislative history of the project owner amendments shows
that the legislature intended to limit its application to cases where the injured worker was
performing the usual business of the project owner.37 The overriding concern of the
legislature was to ensure that all workers were covered by workers' compensation and
that workers' compensation was the exclusive remedy available to injured workers. We
observed in Schiel v. Union Oil Co. of California38 that the legislative goals of the project
owner amendment included the following: "to ensure or expand workers' compensation
coverage for workers, to increase workplace safety, to prevent 'double dipping,' and to
provide protection from tort liability to those who [were] potentially liable for securing
workers' compensation coverage."39
35 Minutes, House Labor & Commerce Comm. Hearing on S.B. 323, 23d
Leg., 2d Sess. 18 (Apr. 27, 2004) (testimony of Jack Miller).
36 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 14 (Mar. 9, 2004) (statement of Sen. Ralph Seekins).
37 Neither does the legislative history show an intent to exclude those cases.
See Anderson v. Alyeska Pipeline Serv. Co., 234 P.3d 1282, 1289 (Alaska 2010) (noting
that legislative history contained examples of "the oil and gas industry's use of contract
labor").
38 219 P.3d 1025 (Alaska 2009).
39 Id. at 1032.
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Senator Seekins, the sponsor of S.B. 323, highlighted the broad scope of
coverage when he stated at an early hearing on the bill, "The intent here is to say that
everyone is covered and you have an exclusive remedy."40 In the sponsor statement, he
wrote that the legislation would extend the rights of injured workers and "allow[]
recourse for the payment of compensation benefits against project owners , as well as
against contractors and subcontractors."41 In response to concerns that the bill took away
rights from workers and gave them nothing in return, Senator Seekins indicated that the
legislation gave injured workers additional recourse because project owners would be
responsible for workers' compensation benefits if neither the contractor nor the
subcontractor had coverage.42 At a later hearing, Senator Seekins told Senator Hollis
French that workers benefitted from the legislation because a project owner would "have
to make sure that work[ers'] compensation exist[ed] because if [he did] not, the project
owner ha[d] to provide it."43 Senator Seekins discussed the problem of employers who
said that all of their employees were subcontractors, "the idea being that they don't want
to have to pay workers' compensation insurance" and said that S.B. 323 "absolutely
makes that impossible to happen."44 In an email to Senator Seekins, Jack Miller wrote
that S.B. 323 would
40 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 27-28 (Mar. 4, 2004) (statement of Sen. Ralph Seekins) (emphasis added).
41 S.B. 323 Sponsor Statement, Sen. Ralph Seekins (emphasis in original).
42 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 16 (Mar. 9, 2004) (statement of Sen. Ralph Seekins).
43 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 20
(Apr. 2, 2004) (statement of Sen. Ralph Seekins).
44 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 27 (Mar. 4, 2004) (statement of Sen. Ralph Seekins).
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have a positive impact for both workers and employers
because it will emphasize the importance of confirming that
all parties in the chain of contracting have the required
insurance in place. That, in turn, will force project owners to
use only qualified and fully insured contractors and
subcontractors on their projects. If they fail to do so and a
contractor or subcontractor does not have the required
insurance the claim would be covered under the project
owner's policy.[45]
Senator Seekins stated that the legislation "mean[t] that the project owner, before he can
hire that subcontractor or contractor has to make sure that those people are covered or
carry that coverage, themselves"46 and that "everyone [up] the chain must make sure that
every worker on the job is covered no matter who they work for."47
The legislature discussed whether the project owner amendments expanded
the requirement for businesses to purchase workers' compensation insurance. The
discussion showed that legislators understood that project owners would likely not need
to purchase additional workers' compensation insurance.48 But legislators noted that
project owners risked liability if they did not require contractors to provide proof of
45 Email from Jack Miller, Att'y, Alaska Chamber of Commerce, to Sen.
Ralph Seekins (Mar. 8, 2004, 16:56 AKST).
46 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 22 (Mar. 4, 2004) (statement of Sen. Ralph Seekins).
