Royse v. Lexington Ins.

Filed 11/26/08 Royse v. Lexington Ins. CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

In this personal injury action, plaintiff Joseph Royse appeals from summary judgments entered in favor of defendants Lexington Insurance Company and DC3-E, LLLP. He contends there are triable issues of fact on the questions of his employment status, and his claims for premises liability and civil conspiracy. He also argues that the trial court erroneously ruled on evidentiary objections. We affirm.

I. FACTUAL BACKGROUND

In 2003, Jonathan Phelps purchased property located at 8028 Centerville Road in Ferndale for his wife, Esther, known as the Lost Coast Ranch.[1] Esther intended to utilize the property as a summer home for friends and family. For tax purposes, the Phelpses placed title to the property in the name of Heartworks Studios, LLC, a California limited liability company. Esther is the sole shareholder of Heartworks. Jonathan purchased a homeowners policy for the property from Lexington.

DC3-E operates a recording studio in Ferndale. The Phelpses are limited partners of DC3-E. DC3-E does not share expenses or profits with Heartworks, Phelps Enterprises, LLC,[2] or the Phelpses. Nor is there a joint venture between the entities.

In September 2003, Kathleen Wells began work at the recording studio. In the spring of 2004, Esther hired Wells as the manager for the ranch. Wells, in turn, hired Royse to do some landscaping and maintenance work on the ranch. Royse was paid $10 per hour. On August 3, 2004, Royse was cleaning the gutters of the ranch when the manlift he was operating hit a power line causing him to be electrocuted and seriously injured. Shortly after the accident, Lexington was notified of the accident. Lexington accepted the claim and provided workers compensation insurance coverage to Royse as a Residence Employee under the policy. As of November 14, 2006, Lexington had paid Royse and his health care providers a total of $633,453. Lexington filed a complaint in intervention in this action seeking reimbursement of the amount paid in workers compensation benefits. Royse subsequently sought to intervene. The court denied the motion.[3]

On March 8, 2006, Royse filed a fourth amended complaint for damages. He alleged that the Phelpses and their attorneys conspired with Lexington to fraudulently claim that Royse was a resident employee of the Phelpses at the time of the accident so that Heartworks, Phelps Enterprises and DC3-E would not be subject to Labor Code provisions pertaining to overtime, taxes, state disability insurance, and workers compensation insurance. In addition, he claimed that they conspired to intentionally misrepresent Royses true employer in order to cover up the failure of Heartworks, DC3-E and Phelps Enterprises to provide workers compensation insurance. He claimed that he relied on their representations and was damaged because of their failure to carry workers compensation insurance. Royse further alleged that DC3-E, Heartworks and Phelps Enterprises were negligent in not providing a safe working environment, in failing to provide adequate training and supervision, and in failing to warn Royse of the danger of the high voltage power lines; and that they were negligent per se because their actions were in violation of California Code of Regulations, title 8, section 2946, subdivision (b)(2) in allowing Royse to perform work within six feet of the power lines.

Lexington moved for summary judgment contending that Royse could not satisfy the elements of intentional misrepresentation because the Phelpses had a homeowners insurance policy at the time of the accident which included workers compensation coverage for resident employees, there was no false claim that Royse was a resident employee under the policy, and there was no intent to defraud Royse. DC3-E moved for summary judgment/adjudication on various grounds, including that it was not Royses employer on the day of the accident and, therefore, had no duty to provide him workers compensation. Royse opposed the motions, arguing that he was not a resident employee under the policy but was instead employed by DC3-E and Heartworks. The trial court granted both motions, finding that Royse failed to show that Lexington conspired with the Phelpses to claim that Royse was a resident employee at the time of the accident, and that DC3-E had no liability for Royses injuries under any theory of employment and, therefore, no obligation to provide him with workers compensation insurance.

II. DISCUSSION

A. Standard of Review

We review a trial courts grant of summary judgment de novo. (Scheiding v. Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, 69.) [T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) California law requires that a defendant moving for summary judgment . . . present evidence, and not simply point out that the plaintiff does not possess, and cannot reasonably obtain, needed evidence. (Id. at p. 854.) A defendants  declarations and evidence must either establish a complete defense to plaintiffs action or demonstrate the absence of an essential element of plaintiffs case. If plaintiff does not counter with opposing declarations showing there are triable issues of fact with respect to that defense or an essential element of its case, the summary judgment must be granted.  (Saldana v. Globe-Weis Systems Co. (1991) 233 Cal.App.3d 1505, 1510-1511, quoting Gray v. America West Airlines, Inc. (1989) 209 Cal.App.3d 76, 81.)

B. DC3-Es Motion

Royse first argues that there is a triable issue of fact on the question of his employer. He contends that DC3-E is liable for his injuries because he could not have been working under the direction of Esther but rather was an employee of both DC3-E and Heartworks.

