W.C. No. 4-565-863.Industrial Claim Appeals Office.
September 13, 2004.
FINAL ORDER
Black Roofing, Incorporated (Black), and its regular workers’ compensation insurer Pinnacol Assurance (Pinnacol), seek review of an order of Administrative Law Judge Muramoto (ALJ). Black and Pinnacol contend the ALJ erred in finding that Black was not insured by respondent American Home Assurance (hereinafter AIG), at the time of the claimant’s injury. We affirm.
The ALJ’s findings may be summarized as follows. The claimant was an employee of Black. Black was a subcontractor selected by Swinerton Builders (Swinerton) to perform work on the Williams Village project in Boulder, Colorado. Swinerton developed a project specific insurance program (PSIP) which covered all subcontractors for workers’ compensation while on the Williams Village project, and Swinerton required all subcontractors to enroll in the program as a condition of their contracts.
Gallagher Construction Services (Gallagher), Swinerton’s insurance broker, managed the PSIP under an agreement with Swinerton. The provisions of the PSIP were set forth in a manual developed by Swinerton and maintained by Gallagher. Under the manual, the subcontractor was to submit an application for enrollment, together with information concerning preexisting insurance policies, to Gallagher. Gallagher was to confirm the data submitted by subcontractors and issue a certificate of insurance to the subcontractor when the enrollment was complete. The PSIP provided that AIG would be the insurer for the program. Helen Hernandez (Hernandez) was an employee of Gallagher principally responsible for enrollment in the PSIP.
The ALJ found that in August 2002, Black, which was regularly insured for workers’ compensation by Pinnacol, submitted an application for enrollment in the PSIP. However, because Black’s policy with Pinnacol was set to renew before October 15, 2002, Black’s anticipated start date on the Williams Village Project, Hernandez determined the application was insufficient to complete enrollment. On August 26 and December 13, 2002, Hernandez notified Jill Henze (Henze) by fax that enrollment could not be completed until Black provided copies of renewal declarations. These faxes also warned that the information was required before Black commenced work on the site because enrollment could not occur until the information was provided.
On January 6, 2002, the claimant was injured when he fell while working for Black on the Williams Village Project. On January 7, 2003, Hernandez issued a Certificate of Insurance to Black stating that coverage would commence January 7, 2003, one day after the accident. The certificate stated that it was issued “as a matter of information only” and conferred no rights on the holder, nor did it alter coverage afforded by the policies listed. AIG denied coverage for the claimant’s injuries, taking the position that Black was not its insured at the time of the injury.
Black and Pinnacol sought a hearing to establish AIG’s liability as the insurer for the claimant’s injuries. They argued that Gallagher and Hernandez had actual or apparent authority to bind AIG to a policy, and had done so by December 20 as a result of Hernandez’s dealings with Henze and Black’s insurance agency (Moody). Black and Pinnacol also advanced an estoppel theory.
However, the ALJ found “no persuasive evidence” that Gallagher was an actual agent of AIG or that Hernandez and Gallagher had any actual or apparent authority to bind AIG to an insurance policy before January 7 (when the certificate was issued). Rather, the ALJ found that Gallagher was Swinerton’s agent, and there is no evidence of a contractual relationship between Gallagher/Hernandez and AIG. Further, the ALJ found Black made no inquiry into the authority of Gallagher and Hernandez to bind AIG.
On review, Black and Pinnacol (Pinnacol respondents) first contend the evidence does not support the ALJ’s findings of fact and conclusions of law. They argue that we should set aside the ALJ’s findings and enter new findings consistent with the “undisputed evidence.” According to the Pinnacol respondents, the undisputed evidence establishes that by December 20, Black had provided all information necessary to complete enrollment in the PSIP, Hernandez knew or should have known that Black was working on the project, and that Gallagher/Hernandez had actual or apparent authority to bind AIG to a workers’ compensation policy by determining the start date. The Pinnacol respondents further assert that Gallagher’s authority to bind AIG is evidenced by the power to accept applications, issue policy numbers, and issue certificates of insurance determining the start date of the policy. We are not persuaded that the evidence compelled the ALJ to find that Gallagher had the authority to bind AIG to any policy before the certificate was issued.
An agency relationship arises from the “manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.” The existence of the relationship is ordinarily one of fact, but may become one of law if the evidence is undisputed See Filho v. Rodrgiuez, 36 P.3d 199 (Colo.App. 2001).