47 Id. at 21.
48 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 20
(Apr. 2, 2004) (statement of Sen. Hollis French); Minutes, Sen. Labor & Commerce
Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 16 (Mar. 9, 2004) (statements of Sen.
Ralph Seekins & Sen. Hollis French); Minutes, Sen. Labor & Commerce Comm. Hearing
on S.B. 323, 23d Leg., 2d Sess. 23 (Mar. 4, 2004) (statement of Sen. Con Bunde).
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workers' compensation coverage.49 According to Senator Seekins, project owners only
had to require proof of workers' compensation coverage "[t]hrough certificates of
insurance" from a contractor in order to protect themselves from liability.50 Senator Con
Bunde thought "that project owners should want to have some kind of workers'
compensation coverage as well, in the event someone was fraudulent in their
representation."51 At a later hearing, Senator Ogan said that the legislation would
"require due diligence on the part of a project owner" and noted that the bill might
"motivate contractors and subcontractors to 'skate' more because they will not be liable
in the end."52
The legislature understood that businesses that usually did not have
workers' compensation coverage would need to be sure their contractors had it or get it
themselves. According to Jack Miller,
this legislation [did not] require the procurement of a
workers' compensation policy when a group of people, say
an investment group, organize without any employees.
However, when a building contractor is hired a certificate of
insurance would need to be obtained in order to ensure that
49 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 11
(Apr. 16, 2004) (testimony of Jack Miller).
50 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 23 (Mar. 4, 2004) (statement of Sen. Ralph Seekins).
51 Id. at 25.
52 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 35
(Apr. 14, 2004) (statement of Sen. Scott Ogan). Senator Ogan expressed concern that
the State, as "the largest project owner in the state, could be liable for workers'
compensation if someone doesn't do their homework." Id. at 34. Mr. Miller explained
that AS 23.30.045 already permitted the State to withhold contractual payments to pay
for workers' compensation insurance if a contractor did not maintain its workers'
compensation coverage. Id. at 35.
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the contractor has a workers' compensation policy. . . . If the
contractor didn't have a workers' compensation policy, the
contractor still has the independent obligation to secure the
workers' compensation benefit payments to its injured
workers. If all of the aforementioned fails, the project owner
would have liability for the workers' compensation payments
and simultaneously couldn't be the subject of a tort
remedy. . . .[53]
Miller also said that "[i]n the event of bankruptcy and no workers' compensation policy
by the contractor, the remedy against the project owner would be for workers'
compensation benefits."54 In sum, the statutory language and legislative history support
Trudell's position that the legislature intended the project owner amendments to apply
broadly, to ensure both that workers received workers' compensation benefits and that
those who were potentially liable for those benefits would be protected against a lawsuit
in tort by the exclusive remedy provision of the act.
2. The usual business rule
In the course of trying to determine the proper interpretation of "project
owner," the superior court applied the Larson test - "project owner liability requires
finding that a business has contracted out its usual work to others" - because it was
"reasonable and consistent with Alaska law." The court determined that "[a] nexus
between the claimant's work and the project owner's business [or] product must be
proven in order to impose liability." Concluding that there was no connection between
Trudell's construction activities - which the court characterized as "a home
improvement project" - and the Hibberts' taxicab or property management businesses,
the superior court ruled against the plaintiff.
53 Minutes, House Labor & Commerce Comm. Hearing on S.B. 323, 23d
Leg., 2d Sess. 24-25 (Apr. 27, 2004) (statement of Jack Miller).
