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FRED CALDARELLI v. WORKMEN'S COMPENSATION APPEAL BOARD (MASTROMONACO AND JAMES DEAN AND ALTEC CORPORATION) (05/04/88)

decided: May 4, 1988.

FRED CALDARELLI, AND ROCKWOOD INSURANCE COMPANY, PETITIONERS
v.
WORKMEN'S COMPENSATION APPEAL BOARD (MASTROMONACO AND JAMES DEAN AND ALTEC CORPORATION), RESPONDENTS



Appeal from the Order of the Workmen's Compensation Appeal Board, in the case of Ronald R. Mastromonaco v. Fred Caldarelli and James Dean and Altec Corporation, No. A-91767.

COUNSEL

Mark Gordon, with him, Daniel D. Harshman, Peitragallo, Bosick & Gordon, for petitioners.

Arthur J. Leonard, with him, Thomas V. Gebler, Jr., Robb, Leonard & Mulvihill, for respondents.

Judges Craig and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 115 Pa. Commw. Page 613]

Fred Caldarelli appeals from an order of the Workmen's Compensation Appeal Board (board) that affirmed an order of a referee directing Caldarelli or his insurance carrier to pay workers' compensation benefits to Ronald R. Mastromonaco (claimant). The referee concluded that Caldarelli was a statutory employer as to the injured claimant and hence was responsible for the payment of benefits.

The sole issue is whether substantial evidence of record supports certain findings by the referee essential to his conclusion that Caldarelli was the statutory employer.*fn1

The undisputed facts, as set forth in the referee's findings, are that on September 13, 1984, the claimant sustained injuries to his head and both lower legs while performing his duties as a painter employed by James Dean (Dean) (Findings Nos. 2 and 3).*fn2 When this accident happened, Dean had no workers' compensation insurance in effect and had not otherwise secured the payment of compensation (Finding No. 13). Al-Tech Construction Consultants, Inc. (Altec) was the owner of

[ 115 Pa. Commw. Page 614]

    the premises on which the claimant was working when he was injured (Finding No. 14).

On the following points the referee made no express findings, but the testimony was consistent and uncontradicted. Ken Leah, principal shareholder of Altec, had decided to expand his company's business from conducting inspections to constructing residences. For that purpose, Altec was building two homes to use as models. Leah approached his friend Caldarelli, principal of Caldarelli, Inc., and asked for his assistance in expanding into this new line of work, because Caldarelli had experience in this field. Caldarelli provided various forms of assistance to Leah, including soliciting a painting bid from Dean on the house involved in this case, submitting that bid to Leah, and advising Dean that the bid had been accepted. Leah offered either to pay Caldarelli for his services or to give him an interest in Altec at some future time, but Caldarelli did not accept either offer.

The Law

Section 302(b) of The Pennsylvania Workmen's Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 462, sets forth the basis of the statutory employer concept, as it relates to the issue of liability for payment of compensation:

Any employer who permits entry upon premises occupied by him or under his control of a laborer or an assistant hired by an employe or contractor, for the performance upon such premises of a part of such employer's regular business entrusted to that employee or contractor, shall be liable for the payment of compensation to such laborer or assistant unless such hiring employe or contractor, if primarily liable for the payment of such compensation, has secured the payment thereof as provided for in this act.

[ 115 Pa. Commw. Page 615]

Any employer or his insurer who shall become liable hereunder for such compensation may recover the amount thereof paid and any necessary expenses from another person if the latter is primarily liable therefor.

For purposes of this subsection (b) [77 P.S. § 462], the term 'contractor' shall have the meaning ascribed in section 105 of this act [77 P.S. § 25].

Section 105 of the act, 77 P.S. § 25, defines the term "contractor," as follows:

The term 'contractor,' as used in article two, section two hundred and three, and article three, section three hundred and two (b), shall not include a contractor engaged in an independent business, other than that of supplying laborers or assistants, in which he serves persons other than the employer in whose service the injury occurs, but shall include a subcontractor to whom a principal contractor has sublet any part of the work which such principal contractor has undertaken.

As Caldarelli correctly notes in his brief, the clear intent of section 302(b) is to hold a general contractor secondarily liable for injuries to the employees of a subcontractor, where the subcontractor primarily liable has failed to secure benefits with insurance or self-insurance (or to hold a subcontractor secondarily liable in relation to a subsubcontractor). Ace Tire Company v. Workmen's Compensation Appeal Board (Hand), 101 Pa. Commonwealth Ct. 186, 515 A.2d 1020 (1986), petition for allowance of appeal denied, 515 Pa. 610, 529 A.2d 1083 (1987).

This court has held previously that five elements must be shown in order to establish that a given party is a statutory employer of a claimant for the purposes of section 302(b):

[ 115 Pa. Commw. Page 616]

Although the meaning of 'statutory employer' under section 302(b) of the Act, 77 P.S. § 462, has not itself been interpreted, our Supreme Court has construed similar language in Section 203 of the Act, 77 P.S. § 52, and has required five elements to be shown:

'(1) An employer who is under contract with an owner or one in the position of an owner. (2) Premises occupied by or under the control of such employer. (3) A subcontract made by such employer. (4) Part of the employer's regular business entrusted [sic] to such subcontractor. (5) An employee of such subcontractor.'

Wright Demolition & Excavating Company v. Workmen's Compensation Appeal Board (Manuel), 61 Pa. Commonwealth Ct. 479, 483, 434 A.2d 232, 234 (1981) (quoting McDonald v. Levinson Steel Company, 302 Pa. 287, 295, 153 A. 424, 426 (1930), in which the Supreme Court adopted these elements as essential to create the relation of statutory employer under section 203 of the Workmen's Compensation Act, 77 P.S. § ...


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