To the extent the ALJ’s findings of fact are supported by substantial evidence, they must be upheld on review. Section 8-43-301(8), C.R.S. 2003. This standard of review requires us to view the evidence in a light most favorable to the prevailing party, and defer to the ALJ’s resolution of conflicts in the evidence, credibility determinations, and plausible inferences drawn from the record. The possibility that some evidence might support contrary findings affords no basis for relief on appeal Wilson v. Industrial Claim Appeals Office, 81 P.3d 1117
(Colo.App. 2003). Further, evidence and inferences not specifically discussed in the order are presumed to have been rejected as not persuasive. Magnetic Engineering, Inc. v. Industrial Claim Appeals Office, 5 P.3d 385 (Colo.App. 2000).
The essence of the Pinnacol respondents’ argument is that Gallagher had authority to bind AIG before the certificate of insurance was issued on January 7. However, substantial evidence supports the ALJ’s finding that Gallagher had no actual authority to issue such a binder. Actual authority is “that authority which is in fact given to an agent.” See Life Investors Insurance Co. v. Smith, 833 P.2d 864, 868 (Colo.App. 1992).
First, as the ALJ pointed out, the Pinnacol respondents produced no contracts or other documentary evidence showing that AIG conferred any actual authority on Gallagher to do anything except take applications and issue certificates of insurance when Gallagher deemed the enrollment complete. Further, the PSI manual itself states that a subcontractor must complete an application and “receive a Certificate of Enrollment before you begin work on the project.” This requirement was reiterated in the fax messages of August 26 and December 13, which warned against commencing work without complying with the enrollment program. Thus, there is ample evidence that whatever authority AIG conferred on Gallagher, it did not extend to the issuance of oral binders prior to the issuance of the certificate of insurance.
Moreover, even the issuance of the certificate of insurance did not represent an unqualified guarantee of coverage by AIG. There is evidence in the record that AIG could reject an application after submission by Gallagher and not issue the policy until further information was provided. (Hernandez Depo. P. 162; Vaughan Depo. Pp. 14, 25, 27). Further, the certificate itself states that it is for informational purposes and does not alter the fundamental protections and coverages afforded by the actual policy. Colorado law holds that certificates of insurance of the type issued by Gallagher create no “contractual relationship for the benefit of the holder.” Broderick Investment Co. v. Strand Nordstrom Stailey Parker, Inc., 794 P.2d 264 (Colo.App. 1990).
Neither was the ALJ required to find that AIG conferred any apparent authority on Gallagher to orally bind AIG to an insurance contract. Apparent authority is the power to “affect legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other’s manifestations to such third persons.” Grease Monkey International, Inc. v. Montoya, 904 P.2d 468 (Colo. 1995).
Once again, there is minimal evidence that AIG took any actions from which it might reasonably be inferred that Gallagher possessed authority to issue oral binders on behalf of AIG. The principal documents evidence a contractual relationship between Swinerton and Gallagher, not Gallagher and AIG. Further, the PSI manual warns that no insurance will be effective until a certificate is issued. Thus, the record fully supports the ALJ’s finding that there is no persuasive evidence that apparent authority was conferred on Gallagher.
Second, we reject the Pinnacol respondents’ argument based on the rule of reasonable expectation. Considering the content of the PSI manual discussed above, the ALJ was certainly not compelled to find that Black or Moody reasonably expected that the alleged statements of Hernandez concerning completion of the application constituted a binding insurance contract. See Peters v. Boulder Insurance Agency, Inc., 829 P.2d 429 (Colo.App. 1991) (rule of reasonable expectation may, depending on facts, incorporate elements of estoppel including requirement for reasonable reliance on representations); Leland v. Travelers Indemnity Co., 712 P.2d 1060 (Colo.App. 1985) (rule of reasonable expectation is derivative of the law of estoppel).
It is true that some evidence in the record cited by the Pinnacol respondents might support a different result. However, we do not deem this evidence “undisputed” such that this issue is one of law. Consequently, we hold that substantial evidence supports the ALJ’s findings and conclusions. Insofar as the Pinnacol respondents make other arguments, we find them to be without merit.
IT IS THEREFORE ORDERED that the ALJ’s order dated February 11, 2004, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
_____________________________ David Cain
_____________________________ Dona Halsey
Christian Lopez-Najera, Commerce City, CO, Black Roofing, Inc., Boulder, CO, American Home Assurance, c/o Rusty Pinckney, AIG Claim Services, Phoenix, AZ, Rodrigo Gloria, Esq., Denver, CO, for Claimant.
David R. DeMuro, Esq., Denver, CO, Brandee DeFalco Galvin, Esq., Pinnacol Assurance — Interagency Mail, Kent L. Yarbrough, Esq., Denver, CO, (For Respondents Black Roofing, Inc. and American Home Assurance).