McKinley v. Pressure Washing Sys.

2019 MTWCC 17

DONALD T. MCKINLEY Petitioner v. PRESSURE WASHING SYSTEMS, LLC.,and UNINSURED EMPLOYERS' FUND Respondents.

WCC No. 2019-4710

WORKERS' COMPENSATION COURT OF THE STATE OF MONTANA

Submitted: October 31, 2019

November 5, 2019

ORDER GRANTING RESPONDENT UNINSURED EMPLOYERS' FUND'S MOTION FOR SUMMARY JUDGMENT AND DENYING PETITIONER'S MOTION FOR SUMMARY JUDGMENT

Summary: Petitioner, a resident of West Virginia, asserts that he is entitled to Montana workers' compensation benefits from Respondent Uninsured Employers' Fund (UEF) for injuries he suffered in a motor vehicle accident near Billings. Petitioner was driving a pickup truck he rented from a West Virginia company to haul an RV from a transport company located in Indiana. Petitioner asserts that the agreement under which he rented the truck created an employment relationship with the West Virginia company. The UEF asserts that Petitioner is not entitled to Montana workers' compensation benefits because the West Virginia company was not his employer under Montana law.

Held: This Court grants summary judgment to Respondents. Petitioner did not have an employment relationship with the West Virginia company under Montana law. The only agreement Petitioner had with the West Virginia company was an agreement with its co-owner under which Petitioner rented one of the company's pickup trucks which, as a matter of Montana law, does not constitute a contract of hire. Because the West Virginia company was not Petitioner's employer, it was not required to furnish workers' compensation coverage under Montana law and Petitioner is not entitled to benefits. Because the UEF is not liable for benefits, the putative employer is not obligated to indemnify the UEF and, therefore, the putative employer is also entitled to summary judgment.

¶ 1 Respondent Uninsured Employers' Fund (UEF) moves for summary judgment, asserting that Petitioner Donald T. McKinley is not entitled to Montana workers' compensation benefits for injuries he sustained in a motor vehicle accident near Billings. The UEF argues that McKinley did not have an employment relationship with a West Virginia company, Pressure Washing Systems, LLC (Pressure Washing Systems), from which McKinley rented a pickup truck.

¶ 2 McKinley moves for summary judgment, asserting that he had an employment relationship with Pressure Washing Systems pursuant to the agreement under which he rented the truck. Because Pressure Washing Systems did not have Montana workers' compensation insurance, McKinley asserts that the UEF is liable for his benefits. McKinley also claims that the UEF's denial of liability was unreasonable and that he is therefore entitled to a penalty and attorney fees.

¶ 3 Neither the UEF nor McKinley requested a hearing.

¶ 4 For the reasons discussed below, this Court grants the UEF's summary judgment motion, grants summary judgment to Pressure Washing Systems, and denies McKinley's summary judgment motion.

FACTS

¶ 5 At all times relevant to this case, McKinley was a resident of West Virginia.

¶ 6 Pressure Washing Systems was a West Virginia limited liability company. Its business was washing concrete structures and parking lots.

¶ 7 Pressure Washing Systems did not have an office nor any facilities in Montana. It never engaged in the pressure washing business in Montana.

¶ 8 Terri Brown owned half of Pressure Washing Systems. Jason Flynn owned the other half. Brown is a resident of West Virginia and has not lived nor worked in Montana. Brown managed the company and was responsible for its day-to-day operations, including hiring and firing employees. Flynn did not participate in Pressure Washing Systems' day-to-day operations.

¶ 9 Brown's romantic partner and the father of her children, Collin Cehrs, worked as an employee of Pressure Washing Systems as its "Chief Engineer." Cehrs had no ownership interest in Pressure Washing Systems. Although Cehrs was oftentimes present when Brown hired Pressure Washing Systems' employees, he had no authority to hire or fire its employees.

¶ 10 In early 2018, Brown and Flynn decided to close Pressure Washing Systems and sell its assets.

¶ 11 On May 15, 2018, Pressure Washing Systems issued the last paychecks to its employees.

¶ 12 Pressure Washing Systems owned four, 2017 Dodge Ram 2500 pickup trucks. After Brown and Flynn decided to close Pressure Washing Systems, they sold two of these trucks.

¶ 13 In August 2018, Brown, Cehrs, and McKinley entered into agreements under which Cehrs and McKinley could use Pressure Washing Systems' remaining trucks to haul RVs for Pinnacle Fleet, an RV transport company with a location in Indiana. McKinley acknowledges that he "was hired by Col[l]in Cehrs as a driver." Pinnacle Fleet pays its drivers with prepaid credit cards, but Cehrs agreed to pay McKinley for his driving services. On August 13, 2018, Brown drafted a statement, which was notarized, stating:

I Terri Brown give permission to Collin Cehrs & Donald McKinley to drive my trucks to haul campers for Pinnacle Fleet.

