Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Kang v. Mullins (5/11/2018) sp-7245

Kang v. Mullins (5/11/2018) sp-7245

          Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  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                                      



YONG  KANG,  d/b/a  LEE'S                                       )  

MASSAGE,                                                        )  

                                                                          Supreme  Court  No.  S-16560  

                                                                )  

                                Appellant,                                                             

                                                               )          Alaska Workers' Compensation  

                                                                                                                    

                                                                )         Appeals CommissionNos. 15-023/16-001  

                     v.                                         )  

                                                                                               

                                                                )         O P I N I O N  

                                                    

ALEXANDER MULLINS and                                           )  

                                       

STATE OF ALASKA, WORKERS'                                                                                   

                                                                )         No. 7245 - May 11, 2018  

                                 

COMPENSATION BENEFITS                                          )  

                        

GUARANTY FUND,                                                  )  

                                                                )  

                                Appellees.                      )  

                                                                )  



                                                                                                        

                                            

                     Appeal from the Alaska Workers' Compensation Appeals  

                     Commission.  



                                                                                                            

                     Appearances:   J. John Franich, Franich Law Office, LLC,  

                                                                                                      

                     Fairbanks,  for  Appellant.                    No  appearance  by  Appellee  

                                                                                                                

                     Alexander  Mullins.                 Notice  of  nonparticipation  filed  by  

                                                                                                   

                     Siobhan McIntyre, Assistant Attorney General, Anchorage,  

                                                                                                               

                     and   Jahna   Lindemuth,   Attorney   General,   Juneau,   for  

                                                                                

                     Appellee State of Alaska, Workers' Compensation Benefits  

                                                

                     Guaranty Fund.  



                                                                                         

                     Before:  Stowers, Chief Justice, Winfree, Maassen, Bolger,  

                                                          

                     and Carney, Justices.  



                                           

                     MAASSEN, Justice.  


----------------------- Page 2-----------------------

I.        INTRODUCTION  



                    A woman who runs a business in the home she rents from her son asked a  

                                                                                                                              



neighbor for help with major home repairs in exchange for a used pickup truck.  The  

                                                                                                                          



neighbor injured his wrist while working on the house.  A few days later the two had a  

                                                                                                                              



dispute and terminated their arrangement, the woman paying her neighbor $500 for his  

                                                                                                                            



work.  



                    The neighbor later sought medical treatment for his wrist; he also filed a  

                                                                                                                              



report  of  injury  and  a  workers'  compensation  claim  with  the  Alaska  Workers'  

                                                                                                                 



Compensation Board.  The woman denied liability on several grounds, but the Board  

                                                                                                                       



decided, after a hearing, that the woman was her neighbor's employer for purposes of the  

                                                                                                                            



Alaska Workers' Compensation Act.   The woman appealed to the Alaska Workers'  

                                                                                                                 



Compensation Appeals Commission, which affirmed the Board's decisions.  We hold,  

                                                                                                                        



however, that the evidence did not support a finding that the woman was her neighbor's  

                                                                                                                



employer, and we therefore reverse the Commission's decision.  

                                                                                 



II.       FACTS AND PROCEEDINGS  

                                 



          A.        Factual Background  

                                                       



                    Yong Kang lived in North Pole and rented a house from her son Benjamin.  

                                                                                                                                 



She once owned the house, but she sold it to Benjamin about nine months before the  

                                                                                                                           



events underlying this dispute, because, as she explained, she was getting old and did not  

                                                                                                                            



know how much longer she would be around. Kang lived in the house with her business  

                                                                                                                    



partner, Chong Sik Kim. The two operated a massage business in the house called Lee's  

                                                                                                                        



Massage, and both had business licenses under that name.  

                                                                             



                    Alexander Mullins lived nearby.  He met Kang when he bought his house  

                                                                                                                       



in 2004, and the two of them became friends.  Mullins estimated that in the 10 or 11  

                                                                                                                            



years preceding this dispute he had helped Kang with work on the house about 15 times.  

                                                                                                                                 



                                                             -2-                                                        7245
  


----------------------- Page 3-----------------------

He testified that she had always taken care of him, and he frequently stopped by her  

                                                                                                                              



house to check on her on the way to or from his mailbox.  In early 2015, when Mullins  

                                                                                                                       



was retrieving his mail, Kang approached him and asked if he could help repair her roof.  

                                                                                                                                    



After some discussion, Mullins agreed.  

                                                             



                    The  repair  job  began  in  May,  when  Mullins  arranged  for  several  

                                                                                                                       



acquaintances to help tear off the old roof. Mullins himself had a full-time job as a small  

                                                                                                                           



engine mechanic, which continued throughout the time he worked on the house.  Kang  

                                                                                                                           



paid all the workers directly.  At some point it became apparent that the roof was not the  

                                                                                                                              



only problem with the house; it also needed to be leveled, and Mullins agreed to do that  

                                                                                                                             



work too.  According to Mullins, he injured his wrist during the leveling while using a  

                                                                                                                                 



hydraulic jack, though he did not immediately tell Kang about the injury.  