54 Id. at 25
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We disagree with the superior court's conclusion that the usual business
rule is relevant to determining the meaning of "project owner." The superior court, faced
with two theories of liability - project owner liability and employer liability - used
principles from the latter to decide the former. We declined to apply the usual business
rule in construing an earlier version of AS 23.30.045 in Thorsheim v. State.55 Thorsheim
involved a claim for death benefits on behalf of a widow whose husband was killed in
a plane crash while flying a Department of Fish and Game employee on a stream
survey.56 The decedent's employer, who did not have workers' compensation coverage,
had contracted with the State to provide flying services.57 Evidence in the record showed
that the Department of Fish and Game "maintained its own fleet of airplanes" but at
times "this fleet was inadequate to meet the total demands" of the department.58 As a
result, "a portion of [the] flying work had been contracted out to private carriers."59 At
that time "contractor" and "subcontractor" were not defined in AS 23.30.045.60 We
declined to follow cases from states where statutes defining coverage referred to work
that was "in the line of [the employer's] usual business"; instead, we adopted alternate
definitions of "contractor" and "subcontractor."61 We held that the Department of Fish
55 469 P.2d 383, 387-88 (Alaska 1970).
56 Id. at 384-85.
57 Id. at 385.
58 Id.
59 Id.
60 Id. at 387.
61 Id. at 387-89 (quoting Evans v. Hawkins, 150 S.E.2d 324, 326 (Ga. App.
1966)).
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and Game and the Department of Administration were not contractors but "acted as an
integral part of the State of Alaska" in contracting with Thorsheim's employer.62
Because the State was not a contractor, it was not a statutory employer, and Thorsheim's
widow was denied benefits.63
The legislature adopted the definitions of "contractor" and "subcontractor"
used in Thorsheim when it amended section .045 in 1972.64 Before passage of the
project owner amendment, a business owner did not come within the scope of the
statutory-employer definition unless the business owner was a contractor who
subcontracted part of the contract.65
The Larsons' treatise identifies two purposes of statutory-employer
legislation: (1) "to protect employees of irresponsible and uninsured subcontractors by
imposing ultimate liability on the presumably responsible principal contractor, which has
it within its power, in choosing subcontractors, to pass upon their responsibility and
insist upon appropriate compensation protection for their workers"66 and (2) "to forestall
62 Id. at 389.
63 Id. at 390.
64 See ch. 166, § 3, SLA 1972 (defining "contractor" as "a person who
undertakes by contract performance of certain work for another" and "subcontractor" as
"a person to whom a contractor sublets all or part of his initial undertaking"). At the
same time the legislature prohibited the State from entering into a contract with a
business unless the business provided proof of workers' compensation insurance and
made the State liable for workers' compensation benefits if the contractor did not in fact
have coverage. Id.
65 Everette v. Alyeska Pipeline Serv. Co., 614 P.2d 1341, 1346 (Alaska 1980)
(citing Thorsheim, 469 P.2d at 389-90).
66 4 ARTHUR LARSON & LEX K. LARSON, LARSON 'S WORKERS '
(continued...)
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evasion of the act by those who might be tempted to subdivide their regular operations
among subcontractors, thus escaping direct employment relations with the workers and
relegating them for compensation protection to small contractors who fail to carry . . .
compensation insurance."67 The usual business rule addresses the second purpose, but
the legislative history of the project owner amendment suggests that the legislature was
concerned more with the first purpose and wanted those who hired contractors to ensure
that the contractors and subcontractors had workers' compensation coverage or be liable
themselves.
We also note that application of the usual business rule in other states does
not always extend the workers' compensation exclusivity shield to owners.68 The
Hibberts assert that Idaho's definition of a statutory employer "plainly attempts to
capture the same concept as Alaska's 'project owner.' " Yet in applying its statutory-
employer statute, the Idaho Supreme Court permitted a negligence suit to go forward
against the owner of a construction site, even though the injured worker received
workers' compensation benefits from his direct employer, a subcontractor on the job.69
66 (...continued)
COMPENSATION LAW § 70.04 (2008) (footnotes omitted).
67 Id. at § 70.05 (footnotes omitted). Some state statutes reflect these
alternative bases for statutory-employer status. See, e.g., IDAHO CODE ANN . § 72-223(1)
(2006) (protecting from third-party liability (1) employers of contractors and
subcontractors who have complied with workers' compensation laws and (2) persons
who are "virtual proprietors or operators"). The Idaho Supreme Court labeled them
"category one" and "category two" statutory employers. See Pierce v. Sch. Dist. No. 21,
164 P.3d 817, 819 (Idaho 2007).
68 Robison v. Bateman-Hall, Inc., 76 P.3d 951, 956 (Idaho 2003); Zizza v.
Dresher Mech. Contractors, Inc., 518 A.2d 302, 305 (Pa. Super. 1986).
