MYATT v. HENDRIX, 2003 AWCC 116

CLAIM NO. F109991

JEFFREY R. MYATT, EMPLOYEE, CLAIMANT v. HAROLD HENDRIX d/b/a HENDRIX FARMS, EMPLOYER, RESPONDENT NO. 1, TUCKER’S LUMBER CO., EMPLOYER, RESPONDENT NO. 2, FREMONT INSURANCE CO., INSURANCE CARRIER, RESPONDENT NO. 2, UPLAND TIMBER CO., EMPLOYER, RESPONDENT NO. 3, FIRST COMP INSURANCE, INSURANCE CARRIER, RESPONDENT NO. 3

Before the Arkansas Workers’ Compensation Commission
OPINION FILED JUNE 17, 2003

Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.

Claimant represented by HONORABLE THOMAS W. MICKLE, Attorney at Law, Conway, Arkansas.

Respondent No. 1 represented by HONORABLE JERRY D. PATTERSON, Attorney at Law, Marshall, Arkansas.

Respondents No. 3 represented by HONORABLE WILLIAM C. FRYE, Attorney at Law, Little Rock, Arkansas.

Decision of the Administrative Law Judge: Affirmed.

OPINION AND ORDER
The claimant appeals from portions of a decision of the Administrative Law Judge filed on October 2, 2002. The claimant appeals the Administrative Law Judge’s finding that Hendrix Farms was not a subcontractor to Upland Timber Company, an alleged prime contractor, so that Upland Timber and its workers’ compensation insurance carrier would be liable to the claimant for benefits under Ark. Code Ann. § 11-9-402. The claimant also appeals the Administrative Law Judge’s finding that the claimant has failed to establish that he is entitled to any period of temporary total disability after July 12, 2001. After conducting a denovo review of the entire record, we affirm both findings.

The claimant was employed by Hendrix Farms as a logging truck driver when on June 11, 2001 the claimant became injured when his truck turned over in route to the International Paper facility in Menifee, Arkansas. At the time the injury occurred, the claimant was in his fourth trip of the day hauling logs to the International Paper facility in Menifee.

The record indicates that when the claimant would arrive at the International Paper facility, he would use a contract number for Upland Timber Company at the International Paper facility. The preponderance of the evidence establishes that International Paper paid Upland Timber $23.50 per ton for pulpwood delivered under this contract number, and Upland Timber Company would then pay Hendrix Farms $23.00 per ton for the timber delivered to International Paper.

The claimant filed a claim with the Commission seeking an award of benefits against Hendrix Farms and against Upland Timber Company. The Administrative Law Judge found that the claimant was an employee of Hendrix Farms at the time the injury occurred, and neither Hendrix Farms nor Upland Timber Company have appealed that finding. The Administrative Law Judge also concluded that the preponderance of the evidence fails to establish that Upland Timber Company is a “prime contractor” within the meaning of Ark. Code Ann. § 11-9-402, and the Administrative Law Judge found that the claimant has failed to establish that he is entitled to any period of temporary disability compensation for any of the period in question after July 12, 2001.

1. Prime Contractor-Subcontractor Issues

The claimant’s brief on appeal argues in relevant part that:

The Administrative Law Judge’s conclusion that no contractual relation existed between Upland and Hendrix is simply ludicrous and is a strained exercise in placing form over substance. This conclusion underlies the Administrative Law Judge’s decision that there was no subcontractor-prime contractor relationship between Upland and Hendrix. The Administrative Law Judge’s decision is one any timber company could love and certainly the decision eviscerates any chance of logging employees such as the Claimant having any hope of workers’ compensation coverage in their dangerous jobs. However, the vast preponderance of the evidence, when basic law school contracts law is applied to that evidence, demonstrates that there was indeed an agreement between Hendrix and Upland, and that agreement created the relationship of subcontractor-prime contractor.
It is clear from the evidence that Hendrix, for several years, delivered pulpwood to the same mill when it was owned by Canal Wood. Hendrix’s business practices did not change when IP bought the mill; only the way he was paid was changed. Hendrix no longer had a direct contract with IP, but he did have a business arrangement with Upland who had a contract with IP, which enabled Hendrix to keep doing what he’s done all along — deliver pulpwood to the IP mill at Menifee. Hendrix did not have a written agreement with Upland in the sense of a formal, executed agreement. However, this is not required for the commission to find that a preponderance of the evidence establishes a contractual relationship, implied in contract and based on custom and dealing of Upland and Hendrix, existed at the time of claimant’s injury.

In addition to his “implied contract” argument, the claimant’s brief also at one point characterizes Upland as a timber “broker.” We have the following observations regarding the legal relationship between Hendrix, Upland, and International Paper.

