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Exclusion of employees defeats coverage for alleged wrongful death



S helter Mutual insurance company sued and requested an explanatory judgment that neither its insured, Double J Timber Company, Inc., nor Terry Johnson were entitled to compensation and defense for claims against them in a state wrongful court action. The district court granted Shelter's proposal for a summary judgment and found that the subject policy's provision on employee exclusion excludes coverage. I S helter Mutual Insurance Company v Double J Timber Company, Incorporated; Dorothy Johnson; Christopher Johnson; Summer Johnson; Julie Pace, Individual and Incorrect Receiver of Death by Jerry Lee Johnson, Deceased No. 19-60421, United States Court of Appeals for the Fifth Circuit (February 4, 2021) The Fifth Circuit was asked to decide on the applicability of exclusion and employment status to the deceased and the operator.

FACTS

In early 2017, Jerry Johnson and his brother Terry Johnson started exclusively logging services for Double J, a company owned by their cousin, Jimmy Johnson. Jerry and Terry had also worked for Double J before 2017, as independent contractors. However, the working relationship changed after Jerry's own company, CTJ Logging, filed for bankruptcy in late 2016 and lost most of its equipment. According to Jimmy's depository testimony, after filing for bankruptcy, Jerry asked Jimmy, "Are you going to give me a job?" And Jimmy said, "Yes, I will."

Jerry became a foreman for Double J. And Terry, who had always worked for Jerry, also started working for Double J after the bankruptcy of CTJ Logging.

After their transition, how Jerry and Terry were paid by Double J also changed. Before the bankruptcy, Jimmy Jerry paid off the job (or timber load), as opposed to paying him a daily wage. This was because CTJ Logging had its own equipment, which Jerry and Terry operated. After the bankruptcy, however, Jimmy paid Jerry and Terry a daily wage, which he did with the rest of the crew members who worked for Double J. A tragic accident occurred. While using Double J & # 39 ;s skids, a machine used to move felled trees, Terry mistakenly surprised his brother Jerry, resulting in Jerry's death. Jerry's beneficiaries later filed a wrongful death sentence against Double J and Terry.

THE INSURANCE

Long before the accident and wrongful death, Shelter issued a standard general liability policy to Double J. The policy contained the following exclusion: “This insurance does not apply to:. . . d. Workers 'compensation and similar laws Any obligation for the insured according to the employees' compensation, disability benefits or unemployment benefits or similar laws. e. Employer's liability "Physical injury" to: (1) An "employee" of the insured that arises due to and during: (a) Employment of the insured; or (b) perform tasks related to the business of the insured; … ”

Shelter argued that Double J and Terry were not entitled to damages or defenses because of the language of the policy and the Mississippi legislation because of the“ Employee Exclusion ”Policy. The district court granted Shelter's request for a summary judgment, concluding that Terry and Jerry Johnson were employed, not independent contractors, by Double J. The respondents appealed

ANALYSIS

As the relevant policy provisions are unambiguous, the only question before the fifth The circuit is whether Jerry was working as a Double J employee or as an independent contractor when the accident occurred. If Jerry was employed, as Shelter claims, the "Personal Exclusion" provision of the policy applies, and Shelter has no obligation to defend or replace Double J and Terry. However, if Jerry was an independent entrepreneur, as the defendants claim, the "exclusion of employees" provision does not apply.

Mississippi law, like most states, sets out seven factors to consider when deciding who is employed: [19659013] The extent of control exercised by the details of the work;

  • Whether the employee is engaged in a clear profession or business;
  • The skill required in the specific profession;
  • Whether the employer provides tools and a workplace for the person performing the work;
  • How long the person has been employed;
  • Payment method, either at the time or through the job; and
  • Whether the work is part of the employer's normal activities or not. [ Miss . Emp’t Sec . Comm & # 39; n v . PDN Inc ., 586 So. 2d 838, 841-42 (Miss 1991) (with reference to Miss . Emp & # 39; t Sec . Comm & # 39; nv . Plumbing Wholesale Co ., 69 So. 2d 814 (1954)).]
  • The primary consideration is the right or degree of control. Jimmy himself stated in his deposit that he would "show [Jerry] the way and where it would go [to do his cutting work]." And he also testified that he "required [Jerry and his crew] to have security meetings and talk." Jerry, as Double J's boss, was simply a "model employee," even though he was the "boss" in place. Jimmy said just as much in his deposit.

    Double J Timber Company, Inc. is in deforestation. Jerry performed services that were a regular part of Double J's daily work and served as a foreman for Double J's forest workers. Double J's owner testified in his deposit that he fired two other crew members to give Jerry and Terry jobs in early 2017.

    The evidence for the fourth factor is clear and indisputable – Double J.. . owned and delivered all the tools, supplies and workplace for. . . Jerry Johnson. In the same vein, while Jerry had only worked for Double J for about six months, he worked exclusively and continuously for Double J during this time period with no indication that he intended to stop working at any particular point. The sixth factor, the payment method, also suggests employment. The method of payment at the time of the accident indicates that Jerry and Double J had an employee-employer relationship even though Double J did not include appropriate taxes. Finally, the seventh factor, whether the work that Jerry performed was part of Double J's regular business, revealed that Jerry performed services that were a regular part of Double J's daily work when he worked as a foreman for Double J's forest workers. [19659005] By applying the Mississippi law to the undisputed document, Jerry was working as an employee of Double J, not as an independent contractor, at the time of the accident. The provision on "exclusion of employees" in Double J's insurance with Shelter was therefore applied, and the district court correctly stated a summary judgment for Shelter.

    Commercial general liability insurance companies usually exclude injuries to employees because the employer and the employee are protected by employee compensation. laws. Employee compensation is an exclusive remedy for the employer and the employees. The exclusion of the employees was clear and unambiguous and therefore the CGL insurer Shelter was neither guilty nor defended to Double J nor to the accused's brother.


    © 2021 – Barry Zalma

    Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance claims and insurance fraud almost equally for insurance policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

    For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become professionals in insurance claims.

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