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Martinez v. CMR Construction & Roofing of Texas, LLC

Supreme Court of Nebraska

March 22, 2019

Juan Martinez, appellee,
v.
CMR Construction & Roofing of Texas, LLC, defendant and third-party plaintiff, appellant, and Rene Menjivar and Texas Mutual Insurance Company, third-party defendants, appellees.

         1. Workers' Compensation: Appeal and Error. A judgment, order, or award of the compensation court may be modified, reversed, or set aside only upon the grounds that (1) the compensation court acted without or in excess of its powers; (2) the judgment, order, or award was procured by fraud; (3) there is not sufficient competent evidence in the record to warrant the making of the judgment, order, or award; or (4) the findings of fact by the compensation court do not support the order or award.

         2. ___: ___. An appellate court is obligated in workers' compensation cases to make its own determinations as to questions of law.

         3. ___: ___. Findings of fact made by the Workers' Compensation Court after review have the same force and effect as a jury verdict and will not be set aside unless clearly erroneous.

         4. Workers' Compensation. As the trier of fact, the Workers' Compensation Court is the sole judge of the credibility of witnesses and the weight to be given their testimony.

         5. Workers' Compensation: Liability. When a contractor fails to require a subcontractor to carry workers' compensation insurance and an employee of the latter sustains a job-related injury, the contractor is a statutory employer and, with the immediate employer subcontractor, is jointly and severally liable to pay compensation under the terms of the Nebraska Workers' Compensation Act.

         6. Workers' Compensation. When determining a loss of earning capacity for an injured worker, the four factors to consider under Neb. Rev. Stat. § 48-121 (Reissue 2010) are the worker's (1) eligibility to procure [302 Neb. 619] employment generally, (2) ability to earn wages, (3) ability to hold a job obtained, and (4) capacity to perform the work in the job in which the worker is engaged.

         7. Workers' Compensation: Words and Phrases. A worker who, solely because of his or her injury, is unable to perform substantial amounts of labor, either in his or her particular line of work, or in any other for which he or she would be fitted except for the injury, is totally disabled within the meaning of the workers' compensation law.

         8. Final Orders: Appeal and Error. Under Neb. Rev. Stat. § 25-1902 (Reissue 2016), the three types of final orders that an appellate court may review are (1) an order that affects a substantial right and that determines the action and prevents a judgment, (2) an order that affects a substantial right made during a special proceeding, and (3) an order that affects a substantial right made on summary application in an action after a judgment is rendered.

         9. Workers' Compensation: Final Orders. A workers' compensation case is a special proceeding.

         10. Final Orders: Appeal and Error. A substantial right is an essential legal right, not a mere technical right. A substantial right is affected if the order affects the subject matter of the litigation, such as diminishing a claim or defense that was available to the appellant prior to the order from which the appeal is taken.

         11. Final Orders. It is not enough that the right itself be substantial; the effect of the order on that right must also be substantial.

         12. Final Orders: Appeal and Error. A substantial right under Neb. Rev. Stat. § 25-1902 (Reissue 2016) is not affected when that right can be effectively vindicated in an appeal from the final judgment.

         13. Jurisdiction: States. Specific personal jurisdiction requires that the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.

         14. ___: ___. To exercise specific jurisdiction, the plaintiff's cause of action must arise out of, or be related to, the defendant's contacts with Nebraska.

         15. ___: ___. In order to give rise to specific personal jurisdiction, the defendant's conduct and connection with the forum state must be such that he or she should reasonably anticipate being haled into court there.

          Appeal from the Workers' Compensation Court: Daniel R. Fridrich, Judge.

          Benjamin E. Maxell, of Govier, Katskee, Suing & Maxell. PC, L.L.O., for appellant.

         [302 Neb. 620] James R. Walz for appellee Juan Martinez.

          Jason W. Grams and Stacy L. Morris, of Lamson, Dugan & Murray, L.L.P., for appellee Texas Mutual Insurance Company.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

          HEAVICAN, C.J.

         INTRODUCTION

         The Nebraska Workers' Compensation Court concluded that CMR Construction & Roofing of Texas, LLC (CMR), was a statutory employer under Neb. Rev. Stat. § 48-116 (Reissue 2010) of the Nebraska Workers' Compensation Act, [1]thus requiring it to compensate Juan Martinez for injuries sustained while acting as an employee of Rene Menjivar, a CMR subcontractor.