69 Robison, 76 P.3d at 952-53, 957.
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The Idaho court applied the usual business rule and decided that the usual business of the
owner, a retail store, did not include building construction or roof installation.70 The
legislative history of the Alaska project owner amendment mandates a different result:
The legislature clearly stated its intent to extend liability for workers' compensation and
protection from negligence suits up the contracting chain to business owners who
engaged general contractors on construction projects.71
The superior court also wrote that "[a]nalysis of project owner liability
should reflect principles used to determine if there is an employer under the Act.
Relative nature of the work analysis is also helpful." But we explicitly rejected using the
relative nature of the work test to establish a statutory-employer relationship in Everette
v.Alyeska Pipeline Service Co.72 There, we stated that the relative nature of the work test
was not "useful" to determine whether the injured worker was a statutory employee of
Alyeska during pipeline construction.73 Because the project owner amendment extends
statutory-employer liability up the contracting chain to owners, the relative nature of the
work test does not determine project-owner status.
70 Id. at 956-57.
71 Minutes, House Labor & Commerce Comm. Hearing on S.B. 323, 23d
Leg., 2d Sess. 11 (Apr. 27, 2004) (statement of Sen. Ralph Seekins); Minutes, Sen.
Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 35 (Apr. 14, 2004) (testimony
of Jack Miller); Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess.
20 (Apr. 2, 2004) (statement of Sen. Ralph Seekins); Minutes, Sen. Labor & Commerce
Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 15 (Mar. 9, 2004) (statement of Sen.
Con Bunde); Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 20-21 (Mar. 4, 2004) (statement of Sen. Ralph Seekins).
72 614 P.2d 1341, 1346 n.5 (Alaska 1980).
73 Id.
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We conclude that it was error to incorporate the usual business rule into the
definition of "project owner" in AS 23.30.045(f)(2). Even if the statutory language is
ambiguous, the legislative history demonstrates the intent to cover many more situations
than are covered by the usual business rule.
C. The Hibberts Were Project Owners As Defined In AS 23.30.045.
Having determined that the usual business rule does not limit project owner
status, we turn to the question whether the Hibberts were "project owners" under
AS 23.30.045. For even if the usual business rule is not a limit on the definition of
"project owner," a project owner must still be a business.74 Although the superior court
stated that "[t]he analysis [of project owner liability] should not end with a business or
residential determination" but should include an evaluation of "the nexus between the
contractor's activities and the project owner's business," the superior court considered
whether the Hibberts were acting as homeowners when they hired Phillips to repair their
office-residence. The court found that "the Hibberts were engaged in a home
improvement project that lasted three summers" and that "[a]ny effect on the Hibberts'
taxicab or rental businesses was incidental - not a factor in the decision to upgrade the
home." The court determined that "[t]he roofing and siding project was not related to
the Hibberts' profit-making businesses"; it called the Hibberts "homeowners and
consumers."
In interpreting the definition of "project owner" the superior court said that
"[t]he project owner's business must be a 'profit-making enterprise which ought to bear
the costs of injuries incurred in the business' to fall within the Act." The quoted
language is from a test we adopted to determine when someone is an employer for
74 AS 23.30.045(f)(2).
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purposes of the Workers' Compensation Act rather than a consumer.75 The test
elaborates on the "business or industry" definition of "employer" in the Workers'
Compensation Act.76 We have noted that the distinction between productive and
consumptive uses is based in part on a business's ability to pass on to consumers the cost
of workers' compensation insurance.77 We agree with the superior court that this test is
useful to differentiate businesses from homeowners for purposes of the project owner
amendments. But we disagree with the superior court's application of the test to the facts
of this case.
