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Atlantic Building Associates v. Trujillo

Superior Court of Delaware

April 3, 2019

Atlantic Building Associates, Appellant/Employer-Below,
v.
Julio Garcia Trujillo, Appellee/Employee-Below.

          Submitted: January 7, 2019

         Upon Appeal from the Industrial Accident Board: REVERSED AND REMANDED.

          Andrew J. Carmine, Esq., E1zufon Austin & Monde11, Attorney for Appellant.

          Arthur M. Krawitz, Esq., Tara E. Bustard, Esq., Doroshow, Pasquale, Krawitz & Bhaya, Attorneys for Appellee.

          MEMORANDUM OPINION

          SHELDON K. RENNIE, JUDGE.

         Before the Court is an appeal from an August 2, 2018 decision of the Industrial Accident Board (the "Board" or "IAB").[1] This appeal originated from Julio Garcia Trujillo's (claimant-below, "Trujillo") petition for workers' compensation benefits against Atlantic Building Associates ("Atlantic"). In its first decision, the Board found Atlantic not liable for Trujillo's workers' compensation claim.[2] The Court reversed that decision on appeal, finding that the Board applied an incorrect legal standard to the case.[3] On remand, the Board found Atlantic liable for Trujillo's claim.[4] Atlantic promptly appealed. Now before the Court is this second appeal of the Board's decision. The issue involved here is a purely legal one: whether the IAB, on remand, applied the legal standard as instructed by the Court in its previous opinion. The Court finds that it did not and hereby REVERSES AND REMANDS.

         I. FACTUAL AND PROCEDURAL BACKGROUND [5]

         Trujillo was an employee of Gaston Santos Bautista d/b/a Santos Construction ("Santos").[6] On April 9, 2014, Trujillo was injured while performing framing work for Santos on a construction site located in Millville, Delaware.[7] The framing work Trujillo conducted for Santos was subcontracted by WVM Construction ("WVM"), and WVM was subcontracted by Atlantic.[8] Trujillo filed Petitions to Determine Compensation Due against Santos, WVM, and Atlantic.[9] Santos never responded to Trujillo's petition.[10] And Liberty Mutual, WVM's workers' compensation policy carrier, denied coverage for Trujillo's claim.[11] Although the Liberty Mutual policy was in effect at the time of Trujillo's injury, it was a New Jersey policy that did not apply to Trujillo' accident, which occurred in Delaware.[12] Hence, this case is now solely between Trujillo and Atlantic.

         Trujillo seeks workers' compensation benefits against Atlantic pursuant to 19 Del. C. § 2311 (a)(5). This statute requires a contracting entity to obtain from its subcontractor, upon signing a contract, "a notice of exemption of executive officers or limited liability company members and/or a certification of insurance in force under this chapter."[13] If it fails to do so, the contracting entity is deemed to insure any workers' compensation claims that arise from such failure.[14] Trujillo's workers' compensation claim against Atlantic is based on the premise that Atlantic failed to obtain from its subcontractor, WVM, a certification of insurance that was "in force under [Chapter 23 of Title 19]" of the Delaware Code.[15]

         There is no dispute that WVM's insurance broker, AVS Insurance Agency, provided Atlantic with a certificate of insurance ("COI") which indicated that WMV had worker's compensation coverage.[16] The COI contained, among other things, a policy number, the amount of insurance coverage, and effective dates of November 25, 2013 through November 25, 2014.[17] But it did not evidence the States to which the coverage extended.[18] In addition to receiving the COI, Atlantic checked the Delaware Division of Revenue's website and saw that WVM had a 2014 Delaware business license.[19]

         The IAB held a hearing in this matter and issued a decision on April 13, 2016. Relying on Cordero v. Gulfstream Development Corp., [20] the Board found that the COI provided by WVM to Atlantic was "valid on its face."[21] Despite the fact that the COI did not delineate which States were covered under WVM's policy, the Board found that Atlantic "acted in good faith and satisfied [] due diligence requirements" in exercising its duties under § 2311(a)(5), and that there were no "red flags" that would have put Atlantic on notice that WVM did not have Delaware coverage.[22]

