Granite State Insurance v. Hernandez

RAYMOND G. THIEME, JR., Judge (Retired, Specially Assigned). This appeal arises out of a decision by the Circuit Court for Baltimore City affirming a decision of the Workers’ Compensation Commission ordering Granite State Insurance Company (“Granite State”), appellant, to provide workers’ compensation insurance benefits for injuries sustained by Edin Najarro Hernandez, appellee, an employee of Granite State’s insured, Stephen Rosenberg, trading as Rhino Shield, appellee. Granite State presents the following three issues for our consideration: I. Whether the circuit court improperly applied the “presumption of correctness” to the decision of the Workers’ Compensation Commission; II. Whether the circuit court erred as a matter of law in failing to follow applicable Maryland law when reaching its decision; and, III.

Whether the circuit court erred in concluding that, at the time of the accident, appellee Hernandez was principally employed in Virginia and improperly concluded that the conditions for other states coverage were satisfied. For the reasons set forth below, we shall reverse the decision of the circuit court. ⁵⁵² Factual Background It is undisputed that on August 29, 2007, Edin Najarro Hernandez was injured while working as an employee of Stephen ■ Rosenberg, trading as Rhino Shield. Rhino Shield provides painting and other exterior ceramic coating products, and the subject accident occurred while Hernandez was working on a painting project for Rhino Shield at a church located in Baltimore, Maryland. A workers’ compensation claim was filed on behalf of Hernandez in the Workers’ Compensation Commission (the “Commission”) on September 25, 2007.

The Uninsured Employer’s Fund 1 was impleaded, and a hearing was held on December 11, 2007, concerning, inter alia, whether Granite State was the proper insurer to provide workers’ compensation insurance benefits for the injuries sustained by Hernandez. Rosenberg was the sole witness to testify before the Commission. He stated that in February or March 2006, he purchased the Rhino Shield franchise for the area outside the Capital Beltway. He uses his parents’ home address in ⁵⁵³ Virginia as his business address, receives mail there, meets with employees there, and lists that address on Rhino Shield’s invoices.

Rosenberg first heard of Hernandez, a painter, through a contact at BB & T Bank in Virginia. Rosenberg called Hernandez and later met with him at a Rhino Shield warehouse in Maryland. At that meeting, Rosenberg hired Hernandez as a painter, showed him a video about Rhino Shield, and discussed safety issues. The two agreed that Hernandez would be paid by the job.

Hernandez’s first job was to paint columns on a house in Potomac, Maryland, for which he was paid $600. His second job involved painting at a house in Davidsonville, Maryland, for which he was paid $1,700. Hernandez’s third, and final, job was to paint columns on a church in Baltimore City. On August 29, 2007, Rosenberg received a telephone call from Raul, the only other Rhino Shield employee working at the church, who told him that while he was in the bathroom he heard Hernandez’s ladder fall.

When Raul ran outside, he found Hernandez on the concrete steps of the church. At the time of his injury, Hernandez had been working for Rhino Shield for 11 days. Rosenberg testified that at the time he hired Hernandez he had jobs in Virginia, but he did not give them to Hernandez, even though he wanted to work in his home state of Virginia. Nevertheless, Rosenberg testified that both he and Hernandez anticipated that Hernandez would become the director of operations of painting and would base his operations out of Woodbridge, Virginia.

Rosenberg acknowledged that “we weren’t at that stage, but I think would have quickly been at that stage.” According to Rosenberg, if Hernandez had not been injured, most of his work would have been at Virginia locations. The workers’ compensation insurance policy at issue in the instant appeal was issued by Granite State to Rosenberg on September 7, 2006. The application for that coverage was ⁵⁵⁴ signed by Rosenberg and submitted to Granite State 2 on his behalf by his insurance agent, BB & T Insurance Services. The application lists Rosenberg’s parents’ address as the only “location” for which coverage was sought.

With regard to employee travel, the application stated: 14. will travel to DC & MD on incidental basis. All employees from VA. Client may travel to SC & GA, but will obtain WC coverage thru those states w/another agent. After the application for insurance coverage was accepted, Granite State issued a workers’ compensation and employers liability policy binder which provided, in part: This is to acknowledge receipt of an initial or deposit premium payment and your application for coverage through the Workers Compensation Insurance Plan for the State of VIRGINIA.

