| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State, Division of Workers' Compensation v. Titan Enterprises, LLC (11/28/2014) sp-6972
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@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, )
DIVISION OF WORKERS' )
COMPENSATION, ) Supreme Court No. S-15166
)
Petitioner, ) Alaska Workers' Compensation
) Appeals Commission No. 11-011
v. )
) O P I N I O N
TITAN ENTERPRISES, LLC; )
TITAN TOPSOIL, INC.; ) No. 6972 - November 28, 2014
CCO ENTERPRISES; and TODD )
CHRISTIANSON, )
)
Respondents. )
)
Petition for Review from the Alaska Workers' Compensation
Appeals Commission, Laurence Keyes, Chair.
Appearances: Aesha Pallesen, Assistant Attorney General,
Anchorage, and Michael C. Geraghty, Attorney General,
Juneau, for Petitioner. David A. Nesbett, Nesbett & Nesbett,
PC, Anchorage, for Respondents.
Before: Fabe, Chief Justice, Winfree, Stowers, and Bolger,
Justices. [Maassen, Justice, not participating.]
FABE, Chief Justice.
I. INTRODUCTION
The Alaska Workers' Compensation Board fined an uninsured employer
a substantial amount because the employer had since 2005 operated for a significant
----------------------- Page 2-----------------------
period of time without carrying statutorily required workers' compensation insurance.
This was not the employer's first failure to carry the required insurance. On appeal, the
Alaska Workers' Compensation Appeals Commission affirmed part of the Board's
decision, but it reversed the Board on the amount of the fine and remanded the case to
the Board for further proceedings. The employer then asked the Commission for an
award of attorney's fees as a successful party on appeal. The State, Division of Workers'
Compensation, which had initiated the Board proceedings, opposed the award on the
basis that it, too, had been successful on a significant issue. The Commission awarded
the employer full fees of approximately $50,000. The Division petitioned for review of
the fee award, and we granted review. Because the Commission failed to consider the
Division's partial success in the appeal, we reverse the Commission's decision and
remand for further proceedings.
II. FACTS AND PROCEEDINGS
Todd Christianson is the sole owner of several businesses, including the
three involved in this proceeding: Titan Enterprises, LLC; Titan Topsoil, Inc.; and CCO
1
At various times Titan has failed to carry workers' compensation
Enterprises, LLC.
insurance, in violation of Alaska law. According to the Board's decision in this case,
Titan had at least one employee injury when it was uncovered, and Christianson paid out
of pocket for that injury. The Board found that Christianson and his businesses had "a
long history" of work-related injuries, with 13 reported injuries; the most serious was a
leg amputation, which happened when the business was insured.
Alaska Statute 23.30.075(a) requires an employer to either buy workers'
compensation insurance or provide proof that it is capable of self-insurance for workers'
1 We refer to the respondents as "Titan" unless the context requires
otherwise.
-2-
----------------------- Page 3-----------------------
compensation claims. Failure to maintain workers' compensation insurance may subject
2 3
an employer to criminal penalties. In addition, beginning in 2005, the legislature gave
the Division of Workers' Compensation the authority to investigate employers without
the required coverage and to initiate proceedings before the Board to fine these
4
Alaska Statute 23.30.080(f) permits the Board "to assess a civil penalty of
employers.
up to $1,000 for each employee for each day an employee is employed" while an
employer is uninsured. The money generated by any fines is deposited in the Workers'
5 6
Compensation Benefits Guaranty Fund, created in 2005; when money is available, the
Fund pays the claims of injured workers whose employers do not have compensation
7
coverage.
The Division began proceedings against Titan in 2008 for failing to carry
workers' compensation insurance and failing to provide proof of workers' compensation
liability coverage. Titan came to the Division's attention when "a routine records check"
showed that Christianson's companies' insurance policies had been cancelled in
March 2006, "for nonpayment of premium." The records also showed Titan had not
obtained a new policy until October 2007; that policy was cancelled in early
January 2008. Christianson paid out of pocket for an uncovered injury to a worker
2 See AS 23.30.075(b) (permitting imposition of fine and term of
imprisonment for up to one year "upon conviction").
