W.C. No. 4-532-029.Industrial Claim Appeals Office.
January 28, 2005.
FINAL ORDER
TOP Construction Inc., (TOP) and its insurer, Pinnacol Assurance, (collectively the Pinnacol respondents) seek review of an order of Administrative Law Judge Felter (ALJ) which determined TOP was the claimant’s statutory employer and was liable for workers’ compensation benefits awarded on account of the claimant’s work-related injury. The Pinnacol respondents contend the claim is barred by the doctrine of collateral estoppel. We disagree and, therefore, affirm.
The essential facts are undisputed. The claimant was injured when he fell from a roof while working for Avalon Construction (Avalon). At the time of the injury, Avalon was uninsured for workers’ compensation. Following a hearing in March 2003, an ALJ issued an order dated April 9, 2003, which required Avalon to pay workers’ compensation benefits and penalties on account of the claimant’s injury. The Pinnacol respondents were not a party to the claim. When Avalon did not comply with the award, the claimant filed a claim against the Pinnacol respondents which alleged TOP was his statutory employer at the time of the injury.
The ALJ found, and the Pinnacol respondents do not dispute that, TOP was the claimant’s statutory employer within the meaning of §8-41-401(1)(a), C.R.S. 2004, which provides that a company which contracts out part or all of its work to any subcontractor is the statutory employer of the subcontractor and the subcontractor’s employees. Where the subcontractor is uninsured, the claimant may reach up-stream to the statutory employer, to recover workers’ compensation benefits. Herriott v. Stevenson, 172 Colo. 379, 473 P.2d 720 (1970).
In holding that the Pinnacol respondents are responsible for the claimant’s injury, the ALJ determined the claimant was not collaterally estopped from seeking recovery against the Pinnacol respondents because there was no identity of issues between the two claims and TOP’s status as a statutory employer was not litigated at the March 2003 hearing. Further, the ALJ determined that none of the factual determinations in the April 9 order contradicted the claim against the Pinnacol respondents.
On review the Pinnacol respondents renew their contention that the claimant is collaterally estopped from seeking recovery against the Pinnacol respondents because the April 9 order required Avalon to pay workers’ compensation benefits for the claimant’s injury. We perceive no error in the ALJ’s order.
The doctrine of collateral estoppel is directed to “issue preclusion,” and may be applicable when a party seeks to relitigate an issue of fact or law determined in a prior proceeding. Sunny Acres Villa Inc. v. Cooper, 25 P.3d 44 (Colo. 2001) ; M M Management Co. v. Industrial Claim Appeals Office, 979 P.2d 574 (Colo.App. 1998). The doctrine bars relitigation of an issue previously determined if the issue: (1) sought to be precluded is identical to an issue actually determined in the prior proceeding; (2) the party against whom estoppel is asserted has been a party to or is in privity with a party to the prior proceeding; (3) there is a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. Sunny Acres Villa Inc. v. Cooper, supra.
The Pinnacol respondents contend there was an identity of issues because the prior claim and this claim both adjudicated the claimant’s entitlement to workers’ compensation benefits for injuries on December 21, 2001. The Pinnacol respondents also argue there was an identity of parties because the claimant was a party to both claims. Further, they assert the claimant was afforded a full and fair opportunity to adjudicate TOP’s liability in the prior claim but chose not to bring that action prior to the entry of the April 2003 order, which was a final order on the merits.
We rejected similar arguments in Wright v. U.S. Home Corporation, W.C. No. 4-312-835 (September 18, 1998). The claimant in Wright filed a claim alleging U.S. Home Corporation (U.S. Homes) was his statutory employer at the time he suffered a work-related injury. U.S. Home argued the claim was barred by the doctrine of collateral estoppel because an ALJ had already determined the claimant was an actual employee of Integrity Business Services (IBS), a non-insured contractor, and ordered IBS to pay the claimant’s workers’ compensation benefits. We concluded the issue resolved by the prior claim was not identical to the issue pending in the claim against U.S. Homes. Specifically, we held the issue of whether IBS was the claimant’s actual employer did not preclude a subsequent finding that U.S. Home was the claimant’s statutory employer. See also Manzanares v. Advanced Building Movers Rigging, W.C. No. 3-837-674 (July 15, 1992). Further, the question of whether U.S. Home was the claimant’s statutory employer was not “actually litigated” in the prior claim. Therefore, we concluded the claimant was not collaterally estopped from seeking recovery from U.S. Home.