The “application notes” indicate that “[cjoverage has been requested for the following states: VA.” On September 7, 2006, Granite State issued a workers compensation and employers liability insurance policy (“the policy”) to Rosenberg at his parents’ Virginia address. The policy required Granite State to “pay promptly when due the benefits required of you by the workers compensation law,” and defined workers compensation law as “the workers or workmen’s compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page.” Item 3A of the policy provided: A. Workers Compensation Insurance: Part One of the policy applies to the Workers Compensation Law of the states listed here: VA. In addition, the policy provided that it “covers all of your workplaces listed in Items 1 and 4 of the Information Page; and it covers all other workplaces in Item 3.A. unless you have other insurance or are self-insured for such workplaces.” Item 1 of the Information Page listed the address of Rosenberg’s parents’ home in Virginia and Item 4 referenced an ⁵⁵⁵ “Extension of Information Page” which provides “State of Virginia Totals.” The policy also included a “Residual Market Limited Other States Insurance Endorsement,” which provided: PART THREE OTHER STATES INSURANCE A. How This Insurance Applies 1. We will pay promptly when due the benefits required of you by the workers compensation law of any state not listed in Item 3.A. of the Information Page if all of the following conditions are met: a.

The employee claiming benefits was either hired under a contract of employment made in a state listed in Item 3.A. of the Information Page or was, at the time of injury, principal [sic] employed in a state listed in Item 3.A. of the Information Page; and b. The employee claiming benefits is not claiming benefits in a state where, at the time of injury, (i) you have other workers compensation insurance coverage, or (ii) you were, by virtue of the nature of your operations in that state, required by that state’s law to have obtained separate workers compensation insurance coverage, or (iii) you are an authorized self-insurer or participant in a self-insured group plan; and c. The duration of the work being performed by the employee claiming benefits in the state for which that employee is claiming benefits is temporary. IMPORTANT NOTICE If you hire any employees outside those states listed in Item 3.A. on the Information Page or begin operations in any such state, you should do whatever may be required under that state’s law, as this endorsement does not satisfy the requirements of that state’s workers compensation law.

At the conclusion of the hearing, the Commission found, inter alia, that Granite State was the proper insurer; that on ⁵⁵⁶ August 29, 2007, Hernandez sustained an accidental injury arising out of and in the course of his employment; that Hernandez’s disability was the result of his accidental injury; and, that at the time he sustained his accidental injury, Hernandez was not engaged in willful misconduct. The Commission also dismissed the claim against the Uninsured Employers Fund. Granite State filed in the Circuit Court for Baltimore City a petition for judicial review of the decision of the Commission on the ground that it was not the proper insurer. Both Granite State and the Uninsured Employer’s Fund filed motions for summary judgment, which were denied.

A bench trial was held on October 17, 2008. Although served with a subpoena, Rosenberg failed to appear at the trial. The court found him unavailable for trial and considered the testimony he gave before the Commission. The court affirmed the decision of the Commission, finding that Granite State was the proper insurer of Rhino Shield for the accidental injury involving Hernandez.

In reaching that decision, the trial judge stated: As I said, for me, the issue comes down to those three requirements in the contract and more specifically, to the one. And that is, the employee being hired under contract of employment made in Virginia; or, at the time of injury, was principally employed in Virginia. And to come down even closer, at the time of injury, wasn’t principally employed in Virginia. And that issue, I seesaw back and forth.

I’m still not exactly sure — convinced, but I don’t need to be convinced. I simply — it’s a preponderance of the evidence. And if I’m sitting on that precipice of not knowing which way, there is a presumption. I was essentially convinced that at the time of the injury “was principally employed in Virginia” could not apply in this case, because he was, ... clearly hired in Maryland by a company that was located in Maryland.

He performed exclusively in Maryland. So, he went into Virginia and ⁵⁵⁷ bought some stuff with a credit card. But, other than that, everything was done in Maryland, et cetera, et cetera, et cetera. However — however, the testimony, that was presented at the Workers’ Compensation Commission and was read into the record here and was placed into evidence here, from the Workers’ Compensation Commission, was that he and his employer had been of the mind that they would — he would become the Director of Operations.

While it seemed to me that that was in the future and was not on the day of the accident; and, therefore, not terribly relevant, I have come to the conclusion that at the time — at the time of the accident, based on all the evidence in this transcript, at the time of the accident, this employee was not just employed as a painter, but he was employed and principally employed to be the Director of Operations. The work he was doing at the time was as a painter, but his employment — even at that time, his [sic] is the guy who is here on this job. He is employed at this time with the idea — and even though it is in the future, he is employed to bring him along as the Director of Operations. That’s my idea of having this guy.

He is the guy. As I said, I feel it’s a close call. But aided by the presumption that comes along with this as an appeal from the Workers’ Compensation Commission, I feel it’s enough to sustain the finding of the Workers’ Compensation Commission; and I will, therefore, do that; and further, affirm the Workers’ Compensation Commission’s finding that there was no willful misconduct on the part of the employee. Standard of Review Appeals from the Commission to the circuit court are conducted essentially as trials de novo.

Barnes v. Children’s Hospital, 109 Md.App. 543, 552 , 675 A.2d 558 (1996)(and cases cited therein). When the circuit court hears the case without a jury, our review of the factual findings is ⁵⁵⁸ governed by the clearly erroneous standard. Md. Rule 8-131(c). Pursuant to LE § 9-745(b)(l), “the decision of the Commission is presumed to be prima facie correct.” Our function is not to determine whether we might have reached a different conclusion on the evidence.