         On June 7, 2017, this Court reversed the IAB's decision. The Court held that the Board applied an incorrect legal standard when it found the COI facially valid.[23]Specifically, the Court found that the plain language of the statute, which requires a COI "in force under [Chapter 23 of Title 19]," demonstrates that there must be workers' compensation coverage that is applicable in Delaware. It concluded that since the COI furnished to Atlantic did not indicate that it applied to work performed in Delaware, it "cannot be valid on its face as to this critical fact."[24] The Court then remanded this case for the Board to determine "whether Atlantic exercised sufficient due diligence to verify" that the insurance coverage evidenced by the COI extended to Delaware.[25]

         A remand hearing was held on May 1, 2018. The Board issued its second decision in this matter on August 2, 2018, finding that Atlantic "failed to verify that WVM's worker's compensation insurance was actually in force in Delaware," and that therefore Atlantic is liable to insure Trujillo's injuries.[26] This appeal followed.

         II. PARTIES' CONTENTIONS

         The parties do not dispute that the question posed by the Court for the IAB to consider on remand was whether Atlantic exercised due diligence in verifying that WVM's workers' compensation insurance coverage applied to Delaware workers and Delaware work-related accidents. Atlantic contends that the IAB, on remand, failed to perform the "due diligence" analysis, but rather applied a strict liability standard by determining whether Atlantic actually "verified" if WVM had Delaware coverage.[27] Atlantic asserts that the IAB's August 2, 2018 decision should for that reason be reversed and remanded for it to reconsider this case under the "due diligence" standard.[28]

         Trujillo acknowledges that the IAB did not use the term "due diligence" in its August 2, 2018 opinion.[29] However, Trujillo contends that the failure to use that specific term does not, in and of itself, indicate that the IAB disregarded the Court's directive to determine whether Atlantic exercised due diligence.[30] Rather, Trujillo asserts that the IAB "conducted an extensive analysis and thorough review" of Atlantic's efforts to verify that WVM's insurance extended to Delaware, [31] which, Trujillo argues, is "the very question this Court asked the [IAB] to address."[32] In short, Trujillo contends that the IAB did perform a "due diligence" analysis in its remand decision, even though it did not expressly label its analysis as such.

         III. STANDARD OF REVIEW

         This Court has appellate jurisdiction over IAB decisions under 29 Del. C. § 10142. On appeal, the Court's review is limited to determining whether the Board's decision is "supported by substantial evidence" and "free from legal error."[33] When the issue raised on appeal from a Board decision involves exclusively a question of law, the Court's review is de novo[34]

         IV. LEGAL ANALYSIS

         At the outset of its remand decision, the Board reiterated the Court's June 7, 2017 holding that the Board "applied an incorrect legal standard" and "erred in concluding that Atlantic had acted in good faith and satisfied any due diligence requirement in conjunction with section 23 11(a)(5)."[35] But this seems to be the only occasion where the Board in that decision used the term "due diligence" in relation to the legal analysis it was instructed to conduct on remand. Other than that one single use, the Board consistently phrased its task on remand as whether Atlantic "verified" that WVM's workers' compensation insurance extended to Delaware.[36]Thus, the question that the Board appeared to have addressed on remand-whether Atlantic "verified" that WVM's insurance was in force in Delaware-is not identical to the question it was asked by this Court to resolve- whether Atlantic exercised due diligence in verifying that information.

         Trujillo argues that, while not labeled correctly, the Board in fact did conduct a due diligence analysis, as evidenced by a large portion of its remand decision devoted to discussing Atlantic's verification process.

         The Court notes that the Board conducted an extensive review of the efforts made by Atlantic to verify that the insurance coverage evidenced by the COI extended to Delaware. The Board first summarized in detail the evidence it had received regarding this issue, specifically Atlantic's representative, Linda Garufi's testimony regarding the actions she had taken after receiving the COI produced by WVM's insurance broker.[37] The Board thereafter analyzed Atlantic's verification process. It noted that, since the territorial information was not evident from the COI, Atlantic "needed to take additional steps to confirm that WVM was insured for Delaware work accidents."[38] It then found that the purported additional step taken by Atlantic-receipt of WVM's Delaware business license-was not "sufficient to satisfy [§]2311 (a)(5)."[39] Specifically, it found that Atlantic may not presume Delaware coverage simply based on the presence of a Delaware business license.[40]The Board ...


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