         CMR challenges the compensation court's determination under § 48-116 of what constitutes the term "employer" and alleges the compensation court lacked personal jurisdiction over Texas Mutual Insurance Company (Texas Mutual), a workers' compensation insurance company domiciled and having its principal place of business in Texas. CMR also challenges the compensation court's findings regarding earning capacity, attorney fees, and entitlement to future medical care. We affirm.

         BACKGROUND

         CMR is engaged in the repair and replacement of the roofs of single family dwellings anywhere in the continental United States, corresponding to the aftermath of severe weather conditions. In 2014, CMR engaged Menjivar as a subcontractor and at that time, required Menjivar to produce workers' compensation insurance, which CMR verified. CMR further required Menjivar to add CMR to its workers' compensation policy and produce a certificate that demonstrated CMR would be notified [302 Neb. 621] by Menjivar's insurance carrier, Texas Mutual, before the cancellation or expiration of the policy.

         CMR agreed to repair a residential roof in Omaha, Nebraska. CMR subsequently assigned the roofing project to Menjivar. On March 12, 2015, Martinez, employed by Menjivar, was working on the roof when he fell two stories and suffered significant injuries to his back, hip, and legs. Martinez was treated at various medical facilities in Omaha.

         On December 11, 2015, Martinez initiated an action in the compensation court to recover for his injuries. Martinez moved for summary judgment, and in the course of litigating that motion, Martinez and CMR agreed that Menjivar previously possessed valid workers' compensation insurance through Texas Mutual, but that the policy of insurance was canceled on December 16, 2014, due to nonpayment.

         On August 17, 2016, following a motion for summary judgment, the compensation court found that CMR was the statutory employer of Martinez. The court specifically noted in response to Martinez' third set of requests for admissions, that CMR admitted it had "created or carried into operation a 'scheme, artifice, or device' as contemplated by Neb. Rev. Stat. §48-116" to avoid employer liability. On September 6, CMR sought an interlocutory appeal seeking to reverse the employer determination, which on October 27, in case No. A-16-857, was summarily dismissed by the Nebraska Court of Appeals.

         During the course of the workers' compensation proceedings, Texas Mutual sought to be dismissed from the suit on the basis that the court lacked personal jurisdiction over it. CMR offered the affidavit of its attorney in opposition to the motion to dismiss filed by Texas Mutual. That affidavit contained the policy of insurance between Menjivar and Texas Mutual, with CMR added as an additional insured. The policy of insurance shows that Texas Mutual's company office is in Austin, Texas, and further that Texas Mutual issued the policy to CMR, whose office was in Haltom City, Texas.

         [302 Neb. 622] Evidence in the record demonstrates that Texas Mutual is a creation of the Texas Legislature as an insurer of last resort and does not provide insurance or do business in the State of Nebraska. The record further demonstrates that in item 3(A) of the policy procured in this case, Texas is the only state in which benefits of the workers' compensation insurance applies. The court found that the evidence offered by CMR failed to establish a prima facie case of personal jurisdiction.

         Martinez also opposed Texas Mutual's motion to dismiss and offered exhibit 35, a workers' compensation insurance policy between Menjivar and Texas Mutual. Exhibit 35 showed that a policy of workers' compensation insurance was issued to Menjivar at an address in Houston, Texas. Texas Mutual's address was noted to be in Austin. The court again found that this exhibit did nothing to show the existence of any contacts between Texas Mutual and Nebraska.

         The court noted that Texas Mutual had initiated a declaratory action in the State of Texas, asking a Texas court to determine whether the policy of workers' compensation insurance issued by Texas Mutual afforded coverage for the injuries suffered by Martinez. The compensation court ultimately found that Texas was the proper forum to decide a dispute between two Texas companies involving a policy of workers' compensation insurance that was issued in Texas, and it therefore granted Texas Mutual's motion to dismiss. On September 20, 2017, CMR filed a second interlocutory appeal with the Court of Appeals, seeking review of the trial court's finding that it lacked personal jurisdiction over Texas Mutual. On October 27, in case No. A-17-1020, the Court of Appeals dismissed the appeal without opinion.