Royses argument ignores the evidence. While the parties agree that Royse worked for DC3-E at the recording studio, he was paid separately for those hours by DC3-E, and was not working for the studio at the time of the accident. And, Royse admitted in his deposition that he worked for Esther at the ranch.

DC3-E urged below, and argues here, that it relinquished all control over Royses activities when he was employed at the ranch, and that under the borrowed servant rule, it was not liable for the actions of Esther and her employees at the ranch.

A special employment relationship arises when an employer lends an employee to another employer and relinquishes to the borrowing employer all right of control over the employees activities. [Citation.] The borrowed employee is  held to have two employershis original or general employer and a second, the special employer.  [Citation.] In this dual employer situation, the employee is generally limited to a statutory workers compensation remedy for injuries he receives in the course of his employment with the special employer; he may not bring a separate tort action against either employer. (Riley v. Southwest Marine, Inc. (1988) 203 Cal.App.3d 1242, 1247‑1248 (Riley).)

The existence of a special relationship is generally a question of fact reserved for the trier of fact. (Kowalski v. Shell Oil Co. (1979) 23 Cal.3d 168, 175 (Kowalski).) Where, as here, however, the evidence is not in conflict and no conflicting inferences can be drawn from the facts, the issue becomes a question of law that may properly be resolved on a motion for summary judgment. (Wedeck v. Unocal Corp. (1997) 59 Cal.App.4th 848, 857.)

In determining whether a special employment relationship exists, the primary consideration is whether the special employer has the right to control and direct the activities of the alleged employee or the manner and method in which the work is performed. (Kowalski, supra, 23 Cal.3d at p. 175.) Evidence that the alleged special employer has the power to discharge a worker is strong evidence of the existence of a special employment relationship. [Citations.] The payment of wages is not, however, determinative. [Citation.] . . . . Evidence that (1) the employee provides unskilled labor, (2) the work he performs is part of the employers regular business, (3) the employment period is lengthy, and (4) the employer provides the tools and equipment used, tends to indicate the existence of special employment. (Id. at p. 177, fn. omitted.)

Here, there was uncontroverted evidence that Wells hired Royse to do maintenance work at the ranch. Esther, in turn, had hired Wells as the ranch manager and authorized her to hire Royse and others to do work around the ranch.[4] In doing his work, Royse utilized tools and equipment supplied by the ranch. Wells rented the manlift that Royse was operating at the time of the accident. While Royse had also worked for DC3‑E at the recording studio, there was no evidence that he was working for DC3-E when he was at the ranch. Moreover, Wells, in her capacity as the ranch manager, maintained control over the details of Royses work while he was employed at the ranch. (See Kowalski, supra, 23 Cal.3d at p. 175.) Finally, at the time of the accident, Royce was indisputably acting at the direction of Wells. Given this evidence, Royse was a special employee of the ranch at the time of the accident; he was, thus, generally limited to a statutory workers compensation remedy for injuries he receive[d] in the course of his employment with the special employer . . . . (Riley, supra, 203 Cal.App.3d at p. 1248.)[5]

Royse further argues that DC3-E is liable to him under a premises liability theory. The trial court found that DC3-E had no ownership interest in the ranch and, therefore, could not be liable based on premises liability. Royse takes issue with the courts finding, asserting that DC3-E could be found liable if it controlled the property. (See Alcaraz v. Vece (1997) 14 Cal.4th 1149, 1162 [defendant need not own, possess and control property in order to be held liable; control alone is sufficient].) While a person who exercises control over property may be held liable for injuries on the property, there is no evidence here that DC3-E exercised any control over the ranch. Accordingly, the trial courts finding that DC3-E was not liable to Royse under premises liability was correct.

Royse also argues that the court should have sustained his objections to the declarations of Wells, Esther, Martin Woodlee, and George Enos.[6] He argues that the testimony of Wells, Woodlee and Enos was speculative on the issue of Royses employer and that Esthers testimony that she owned the ranch was an inadmissible legal conclusion. The trial court did not abuse its discretion in overruling Royses objections to the declarations. The witnesses attested to facts within their personal knowledge; their statements were neither speculative nor legal conclusions. No error appears.

C. Lexingtons Motion

Royse argues that the trial court erred in granting summary judgment on his misrepresentation cause of action because it mistakenly believed that he was required to show that Lexington and the Phelpses acted in concert. The trial court did not so rule. The courts ruling stated simply that Royse failed to state a cause of action against Lexington and had not sufficiently shown that Lexington, Jonathan Phelps and Esther Phelps, conspired to fraudulently claim that Joseph Royse was a resident employee of [the Phelpses] at the time of the subject accident.