3 Ch. 10, § 30, FSSLA 2005.
4 AS 23.30.080(e)-(f).
5 AS 23.30.082(a).
6 Ch. 10, § 31, FSSLA 2005.
7 AS 23.30.082(a), (c).
-3-
----------------------- Page 4-----------------------
in 2006. The Division investigated Titan at that time but closed its file without
requesting a Board hearing.
The Board held two hearings on the Division's petition. Neither party was
represented by counsel before the Board: Christianson represented himself and his
companies, and Christine Christensen, an investigator, represented the Division. The
parties presented conflicting evidence about the length of Titan's lapses in coverage and
the reasons for them. They also disputed the extent to which Christianson observed
corporate formalities and kept the corporations separate. The Division contended that
a number of aggravating factors in its regulation applied to the case.8
The Board found that Titan was an uninsured employer for 563 calendar
days after 2005. The Board looked at Titan's history of workers' compensation coverage
problems and Christianson's appearance before the Board in 2002 for failing to insure
when he was doing business as another corporation. The Board found that
Christianson's businesses had been involved in 13 injuries, including "a leg amputation,
upper and lower extremity injuries, and back injuries." The Board also noted the
uninsured injury in 2006. Using data from the Employment Security Division, the Board
found Christianson had "utilized 6,399 uninsured employee workdays after November 7,
2005" and had "purchased a single workers' compensation insurance policy for several
different business entities." It summarized facts related to the use and purchase of CCO,
an employee leasing company, including the fact that CCO's only client was Titan. The
8 A regulation effective in February 2010 sets out 15 aggravating factors the
Board should consider when setting the amount of a fine. 8 Alaska Administrative Code
(AAC) 45.176(d) (2011). Possible fines vary depending on the number of aggravating
factors, with higher penalties imposed for a larger number of aggravating factors.
8 AAC 45.176(a)(2)-(6).
-4-
----------------------- Page 5-----------------------
Board pierced the corporate veil and found Christianson individually liable, jointly and
severally, with his companies.
Noting that Christianson had previously been before the Board for failing
to have insurance, the Board found that he had a "blatant disregard for the law" and had
"gamed the workers' compensation system in attempts to avoid paying fully for
coverage." The Board acknowledged that its regulation about uninsured employers did
not apply because the regulation became effective only after the coverage lapses, but the
Board nonetheless used the factors as a guide in assessing a penalty. The Board decided
that had the regulation applied, Titan's conduct would have justified nine aggravating
9
factors and no mitigating factors, resulting in a minimum penalty of $500 per uninsured
employee workday and a maximum of $999 per uninsured employee workday. The
Board fined Titan $999 per employee workday for the period it was uninsured, resulting
in a fine of more than $6 million.
Titan appealed to the Commission, appealing both the size of the fine and
the Board's decision to pierce the corporate veil. Titan also argued that the Board
violated Titan's due process rights by "refusing to allow [it] additional time to hire
representative legal counsel prior to the Board hearing." The Division responded that
the fine was not excessive given the facts of the case and that piercing the corporate veil
was appropriate in the case.
The Commission affirmed the Board's decision to pierce the corporate veil
and hold Christianson liable individually. But the Commission decided that the Board
had abused its discretion when setting the penalty, calling the fine "a shocking amount."
9 8 AAC 45.176 does not set out mitigating factors, but a Commission
decision predating the regulation mentions them. See Alaska R & C Commc'ns, LLC v.
State, Div. of Workers' Comp., AWCAC Dec. No. 088 at 23, 25-26 (Sept. 16, 2008),
available at http://labor.state.ak.us/WCcomm/memos-finals/D_088.pdf.
-5-
----------------------- Page 6-----------------------
The Commission reversed part of the basis for the Board's fine, including its finding on
the time periods when Christianson's businesses were uncovered, and remanded to the
Board for additional findings about the liability of Christianson's various corporate
entities. According to the Commission, the Division "conceded that two of the
aggravating factors" were not supported by the evidence, and Christianson conceded "at
least initially" that five of the aggravating factors were supported by the evidence. The
Commission also remanded for the Board to "hear evidence on any disputed aggravating
factors."
