COURT OF APPEALS OF VIRGINIA

ROMINGER LEGAL

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COURT OF APPEALS OF VIRGINIA

Present: Judges Bray, Annunziata and Frank

UNINSURED EMPLOYER'S FUND

MEMORANDUM OPINION*

v. Record No. 0008-00-3 PER CURIAM

JUNE 20, 2000

HILLTOP LUMBER COMPANY, INC.,

BITUMINOUS FIRE & MARINE INSURANCE COMPANY,

ERNEST LUTHER SOWERS, III, and

CALVIN T. ANGUS

FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION

(Mark L. Earley, Attorney General; John J.

Beall, Jr., Senior Assistant Attorney

General; Robert L. Walker, Assistant Attorney

General, on briefs), for appellant.

(S. Vernon Priddy, III; Sands, Anderson,

Marks and Miller, on brief), for appellees

Hilltop Lumber Company, Inc. and Bituminous

Fire & Marine Insurance Company.

No brief for appellees Ernest Luther

Sowers, III and Calvin T. Angus.

The Uninsured Employer's Fund (the Fund) contends that the

Workers' Compensation Commission (commission) erred in finding

that Hilltop Lumber Company, Inc. (Hilltop) was not the

statutory employer of Ernest Luther Sowers, III (claimant),

pursuant to either Code 65.2-302(A) or Code 65.2-302(B).

Upon reviewing the record and the briefs of the parties, we

conclude that this appeal is without merit. Accordingly, we

summarily affirm the commission's decision. See Rule 5A:27.

"'The issue whether a person is a statutory employee

presents a mixed question of law and fact . . . .' Where, as

here, the facts relevant to the resolution of the . . . issue

are not in dispute, we must determine whether the [commission]

correctly applied the law to those facts." Cinnamon v.

International Business Machines Corp., 238 Va. 471, 474, 384

S.E.2d 618, 619 (1989) (citation omitted).

A review of the parties' briefs and the commission's

opinion shows that with respect to this issue, the material

facts are not in dispute. Thus, this is a question of whether

the commission correctly applied the law to the facts.

Hilltop operated a sawmill, but it did not have employees

who went into the woods to cut trees. Hilltop entered into a

Timber Sale Agreement with Kenneth C. Howell ("the landowner").

The Timber Sale Agreement allowed Hilltop the rights to certain

trees on the landowner's property, but it did not obligate

Hilltop to harvest the trees. Rather, it provided that Hilltop

would waive its right to cut the trees if they were not "cut and

removed on or before the First day of January 1998."

Hilltop then entered into a Logging Contract and Agreement

with Calvin Angus wherein Angus agreed to "harvest all standing

timber" on the landowner's property, and it required that "[a]ll

logging must be completed by January 1, 1998." The logging

contract provided various schedules of payment for cut logs

delivered to Hilltop and also the respective shares of payment

for other logs delivered to other mills "agreeable to both

parties."

Claimant, an employee of Angus, suffered an injury by

accident arising out of and in the course of his employment,

when he was pinned under a skidder during logging operations on

the landowner's property. Claimant filed a claim for benefits,

naming Angus as his employer.

The commission found that claimant was an employee of

Angus, who was uninsured for workers' compensation. The

commission also ruled that Hilltop was not claimant's statutory

employer. The Fund appeals from that ruling.

Code 65.2-302(A)

Code 65.2-302(A) provides as follows:

When any person (referred to in this

section as "owner") undertakes to perform or

execute any work which is a part of his

trade, business or occupation and contracts

with any other person (referred to in this

section as "subcontractor") for the

execution or performance by or under such

subcontractor of the whole or any part of

the work undertaken by such owner, the owner

shall be liable to pay to any worker

employed in the work any compensation under

this title which he would have been liable

to pay if the worker had been immediately

employed by him.

In ruling that Hilltop was not claimant's statutory

employer pursuant to Code 65.2-302(A), the commission held

that the evidence failed to prove that Angus' business of

cutting the timber was part of Hilltop's trade, business, or

occupation. The commission found that no evidence showed that

Hilltop, which received the logs and processed them into

manufactured timber, was ever involved in the cutting and

harvesting of the timber.

