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Caus v. Paul Hug d/b/a Hug Construction Company, Hug Contracting Company, Crown Asphalt Paving, LLC, P. Hug Contracting, LLC

CASE NO. 5392 CRB-4-08-11

COMPENSATION REVIEW BOARD

WORKERS’ COMPENSATION COMMISSION

JANUARY 22, 2010

ALBERTO CAUS

CLAIMANT-APPELLEE

v.

PAUL HUG d/b/a HUG CONSTRUCTION COMPANY, HUG CONTRACTING COMPANY, CROWN ASPHALT PAVING, LLC, P. HUG CONTRACTING, LLC

EMPLOYER

NO RECORD OF INSURANCE

RESPONDENT-APPELLANT

and

SECOND INJURY FUND

RESPONDENT-APPELLEE

APPEARANCES:

The claimant was represented by John Bochanis, Esq., and Thomas Weihing, Esq., Daly, Weihing & Bochanis, 1776 North Avenue, Bridgeport, CT 06604.

The respondent-employer was represented by Robert Jahn, Esq., Morrison Mahoney LLP, One Constitution Plaza, 10th Floor, Hartford, CT 06103.

The Second Injury Fund was represented by Kenneth Kennedy, Esq., Assistant Attorney General, Office of the Attorney General, 55 Elm Street, P.O. Box 120, Hartford, CT 06141-0120 who did not file a brief or appear at oral argument.

This Petition for Review from the October 23, 2008 Finding and Award from the Commissioner acting for the Fourth District was heard November 20, 2009 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners Peter C. Mlynarczyk and Randy L. Cohen.

OPINION

JOHN A. MASTROPIETRO, CHAIRMAN. The respondent, Paul Hug, appeals from a Finding and Award granted to the claimant, Alberto Caus.1 The Finding and Award found the respondent employed the claimant at the time of his June 25, 2004 injury. We find this was a factual determination of the trial commissioner based on the evidence submitted and, as such, affirm the Finding and Award and dismiss this appeal.

The trial commissioner found the following facts. The claimant was hired by Alberto Barbosi, who was employed as a supervisor by the respondent, Paul Hug. The commissioner found Mr. Hug conducted his business through a variety of entities, including Paul Hug d/b/a Hug Construction Company, Hug Contracting Company, Crown Asphalt Paving, LLC, and P. Hug Contracting LLC. On June 25, 2004 the claimant sustained injuries to his neck as a result of dumping a wheel barrel. He treated the next day at St. Vincent’s Medical Center. Medical reports following the initial treatment attributed the claimant’s injury to “[n]eck pain…for last five days while lifting black top.” Following a July 8, 2004 MRI, Michael E. Opalak, M.D., diagnosed the claimant with a cervical herniation and recommended surgery.

The commissioner found the respondent provided the claimant with all the tools and materials that he used on the job. He also found the claimant was paid on an hourly basis at a rate of $13.00 per hour and worked a normal schedule of eight hours per day. As a result the trial commissioner found the claimant was an employee of the respondent when he was injured on June 25, 2004, since the respondent hired the claimant provided him with tools and controlled his work hours, his rate of pay, as well as his job duties while working for the respondent. The trial commissioner further found the claimant was fully credible and persuasive and Paul Hug’s testimony was not fully credible and persuasive. As the respondent was not insured, pursuant to § 31-355 C.G.S. the Second Injury Fund was potentially responsible for paying the claim.

The respondent filed a Motion to Correct. The Motion was denied in its entirety. The respondent has proceeded with this appeal. The sole basis for his appeal is his argument that the Commission lacks jurisdiction against any entity other than Crown Asphalt Paving, LLC, and therefore, he is not liable for the award.

A review of the testimony presented by Mr. Hug at the formal hearing, however, demonstrates that he admitted that he was the principal behind each of the various business entities enumerated in the Finding and Award. His testimony presents a confusing account as to which business entities were actually legally in existence at the time of the accident, and could reasonably cause the finder of fact to conclude Mr. Hug treated the maintenance of proper corporate formality as a casual matter.

Mr. Hug first testified that Hug Construction Company “was his father’s company.” December 11, 2006 Transcript, p. 8. He then testified that he had not used that business name since 1999. Id. He denied advertising under the name Hug Construction Company. Id., at 9. However, he admitted that this name was still on his business’s trucks, id., at 10, and the firm was listed in the phone book under this name. Id., at 12. He also testified that he thought a sign identifying Hug Construction was put up when he was working on a job. Id. Nonetheless, he claimed Hug Construction “had been dissolved” in 2004 or 2005. Mr. Hug testified that Hug Construction was not a corporation or an LLC, but rather a d/b/a. He testified the firm was closed, not by virtue of any legal filings, but because he allegedly “no longer did business” under that name. Id., at 14. He later testified that he had sold the Hug Construction name to another individual in 2005. Id., at 18-20.