Black’s Law Dictionary, 5th Edition, defines “broker” as follows:

An agent employed to make bargains and contracts for a compensation. A dealer in securities issued by others. [Citations omitted.] A middleman or negotiator between parties. A person dealing with another for sale of property. A person whose business it is to bring buyer and seller together. The term extends to almost every branch of business, to realty as well as personalty. One who is engaged for others, on a commission, to negotiate contracts relative to property. [Citations omitted.] An agent of a buyer or a seller who buys or sells stocks, bonds, commodities, or services, usually on a commission basis.
Ordinarily, the term is applied to one acting for others but is also applicable to one in business of negotiating purchases or sales for himself.

Based on the undisputed evidence that (1) Tucker on behalf of Upland Timber made standing offers to pay $23.00 per ton for delivering pulpwood to IP at Menifee; (2) the undisputed fact that Hendrix, Smiley, and apparently others did in fact deliver pulpwood to IP using Upland’s number; (3) the essentially undisputed evidence that IP paid Upland $23.50 per ton for the pulpwood delivered by Hendrix; and (4) the undisputed evidence that Upland Timber then paid Hendrix $23.00 per ton for the wood delivered to IP, it certainly seems possible to conclude that the claimant’s brief on appeal is correct that Upland might accurately be characterized as a “broker,” as that term is defined inBlack’s Law Dictionary.

The potential problem with the claimant’s “broker” theory, however, is that nowhere in Ark. Code Ann. § 11-9-402 does the law provide a recovery against “brokers.” In this regard, we note that Section 402(a) states:

Where a subcontractor fails to secure compensation required by this chapter, the prime contractor shall be liable for compensation to the employees of the subcontractor.

Therefore, we interpret that the claimant must establish that Upland Timber was a prime contractor, in addition to apparently being a “timber broker” in order to establish that Upland Timber is liable for the claimant’s injuries under Ark. Code Ann. § 11-9-402.

With regard to the elementary contract principles alluded to in the claimant’s brief, and with regard to the Administrative Law Judge’s conclusion that Upland Timber had an informal ad hoc noncontractual basis with Hendrix for wood to be delivered on Upland’s behalf to the IP scale yard at Menifee, we reach the following conclusions.

If a contract exists between Upland Timber and Hendrix in this case, our contracts research indicates that Upland Timber made a “standing offer” to Hendrix, Smiley, and similar timber developers, and that Upland Timber and Hendrix engaged in a series of “unilateral” sales contracts, as the term “unilateral contract” has been described by Professor Farnsworth and by Professor Corbin. In this regard, Professor Farnsworth distinguishes between bilateral and unilateral contracts as follows:

Traditional analysis of the bargaining process developed a dichotomy between “bilateral” and “unilateral” contracts. In forming a bilateral contract, each party makes a promise: the offeror makes the promise contained in the offer, and the offeree makes a promise in return as acceptance. For example, a buyer offers to pay the price 30 days after delivery in return for a seller’s promise to deliver apples. In forming a unilateral contract, only one party makes a promise: the offeror makes the promise contained in the offer, and the offeree renders some performance as acceptance. For example, a buyer offers to pay the price 30 days after delivery in return for a seller’s delivery of apples. Traditional analysis has it that in a bilateral contract, there are promises on both sides (the buyer’s promise to pay and the seller’s promise to deliver); there are duties on both sides (the buyer’s duty to pay and the seller’s duty to deliver); and rights on both sides (the seller’s right to payment and the buyer’s right to delivery). In a unilateral contract, however, there is a promise on only one side (the buyer’s promise to pay); there is a duty on only one side (the buyer’s duty to pay); and a right on the other side (the seller’s right to payment).

E. Allan Farnsworth, Farnsworth On Contracts § 3.4 at 115-116 (2d ed. 1990) (footnotes omitted).

Professor Corbin likewise notes the following distinctions with regard to express versus implied contracts, and unilateral versus bilateral contracts:

The distinction between an express and an implied contract, therefore, is of little importance, if it can be said to exist at all. The matter that is of importance is the degree of effectiveness of the expression used. Clarity of expression determines the reasonableness of understanding and eases the Court’s problem in case of dispute. The character of the evidence to be presented to the court depends on the mode of expression used. The more variant and obscure the mode, the more difficult the court’s problem. Nowhere is accomplished artistry worth more than in the drafting of an important contract. It may be an exaggeration to say that nowhere is it less often to be found.
When an expression of agreement is put into words that are frequently used with more than one meaning, it is difficult, and sometimes impossible, to decide that an express contract exists. Likewise, when conduct other than words is such as persons frequently perform with different meanings, it is difficult, and sometimes impossible, to decide that an implied contract exists.
It is well understood that a contract may be unilateral; that is, that only one party makes a promise. The consideration for the promise is some non-promissory performance rendered by the promissee or the promise is binding without consideration. In such cases, it is nearly always the promissor who makes an offer of a promise and requests action or forbearance in return. If such is the offer that has been made, it is usually unreasonable to infer that the offeree has made a promise to render the requested performance. Generally, therefore, the implication of a return promise is directly bound up with the interpretation of the terms of the offer. If the offeror has not asked for a promise, the normal result is that the offeror doesn’t get one; but if the offeror does ask for a promise and the conduct of the offeree makes the offeror believe reasonably that the requested promise has been made, the court will generally find that it has been made by, implication if not expressly. This will be true, whether the plaintiff is trying to prove that the defendant made such an implied promise in order to maintain an action for its enforcement, or whether the plaintiff is trying to show that the plaintiff made such an implied promise in order to establish a consideration for the express promise of the defendant. [Emphasis ours.]