I'm the owner of Pressure Washing Systems LLC.

/s/ Terri L. Brown

In exchange for permission to use the truck, McKinley agreed to pay Brown and Cehrs the amount of Pressure Washing Systems' truck's monthly loan payments.

¶ 14 Shortly thereafter, Cehrs and McKinley began transporting RVs from Pinnacle Fleet's location in Indiana to locations in other states. They used Pressure Washing Systems' trucks.

¶ 15 In mid-January 2019, Brown asked Cehrs to tell McKinley that he needed to return the truck he had rented to West Virginia, so it could be sold.

¶ 16 On January 22, 2019, McKinley suffered injuries in a motor vehicle accident while driving Pressure Washing Systems' truck near Billings. He was hauling an RV.

¶ 17 In an answer to an interrogatory asking McKinley to identify who paid him for his driving services on January 22, 2019, McKinley stated, in relevant part: "Collin Cehrs paid [me] through Pinnacle Fleet for driving services that were performed on January 22, 2019."

¶ 18 On April 17, 2019, McKinley filed a First Report of Injury or Occupational Disease, asserting that he was an employee of Pressure Washing Systems at the time of the accident.

¶ 19 Pressure Washing Systems did not have Montana workers' compensation insurance. Thus, the claim was submitted to the UEF.

¶ 20 On April 25, 2019, the UEF denied liability for McKinley's claim, asserting that Pressure Washing Systems was not a Montana employer under § 39-71-117(4), MCA, and that McKinley was not a Montana employee under § 39-71-118(8), MCA.

¶ 21 In his Petition for Hearing, McKinley alleges he "was injured while truck driving/working for Pressure Washing Systems, LLC."

LAW AND ANALYSIS

¶ 22 This case is governed by the 2017 version of the Montana Workers' Compensation Act (WCA) since that was the law in effect at the time of McKinley's injury.¹

¶ 23 To prevail on a motion for summary judgment, the moving party must meet its initial burden of showing the "absence of a genuine issue of material fact and entitlement to judgment as a matter of law."² "[If] the moving party meets its initial burden to show the absence of a genuine issue of fact and entitlement to judgment, the burden shifts to the party opposing summary judgment either to show a triable issue of fact or to show why the undisputed facts do not entitle the moving party to judgment."³

Issue 1: Is there a material issue of fact?

¶ 24 McKinley argues that there is an issue of fact as to whether he was hired to work for Pressure Washing Systems under the agreements he reached with Brown and Cehrs. However, the terms of the agreements are undisputed. McKinley actually disputes whether the terms of the agreements create an employment relationship between himself and Pressure Washing Systems. This dispute does not create an issue of fact because, "[a] mere disagreement about the interpretation of a fact or facts does not amount to genuine issues of material fact."⁴ Thus, there are no issues of material fact for this Court to resolve at trial.

Issue 2: Did McKinley have an employment relationship with Pressure Washing Systems?

¶ 25 Section 39-71-401(1), MCA, states, in relevant part:

Except as provided in subsection (2), the Workers' Compensation Act applies to all employers and to all employees. An employer who has any employee in service under any appointment or contract of hire, expressed or implied, oral or written, shall elect to be bound by the provisions of compensation plan No. 1, 2, or 3.

The Montana Supreme Court has explained that under this statute, the WCA does not apply unless there is both an "employer," as defined in § 39-71-117, MCA, and an "employee," as defined in § 39-71-118, MCA.⁵

¶ 26 The UEF makes two arguments in support of its position that the WCA does not apply to the relationship between McKinley and Power Washing Systems. First, the UEF argues that because McKinley was working for a motor carrier and because neither Pressure Washing Systems, Pinnacle Fleet, nor Cehrs had a place of business in Montana, McKinley did not have a Montana employer under § 39-71-117(4), MCA. That statute states, in relevant part:

An interstate or intrastate common or contract motor carrier that maintains a place of business in this state and uses an employee or worker in this state is considered the employer of that employee, is liable for workers' compensation premiums, and is subject to loss experience rating in this state . . . .

The UEF relies on Benton v. Uninsured Employers' Fund, where this Court ruled that an Oregon motor carrier was not an employer under § 39-71-117(4), MCA, even though it had a truck drive through Montana, because it did not maintain a place of business in Montana.⁶

¶ 27 Second, the UEF argues that McKinley's agreements with Brown and Cehrs do not establish that McKinley had an employment relationship with Pressure Washing Systems. The UEF notes that Pressure Washing Systems neither hired nor paid McKinley for his driving work and that the only...