Evergreen Investment & Realty Co. v. Baca

PIERCE, Judge. In this workmen’s compensation case, petitioner, Evergreen Investment and Realty, Co. (Evergreen), seeks review of the final order of the Industrial Commission which determined that Evergreen’s insurance policy with the State Compensation Insurance Fund (Fund) did not afford coverage for injuries sustained by claimant, Dennis Wayne Platts. We affirm. The record discloses that Evergreen had the exclusive right to sell lots in Saddleback Ridge Estates. In the fall of 1978 it commenced construction of four homes in the subdivision for resale. Evergreen entered into a contract with Charles P. Scheidell Construction (Scheidell) for the framing and exterior trim on two of its homes. In February 1979, claimant, who was employed by Scheidell as a carpenter, was injured during the construction of one of these homes. One of Evergreen’s officers testified the company’s business was real estate sales or brokerage, not construction. He stated that the four homes were the first and only homes built by the company, and had been constructed only to spur sales. The witness acknowledged that the Fund had not been notified of the construction, and that it had been assumed the company’s policy would [167] cover this activity, or that it would be picked up on an audit by the Fund. The Fund denied liability for claimant’s injuries under a policy issued to Scheidell, because the policy had been cancelled in September 1978. The Fund also denied liability under its policy with Evergreen, contending that this policy did not cover construction operations. The Commission found that Scheidell was uninsured on the date of the accident and that claimant was the constructive employee of Evergreen. Evergreen was determined to be liable for claimant’s workmen’s compensation benefits. The Commission further found that the Fund’s policy was intended to cover only Evergreen’s compensation liability in its real estate activities, and that the company’s construction operation was an unrelated business activity which was not included within the policy’s coverage. For Evergreen’s failure to comply with the insurance provisions of the Workmen’s Compensation Act, the Commission ordered that claimant’s benefits be increased by fifty percent. The issue of additional temporary total and permanent disability benefits was left open. See § 8-44-107(1), C.R.S.1973 (1982 Cum.Supp.). Evergreen does not challenge the Commission’s finding that it was claimant’s statutory employer. It argues only that the Commission erred in finding that its insurance policy with the Fund did not extend to afford coverage with respect to claimant. Evergreen maintains that the language of the policy is broad, all-encompassing, and provided coverage without limitation for all risks of the insured under the Workmen’s Compensation Act. We do not agree. The policy issued to Evergreen is in conformity with § 8-44-105, C.R.S.1973. The policy’s coverage is coextensive with Evergreen’s liability as an employer in the real estate business, see Industrial Commission v. Lopez, 150 Colo. 87, 371 P.2d 269 (1962), or some naturally connected business. See State Compensation Insurance Fund v. Batis, 117 Colo. 1, 183 P.2d 891 (1947); cf. Connell v. Continental Casualty Co., 87 Colo. 573, 290 P. 274 (1930). The sole fact that the company may have profited from the combined operations does not, in itself, make the businesses naturally connected. See State Compensation Insurance Fund v. Batis, supra. The Commission here found that the two businesses were unrelated. This ultimate conclusion of fact is supported by the evidence and the reasonable inferences that may be drawn therefrom. We accept its determination. American Metals Climax, Inc. v. Cisneros, 195 Colo. 163, 576 P.2d 553 (1978). Industrial Commission v. Lopez, supra, is not so broad as Evergreen suggests. In particular, Lopez does not extend the coverage of a compensation insurance policy to an unrelated business of the insured. There, one of two joint venturers was insured, and the court held that the coverage of this policy extended to the joint venture because it was in furtherance of the cement contracting business in which each of the joint venturers was individually engaged. The order is affirmed. SMITH, J., concurs. TURSI, J., dissents.