Arthur Linton Corbin, Corbin on Contracts § 1.19 at 57-60 (1993) (footnotes omitted).

With regard to the concept of a “standing offer,” Professor Corbin explains as follows:

There is one sort of case in which the offer is not made irrevocable either by part performance or by express notice of acceptance. This is the case in which an offer has been made in such terms as to create a power to make a series of separate contracts by a series of separate acceptances. The closing of one of these separate contracts by one acceptance leaves the offer still revocable as to any subsequent acceptance. The two most common instances of such offers are continuing guarantees of the credit of another and offers made by credit card agreements. Yet, offers of this type are not limited to these two situations. . . .
Just as in the case of an offer for a single acceptance, an offer to a series of contracts can be made irrevocable. It will create a binding option if a consideration is given for the offeror’s promise to do the series of acts. The offer may itself specify that the making of one loan or the giving credit on one bill of goods or the discounting of one bill of exchange, will be a consideration making the offer irrevocable as to further transactions. . . . [Emphasis ours.] It is a question of interpretation, sometimes difficult, whether the offer contemplates a single transaction with one acceptance, involving a series of performances, or contemplates a series of independent transactions concluded by a series of separate acceptances. If the performances are so interrelated that the cost and the risks overlap, the former interpretation will generally be the more reasonable one.

Arthur Linton Corbin Corbin on Contracts, § 2.33 at 300-304 (1993) (footnotes omitted).

In the present case, we simply fail to see any persuasive evidence indicating that Hendrix ever made any type of express or implied promise to Tucker and/or Upland Timber for any future timber deliveries to the International Paper facility, so as to arguably create any type of bilateral ongoing contract as the claimant’s brief seems to assert. Likewise, we fail to see any persuasive evidence to indicate that Hendrix ever provided a consideration to Upland Timber so as to render irrevocable Upland’s standing offer to pay $23.00 per ton for pulpwood delivered to the IP facility at Menifee. In fact, we note with interest that Hendrix testified that he had never even spoken to Tucker prior to the claimant’s injury in this case. Therefore, to the extent potentially legally relevant, it certainly appears to us that Hendrix and Tucker engaged in a series of unilateral sales contracts, where Tucker made a standing offer to buy and Hendrix accepted the offer by performance (i.e., delivery of pulpwood at Menifee). Therefore, while there may be some question as to the technical accuracy of the Administrative Law Judge’s conclusion on page 10 that Upland Timber and Hendrix and IP operated on a “noncontractual” basis, we do agree with the Administrative Law Judge’s conclusion that the transactions were “ad hoc” (i.e., a series of unilateral sales contracts).

Because we conclude that Upland Timber and Hendrix Farms engaged in a series of unilateral contracts, and not an implied contract based on an unspoken promise to perform on the part of Hendrix, the next question we must determine is whether or not, through a series of unilateral sales contracts, Upland Timber might still be deemed a prime contractor and Hendrix might be deemed a subcontractor, as those terms are used in Ark. Code Ann. § 11-9-402.

Black’s Law Dictionary defines “subcontractor” as follows:

One who takes portion of a contract from principal contractor or another subcontractor. One who has entered into a contract, express or implied, for the performance of an act with the person who has already contacted for its performance. One who takes from the principal or prime contractor a specific part of the work undertaken by the principal contractor. (Citations omitted.)

Black’s Law Dictionary defines “prime contractor” as follows:

A party to a building contract who is charged with the total construction and who enters into sub-contracts for such work as electrical, plumbing, and the like. Also called “general contractor.”

Black’s Law Dictionary defines “general contractor” as follows:

One who contracts for the construction of an entire building or project, rather than for a portion of the work. The general contractor hires subcontractors (e.g. plumbing, electrical, etc.), coordinates all work, and is responsible for payment to subcontractors. Also called “prime contractor.”