Titan then requested attorney's fees as the successful party on appeal,
contending that under Lewis-Walunga v. Municipality of Anchorage 10 it was entitled to
an award of full fees ($50,925) because it had won a significant issue on appeal. Titan
justified the amount of fees in part because "[a]ppellants consisted of three business
entities and one person, which necessitated legal analysis and counsel individual to each
entity" and because "the law involving piercing the corporate veil . . . required intensive
and expansive legal research."
The Division responded that both parties were partially successful in the
appeal, since it had won the veil-piercing issue, and asserted that no fee award was
warranted. The Division argued in the alternative that Commission precedent required
the Commission to reduce the amount of fees from the full amount because Titan had not
won all issues on appeal. Finally, it maintained that full fees should not be awarded to
Titan because "the public policy concern of securing competent counsel for injured
workers" was "not implicated in this case."
The Commission decided that Titan qualified for an award of fees. Before
setting out its legal analysis, the Commission "point[ed] out . . . that Christianson's
10 249 P.3d 1063 (Alaska 2011).
-6-
----------------------- Page 7-----------------------
conduct entailed deliberate wrongdoing." It first stated that neither the statute nor the
Commission's regulations "discriminate between claimants and other parties to an
appeal, as far as eligibility for attorney fee awards is concerned." It then decided that
Christianson should be considered a "successful party" under Lewis-Walunga because
he had "prevailed on at least two issues that were significant." The Commission wrote
that it took "a dim view of Christianson's conduct," but it felt "constrained by
[AS 23.30.008(d)] to award Titan 'fully compensatory and reasonable' attorney fees, and
costs." It awarded all of the requested fees, as well as costs. The Commission discussed
none of the Division's arguments.
The Division petitioned for review, which we granted on two questions:
(1) whether a successful party who is not a workers' compensation claimant should be
awarded attorney's fees under AS 23.30.008(d) and (2) how attorney's fees should be
awarded under AS 23.30.008(d) consistent with our holding in Lewis-Walunga if more
than one party prevails on a significant issue in the appeal.
III. STANDARD OF REVIEW
We apply our independent judgment to questions of law that do not involve
11 Interpretation of a statute is a question of law to which we apply our
agency expertise.
independent judgment; we interpret the statute according to reason, practicality, and
common sense, considering the meaning of the statute's language, its legislative history,
and its purpose.12
11 Id. at 1066 (citation omitted).
12 Monzulla v. Voorhees Concrete Cutting , 254 P.3d 341, 345 (Alaska 2011)
(citations omitted).
-7-
----------------------- Page 8-----------------------
IV. DISCUSSION
A. A Successful Party Should Be Awarded Attorney's Fees Even When
The Party Is Not A Workers' Compensation Claimant.
Alaska Statute 23.30.008(d) provides in part, "[i]n an appeal, the
commission shall award a successful party reasonable costs and, if the party is
represented by an attorney, attorney fees that the commission determines to be fully
compensatory and reasonable." Subsection (d) shields injured workers from having to
13
We
pay fees unless their appeal is frivolous, unreasonable, or brought in bad faith.
have construed AS 23.30.008(d) three times, once considering whether an appeal was
frivolous14 and twice considering whether a claimant was a "successful party" entitled
15
In Lewis-Walunga v. Municipality of Anchorage , we
to an award of attorney's fees.
held "that a claimant is a successful party in an appeal to the Commission when the
16
Here we must decide whether a
claimant prevails on a significant issue on appeal."
litigant who is not a claimant can be awarded attorney's fees and costs for an appeal to
the Commission. We hold that litigants other than claimants are entitled to attorney's
fees and costs in a Commission appeal.
We apply a sliding-scale approach to statutory interpretation: We consider
the plain meaning of the statutory language, but we also look at the legislative history
13 AS 23.30.008(d).
14 Shehata v. Salvation Army, 225 P.3d 1106, 1119-20 (Alaska 2010).
15 Humphrey v. Lowe's Home Improvement Warehouse, Inc. , ___ P.3d ___,
Op. No. 6960, 2014 WL 5305861 (Alaska Oct. 16, 2014); Lewis-Walunga , 249 P.3d at
1068-69.