In Shell Oil Co. v. Leftwich, 212 Va. 715, 187 S.E.2d 162

(1972), the Supreme Court set forth the test this Court must use

in determining whether claimant was engaged in Hilltop's trade,

business, or occupation:

"[T]he test is not one of whether the

subcontractor's activity is useful,

necessary, or even absolutely indispensable

to the statutory employer's business, since,

after all, this could be said of practically

any repair, construction or transportation

service. The test (except in cases where

the work is obviously a subcontracted

fraction of a main contract) is whether this

indispensable activity is, in the business,

normally carried on through employees rather

than independent contractors."

Id. at 722, 187 S.E.2d at 167 (citation omitted) (emphasis

added). Here, credible evidence proved that Hilltop did not

have any employees who normally carried out the type of work

which caused claimant's injury, i.e., the cutting and harvesting

of standing timber. This work, although necessary to Hilltop's

business, was done by independent contractors, such as Angus.

Therefore, the commission did not err in finding that Angus'

activity was not part of Hilltop's trade, business, or

occupation and that Hilltop was not claimant's statutory

employer pursuant to Code 65.2-302(A).

Code 65.2-302(B)

Code 65.2-302(B) provides as follows:

When any person (referred to in this

section as "contractor") contracts to

perform or execute any work for another

person which work or undertaking is not a

part of the trade, business or occupation of

such other person and contracts with any

other person (referred to in this section as

"subcontractor") for the execution or

performance by or under the subcontractor of

the whole or any part of the work undertaken

by such contractor, then the contractor

shall be liable to pay to any worker

employed in the work any compensation under

this title which he would have been liable

to pay if that worker had been immediately

employed by him.

In F. Richard Wilton, Jr., Inc. v. Gibson, 22 Va. App. 606,

471 S.E.2d 832 (1996), we discussed the subcontracted-fraction

test and the method to be used to analyze statutory employer

status under Code 65.2-302(B) as follows:

"In the context of the construction

business, [the subcontracted-fraction prong]

relates to a general contractor, the party

obligated by the main contract with the

owner to complete the whole project. If the

work out of which the accident arose was, in

the language of Shell Oil, 'obviously a

subcontracted fraction of [that] contract'

and, in the language of the statute, 'not a

part of the trade, business or occupation

of' the owner, the general contractor who

engaged the subcontractor to perform that

fraction is the statutory employer of the

injured worker, whether directly employed by

the primary subcontractor or by a secondary

subcontractor."

Id. at 610, 471 S.E.2d at 834-35 (quoting Cinnamon, 238 Va. at

476, 384 S.E.2d at 620).

In holding Code 65.2-302(B) inapplicable to this case,

the commission found as follows:

Hilltop entered into a contract with a

private landowner for timber rights. The

landowner is not in the same trade, business

or occupation as Hillside. There is no

evidence that Hillside contracted to perform

or execute any work for another person. All

it purchased was land rights to cut timber.

It could elect to cut the timber or not cut

the timber with the rights reverting back to

the landowner at the end of the contract

period. We cannot find, based on the

evidence, that Hilltop contracted to perform

any work or undertaking for the owner.

Hilltop sold the rights to cut this timber

to Calvin Angus and agreed to pay for

certain logs delivered at the rate of

$120.00 per 1000 board feet. Other logs

were paid per pound. Based on the evidence

that the Hilltop was not in the trade,

business or occupation of cutting logs, and

the terms of the contract, we cannot find

that 65.2-302(B) is applicable in this

case.

Credible evidence supports the commission's findings.

Pursuant to the Timber Sale Agreement, Hilltop was not obligated

to the landowner to cut timber from the landowner's property.

Thus, because the work out of which the accident arose was not

an "obviously subcontracted fraction" of the Timber Sale

Agreement, the commission did not err in finding that Hilltop

was not claimant's statutory employer pursuant to Code

65.2-302(B).

For these reasons, we affirm the commission's decision.

Affirmed.

* Pursuant to Code 17.1-413, recodifying Code

17-116.010, this opinion is not designated for publication.

Because we summarily affirm the commission's decision, we

find it unnecessary to rule upon Hilltop's motion to dismiss and

decline to do so.

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