The Hibberts have two profit-making businesses that are able to pass on the
cost of workers' compensation insurance to consumers - their cab business78 and their
property rental business.79 The Hibberts did not take a home-office deduction for a part
of their home used exclusively for business.80 Instead, the Hibberts entered into a
commercial lease with the cab company. The cab company rented its shop and office
from the Hibberts, and, as the trial court found, the rent paid by the cab company was the
75 Gaede v. Saunders, 53 P.3d 1126, 1127 (Alaska 2002) (quoting Kroll v.
Reeser, 655 P.2d 753, 757 (Alaska 1982)).
76 Id. at 1126-27.
77 Nickels v. Napolilli, 29 P.3d 242, 253 (Alaska 2001).
78 The cab business had gross receipts of $613,000 in 2006, with a net income
of $138,212 after paying the Hibberts $84,856 in salaries, paying $15,563 in rent,
(which covered all of the house mortgage) and paying all of the utilities (septic, electric,
gas, and sanitation), telephone, property taxes, and non-liability insurance on the
property, collectively totaling over $14,500.
79 The property rental business reported a profit of $15,923 in 2006.
80 See Tilman v. United States, 644 F. Supp.2d 391, 399-400 (S.D. N.Y. 2009)
(citing Weissman v. Comm'r, 751 F.2d 512, 514 (2d Cir. 1984)) (discussing home-office
deduction).
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full amount of the home mortgage.81 The lease agreement between the Hibberts and the
cab company also made the cab company responsible for all utilities, insurance, and
taxes, and it required that "any damage to the building and supplies will be fixed or
repaired by tenant." Debra Hibbert testified that the cab company paid the expenses of
the properties it was associated with rather than paying a rent check to the Hibberts. The
Hibberts reported the rent they received from the cab company as income to their rental
business and took depreciation on the shop as a deduction against that income.82 The cab
company in turn deducted the rent it paid the Hibberts - the amount of the mortgage -
as a business expense. Even though the Hibberts and the cab company did not engage
in arms-length negotiations to establish a rental amount, they nonetheless engaged in a
commercial transaction when they signed the lease.
The Hibberts' contract with Phillips and the work performed under it
arguably had both business and personal purposes. Brent Hibbert testified about other
work that was done on the office-residence in the years before and after the foundation
and roof repair, emphasizing non-business aspects of that work. Debra Hibbert testified
that the renovations on which Trudell worked were not intended "primarily" to benefit
the business. The superior court focused its analysis on the reasons the Hibberts gave
for the roof and foundation repair, finding that "[a]ny effect on the Hibberts' taxicab or
rental businesses was incidental - not a factor in the decision to upgrade the home."
81 The lease did not specify that the cab company was leasing only a small
part of the office-residence. It said that the cab company "lease[d] the shop (1380
Nighthawk Ln) and office (1385 Nighthawk Ln) space" from the Hibberts.
82 Even though the lease required the cab company to pay utilities and Debra
Hibbert testified that the cab company paid the expenses of the properties, the Hibberts
took a deduction for utility payments from the rent they reported receiving on the office
and shop on their personal income tax returns.
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The proper inquiry to determine whether the project was business-related
is not the intent of the property owner, but the benefit to the business from the project.
If intent alone determined project-owner status, a business owner could always evade
responsibility in a situation that might have both business and personal purposes by
saying that the primary intent was personal. A more appropriate inquiry is the extent to
which the business benefitted from the work and what connection there was between the
repair work and the business.83
Here, the Hibberts' two profit-making businesses, the cab company and the
rental business, both gained from the remodel work.84 The cab business benefitted from
the repairs because they shored up the foundation under its office, provided a new door
for the office, and repaired the office roof.85 The Hibberts' rental business benefitted
because it had improved property to rent.