Barnes, 109 Md.App. at 553 , 675 A.2d 558 . Rather, we view the evidence in the light most favorable to the prevailing party, assume the truth of the evidence presented, and give the prevailing party the benefit of all favorable inferences fairly deducible from the evidence. Id. (citing Mercedes-Benz v. Garten, 94 Md.App. 547, 556 , 618 A.2d 233 (1993)).

We cannot set aside the trial court’s factual findings if there is any competent, material evidence to support them. Id. The clearly erroneous standard “does not apply to a trial court’s determinations of legal questions or conclusions based on findings of fact.” Heat & Power Corp. v. Air Products & Chemicals, Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990). As we stated in Barnes , The Maryland Workers’ Compensation Act, which entitles covered employees to compensation for accidental personal injuries that arise “out of and in the course of employment,” ... is a remedial statute.

Its provisions are liberally construed in favor of the employee. Thus, any ambiguity in the law is resolved in favor of the claimant. The doctrine of liberal construction does not mean, however, that coverage may be granted beyond that which is authorized by the provisions of the Act. Barnes, 109 Md.App. 543, 553-54 , 675 A.2d 558 .

In the appeal at hand, we are asked to consider whether the circuit court erred in determining that Granite State was the proper insurer. Resolution of that issue requires us to look to the terms of the insurance policy. In Maryland, “the interpretation of an insurance policy is guided by the same principles that apply to the construction of other contracts.” Philadelphia Indem. Ins.

Co. v. Maryland Yacht Club, Inc., 129 Md.App. 455, 467 , 742 A.2d 79 (1999). When construing a contract, our goal is to “ascertain and effectuate the intention ⁵⁵⁹ of the contracting parties.” Id. Maryland courts give “the words of the contract their ordinary and accepted meaning, looking to the intention of the parties from the instrument as a whole.” Finci v. American Cas. Co., 323 Md. 358, 369-70 , 593 A.2d 1069 (1991).

The contract is “[t]he primary source for determining the intent of the parties.” Hartford Accident & Indem. Co. v. Scarlett Harbor Assocs. Ltd. P’ship, 109 Md.App. 217, 291 , 674 A.2d 106 (1996) (and cases cited therein), aff'd, 346 Md. 122 , 695 A.2d 153 (1997). With these standards in mind, we shall discuss the issues presented by Granite.

Discussion I. Granite first contends that the circuit court improperly construed its role in the trial de novo from the Commission because it failed to apply applicable Maryland law and erroneously applied the presumption of correctness to the Commission’s factual finding that Hernandez was principally employed in Virginia at the time of the accident. According to Granite, even if the circuit court did not erroneously apply the presumption of correctness, but rather evaluated the evidence presented, its finding that Hernandez was principally employed in Virginia at the time of the accident was clearly erroneous because none of the evidence, nor any reasonable inference from it, can support such a conclusion. We agree and explain. From the record before us, it is unclear whether the circuit court erroneously treated the presumption of correctness as requiring it to accept the Commission’s finding that Hernandez was principally employed in Virginia or whether it weighed the evidence, and the inferences reasonably drawn from it, and reached the same conclusion as the Commission.

Nevertheless, whether by an erroneous application of the presumption of correctness or through its own evaluation of the evidence, the circuit court concluded that because Rosenberg contemplated the possibility that Hernandez might serve ⁵⁶⁰ as Rhino Shield’s director of operations and work in Virginia in the future, he was principally employed in Virginia at the time of the accident. Neither the facts presented before the Commission nor any reasonable inference from those facts support such a conclusion. It is undisputed that Rosenberg first met with Hernandez and hired him at a Rhino Shield warehouse in Temple Hills, Maryland. It is also undisputed that prior to the accident Hernandez worked on only three projects for Rhino Shield and that all three of those jobs were located in Maryland.

At the hearing before the Commission, Rosenberg testified as follows: [Counsel for Granite]: And on the three jobs then that Mr. Hernandez worked for you, they were all located in Maryland? [Rosenberg]: Correct. Q. When you hired Mr. Hernandez, did you have any Virginia jobs lined up? A. Yes, ma’am. Q. Was Mr. Hernandez assigned to work to [sic] any of those jobs?

A. No, just priorities. I had backed up some jobs. He wanted to work more in Virginia because he lived in Wood-bridge. [Counsel for Uninsured Employers Fund]: Okay. Based on the testimony that you’ve given, am I correct in understanding that had he not injured himself and continued to work for you, that most of his work would have been in Virginia locations? [Rosenberg]: With the traffic in the D.C. area and with the price of gasoline and time, Eddie [Hernandez] and I both had the same thought, that he would be the director of