                                                                                                                 



                    Soon afterwards, the two had a dispute about a used pickup truck that,  

                                                                                                                            



according to Mullins, Kang had promised him as part of the payment for his work.  The  

                                                                                                                             



parties ended their working relationship with an agreement signed on May 17, 2015, by  

                                                                                                                               



which  Mullins accepted $500 "for all services & work on the roof of the massage  

                                                                                                                      



parlor."  This was the end of Mullins's participation in the repair project.  

                                                                                                               



                    A few weeks later, on June 1, 2015, Mullins went to the emergency room  

                                                                                                                           



complaining of pain in his wrist. He filed a report of injury with the Board the following  

                                                                                                                    



day reporting the date of injury as May 19, 2015, and naming "Lee's Oriental Massage"  

                                                                                                                    



as his employer.  Lee's Massage controverted benefits, denying that Mullins was its  

                                                                                                                               



"employee" as that term is defined in the Alaska Workers' Compensation Act.  It also  



contended that it was not an "employer" as defined in the Act.  

                                                                                                



                                                               -3-                                                        7245
  


----------------------- Page 4-----------------------

                 B.              Board And Commission Proceedings                                  



                                 Because   neither   Kang   nor   Lee's   Massage   had   workers'   compensation  



                        1 

coverage,  the Workers' Compensation Benefits Guaranty Fund became a party to the  



                                                                                                                                                                                                 

claim.  The Board held a hearing in late August 2015.  Mullins represented himself;  



                                                                                                                                                                                                            

Kang was represented by counsel; and the Fund's adjuster represented the Fund and  



                                                       

cross-examined some witnesses.  



                                                                                                                                                                                              

                                 There was conflicting evidence about how the arrangement for Mullins's  



                                                                                                                                                                                                              

work came about, who controlled the work and the hiring, who provided tools, how the  



                                                                                                                                                                                                 

injury happened, and what provoked the dispute that ended Mullins's work.  Mullins  



                                                                                                                                                                                                  2  

                                                                                                                                                                                                       

described the work as "doing [Kang] a favor as a friend trying to help her out."                                                                                                                      When  



                                                                                                                                                                                                                

the Board chair asked him why he thought he was an employee of Lee's Massage, he  



                                                                                                                                                                                                     

answered, "Well, if . . . I came down and asked you to help me build a garage, . . . I guess  



                                                                                                                                                                                                             

that you would be my employee." He added, "[E]ven if I only hired you for the day, I'm  



                                                                                                                                                                                                               

still  your  boss  for  the  day,  period."                                                          But  on  cross-examination  he  disavowed  an  



                                                                                                                                                                                                            

employment relationship with Kang, saying that, both at the time of the hearing and  



                                                                                                                                                                                                             

when the parties first discussed the job, he did not "identify" himself as an employee and  



                                                                                                                                                                                                               

adding, "I never signed no paperwork from [Kang].  I never filled out an application for  



                                                                                                           

her.  I never filled out a W-2 [sic] for her."  



                 1               Lee's Massage was not required to have coverage under the Act as long as                                                                                                        



it had no employees, because only an employer as defined in the Act is required to secure                                                                                                             

payment of compensation for its employees. AS 23.30.045(a), .395(20). "A person who                                                                                                                        

is a sole proprietor, or a member of a partnership, may elect coverage as an employee                                                                                                         

under [the Act]"; if the person elects coverage as an employee, she is not entitled to the                                                                                                                    

presumption of compensability and "bears the burden of proof of the validity of the                                                                                                                           

claim."   AS 23.30.239(a)-(c).   



                 2               Kang agreed with this characterization of the arrangement.  

                                                                                                                                                  



                                                                                                       -4-                                                                                               7245
  


----------------------- Page 5-----------------------

                                  The Board decided first that Yong Kang d/b/a Lee's Massage had entered                                                                                              



into an employment contract with Mullins.                                                                    It then applied its regulatory "nature of the                                                       



                          3  

work" test                                                                                                                                                                                                       

                             to the facts and decided that Mullins was not an independent contractor but  



                                                                                                                                                                                                            

an employee of Lee's Massage, though characterizing this decision as "a relatively close  



                                                                                                                                                              

call."  The Board concluded that Mullins's injury arose out of and in the course of his  



                                                                                    4  

                                                                                                                                                                                                         

employment with Lee's Massage.                                                           In what it labeled an interlocutory order, the Board  



                                                                                                                                                                                                                 

required "Yong Kang d/b/a Lee's Massage . . . to pay directly to Claimant and his  



                                                                                                                                                                                                               

medical providers any and all benefits to which he is currently entitled under the Act  



                                                                                                                                                                                                           

unless and until Lee's controverts his right to benefits for reasons other than those  



                                                                                                                                                                                                    

addressed in this decision and order."  It reserved jurisdiction "to resolve any disputes  



                                                                                                                                                                             

over specific benefits" but did not order that any specific benefits be paid.  