Mr. Hug testified that he created the firm known as Crown Asphalt Paving LLC. Id., at 13. He testified that this was the firm that “should have been” the party which contracted with the homeowner to do the work at the location where the claimant’s injuries occurred. Mr. Hug testified that on the issue as to what firm was actually paid for the work at this location that he did not know who the check was made out to. Id., at 36. Mr. Hug had previously testified that Hug Construction was “owned” by Crown Asphalt Paving. Id., at 18. He also testified that another firm, Paul Hug Contracting LLC, had been existence at the time of the injury. Id., at 41. Mr. Hug testified that neither Crown Asphalt nor Paul Hug Contracting LLC had workers’ compensation insurance at the time of the claimant’s injury. Id., at 42-43. Mr. Hug told the commissioner that the actual firm doing the work at the location of the injury “could have been Paul Hug Contracting LLC.” Id., at 49. When Mr. Hug was asked whether the claimant was paid in cash or by check for his work, Mr. Hug invoked his right not to testify under the 5th Amendment. Id., at 30.

Based on this foregoing record, we believe that the trial commissioner could have reasonably concluded that Mr. Hug commingled the activities of his various businesses and that each firm acted as an alter ego of Mr. Hug personally. The respondent admitted that he had held his business out to the public as “Hug Construction Company” at the time of the claimant’s injury, and proffered no documentation that his limited liability company was the actual firm which had a contractual relationship with either the homeowner where the injury occurred, or with the claimant.

We have dealt with a number of recent cases wherein a business owner facing workers’ compensation liability attempted to shift liability for the injury to some other entity other than the party from which the claimant was seeking compensation. We have also ruled on the issue of whether service was proper when it was directed on the principal of an LLC and not the LLC itself. In all these cases, we have ruled against the effort of the respondent to evade liability.

In Lema v. John Eoanou, 5056 CRB-4-06-2 (January 29, 2007) the respondent argued the claimant was working for a limited liability company at the time of the injury, and not the respondent in a personal capacity. The trial commissioner denied a Motion to Correct on this issue. We concluded, therefore, the evidence on the record supported a finding the claimant was working for the respondent at the time of the injury, and not the LLC. We noted in Lema the respondent’s testimony was found not to be credible and much as in the instant case, the respondent had poorly documented the nature of the business relationship between his various business entities. We find Lema on point.

We also find a case decided under the “principal employer” statute, § 31-291 C.G.S., applicable to these circumstances. In Sobon v. Andrzej Oszmian d/b/a Andy’s Carpentry, 5368 CRB-8-08-8 (August 12, 2009), we noted that the factual question of who was controlling the worksite was a critical factor. The respondent in that case argued that the control of the worksite was in the hands of a construction manager. After reviewing the testimony, we concluded the trial commissioner could have found the respondent had actually acted as the general contractor on the project. In the present case, the trial commissioner decided the evidence did not support the respondent’s argument that Crown Asphalt Paving was the claimant’s employer. In light of the respondent’s testimony concerning Hug Construction, and his decision not to offer any documentation or evidence as to the manner in which the claimant was paid, we cannot find the trial commissioner’s conclusion herein unreasonable.2

Indeed, we have decided that for the purpose of commencing a claim, this Commission shall not penalize claimants who fail to properly distinguish between the principal of a limited liability company and the limited liability company itself. In Antos v. Jaroslaw Korwek d/b/a Jerry’s Home Improvement, 5225 CRB-7-07-5 (April 4, 2008) we noted that notice against a member of the LLC acts, pursuant to statute, to put the firm on notice. The record herein would allow a fact finder to conclude that Mr. Hug and Crown Asphalt were interchangeable as to their business operations. A Finding and Award that placed liability on both entities accurately reflects the nature of the business relationship as described by Mr. Hug’s own testimony.

A review of Mr. Hug’s testimony at the formal hearing indicates that it was not consistent in regards to material issues, and on a number of occasions the witness exercised his constitutional right to refuse to answer questions. In so exercising this right, the witness allowed the trier of fact to draw an adverse inference from his failure to testify. Olin Corporation v. Castells, 180 Conn. 49 (1980). The trial commissioner in considering the totality of the record could clearly have determined that Mr. Hug’s effort to place sole responsibility on the LLC was a strategy aimed at evading his legal obligations. “We do not condone the use of misrepresentation or artifice by either claimants or respondents before this Commission” Mankus v. Robert Mankus, 4958 CRB-1-05-6 (August 22, 2006), aff’d, 107 Conn. App. 585 (2008), cert. denied, 288 Conn. 904 (2008). The trial commissioner was the sole judge of whether the witnesses’ testimony was worthy of belief. Ialacci v. Hartford Medical Group, 5306 CRB-1-07-12 (December 2, 2008), citing Burton v. Mottolese, 267 Conn. 1, 40 (2003). We cannot revisit this determination.

We affirm the Finding and Award and dismiss this appeal.

Commissioners Peter C. Mlynarczyk and Randy L. Cohen concur in this opinion.

1 The Second Injury Fund also filed a Petition for Review from a July 28, 2009 Order by the trial commissioner. As the Fund took no further action to advance this appeal, we deem said to be abandoned. BACK TO TEXT

2 See also Samaoya v. Gallagher, 102 Conn. App. 670 (2007) where the Appellate Court decided this commission properly concluded that for the purposes of compensation liability, there could be multiple “principal employers” on a project potentially subject to liability for an injury, and that the Finding and Award was not “void for uncertainty.” BACK TO TEXT

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State of Connecticut Workers' Compensation Commission, John A. Mastropietro, Chairman
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