The arguments of the Pinnacol respondents do not persuade us to depart from our conclusions in Wright and we perceive no basis to treat this claim differently than the facts in Wright. Therefore, we are not persuaded the ALJ erroneously allowed the claimant to proceed with the claim against the Pinnacol respondents.
We recognize that in M M Management Co. v. Industrial Claim Appeals Office, supra, the court held the factual issue of whether the claimant’s direct employer carried compensation insurance was unsuccessfully litigated in the first claim against the direct employer (when the legal issue was penalties for failure to insure), and was again litigated in the second claim when the direct employer’s lack of insurance was a legal prerequisite to statutory employer liability. However, in the second claim the doctrine of collateral estoppel was not applied to the initial finding concerning insurance because the first order did not establish a “final judgment” on the question. Here, unlike the situation in M M, the dispositive issue of the general contractor’s liability for the claimant’s work-related injury was not litigated at all in the first hearing concerning Avalon’s liability. Neither did the prior order contain any factual finding inconsistent with TOP’s status as stautory employer. Rather, the claimant alleged Avalon was uninsured for purposes of obtaining a penalty, but the parties did not litigate whether there was a statutory employer upstream from Avalon. Thus, M M does not compel a contrary result, and the ALJ correctly held that there was no “identity of issues” in this case.
Further, we do not dispute that an “affirmative” defense such as the statute of limitations is waived if not timely raised. See Central Bank of Denver v. Mehaffy, Rider, Windholz Wilson, 940 P.2d 1097 (Colo. 1997); Kersting v. Industrial Commission, 39 Colo. App. 297, 567 P.2d 394
(1977). However, in the first claim the existence of stautory employment, if any, constituted an affirmative defense for Avalon, not the claimant. Therefore, the claimant did not “waive” the right to raise a claim of statutory employment by failing to present it at the hearing against Avalon, his direct employer. See Johnson v. Industrial Commission, 761 P.2d 1140 (Colo. 1988).
Moreover, in Sunny Acres Villa Inc., v. Cooper, supra, the Supreme Court held that a causation finding reached after a hearing on temporary partial disability benefits did not invoke the doctrine of collateral estoppel to preclude the respondents from again litigating causation at a hearing on permanent total disability. The court reasoned that the “difference in potential duration of benefits [between temporary total and permanent total] alone demonstrates the difference in exposure to an employer” so as to prohibit application of collateral estoppel. Id. at 48. Consequently, the court concluded the respondents did not have a “full and fair” opportunity to litigate the causation issue at the initial proceeding.
Here, there is no assertion that any party litigated TOP’s status as a statutory employer at the March 2003 hearing. Nor does the April 9 order contain any factual determinations on that issue. Therefore, we decline to conclude the claimant had a full and fair opportunity to litigate the statutory employment issue at the March hearing. To the contrary, the claimant’s incentive to litigate the issue did not arise until Avalon failed to pay the April 9 award.
Finally, insofar as the Pinnacol respondents may be understood to also argue that the claim is barred by res judicata we disagree. Res judicata, unlike collateral estoppel, encompasses the concept of “claim preclusion” and, under the doctrine of merger, bars relitigation of not only all issues actually decided, but all issues that might have been decided. See Ferris v. Bakery, Confectionery and Tobacco Union, Local 26, 867 P.2d 38 (Colo.App. 1993). However, the doctrine of res judicata
applies only when there exists identity of subject matter, cause of action, parties, and capacity in the person for whom or against whom the claim is made. People in Interest of G.K.H., 698 P.2d 1386 (Colo.App. 1984). Privity requires a substantial identity of interests. See Turkey Creek Limited Liability v. Anglo American Consolidated Corp., 43, P.3d 701 (Colo.App. 2001)
TOPS was not a party to the initial claim against Avalon. Further, the Pinnacol respondents have failed to advance any factual assertions that TOPS was in privity with Avalon. Consequently, we are not persuaded the claim was barred by the doctrine of res judicata.
IT IS THEREFORE ORDERED that the ALJ’s order dated August 17, 2004, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________ David Cain
____________________ Kathy E. Dean
Charles Grant, Top Construction, Inc., Avalon Construction, James R. Koncilja, Esq. and Lawrence D. Saunders, Esq., Pueblo, CO, (For Claimant).
Brandee DeFalco Galvin, Esq., Pinnacol Assurance — Interagency Mail.