                                                                                                                                                                                                                 

                                 Lee's Massage filed an appeal with the Commission in September but did  



                                                                      5  

                                                                                                                                                                                                

not immediately seek a stay.                                              The Commission, seeing that the Board's order purported  



                                                                                                                                                       

to be interlocutory, issued a short decision determining that the Board decision was in  



                 3                8 Alaska Administrative Code (AAC) 45.890 (2011).                                                                                            This regulation   



encompasses   elements   of   "the   relative-nature-of-the-work   test,"   id.,   which   we   first  

adopted in                 Searfus v. N. Gas Co.                                  , 472 P.2d 966, 969 (Alaska 1970).                                                        In  Searfus  we set  

out factors Larson's treatise considered relevant in determining status as an employee                                                                                                          

under    the    Act.      Id.    (citing    1A    ARTHUR                                                             LARSON,                    THE           LAW             OF        WORKMEN'S  

COMPENSATION   43.52 (1967));                                                     see also Ostrem v. Alaska Workmen's Comp. Bd.                                                                            , 511   

P.2d 1061, 1063 (Alaska 1973) (discussing application of test to distinguish independent                                                                                                  

contractors from employees).                



                 4                TheBoard explained thediscrepancy in the date ofinjury and Mullins's last  

                                                                                                                                                                                                                 

day of work by finding that Mullins was "a 'poor historian,' meaning he confuses dates,  

                                                                                                                                                                                                           

but is otherwise credible."  

                                                                    



                 5               Its first stay request was made more than two months after the first Board  

                                                                                                                                                                                                         

decision.  



                                                                                                         -5-                                                                                                7245
  


----------------------- Page 6-----------------------

fact final and inviting Mullins or the Fund to seek dismissal of the appeal if either wanted                                                                                                                                                                                                                               



to.   Neither did.                                               



                                                     The Board held a second hearing on December 3 after Mullins complained                                                                                                                                                                               



that Lee's Massage had not paid him or his medical providers.                                                                                                                                                                                                       The Board issued a                                                            



 supplemental order declaring Lee's Massage in default of its order only with respect to                                                                                                                                                                                                                                                        



temporary total disability (TTD) benefits because Mullins had not submitted his medical                                                                                                                                                                                                                                  



bills correctly.                                            Lee's Massage filed a second notice of appeal and a second motion for                                                                                                                                                                                                           



a stay, and the Commission consolidated the cases and issued a partial stay.                                                                                                                                                                                                                                  The Fund   



paid TTD benefits to Mullins and authorized some medical care as well.                                                                                                                                                                                                                                     The Fund   



participated in the Commission appeal but only briefed issues related to the                                                                                                                                                                                                                      supplemental  



order.  



                                                     Before the Commission, Lee's Massage contended that Mullins was not                                                                                                                                                                                                                  



working for Kang or Lee's Massage "in connection with a business or industry" as that                                                                                                                                                                                                                                                    



                                                                                                        6  

phrase is used in the Act,                                                                                                                                                                                                                                                                                                                   

                                                                                                              focusing on a distinction we have made - in reliance on  



                                                                                                                                                                                                                                                                                               7  

                                                                                                                                                                                                                                                                                                                  

Larson's treatise - between "productive" and "consumptive" activities.                                                                                                                                                                                                                                 Its argument  



                                                                                                                                                                                                                                                                                                                         

related to the default order was that Lee's Massage was not Mullins's employer. Mullins  



                                                 

did not file a brief.  



                           6                         See  AS23.30.395(20) (defining                                                                                              employer  as including"apersonemploying                                                                                       



one or more persons in connection with a business or industry coming within the scope                                                                                                                                                                                                                                            

of [the Act]").             