There was no evidence before the court to support Royses theory that the Phelpses and Lexington conspired to misrepresent his employee status. In order to establish misrepresentation, Royse was required to show: (1) a false representation, concealment, or nondisclosure; (2) knowledge of falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1108.) As Lexington contended below, Royses theory that it conspired with the Phelpses to claim that he was a resident employee within the workers compensation coverage of the policy so that the Phelpses would not be in violation of the Labor Code cannot be substantiated. The evidence adduced below demonstrated that Royse was employed at the ranch, that the ranch was insured under a homeowners insurance policy issued by Lexington that contained workers compensation coverage for residence employees, and that Lexington paid Royse and his health care providers over $600,000 of benefits under the policy. There was no evidence of a false representation, or any evidence that the Phelpses or Lexington concealed Royses true employer. Indeed, even Royse acknowledged in his deposition that he worked for Esther.

Royse argues Lexington exhibited its knowledge that Mr. Royse did not work for Mrs. Phelps through its actions in the workers compensation case . . . . This contention has no merit.

Two months after Royse filed this action, Royses treating physician initiated a claim for unpaid medical expenses with the Workers Compensation Appeals Board against AIG Claims (who handled the Royse claim on behalf of Lexington). Royses attorney twice objected to these proceedings, claiming that the Phelpses and Lexington were not proper party defendants and refusing to admit or allege that Royse had been employed by the Phelpses. In the trial court, Royse proffered the declarations of the physicians accountant and of his attorney, who were in attendance at a WCAB mandatory settlement conference. The declarations, purporting to describe the proceedings, stated that Lexington refused to offer evidence of employment or have the matter sent up on an appeal with respect to the employment issue. According to Royse, Lexingtons declination demonstrated that Lexington was concerned with the collateral estoppel effect the judges decision could have on this case.

The testimony regarding Lexingtons alleged conduct at the settlement conference is inadmissible. The trial court correctly sustained Lexingtons objections to the declarations as hearsay, as a violation of Evidence Code section 1152, and as speculation. Royses speculative contention, moreover, is irrelevant. No doubt it was, initially, Royses concern about the potential collateral estoppel effect of the WCAB decision on his pending action that caused him to interject himself in those proceedings. That both parties may have wanted the employment issue to be decided on a full record in the trial court rather than before the WCAB in no way proves that Lexington exhibited . . . knowledge that Mr. Royse did not work for Mrs. Phelps.

Inasmuch as Royse failed to show any representation or concealment, he cannot prevail on his cause of action for misrepresentation. We, therefore, need not address the other issues Royse raises concerning that cause of action.[7]

D. Evidentiary Rulings

Royse contends that the trial court erred in its evidentiary rulings in connection with the Lexington summary judgment motion. As Lexington points out, Royse has failed to support his argument with appropriate citations to the record or any legal authority. Moreover, we have previously concluded that the courts evidentiary rulings on Royses objections to the declarations of Wells, Esther, Woodlee and Enos were proper. We have nonetheless reviewed the courts evidentiary rulings on the moving papers submitted by Royse and Lexington and conclude that the court did not abuse its discretion.[8]

Finally, on September 20, 2007, Royse moved to present new evidence on appeal. On October 12, 2007, we denied the motion without prejudice to whatever rights appellant may have to raise the matter in the trial court after remittitur issues, and in the event the judgment is affirmed on appeal. We decline Royses request to reconsider our order.

III. DISPOSITION

The judgments are affirmed.

________________________

RIVERA, J.

We concur:

___________________________

REARDON, Acting P. J.

___________________________

SEPULVEDA, J.

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[1] For ease of reference, we will use Jonathans and Esthers first names.

[2] The court dismissed Phelps Enterprises from the action.

[3] This court granted Royses request partially dismissing the appeal with prejudice only as to the issues arising from the courts intervention ruling.

[4] While there is limited evidence in the record that DC3-E had Wells on its payroll, that is not determinative on the question of Royses status as a special employee of the ranch. (Kowalski, supra, 23 Cal.3d at p. 177.)

[5] Royse also contends that Esther, as the sole member of Heartworks, was not Royses employer, and that the trial court erred in disregarding Heartworkss existence. It is premature for us to decide the question; Royses case against Heartworks is not before us in this appeal.

[6] Woodlee was Royses supervisor at the recording studio. Enos was the caretaker of the ranch.

[7] Royse argues that the trial court erred in requiring evidence that the parties acted in concert and that there was substantial evidence to support his cause of action for misrepresentationthat Lexington had knowledge of false representations, that Lexington intended to defraud him, that he justifiably relied on Lexingtons misrepresentations, and that he suffered resulting damage.

[8] Royse also suggests that the court erred in denying a continuance of the hearing on the summary judgment motion. Again, he presents no legal argument in support of his argument. The record reveals that the trial court denied the motion as untimely because Royse brought the motion the afternoon of the last business day before the hearing. On this record, we cannot conclude that the court abused its discretion in denying the motion.