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Dunnington v. State Compensation Insurance Fund

Court of Workers Compensation of Montana

November 5, 1998

MIKEL DUNNINGTON Petitioner
v.
STATE COMPENSATION INSURANCE FUND Respondent/Insurer for CENTURY CONSTRUCTION COMPANY and MOR-BERG, INCORPORATED Employer.,

          Date Submitted: September 16, 1998

          FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

          MIKE MCCARTER JUDGE.

         Summary: Dispute involved calculation of claimant's time of injury wage for purposes of permanent partial disability benefits where he worked for a corporation closely linked to another corporation for which he had previously worked. Claimant wanted the Court to aggregate his wages from both companies to yield a higher wage rate. He had two theories: (1) that the two companies should be considered a single employer; and (2) that he was concurrently employed within the meaning of section 39-71-123(4), MCA (1995.)

         Held: Under section 39-71-123(3), MCA (1995), the insurer is required to use the average actual earnings for the four pay periods immediately preceding injury unless the use of the last four pay periods does not accurately reflect the claimant's employment history with the employer and good cause requires use of additional weeks up to one year. Contrary to claimant's argument, the two companies were not the same employer where they were separate corporations and separate legal entities, kept separate accounts, paid their employees out of separate accounts, had their own employees - most of whom were not shared - and provided different services. The fact of common ownership is not sufficient to disregard the corporate veil where there was no evidence that one company was the alter ego, instrumentality or agent of the other or that one corporate entity was a subterfuge. The fact that, after injury, claimant was employed by one entity in a job created to accommodate him, and infrequently did work for the other entity, does not prove commingling where pre-injury he had been laid off by one company prior to beginning exclusive work for the other company. Similarly, claimant did not prove he had "concurrent employment" within section 39-71-123(4), MCA (1995) requiring the aggregation of wages where he was not actually employed by the other entity at the time of the injury.

         Topics:

         Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-123(3), MCA (1995). Claimant was injured while working for company with close ties to second company for which claimant had previously worked. Claimant argued the insurer should aggregate his earnings from both companies when calculating wage rate for purposes of permanent partial disability benefits. The Court refused. Under section 39-71-123(3), MCA (1995), the insurer is required to use the average actual earnings for the four pay periods immediately preceding injury unless the use of the last four pay periods does not accurately reflect the claimant's employment history with the employer and good cause requires use of additional weeks up to one year. Contrary to claimant's argument, the two companies were not the same employer where they were separate corporations and separate legal entities, kept separate accounts, paid their employees out of separate accounts, had their own employees - most of whom were not shared - and provided different services. The fact of common ownership is not sufficient to disregard the corporate veil where there was no evidence that one company was the alter ego, instrumentality or agent of the other or that one corporate entity was a subterfuge. The fact that, after injury, claimant was employed by one entity in a job created to accommodate him, and infrequently did work for the other entity, does not prove commingling where pre-injury he had been laid off by one company prior to beginning exclusive work for the other company.

         Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-123(4), MCA (1995). Claimant did not prove he had "concurrent employment" within section 39-71-123(4), MCA (1995) requiring the aggregation of wages. Although the second company had close ties to the first, claimant's employment with the second company had terminated prior to his hire by the company where he was injured. Aggregation of wages is authorized under the statute only where a claimant is actually employed by another entity at the time of the injury.

         Wages: Aggregation. Claimant was injured while working for company with close ties to second company for which claimant had previously worked. Claimant argued the insurer should aggregate his earnings from both companies when calculating wage rate for purposes of permanent partial disability benefits. The Court refused. Under section 39-71-123(3), MCA (1995), the insurer is required to use the average actual earnings for the four pay periods immediately preceding injury unless the use of the last four pay periods does not accurately reflect the claimant's employment history with the employer and good cause requires use of additional weeks up to one year. Contrary to claimant's argument, the two companies were not the same employer where they were separate corporations and separate legal entities, kept separate accounts, paid their employees out of separate accounts, had their own employees - most of whom were not shared - and provided different services. The fact of common ownership is not sufficient to disregard the corporate veil where there was no evidence that one company was the alter ego, instrumentality or agent of the other or that one corporate entity was a subterfuge. The fact that, after injury, claimant was employed by one entity in a job created to accommodate him, and infrequently did work for the other entity, does not prove commingling where pre-injury he had been laid off by one company prior to beginning exclusive work for the other company.

         Wages: Concurrent Employment. Claimant did not prove he had "concurrent employment" within section 39-71-123(4), MCA (1995) requiring the aggregation of wages. Although the second company had close ties to the first, claimant's employment with the second company had terminated prior to his hire by the company where he was injured. Aggregation of wages is authorized under the statute only where a claimant is actually employed by another entity at the time of the injury.

         ¶1 The trial in this matter was held on September 16, 1998, in Great Falls, Montana. Petitioner, Mikel Dunnington (claimant), was present and represented by Mr. Torger S. Oaas. Respondent, State Compensation Insurance Fund (State Fund), was represented by Mr. Thomas E. Martello. No transcript of the trial has been prepared.

         ¶2 Exhibits: Exhibits 1 through 15 were admitted without objection.

         ¶3 Witnesses and Depositions: Claimant and J.R. Killham were sworn and testified. In addition, the parties submitted the depositions of claimant and Jack K. Morgenstern for the Court's consideration.

         ¶4 Issue Presented: As set forth in the Pretrial Order, the following issue is presented for decision:

Whether the State Fund utilized petitioner's correct time of injury wage when determining petitioner's permanent partial disability benefits.

         ¶5 Having considered the Pretrial Order, the testimony presented at trial, the demeanor and credibility of the witnesses, the depositions and exhibits, and the arguments of the parties, the Court makes the following:

         FINDINGS OF FACT

         ¶6 Claimant suffered an industrial accident on February 8, 1996, while steam cleaning a construction loader that was owned by Century Construction Company (Century).

         ¶7 At the time of his injury, claimant was employed by Mor-Berg, Incorporated (Mor-Berg) in a janitorial capacity.

         ¶8 Mor-Berg was insured by the State Fund, which accepted liability for the claim and paid temporary total disability benefits and medical expenses.

         ¶9 In computing and paying claimant benefits, the State Fund used claimant's Mor-Berg wages. Claimant alleges that the State Fund should also have included his wages from work he performed for Century. He tenders two theories for cumulating wages from the two companies. First, he argues that Mor-Berg and Century should be considered a single employer. Second, and alternatively, he argues that he was concurrently employed by Mor-Berg and Century and that his wages should be cumulated under the concurrent employment rule, § 39-71-123(4), MCA (1995).

         I. Mor-Berg and Century

         ¶10 Mor-Berg and Century are separate corporations. Jack Morgenstern (Morgenstern) is the sole shareholder of Mor-Berg. He owns 95% of Century's stock. (Morgenstern Dep. at 6, 10.)

         ¶11 Century is a road construction contractor. Its primary business is heavy highway and asphalt paving.

         ¶12 Mor-Berg is a large equipment service company. It was incorporated to provide equipment maintenance services to Century and to other central Montana companies with heavy equipment. At one point, 50% of Mor-Berg's business was servicing Century equipment while the other 50% was servicing the equipment of other companies. (Id. at 12.) However, by February of 1996, when claimant was injured, Mor-Berg was primarily servicing Century equipment and had only three other clients. (Id. at 18.)

         ¶13 Most of Century's work is performed outside of Lewistown on construction sites around Montana. (Id. at 20.) Mor-Berg ...


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