16 249 P.3d at 1068 (emphasis added).
-8-
----------------------- Page 9-----------------------
because "legislative history can sometimes alter a statute's literal terms."17 "The plainer
the statutory language is, the more convincing the evidence of contrary legislative
18 19
purpose or intent must be." We construe all sections of an act together.
As we observed in Lewis-Walunga , there is very little legislative history
about AS 23.30.008(d), and what little there is suggests an intent for the Commission to
award attorney's fees in a manner similar to appellate attorney's fee awards in the
20
courts. But there is a critical difference in the statutory language and our practice in
awarding appellate attorney's fee awards: While the legislature continued to shield
injured workers from fee awards - as do the appellate rules - it directed the
Commission to award attorney's fees to a successful party , not just to a successful
claimant.21 The legislature also did not limit fee awards by the Commission to those fees
22 23
"rendered in respect to a claim" or "in the successful prosecution of [a] claim." The
17 Bartley v. State, Dep't of Admin., Teacher's Ret. Bd. , 110 P.3d 1254, 1258
(Alaska 2005).
18 Muller v. BP Exploration (Alaska) Inc. , 923 P.2d 783, 788 (Alaska 1996)
(citation omitted).
19 Monzulla v. Voorhees Concrete Cutting , 254 P.3d 341, 345 (Alaska 2011).
20 Lewis-Walunga , 249 P.3d at 1067 (quoting STATE OF ALASKA , DEP 'T OF
LAW , SECTION BY SECTION ANALYSIS OF SB 130 at 7 (Mar. 3, 2005)).
21 Compare AS 23.30.008(d), with Alaska R. App. P. 508(g).
22 See AS 23.30.145(a) (authorizing attorney's fee awards by the Board when
claim has been controverted).
23 See AS 23.30.145(b) (authorizing attorney's fee awards by the Board when
employer "otherwise resists" payment of compensation).
-9-
----------------------- Page 10-----------------------
definition of "party" in Black's Law Dictionary includes both plaintiffs and defendants.24
Absent any related statutory provisions or contrary legislative history that might alter the
statute's meaning, we construe AS 23.30.008(d) according to its plain language and hold
that non-claimants are entitled to fees that are fully compensatory and reasonable25 when
they are a successful party in an appeal to the Commission, with the exception that non-
claimants are not entitled to an award of fees against an injured worker unless the
worker's position on appeal "was frivolous or unreasonable or the appeal was taken in
bad faith."26
The Division asks us to construe the statute to prohibit awards of full fees
in cases like this one, where the Board has fined an employer for failing to insure,
because such fee awards contravene the statute's purpose of protecting injured workers
and do not accomplish the goal of ensuring that competent counsel are available to
injured workers. The Division also contends that the legislature likely did not consider
a situation like this one when it wrote subsection .008(d). Titan responds by
emphasizing the statutory language.
We do not rewrite statutes even when the legislative history suggests that
27
the legislature may have made a mistake in drafting, but here, there is no indication the
24 BLACK 'S LAW DICTIONARY 1297 (10th ed. 2014). In contrast, a claimant
is "[o]ne who asserts a right or demand." Id. at 302.
25 We consider the phrase "fully compensatory and reasonable" to mean full
reasonable fees. The Commission may consider the reasonableness of the fees requested
when making an award under AS 23.30.008(d); it need not feel constrained to award the
full amount of fees requested in every case. We have determined at times that the
requested fee was not reasonable and awarded a smaller amount.
26 AS 23.30.008(d).
27
See State, Dep't of Commerce, Cmty. & Econ. Dev., Div. of Ins. v. Alyeska
(continued...)
-10-
----------------------- Page 11-----------------------
legislature made such a mistake. Even if the Division is correct that the legislature did
not envision the possibility of an attorney's fee award to an employer who is subject to
a fine for failing to insure, "[t]he Division's remedy lies with the legislature, not this
28
court." We thus agree with the Commission that attorney's fees in appeals to the
Commission are not restricted to claimants.