                           7                         Kroll v. Reeser, 655 P.2d 753, 757 (Alaska 1982) (citing 1C A                                                                                                                                                                                                           RTHUR  

                                                                                                                                                                                                                                                                                                     

LARSON, THE LAW OF WORKMEN'S COMPENSATION  50.21, at 9-10 to 9-71 & nn.4-5                                                                                                                                                                                                         

                                                                                                                                                 

(1980));  see also Gaede v. Saunders                                                                                                           , 53 P.3d 1126, 1127 (Alaska 2002) (quoting                                                                                                                                     Kroll,  

655 P.2d at 757).                              



                                                                                                                                                                       -6-                                                                                                                                                           7245
  


----------------------- Page 7-----------------------

                       The Commission affirmed the Board's decision.                                        It discussed in detail one          



                                                                                            8  

of the cases Lee's Massage relied on,                            Kroll v. Reeser            ,                                         

                                                                                               noting Kroll 's factual similarity  



                                                                                                                                        

to this case:  both involving construction work on a residence that was used to generate  



                                                                                                                                          

income. The Commission interpreted Kroll to mean that "when an individual is injured  



                                                                                                                                    

while performing work under such a contract, whether the contract should be considered  



                                                                                                                                                

to  be  'in  connection  with  a  business  or  industry'  depends  on  the  totality  of  the  



                                                                                                                                        

circumstances, and not merely on the degree to which the structure is used for business  



                                                                                                                                       

purposes."             The  Commission  looked  at  the  way  "maintenance  work  on  business  



                                                                                                                                                

premises" is discussed in Larson's treatise and decided that "the activities at issue in this  



                                                                                                                                           

case go well beyond routine maintenance or repair."  It observed that the project "might  



                                                                                                                                             

be characterized as a real estate improvement project rather than as maintenance or repair  



                                                                                                                                                 

ancillary to Ms. Kang's massage parlor business." It noted the lack of evidence "that the  



                                                                                                                                                

roof  leaks  that were the genesis of the project affected the business portion of the  



                                                                                                                                            

premises at all, much less that Ms. Kang had a business purpose for undertaking a major  



                                                   

renovation of the structure."  



                                                                                                                                                  

                       The Commission nonetheless concluded that  the Board was correct in  



                                                                                                                                              

determining  that  Mullins  was  an  employee  of  Kang  and  Lee's  Massage.                                                                  The  



                                                                                                                                    

Commission noted Lee's Massage's argument that "[i]f anyone employed Mullins in  



                                                                                                                                                

connection with a business or industry (rental property), it was Benjamin Kang, not  



                                                                                                                                                  

Yong Kang."  But the Commission did not consider this relevant to the question on  



                                                                                                                                      

appeal, because it was not being asked to choose between Kang and her son as Mullins's  



                                                                                                                                                

employer.  The Commission characterized "the issue [as] whether the employment was  



                                                                                                                                                   

in connection with a business or industry." The Commission recognized the anomaly in  



            8          655 P.2d 753.  

                                        



                                                                        -7-                                                                       7245  


----------------------- Page 8-----------------------

this case that "the putative employer, Yong Kang, hired an individual to perform major                                                                                                                                                  



construction work on a structure she did not own and which she apparently had no legal                                                                                                                                                     



obligation to maintain."                                               It construed the evidence as showing that Kang was acting in                                                  



some type of agency relationship on behalf of her son and decided that because the son                                                                                                                                                         



was aware Mullins was going to work on the house and "acquiesced in" that plan, the                                                                                                                                                             



work was done in connection with a business or industry.                                                                                                               It then affirmed the Board's                               



decision that Yong Kang d/b/a/ Lee's Massage was Mullins's employer under the Act.                                                                                                                                                                          



                                      Kang appeals.                              Neither Mullins nor the Fund participated in this appeal.                                                                                                             



III.               STANDARDS OF REVIEW                                       



                                      In    an    appeal    from    the    Alaska                                                                Workers'    Compensation    Appeals  



                                                                                                                                                                                                                        9  

Commission, we review the Commission's decision rather than the Board's.                                                                                                                                                    "Whether  



                                                                                                                                                                                                                              

 [a claimant] is appropriately considered an 'employee' for purposes of the workers'  



                                                                                                                                                                     10  

                                                                                                                                                                                                                                     

compensation statute is a mixed question of law and fact."                                                                                                                  "We independently review  



                                                                                                                                                                                                                                   

theCommission's conclusionthatsubstantial evidenceintherecordsupports theBoard's  



                                                                                                                                                                                                                                        11  

                                                                                                                                                                                                                                               

factual findings by independently reviewing the record and the Board's findings."                                                                                                                                                              We  



                                                                                                                                                                                                                                       

reviewde novo"thelegal determination ofwhether the[]facts[about employment status]  



                                                                                                                         12  

                                                                                                 

amount to employment under the statute." 



                   9                  Humphrey  v.  Lowe's  Home  Improvement  Warehouse,  Inc.,  337  P.3d  1174,  



 1178  (Alaska  2014).  