In the present case, Mr. Smiley testified that Tucker had called Smiley approximately one and a half years before the hearing, and had advised Smiley that Tucker had a contract with IP to deliver pulpwood, and that in order to keep his contact, Tucker had to meet a 1,000 ton per week quota. There appears to be no dispute that Hendrix, Smiley, and apparently others were delivering timber to IP on Tucker’s contract number which would permit Tucker to meet his 1,000 ton per week quota required to keep his contract with IP.

This case therefore turns on whether or not people such as Hendrix and Smiley can be deemed subcontractors of Tucker where the only contractual obligation that existed between Tucker and these individuals was a standing offer and a series of unilateral contracts that were formed at the point that Hendrix, Smiley, and similarly situated timber companies actually delivered pulpwood to the IP facility. Stated another way, this case seems to turn on whether or not one may become a subcontractor in a sales agreement simply by making a series of deliveries, or whether something more is required.

Our research indicates that this issue was addressed with regard to timber buyers and sellers in Hobbs-Western Co. v. Craig, 209 Ark. 630, 192 S.W.2d 116 (1946), and in Brothers v. Dierks Lumber Co., 217 Ark. 632, 232 S.W.2d 646 (1950) which involved application of the 1939 subcontractor law to timber sales contracts. We note with interest that the Arkansas Supreme Court in Craig cited with approval the Louisiana Court of Appeals decision in Harris v. Southern Kraft Co., 183 So. 65 (La.App. 1938), which addressed a fact pattern which appears to be essentially identical to the facts presented in the present case. As we understand the Arkansas Supreme Court’s discussion in Craig, the Court seems to indicate that a mere contract for the sale of goods does not necessarily make either the buyer or seller or both a “contractor,” and the Arkansas Supreme court reiterated that rule of law again inBrothers. We note with interest that the 1939 law at issue in Craig and in Brothers speaks of subcontractors, as does the present statute. The primary difference between the 1939 law and the present version of Ark. Code Ann. § 11-9-402 is that Section 402 has inserted in front of the word “contractor” the word “prime.” We are not persuaded, however, that the legislature’s insertion of the word “prime” in front of the word “contractor” in amendments after 1939 has in any way invalidated the general rule of law from the Louisiana Court of Appeals Harris decision which was discussed with approval in Craig. We reach the same conclusion previously recorded by the Administrative Law Judge: that the ad hoc sales at issue in this case did not create a prime contractor-subcontractor relationship between Hendrix Farms and Upland Timber.

2. Temporary Total Disability

Claimant has the burden of proving by a preponderance of the evidence that he is entitled to compensation. Jordan v. Tyson Foods, Inc., 51 Ark. App. 100, 911 S.W.2d 593 91995). Questions of credibility and the weight and sufficiency to be given evidence are matters within the province of the Workers’ Compensation Commission. Swift-Eckrich, Inc. v.Brock, 63 Ark. App. 118, 975 S.W.2d 857 91998). Temporary total disability for unscheduled injuries is that period within the healing period in which claimant suffers a total incapacity to earn wages. Ark.State Highway Transportation Dept. v. Breshears, 272 Ark. 244, 613 S.W.2d 392 (1981). The healing period ends when the underlying condition causing the disability has become stable and nothing further in the way of treatment will improve that condition. Mad Butcher, Inc. v.Parker, 4 Ark. App. 124, 628 S.W.2d 582 (1982).

As regards the length of the claimant’s healing period, the primary evidence on the healing period issue comes from the claimant’s testimony. The Administrative Law Judge, who heard the live testimony and observed the demeanor of the claimant as a witness, obviously did not find the claimant’s testimony sufficiently credible to establish that he was undergoing additional medical treatment which would improve the underlying nature of his permanent injury during the period at issue. In fact, the Administrative Law Judge found that the claimant’s work injury was temporary and resolved before July 12, 2002. We do not see adequate evidence in the record which might persuade us to disregard the Administrative Law Judge’s credibility determination as it relates to the duration of the claimant’s injury. Likewise, with regard to the claimant’s capacity or incapacity to work after July 12, 2001, we note that there are no reports in the record of physicians specifically taking the claimant off work during any of the period in question, and the Administrative Law Judge apparently did not find sufficiently credible the claimant’s testimony, by itself, to persuade the Administrative Law Judge that the claimant was in fact totally incapacitated from earning during the period in question. Again, we do not see sufficient evidence to persuade us to disregard the Administrative Law Judge’s credibility determination. Therefore, we find that the claimant failed to establish by a preponderance of the credible evidence either that he remained within his healing period or that he was incapacitated from working during any period in question after July 12, 2001.

Therefore, after conducting a de novo review of the entire record, and for all of the reasons discussed herein, we affirm the Administrative Law Judge’s findings at issue on appeal.

IT IS SO ORDERED.

________________________________ OLAN W. REEVES, Chairman
________________________________ JOE E. YATES, Commissioner

Commissioner Turner dissents.