The Hibberts assert that their contract with Phillips was a personal expense
rather than a business one because they paid cash for it; according to the Hibberts, they
paid all business expenses with checks. But the business and personal expenses and
payments were commingled to such an extent here that the Hibberts' claim is
problematic. For example, the lease agreement required the cab company to pay taxes
on the property it rented, yet the records showed that it paid all the taxes on the entire
83 Cf. Bartoo v. Buell, 662 N.E.2d 1068, 1070 (N.Y. 1996) (holding that to
qualify for exemption for one- and two-family dwellings under New York scaffolding
law, work must directly relate to residential use of the home).
84 The Hibberts' rental business was not limited to their lease agreement with
the cab company. They owned five pieces of property, including what Debra Hibbert
conceded was "valuable commercial property," and rented out at least three of them.
85 Indeed, Brent Hibbert testified that Phillips was chosen from among several
bidders because the others could not do the necessary foundation work under the office.
Even the choice of contractor benefitted the cab company.
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parcel and the Hibberts took a home-mortgage deduction on their personal income tax
return. The 2005 profit/loss statement for the cab company shows "land" expenses, that
are different from the rental payments, but the cab company did not own land. And the
cash payments for the remodel made it impossible to determine who actually paid for the
repairs.
The Hibberts contend that if they are found liable as project owners, any
person with a home office who gets repair work done on his or her home could face
liability for workers' compensation. The Hibberts' office is not a typical home-office
situation: Their home also served as an office for two businesses, one of which was a
putatively separate corporation that entered into a commercial lease for the office space,
paid all of the expenses of the home and generated income in the hundreds of thousands
of dollars. In any event, the legislature wanted project owners to employ only
contractors who had workers' compensation; it recognized that the project owner
amendments would require "due diligence" on the part of project owners and that project
owners might choose to buy their own workers' compensation policy to protect
themselves.86 The Hibberts were sophisticated business owners who were familiar with
sales tax and workers' compensation requirements. Although the trial court considered
the Hibberts "blameless," they failed to inquire as to the workers' compensation
coverage for employees working on their premises; they also willingly agreed to pay
cash for a large remodel project and to accept a job that charged $25 in sales tax on a bid
of approximately $28,000. The cab company at times carried workers' compensation
86 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 35
(Apr. 14, 2004) (statement of Sen. Scott Ogan); Minutes, Sen. Judiciary Comm. Hearing
on S.B. 323, 23d Leg., 2d Sess. 20 (Apr. 2, 2004) (statement of Sen. Ralph Seekins);
Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 25
(Mar. 4, 2004) (statement of Sen. Con Bunde).
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----------------------- Page 29-----------------------
insurance for office workers, so the Hibberts were aware that a business needed it for
employees but not for owners or corporate officers. They could have inquired of Phillips
about his workers' compensation coverage before the accident, as the legislature
envisioned.87
We agree with Trudell that this case is analogous to Suave v. Winfree.88
There, an employee of a corporation was injured at work; after receiving workers'
compensation benefits, she sued the building owner for negligence.89 The building
owner was a partnership composed of the two officers and shareholders of the
corporation that employed the injured worker.90 The officers raised the defense that they
were the injured worker's co-employees and thus protected by the exclusivity provision
of the workers' compensation act.91 We noted there that "[t]he circumstance of separate
legal entities owning the business and its premises . . . has ramifications."92 Because the
officers chose "to have different business organizations own the real estate and the
business," as landlords they were not the worker's co-employees.93
Here, the Hibberts chose to enter into a commercial lease with the cab
company to rent the office-residence from them. In the lease agreement, they did not
87 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 23 (Mar. 4, 2004) (statement of Sen. Ralph Seekins).
88 907 P.2d 7 (Alaska 1995).
89 Id. at 8.
90 Id.
91 Id.
92 Id. at 10.
93 Id.
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allocate a specific portion of the residence as the office of the cab company, nor did they
prorate a part of the home mortgage as rent. Instead, the cab company paid the full
amount of the home mortgage. They deducted the full amount of rent as a business
expense of the cab company and reported the rent as income for their property business.