                   10                 Nickels  v.  Napolilli,  29  P.3d  242,  247  (Alaska  2001).  



                   11                 Humphrey,  337  P.3d  at   1178.  



                   12                 Nickels,  29  P.3d  at  247.  



                                                                                                                        -8-                                                                                                                7245
  


----------------------- Page 9-----------------------

IV.        DISCUSSION  



           It  Was  Error  To  Conclude  That  Yong  Kang  d/b/a  Lee's  Massage  Was  

                                                                                                                                      

           Mullins's Employer Under The Act.  

                                                                    



                      The only  issue Kang  has raised  on appeal is whether  Mullins  was  an  

                                                                                                                   



"employee" of Lee's Massage as that term is defined in the Act. This is a mixed question  

                                                                                                                                 



of law and fact, and Kang asserts that the facts are "undisputed," which we take to mean  

                                                                                                                                      



that she no longer disputes them. Whether those facts "amount to employment under the  

                                                                                                                                          

statute" is a purely legal issue.13  

                                          



                                                                                                                                

                      The Act requires employers to provide workers' compensation coverage  



                                 14  

                                                                                                                               

for their employees,                 but not all workers are covered by the Act.  The Act explicitly  



                                                                                                                                       

exemptsfromcoverage people whowork in somecasualemployment relationships, such  



                                                                                                                                      

as part-time baby-sitters, "harvest help and similar part-time or transient help," and some  



                                                   15 

sports officials, to name a few.                                                                                                                

                                                       But the definition of "employer" in the Act is broad:  



                                                                                                                                           

"the state or its political subdivision or a person employing one or more persons in  



                                                                                                                                        

connection with a business or industry coming within the scope of this chapter and  



                                        16  

                                                                                                                               

carried on in this state."                   The definition of "employee" is also broad:  "an employee  



                                                                                                     17  

                                                                                                          

employed by an employer as defined in [AS 23.30.395(20)]." 



           13         Id.  



           14         AS 23.30.075.   



           15         AS 23.30.230.  

                             



           16         AS 23.30.395(20).   



           17  

                             

                      AS 23.30.395(19).  



                                                                     -9-                                                              7245
  


----------------------- Page 10-----------------------

                        Kang   discusses   three   of   our   decisions   that   in   her  view   show   the  



                                                                         18                                     19                                     20  

Commission's error:                    Gaede v. Saunders                ,                                                                                   

                                                                             Nickels v. Napolilli,                  and Kroll v. Reeser.  



                                                                                                                                                    

She contends that she was merely a consumer of Mullins's construction activity for  



                                                                                                                                                      

several reasons:  she was a tenant; she had a massage business rather than the type of  



                                                                                                                         

business for which major building repairs are productive activities, such as real estate,  



                                                                                                                                                    

construction,  or  property  development;  and  the  building  was  used  not  just  for  her  



                                                                                                                          

business but as her residence as well.  As Kang puts it, her business "derived no profit  



                                                                                                                                                  

from Mullins's work on Benjamin Kang's building."   Because her connection with  



                                                       

Mullins's work could only be consumptive and not productive, she concludes that she  



                                                                                                                                         

was not Mullins's employer as we have construed the Act. We agree with her argument.  



                                                                                                                                                       

                        In Kroll we considered who, for purposes of the Act, was the employer of  



                                                                                                                                                     

a worker injured during construction of a four-plex that was intended both to house the  



                                                                                                                                  21  

                                                                                                                                               

owner's family and to provide him with rental income from the other units.                                                             The owner  



                                                                                                                                                      

had engaged the services of a contractor licensed in another state, who happened to be  



                                                                                                                22  

                                                                                                                                                    

in Alaska for the summer, as well as "one or two other people."                                                      The contractor's son  



                                                                                                                                

was  injured  while  working  on  the  four-plex  and  sought  workers'  compensation  



               23  

benefits.                                                                                                                               

                    The Board decided that the property owner rather than the general contractor  



            18          53 P.3d 1126 (Alaska 2002).             



            19  

                                                                            

                        29 P.3d 242 (Alaska 2001).  



            20          655 P.2d 753 (Alaska 1982).             



            21         Id. at 754.  

                                   



            22         Id.  at 754-55.   



            23  

                                   

                       Id. at 755.  



                                                                         -10-                                                                    7245
  


----------------------- Page 11-----------------------

                                            24  

was the employer.                                We reversed the Board, concluding that it had relied too heavily on                                                                                         



the contract between the owner and the general contractor, and we required that the                                                                                                                       



Board consider "the totality of all the relevant circumstances" in determining which of                                                                                                                      

the two possible employers should be considered the employer for purposes of the Act.                                                                                                                          25  



                                                                                                                                                                                                      

                                But in Kroll we also required the Board on remand to consider a more basic  



                                                                                                                                                                                                           

question:  whether the owner should be considered an employer at all in light of the  



                                                                                                                                                                                        26  

                                                                                                                                                                                                        

argument that he was a consumer of services rather than a producer of goods.                                                                                                                  We held  



                                                                                                                                                                                                              

that  the Board  had  applied  a definition  of employer  that was too broad  because  it  



                                                                                                                                                                                 

"fail[ed] to give proper weight to the statutory limitation to employment relationships"  



                             27  

                                                                                                                                                                                           

in  the  Act.                          We  noted  that  the  "policy  question  [was]  whether  [the  owner's]  



                                                                                                                                                                                                  

construction activity, either by itself or as an element of his rental activities, was a profit- 



                                                                                                                                                                                                              28  

                                                                                                                                                                                      

making enterprise which ought to bear the costs of injuries incurred in the business." 