B. When Two Non-Claimant Parties Are Both Successful On A
Significant Issue On Appeal, The Commission Must Consider The
Success Of Both Parties In Making A Fee Award.
Although we have previously interpreted AS 23.30.008(d), we have not had
occasion to consider how fees should be awarded under this statute when two non-
claimants both enjoy partial success before the Commission. In Lewis-Walunga , a
claimant succeeded on the sole issue presented on appeal to the Commission, the Board's
29
award of attorney's fees. The Commission vacated the Board's fee award and
30
remanded for further proceedings. In spite of the claimant's success in obtaining a
remand to the Board, the Commission refused to award attorney's fees to the claimant
31 We reversed,
because, in its view, she had not gotten the specific relief she requested.
holding that a claimant who succeeds on a significant issue on appeal is entitled to an
award of fees and that the appellant there was a successful party.32
27 (...continued)
Pipeline Serv. Co. , 262 P.3d 593, 597-98 (Alaska 2011) (citation omitted).
28 Id. at 598 (citation omitted).
29 249 P.3d 1063, 1066 (Alaska 2011).
30 Id.
31 Id.
32
Id. at 1068-70.
-11-
----------------------- Page 12-----------------------
Similarly, in Humphrey v. Lowe's Home Improvement Warehouse, Inc. we
reversed the Commission's denial of attorney's fees to a claimant who had partial
33
There the Commission vacated the Board's attorney's fee award to
success on appeal.
the claimant but affirmed the Board's decision that the claimant was not entitled to
34
temporary total disability benefits for a specific period of time. When the claimant
asked the Commission to award him attorney's fees for the appeal, the Commission
denied his motion, deciding he was not a successful party and thus not entitled to any
fees for the appeal.35 We reversed the Commission's decision about attorney's fees,
holding that "a claimant who prevails on 'a significant issue' on appeal is a successful
36
party." Disregarding the partial success of the employer in Humphrey is consistent
with the statute's language, which shields an injured worker from having to pay fees
unless his "position on appeal was frivolous or unreasonable or the appeal was taken in
37
bad faith."
But AS 23.20.008(d) has no corresponding shield for non-claimants who
lose a significant issue in a Commission appeal. As a result, even though one
non-claimant can get an attorney's fee award in an appeal when it litigates against
another non-claimant, there is no reason to disregard the success of the other non-
claimant in the event that both non-claimants are successful on a significant issue. In this
33 ___ P.3d ____, Op. No. 6960 at 17, 2014 WL 5305861 at *7 (Alaska
Oct. 16, 2014).
34 Id. at 6.
35 Id.
36
Id. at 15 (emphasis in original) (citing Lewis-Walunga , 249 P.3d at 1068).
37 AS 23.30.008(d).
-12-
----------------------- Page 13-----------------------
38
case, there is no dispute that the Division was successful on the veil-piercing issue. As
the Division points out, by creating precedent permitting the Board to pierce the
corporate veil, the Commission enhanced the Division's ability to pursue enforcement
actions when someone abuses the corporate form. At oral argument before us, Titan
agreed that piercing the corporate veil was a significant issue, admitting that Christianson
is not able to discharge the debt in a personal bankruptcy even if the corporations might
39
be able to do so. We therefore hold that the Commission erred in disregarding the
Division's success on the veil-piercing issue, a significant issue in the appeal, when it
awarded full attorney's fees to Titan.
If two non-claimants both succeed on significant issues in an appeal, the
Commission must weigh the success of both parties when it considers a motion for
attorney's fees. The Commission may take one of two approaches in evaluating this type
of fee request. The Commission may decide that neither party can truly be deemed a
successful party, just as a trial court in applying Alaska Civil Rule 82 does not abuse its
discretion when it decides that neither party can be characterized as the prevailing
40
party. In such a case, the Commission can opt not to award fees: "We have found 'no
abuse of discretion in the superior court declaring the case a "wash" and ordering each
38 In addition to the Division's success on the veil-piercing issue, Titan
conceded a number of aggravating factors in the appeal, just as the Division conceded
that some aggravating factors were not supported.
39 When questioned at oral argument before us, neither party was certain
whether the companies could discharge this type of debt in bankruptcy.