They cannot disavow the commercial nature of the transaction when it does not benefit
them. The nature of the repairs to the office-residence and the structure of the lease
agreement persuade us that, as a matter of law, the Hibberts were acting in their business
capacity as commercial landlords when they contracted with Phillips. They are therefore
project owners as defined in AS 23.30.045(f)(2).
Trudell's situation is one that the legislature hoped to prevent when it
enacted the project owner amendments. The problem with uninsured contractors and
their attempts to require employees to become independent contractors to avoid workers'
compensation liability was discussed in hearings in both houses.94 The legislature
intended that someone in the contracting chain would have workers' compensation
insurance; the legislation was limited to businesses, and for the most part businesses are
required to carry workers' compensation coverage.95 As Senator Seekins said, "The
intent here is to say everyone is covered and you have an exclusive remedy."96 Trudell,
94 Minutes, House Labor & Commerce Comm. Hearing on S.B. 323, 23d
Leg., 2d Sess. 22-24 (Apr. 27, 2004) (statement of Sen. Ralph Seekins); Minutes, Sen.
Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 27-28 (Mar. 4,
2004) (testimony of Jack Miller).
95 Minutes, Sen. Judiciary Comm. Hearing on S.B. 323, 23d Leg., 2d Sess. 11
(Apr. 16, 2004) (testimony of Jack Miller).
96 Minutes, Sen. Labor & Commerce Comm. Hearing on S.B. 323, 23d Leg.,
2d Sess. 27-28 (Mar. 4, 2004) (statement of Sen. Ralph Seekins).
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limited to the exclusive remedy, is entitled to the compensation that the legislature
intended.97
97 The dissenting opinion, while agreeing that the superior court erred in its
interpretation of AS 23.30.045, (Dissent at 33) would remand for the superior court to
apply the proper legal test to determine whether the Hibberts are project owners. (Dissent
at 35) But where application of the rule to the facts before the court can lead to only one
result, we have adopted that result and have declined to remand. See Kelly v. State, Dep't
of Corrs., 218 P.3d 295, 302-03 (Alaska 2009) (holding that prison guard had satisfied
all elements required to show that he had suffered an injury, obviating need for remand
on that issue, where guard showed he had received traumatic death threat constituting
"extraordinary and unusual" stress); Guttchen v. Gabriel, 49 P.3d 223, 226-27 (Alaska
2002) (holding that while resolution of "issue typically involv[ing] a factual component
. . . is . . . usually consigned to the superior court's discretion," remand unnecessary
where facts had been fully presented at superior court level); State v. Wentz, 805 P.2d,
967 n.7 (holding "exceptional case" aggravator needed to enhance presumptive sentence
had been established, obviating need for remand, where man with history of assaultive
behavior beat his particularly vulnerable wife almost to death, causing permanent brain
damage). This is such a case.
The undisputed facts are that (1) the Hibberts have two profit-making
businesses run from their home; (2) these businesses enjoyed gross receipts in excess of
$600,000 and, considering net income plus salaries, returned about $240,000 to the
Hibberts yearly and fully paid their mortgage, all utilities, and property taxes; (3) the
businesses are able to pass on the cost of workers' compensation insurance to their
customers, especially the cab business; (4) the businesses benefitted directly from the
repair work because it provided the businesses the locales from which they operated
(shoring up the foundations, repairing the roof, etc. of the cab company office, and
providing enhanced rental space for the rental business); (5) the lease between the
Hibberts and the cab company made no allocation of a specific portion of the house as
the cab company's office nor did it prorate a part of the mortgage as rent; rather, the cab
company paid the full amount of the mortgage (as well as all utilities and property taxes).
When looking at the extent to which the businesses benefitted from the work and the
connection between the work and the business, and given the size of the businesses and
their ability to pass on the costs of workers' compensation insurance, the only possible
conclusion is that the Hibberts were project owners.
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V. CONCLUSION
The judgment of the superior court is REVERSED, and the case is
REMANDED to the superior court for entry of judgment that the Hibberts are project
owners as defined in AS 23.30.045(f)(2).
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STOWERS, Justice, dissenting in part.