                                                                                                                                                                                                         

                                 The Board in this case began its analysis by considering whether there was  



                                                                                                                                                                                         

a contract of hire between Mullins and Lee's Massage.   Mullins had the burden of  



                                                                                                 29  

                                                                                                                                                                                                     

proving the existence of such a contract.                                                              The Board determined that Kang d/b/a Lee's  



                24              Id.  



                25              Id.  at 756.               Here the Commission applied this rule to a different issue -                                                                                     



whether the work was in connection with a business or industry.                                                                                                



                26              Id.  at  756-57.  



                27              Id.  at  757.  



                28              Id.  (footnote  omitted)  (first  citing   1C  LARSON,  supra  note  7,    50.24;  and  



then  citing  id.    50.21,  at  9-70  to  9-71  &  nn.4-5).   



                29              See   City   of   Seward   v.   Wisdom,   413   P.2d   931,   935-36   (Alaska   1966)
  



(holding    that    claimant,    decedent's    wife,    "failed    to    prove    that    a    contract    of
  

                                                                                                                                                                                  (continued...)
  



                                                                                                    -11-                                                                                              7245
  


----------------------- Page 12-----------------------

Massage and Mullins entered into a contract of hire, but it did not consider the capacity                                                                                                          



in which Kang was acting at that time or later, following their dispute, when she paid him                                                                                                                    

$500.   The Commission suggested that she might have been acting as her son's agent,                                                                                                                               30  



                                                                                                                                                                                                                   

but it considered the possible agency irrelevant to the question on appeal, which it  



                                                                                                                                                                                                                  

identified as "whether [Mullins's] employment was in connection with a business or  



                                                                                                                                                                                        

industry."  (Emphasis added.)  But the answer to the abstract question the Commission  



                                                                                                                                                                                                               

posed is not sufficient to determine that the particular business the Board ordered to pay  



                                                                                                                                                                             

workers' compensation benefits - Lee's Massage - was Mullins's employer.  



                                                                                                                                                                                                    

                                 The evidence the Board accepted showed that Kang and Mullins reached  



                                                                                                                                                                                                                   

an agreement about repairing the building, but it does not show the role Kang played in  



                                 31  

                                                                                                                                                                                                              

that  process.                             She  had  different  roles  that  the  Board  and  Commission  did  not  



                                                                                                                                                                                                                

distinguish.  She was a businesswoman, operating Lee's Massage in a partnership, but  



                                                                                                                                                                                                   

she rented the building - which served as both her residence and her place of business  



                                                                                                                                                                                                                

- from her son.  She was Mullins's neighbor and, at least when these events began, his  



                 29(...continued)  



                                                                                                                                             

employment . . . existed" at the time of worker's death).  



                 30              Like the employer-employee relationship, the determination of an agency                                                                                              



relationship has both factual and legal elements.                                                                       See Foster v. Cross                             , 650 P.2d 406, 408                    

(Alaska 1982) ("While the questions of what constitutes agency and whether evidence  

                                                                                                                                                                                                  

is competent to show it are questions of law, the evaluation of the evidence and the                                                                                                                

decision on whether an agency relationship exists is for the factfinder."). The Board did                                                                                                                       

not consider or make findings about this theory.  

                                                                                                       



                 31              The same person can have more than one role in workers' compensation  

                                                                                                                                                                                     

cases.  See, e.g., Sauve v. Winfree, 907 P.2d 7, 13 (Alaska 1995) (holding that exclusive  

                                                                                                                                                                                                

remedy  provision  did  not  bar  negligence  action  against  coworkers  who  were  also  

                                                                                                                                                                                                             

landlords).  