40
See Schultz v. Wells Fargo Bank, N.A., 301 P.3d 1237, 1242 (Alaska 2013)
(quoting Chambers v. Scofield, 247 P.3d 982, 989 (Alaska 2011)).
-13-
----------------------- Page 14-----------------------
41
party to bear [its] own costs and fees.' " Alternatively, the Commission can consider
the amount of fees incurred by both parties, as well as the parties' relative success in the
appeal, and offset the competing fee awards to the parties to arrive at the final award of
attorney's fees in the case.
Treating non-claimants differently from claimants follows from the
language of AS 23.30.008(d) as well as other sections of the statute: The Alaska
Workers' Compensation Act restricts the manner in which fees can be paid to claimants'
attorneys. Attorneys are prohibited from receiving fees for representing claimants unless
42
the Board awards them fees when claimants are successful. In addition claimants'
attorneys were until 2005 subject to criminal sanctions if they accepted any fee that was
43
not Board ordered. In 2005 the legislature amended the statute to permit an attorney
licensed in Alaska to accept "a one-time-only charge" of $300 from a claimant for
providing legal services so long as the attorney does not enter an appearance for the
44
claimant. The policy that counsel for injured workers are entitled to fully compensable
and reasonable fees is grounded in the restrictions the legislature places on fees attorneys
41 Id. (alteration in original) (quoting Pavone v. Pavone , 860 P.2d 1228, 1233
(Alaska 1993)).
42 AS 23.30.145(a)-(b), .260(a). See also Hulsey v. Johnson & Holen , 814
P.2d 327, 328 (Alaska 1991) (reversing small claims judgment for attorneys who had
tried to reopen workers' compensation claim because the fee was "in respect to a claim"
and had not been approved by Board); McShea v. State, Dep't of Labor , 685 P.2d 1242,
1246 (Alaska 1984) (quoting Board for proposition that AS 23.30.260 shows intent for
Board to approve fees); Rose v. Alaskan Village, Inc. , 412 P.2d 503, 508-09 (Alaska
1966) (noting that statute makes it a crime to receive a fee that has not been approved by
Board).
43 Former AS 23.30.260 (2004).
44 AS 23.30.260(b).
-14-
----------------------- Page 15-----------------------
45
may charge for representing injured workers. As we observed in Wise Mechanical
Contractors v. Bignell, "If an attorney who represents claimants makes nothing on his
unsuccessful cases and no more than a normal hourly fee in his successful cases, he is
in a poor business. He would be better off moving to the defense side of the
46
compensation hearing room where attorneys receive an hourly fee, win or lose . . . ."
We reaffirmed this principle in State, Department of Revenue v. Cowgill, again observing
that "employers' attorneys are paid whether they win or lose, while employees'
47
attorney's fees are, by statute, contingent upon success." Given the continuing
restrictions on fee arrangements available to claimants' attorneys, the statutory restriction
on fee awards against injured workers in appeals to the Commission, and the continuing
need for competent counsel to represent injured workers, AS 23.30.008(d) necessitates
awards of "fully compensatory and reasonable" fees to claimants when they prevail on
a significant issue, even when the employer also has partial success on appeal. Because
there are no similar restrictions on the fee arrangements of attorneys who represent
employers, and because the legislature did not shield non-claimants from fee awards in
any situation, the Commission must consider the relative success of all non-claimant
parties in deciding a motion for attorney's fees in appeals involving only non-claimants.
45 Wise Mech. Contractors v. Bignell , 718 P.2d 971, 972-73 (Alaska 1986)
(citing Wien Air Alaska v. Arant, 592 P.2d 352, 365-66 (Alaska 1979), overruled on
other grounds by Fairbanks N. Star Borough Sch. Dist. v. Crider, 736 P.2d 770, 775
(Alaska 1987)).
46 Id. at 975.
47 115 P.3d 522, 525 (Alaska 2005) (citation omitted).
-15-
----------------------- Page 16-----------------------
V. CONCLUSION
We REVERSE the Commission's decision that Titan was the successful
party on appeal and REMAND to the Commission for further proceedings consistent
with this opinion.
-16-
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