         On January 12, 2017, the compensation court held a hearing on Martinez' second motion for partial summary judgment, in which Martinez sought a finding and award of, among other things, attorney fees. On February 10, the compensation court entered partial summary judgment in favor of Martinez, finding that Martinez was entitled to "a reasonable attorney's fee [302 Neb. 623] pursuant to Neb. Rev. Stat. § 48-125 for [CMR's] failure to pay the medical bill from [a medical center in Omaha] within thirty days of its receipt."

         On February 13, 2018, the compensation court held a trial in this case. The court issued its award on March 23. During trial, the court resolved the outstanding issues of the nature and extent of the injuries Martinez suffered on March 12, 2015, the extent of Martinez' entitlement to temporary and permanent disability benefits, CMR's liability for medical bills incurred by Martinez, and Martinez' entitlement to an award of future medical care.

         The court found that Martinez was entitled to temporary total disability benefits for the 3 months he was off work after the accident. The court relied on the opinion of the physician who treated Martinez' femur fracture, as well as the testimony of Martinez, to find that Martinez was temporarily totally disabled from and including March 12 through and including June 12, 2015, a period of 13.2857 weeks. The court found that Martinez was entitled to temporary total disability benefits at the weekly rate of $761, which was the maximum rate for injuries in 2015.

         Finding insufficient evidence, the compensation court declined to award Martinez temporary partial disability benefits. The court found that Martinez had reached maximum medical improvement from all of his injuries on October 12, 2016. Relying on the testimony of Dr. Sunil Bansal, a physician who examined Martinez, the court further found that Martinez suffered permanent impairment to his whole body due to his neck, head, and back injuries.

         Having considered all of the evidence, including the opinion of the agreed-upon vocational rehabilitation counselor, the court found that Martinez had suffered an 80-percent loss of earning capacity. Based upon that factual finding, the court found that Martinez was entitled to permanent partial disability benefits at the weekly rate of $613.34, starting June 13, 2015, and continuing for 286.7143 weeks.

         [302 Neb. 624] CMR was ordered to pay a total of $52, 980.58 in medical and physical therapy expenses. The court further found that Martinez was entitled to an award of future medical care for his neck injury only.

         ASSIGNMENTS OF ERROR

         CMR assigns, consolidated and restated, that the compensation court erred in (1) finding that CMR was the statutory employer of Martinez and that therefore CMR was liable for the payment of any awarded indemnity, medical, or other benefit to Martinez; (2) awarding Martinez an excessive loss of earning capacity; (3) finding that CMR was liable for the payment of attorney fees to Martinez for unpaid medical bills related to Martinez' injuries; (4) finding that Martinez is entitled to future medical care; and (5) finding that the court lacked personal jurisdiction over Texas Mutual.

         STANDARD OF REVIEW

         A judgment, order, or award of the compensation court may be modified, reversed, or set aside only upon the grounds that (1) the compensation court acted without or in excess of its powers; (2) the judgment, order, or award was procured by fraud; (3) there is not sufficient competent evidence in the record to warrant the making of the judgment, order, or award; or (4) the findings of fact by the compensation court do not support the order or award.[2]

         An appellate court is obligated in workers' compensation cases to make its own determinations as to questions of law.[3] Findings of fact made by the Workers' Compensation Court after review have the same force and effect as a jury verdict and will not be set aside unless clearly erroneous.[4]

         [302 Neb. 625] As the trier of fact, the Workers' Compensation Court is the sole judge of the credibility of witnesses and the weight to be given their testimony.[5]

         V. ANALYSIS

         CMR 's Liability for Martinez' Injuries.

         CMR assigns that it was not liable for Martinez' injuries. CMR argues that it is not a statutory employer under § 48-116. because it had taken all requisite steps to ensure that Menjivar, its subcontractor, had proper workers' compensation coverage for its employees and therefore was excluded from the status of a statutory employer under § 48-116.

         The Nebraska Workers' Compensation Act applies to every nonresident employer performing work in the state who employs one or more employees in the regular trade, business, profession, or vocation of such employer.[6] Workers' compensation coverage must be obtained from an insurance company licensed to provide workers' compensation coverage in Nebraska, unless the employer is authorized to self-insure workers' compensation liability under Nebraska law.[7] The record contains no ...


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