                                                                                                       -12-                                                                                                7245
  


----------------------- Page 13-----------------------

friend.   She had owned the building in the past and had received help from Mullins on                                                                                                                                                                                                              



earlier repair projects, evidently while she was the owner.                                                                                                                      



                                              But the unrebutted evidence also showed that Kang's son Benjamin owned                                                                                                                                                                  



the building as of September 2014, before Kang approached Mullins about the roof                                                                                                                                                                                                             



repair,   and   that   she   paid   Benjamin   rent.     She   was   therefore   a   tenant,   and,   as   the  



Commission observed, nothing in the record suggests that she or her business had any                                                                                                                                                



obligation   to   maintain   the   premises   to   the   extent   of making                                                                                                                                                  the   major   repairs   that  



underlie this case.                                                 No evidence was elicited at the hearing about the nature of the                                                                                                                                                              



tenancy between Kang and her business and Benjamin Kang.                                                                                                                                                                  A tenant generally is a                                                       



                                                                                                                                                                                                                    32  

consumer of rental services, not a producer of those services.                                                                                                                                                                                                                            

                                                                                                                                                                                                                             In the absence of proof  



                                                                                                                                                                                                                                                                                                  

that Lee's Massage had a legal obligation to arrange and pay for major repairs on  



                                                                                                                                                                                                                                                                                                

premises it rented from Benjamin Kang, Mullins did not meet his burden of proving that  



                                                                                                                                                                                                                                                                           

he entered into an employment contract with Lee's Massage - the entity he identified  



                                                        33                                                                                                                                                                                                                               34  

                                                                                                                                                                                                                                                                                                

as his employer.                                                 As a tenant, Kang, like the homeowners in Gaede v. Saunders,   had  



                                                                                                                                                                                                                                                                               

a  consumptive  role  with  respect  to  the  building  repairs.                                                                                                                                                     And  unlike  the  putative  



                                                                                                                                                                                                                                                   

employers in Gaede, she did not even own the home Mullins worked on.  



                       32                     A residential landlord has a duty to "make all repairs and do whatever is                                                                                                                                  



necessary    to    put    and    keep    the    premises    in    a    fit    and    habitable    condition."   

AS 34.03.100(a)(1).                                                     A landlord and the tenant of "a one-                                                                                           or two-family residence" can                                                              

"agreein writing thatthe tenant performspecified                                                                                                                         repairs, maintenancetasks, alterations,                                                       

and remodeling."                                               AS 34.03.100(c).                                                 A commercial lease may assign to the tenant the                                                                                                                   

duty to make repairs to the leased premises.                                                                                                             See Berrey v. Jeffcoat                                                        , 785 P.2d 20, 22-23                             

(Alaska 1990) (discussing repair provisions of commercial lease). No written agreement                                                                                                                                                                                   

or lease is in the record.                                                           



                       33                      In fact, Mullins described the repair job as "doing [Kang] a favor as a friend  

                                                                                                                                                                                                                                                                                     

trying to help her out."  

                                                                                  



                       34                      53 P.3d 1126, 1126 (Alaska 2002).  

                                                                                                                                                  



                                                                                                                                                -13-                                                                                                                                        7245
  


----------------------- Page 14-----------------------

                          Here the Board and Commission essentially repeated the Board's mistake                                                         



in  Kroll : they in effect interpreted the phrase "in connection with a business or industry"                                                         



                                                                35  

in  the   definition   of   "employer"                                                                                                                      

                                                                      to  mean  that  "all  business  or  industry  is  to  be  



                                                                       36  

                                                                                                                                                              

considered  as  covered  by  the  Act."                                       The  Board  and  Commission  appear  to  have  



                                                                                                                                                       

concluded that because Kang discussed the roof repair with Mullins and had a business  



                                                                                                                                                                    

that occupied part of the affected building, the labor associated with that contract was in  



                                                                                                                                                                  

connection with the service provided by her business, Lee's Massage, even though the  



                                                                                                                                         

benefit she received was in her role as a consumer of real estate rental services.  



                                                                                                                                                

                          Setting aside Kang's status as a tenant, we conclude that the Commission  



                                                                                                                                                             

also  failed  to  properly  consider  whether  the evidence showed  that the repair  work  



                                                                                                                                                       

furthered the business of Lee's Massage. In Nickels v. Napolilli we reviewed a superior  



                                                                                                                                                             

court's determinationthat awoman withan unconventional work arrangementon asmall  

farm was an employee for purposes of the Act.37  The woman was injured doing work  



                                                         38  

                                                                                                                                                                 

related to the farm business.                                   The farm owners contended that the injury was not  



                                                                                                                                                             

covered by the Act because the farm was not their principal source of income but rather  



                                                                                                                                                              

"a lifestyle choice" that "ought not bear the costs of injuries in furtherance of" their  



                                   39  

                                                                                                                                                               

farming activities.                    But the farm did sell "animals, eggs, hay, farm equipment, and farm  



                                                                                                                                                              

implements,"  and  the  owners  "list[ed]  the  business  in  the  phone  book  and  a  farm  



             35           AS 23.30.395(20).   



             36           Kroll v. Reeser, 655 P.2d 753, 757 (Alaska 1982) (emphasis in original).  

                                                                                                                                                     



             37           29 P.3d 242, 245-46 (Alaska 2001).  

