W.C. No. 4-336-001Industrial Claim Appeals Office.
April 29, 1998
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Martinez (ALJ) which denied and dismissed his workers’ compensation claim against the respondent, Allen Cordillera L.L.C. (Cordillera). We affirm.
The claimant suffered a work-related back injury on February 27, 1997. At the time of the injury the claimant was working for Advanced Home Technologies, Inc. (Advanced Home), which was hired by Richard Allen (Allen) to install an electronics system at a home located in Edwards, Colorado. Allen testified that he and his family used the Edwards property as a second home. However, Allen stated that for estate planning purposes the property was titled to Cordillera, a limited liability company organized under Colorado law.
Because Advanced Homes was the claimant’s actual employer, the ALJ held Advanced Homes liable for the claimant’s injury. However, Advanced Home was uninsured for workers’ compensation at the time of the injury, and therefore, the claimant sought an order imposing liability on Cordillera as the statutory employer.
Section 8-41-402(1), C.R.S. 1997, provides that the owner of real property who contracts out work to be done on the property is the statutory employer of the employees of the subcontractor. However, § 8-41-402(1) also provides that the Workers’ Compensation Act (Act) does not apply to the:
“owner or occupant, or both, of residential real property which meets the definition of a `qualified residence’ under section 163(h)(4)(A) of the federal `Internal Revenue Code of 1986,’ as amended, who contracts out any work done to the property, unless the person performing the work is otherwise an employee of the owner or occupant, or both, of the property.”
The ALJ found that Allen is a “principal” in Cordillera, and the “owner” of the Edwards property. Therefore, the ALJ determined that Cordillera is exempt from liability as a statutory employer, because the Edwards property is a qualified residence of Allen.
The claimant contends that Allen is not the “owner” of the Edwards property, and therefore, the claimant argues that Cordillera is not exempt from liability on the basis that the property is a “qualified residence” of Allen. The claimant also contends that a limited liability corporation cannot own or occupy a “qualified residence.” Therefore, the claimant argues that the ALJ erroneously dismissed and denied the claim against Cordillera. We perceive no reversible error, however we agree that the record does not support the ALJ’s finding that Allen is the “owner” of the Edwards property.
Although Allen stated that he makes “no significant distinction” between himself and Cordillera, he admitted that Cordillera is the owner of the Edwards property, and his testimony is consistent with the Warranty Deed in the record. (Tr. pp. 82, 83). Allen also testified that he owned no shares or interest in Cordillera, and this testimony is corroborated by Cordillera’s Articles of Incorporation. (Tr. p. 84).
In the absence of any evidence to the contrary, we conclude as a matter of law that Cordillera, not Allen is the owner of the Edwards property. Furthermore, because the claimant filed the claim against the “owner” of the Edwards property the issue becomes whether the Edwards property is Cordillera’s “qualified residence” under § 163(h)(4)(A) of the Internal Revenue Code (Code). See Brown v. Muto, 943 P.2d 38 (Colo.App. 1996) cert. denied August 25, 1997.
A “qualified residence” means the principal residence of the “taxpayer” and one other residence of the “taxpayer” which is selected by the “taxpayer” and used by the “taxpayer” as a residence within the meaning of § 280A. 26 U.S.C. § 163(h)(4)(A) Organ v. Jorgensen, 888 P.2d 336 (Colo.App. 1994). The Code defines “taxpayer” as “any person subject to any internal revenue tax.” 26 U.S.C. § 7701(14) (1996). The Code defines the term “person” to include “an individual, a trust, estate, partnership, association, company or corporation.” 26 U.S.C. § 7701(1) (1996). It follows that a limited liability company may be a “taxpayer” for purposes of owning a “qualified residence.”
Under 26 U.S.C. § 280A(d)(2)(A), a dwelling unit is considered to be used as a residence if used “for personal purposes by the taxpayer or any other person who has an interest in such unit.” For example, where a dwelling is owned by an S corporation the term “any shareholder of the S corporation” is substituted for the term “the taxpayer.” 26 U.S.C. § 280A(A)(f)(2). Thus, a corporate taxpayer may establish a qualified residence through the use of its shareholders.
Here, there is some evidence that Allen’s family held an “interest” in Cordillera and used the Edwards property for personal purposes. See (Articles of Incorporation; Tr. pp. 84 l. 7, p. 87). Moreover, there is no evidence that Cordillera used the property for any business purpose. Under these circumstances, the ALJ could reasonably infer that the Edwards property met the definition of a “qualified residence” under § 163(h)(4)(A). Therefore, the ALJ did not err in finding that Cordillera is exempt from liability as the claimant’s statutory employer.
In reaching this conclusion, we are mindful of our holding in Feltman v. Miniat, W.C. No. 4-106-759 (August 18, 1992), where we concluded that a corporate entity is incapable of residing in a private home, and thus may not take advantage of the homeowner exemption. Howeve , Feltman was decided under the predecessor statute, which created an exemption for the owner of a “private home.” Section 8-41-402(1), C.R.S. 1990. As noted by the court in Organ v. Jorgensen, supra, the amended version of § 8-41-402(1) broadens the scope of the residential real property exemption by incorporating the definition of a “qualified residence” under the Code. Colo. Sess. Laws 1991, ch. 219 at 1295-96.
The claimant’s remaining arguments have been considered and do not alter our conclusion.
IT IS THEREFORE ORDERED that the ALJ’s order dated December 4, 1997 is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL ____________________________________ David Cain ____________________________________ Kathy E. Dean
NOTICE
This Order is final unless an action to modify or vacate thisOrder is commenced in the Colorado Court of Appeals, 2 East 14thAvenue, Denver, CO 80203, by filing a petition for review with thecourt, with service of a copy of the petition upon the IndustrialClaim Appeals Office and all other parties, within twenty (20)days after the date this Order is mailed, pursuant to section8-43-301(10) and 307, C.R.S. 1997.
Copies of this decision were mailed April 29, 1998 to the following parties:
Norman K. Pozzie, Barbara Gammon, 3700 Curryford Rd., Apt. 21-W, Orlando, FL 32806
Advanced Home Technologies, Inc., P.O. Box 2767, Avon, CO 81620-2767
Allen Cordillera, L.L.C., 905 16th St., NW, Washington, D.C. 20006-1703
Allen Cordillera, L.L.C., Registered Agent, James P. Gregory, Esq., 1600 Broadway, Ste. 2600 Denver, CO 80202
Rebecca Greben, DOWC/Director’s Office — Interagency Mail
Barbara Carter, Special Funds Unit — Interagency Mail
Douglass Briggs, Esq., 743 Horizon Ct., Ste. 200, Grand Junction, CO 81506 (For Allen Cordillera)
Robert M. Noone, Esq., P.O. Drawer 39, Glenwood Springs, CO 81602 (For the Advanced Home)
Jeffrey Auxier, Esq., P.O. Box 1391, Vail, CO 81658 (For the Claimant)
BY: _______________________