The court today considers whether the phrase "in the course of the person's
business" in the statutory definition of "project owner" limits project owner liability to
instances when a business contracts out its usual work to others, and holds that it does
not.1 I do not disagree with the court's legal interpretation of AS 23.30.045.
The court concludes, however, that the Hibberts' contract with Trudell's
employer and the work performed under it "arguably had both business and personal
purposes,"2 notwithstanding that the superior court found as a matter of fact that the
Hibberts were engaged in a home improvement project when Trudell fell and injured
himself, and that any effect of Trudell's work on the Hibberts' taxicab or rental business
was "incidental" and that the roofing and siding project was not related to the Hibberts'
profit-making business. The court criticizes the superior court for focusing on the
Hibberts' intent when they contracted with Trudell's employer; the court explains that
the proper inquiry to determine whether the project was business related is to focus on
the benefit to the business.3 I do not disagree with this interpretive rule. But the court
then makes and weighs its own "findings": the court explains "the Hibberts' two profit-
making businesses, the cab company and the rental business, both gained from the
remodel work"; " [t]he cab business benefitted from the repairs because they shored up
the foundation under its office, provided a new door for the office, and repaired the office
roof"; and the Hibberts' business and personal expenses and payments were commingled
to the extent that these facts rendered "meaningless" the Hibberts' claim that their
1 Slip Op. at 10.
2 Slip Op. at 24, 26.
3 Slip Op. at 27.
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----------------------- Page 34-----------------------
contract with Trudell's employer was a personal expense.4 In essence, the court finds,
contrary to the superior court's findings, that the Hibberts' roof repair project was
business related; concludes that the Hibberts are project owners as defined in
AS 23.30.045(f)(2); and remands for the superior court to enter judgment in favor of
Trudell. It is the court's unwarranted intrusion into the superior court's function as fact-
finder that I disagree with, and I therefore respectfully dissent in part.
The history of this case illustrates the basis of my disagreement with the
court's resolution of this appeal. After the Hibberts filed their motion for summary
judgment - which argued that their contract with Trudell's employer did not fall within
AS 23.30.045's definition of "project owner" - the superior court ruled correctly that
there was "a question of fact as to whether [the Hibberts] were hiring [Trudell] to
perform repairs and renovations while engaged in the course of their cab business."5 The
case went to trial; the parties were the only witnesses, and the superior court inspected
the Hibberts' home/cab company office.6 At the conclusion of the trial, the court made
factual findings that the construction project was mainly a home improvement project
and that any effect on the Hibberts' taxicab or rental businesses was "incidental - not
a factor in the decision to upgrade the home."7 The superior court made a legal
conclusion that the Hibberts therefore were not project owners or employers, and
therefore not liable for workers' compensation payments to Trudell.8
4 Slip Op. at 27.
5 Slip Op. at 5.
6 Slip Op. at 6.
7 Slip Op. at 8-9.
8 Slip Op. at 8.
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I agree with this court that the superior court's legal analysis was erroneous
through its application of the Larson test to determine the proper meaning of "project
owner."9 But this does not end the analysis; the question then becomes whether the
superior court'sfactual findings were erroneous. We review the superior court's factual
findings for clear error, reversing only when the court is left with the definite and firm
conviction that a mistake has been made.10 Notably, the court does not determine that
the superior court's factual findings were clearly erroneous, nor could it in my opinion.
Rather, the court proceeds to review and weigh the facts, emphasizing its own findings
as described above. But this is not the supreme court's proper function.
I therefore dissent from the part of the opinion whereby the court finds that
the Hibberts' roof repair project was business related, and the remand order for the
superior court to enter judgment that the Hibberts are project owners as defined in
AS 23.30.045(f)(2). Rather, I would reverse and remand for the superior court to apply
the proper legal test to the facts and determine whether the Hibberts are project owners
under the statute and the legal test established by this court's opinion.
9 Slip Op. at 20-21.
10 Shooshanian v. Dire, 237 P.3d 618, 622 (Alaska 2010) (citations omitted).
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