                                                                                    



             38           Id.  



             39           Id.  at 253.   



                                                                                -14-                                                                          7245
  


----------------------- Page 15-----------------------

                                     40  

products directory."                     We upheld the superior court's determination that the worker was                                                



injured performing "a regular part of the regular work" of the farm                                                     business and held that            



                                                                                                                                                  41  

the injury was covered by the Act because the work furthered that business.                                                                             Our  



                                                                                                                                      

analysis in Nickels was consistent with the way the American workers' compensation  



                                                                                                                                                  

system is funded:  according to Larson's treatise, "the consumer of a particular product  



                                                                                                                                                           

ultimately pays the cost of compensation protection for the workers engaged in its  



                          42  

manufacture."                   



                                                                                                                                                      

                         In Kroll, in our remand related to the basic question of the owner's status  



                                                        

as an employer, we identified  



                                                                                                                 

                         the policy question [as] whether [the owner's] construction  

                                                                                                                            

                         activity,  either  by  itself  or  as  an  element  of  his  rental  

                                                                                                                                

                         activities, was a profit-making enterprise which ought to bear  

                                                                                                                                 

                         the  costs  of  injuries  incurred  in  the  business,  or  was  the  

                                                                                                                              

                         construction activity simply a cost-cutting shortcut in what  

                                                                                                                            

                         was  basically  a  consumptive  and  not  a productive  rol[e]  

                                                                   [43]  

                                                                          

                         played by [the owner]. 



                                                                                                                                                         

Nothing in the present case suggests that Mullins was injured performing work that was  



                                                                                                                                                              

part of Kang's business.  Mullins was not, as Kang points out, injured performing a  



                                                                                                                                               

massage. Nor was the injury related to the business's day-to-day maintenance activities,  



            40          Id.  at  245.  



            41          Id.  at  253.  



            42           1 ARTHUR   LARSON   ET   AL.,   LARSON 'S   WORKERS'   COMPENSATION   LAW,  



   1.04[2]  (Matthew  Bender  rev.  ed.  2015).   



            43          Kroll v   .  Reeser,  655  P.2d  753,  757 (Alaska   1982)  (emphasis i  n  original)  



(footnote  omitted).  



                                                                            -15-                                                                      7245
  


----------------------- Page 16-----------------------

                                                                   44  

like sweeping or cleaning.                                                The Commission correctly observed that "this type of                                                                                  



project   might   be   characterized   as   a   real   estate   improvement   project   rather   than   as  



maintenance or repair ancillary to [the] massage parlor business."                                                                                                            But there is no                  



evidence that Lee's Massage was engaged in the construction or real estate business or                                                                                                                           



that Kang was engaged in any other "profit-making enterprise which ought to bear the                                                                                                                          

costs of injuries" related to the major building repairs to her son's building.                                                                                                           45  



V.               CONCLUSION  



                                                                                                                                            46  

                                                                                                                       

                                 We REVERSE the Commission's decision. 



                 44              Whether the services are part of the potential employer's usual business is                                                                                                      



one    of    the    factors    in    applying    the    regulatory    relative-nature-of-the-work    test.   

8 AAC 45.890(2).                               The Board resolved this issue in favor of Lee's Massage.                                                                                        



                 45              The Commission speculated that Kang may have acted as an agent for  

                                                                                                                                                                                                              

Benjamin in contracting with Mullins. But Mullins provided no evidence to support that  

                                                                                                                                                                                                             

theory, and in any event Benjamin was not a party to the proceedings and would have  

                                                                                                                                                                                                                

to receive notice and opportunity to be heard before a factual determination could be  

                                                                                                                                                                                                                

made about whether his construction activity was sufficient to establish his status as an  

                                                                                                                                                                                                                

employer for purposes of the Act.  Our remand in Kroll  suggests that construction or  

                                                                                                                                                                                                                 

ownership of a building for purposes of renting out some units is not alone sufficient to  

                                                                                                                                                                                   ARSON ET AL                     .,  

determine employer status as a matter of law. 655 P.3d at 757; see also 6 L 

                                                                                                                                                                                                                

supra note 42,  72.02[4] (setting out cases related to rental businesses and status as  

employer).  



                 46              Kang also contends that the Commission erred in affirming the Board's  

                                                                                                                                                                                                  

default order.  We agree with her that the issue "is controlled by the first issue in the  

                                                                                                                                                                                                       

case."              Because  we  hold  that  Yong  Kang  d/b/a  Lee's  Massage  was  not  Mullins's  

                                                                                                                                                                                             

employer under the Act, the default order must also be reversed.  

                                                                                                                                         



                                                                                                      -16-                                                                                               7245
  

Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC