Injured Worker Not an Employee under Insured's CGL Policy
In Rhiner v. Red Shield Ins. Co., 2009 WL 1458360 (Or.App.), the plaintiff owned and operated a tree and shrubbery company and held a CGL policy issued by defendant Red Shield Insurance Company. The plaintiff hired Mize to work for him cutting and trimming trees and shrubs. The plaintiff hired Mize himself and did not utilize an employment agency, labor contractor, or any other entity to obtain Mize's services. Mize had worked for plaintiff continuously for over a year when he fell from a tree.
Mize filed a claim for workers compensation benefits and recovered benefits for partial disability. In the course of that process, the Department of Consumer and Business Services determined that the plaintiff was a noncomplying employer. In light of the plaintiff's noncomplying employer status, Mize brought an action against him for negligence and employer liability.
Red Shield refused to defend or indemnify the plaintiff, citing the policy's exclusions for employment-related injuries. The plaintiff then initiated an action for a declaration that Red Shield was obligated to defend and indemnify on the grounds that because Mize was a “temporary worker” his claim was subject to the policy's exception from the exclusion for employment-related injuries.
The policy excluded coverage for claims made by the plaintiff's employees, but covered claims made by “temporary workers” who were not employees. The policy defined a “temporary worker” as “a person who is furnished to you” to substitute for a permanent employee who was on leave or to meet seasonal or short-term workload conditions.
Red Shield contended that Mize was an employee because he was not “a person who [was] furnished” to the plaintiff by a third party, such as an employment agency. The plaintiff claimed that Mize was a temporary worker within the meaning of the policy because he was “a person who [was] furnished” to the plaintiff by the worker himself. On cross-motions for summary judgment, the trial court agreed with the plaintiff. Red Shield appealed, arguing that the trial court's decision was contrary to the plain meaning of the policy.
On appeal, Red Shield contended that the trial court erred in concluding Mize was a “temporary worker” within the meaning of the policy. According to Red Shield, Mize could not be regarded as a “temporary worker” because he was not “a person who [was] furnished to [plaintiff].” Red shield further contended that even if the trial court correctly determined that, in some sense, Mize “furnished” himself to the plaintiff, Mize still was not a “temporary worker” within the meaning of the policy because he was not furnished to meet seasonal or short-term workload needs.
The plaintiff responded that because the policy's requirement that a “temporary worker” has been “furnished to [plaintiff]” was ambiguous, the policy must be construed in favor of coverage. The plaintiff asserted that the policy was ambiguous because it was not clear that the phrase “a person furnished to you” was relevant in this case as the policy definition of “temporary worker” could be read to apply to any person who was hired to meet seasonal or short-term workload conditions, regardless of who furnished the worker. The plaintiff also contended that, assuming the worker must have been “furnished to” the employer, it was still unclear whether the worker may not “furnish” himself. In addition, the plaintiff contended that the record made clear that Mize was hired only on a project-by-project basis to meet short-term work needs.
The Court of Appeals of Oregon rejected the plaintiff's contention that the policy's definition of “temporary worker” could be read to apply to any person who had been hired to meet seasonal or short-term workload conditions, regardless of who furnished the worker. According to the court, the wording of the policy plainly and unambiguously provided that a temporary worker was “a person who is furnished to you” either to substitute for a permanent employee or to meet seasonal or short-term workload conditions. The reference to meeting seasonal or short-term workload conditions referred to the purpose for which the worker had been “furnished to” the employer.
The court turned to the meaning of the reference to “a person who is furnished to you,” and whether it encompassed a worker who the plaintiff hired directly, without the use of an employment agency or any other entity that supplies the worker. The court agreed with Red Shield that there was only one plausible reading of the policy in that regard. Because the word “furnished” was not defined in the policy, the court looked to the dictionary definition of the word which defined “furnish” as “to provide or supply with what is needed.” Under that definition, the person who “furnishes” is the party who provides or supplies what is needed. The court explained that in context, plaintiff's proposed reading of the term “furnished” became untenable, because it rendered the entire phrase “a person furnished to you” superfluous. Further, if the plaintiff was correct that a temporary worker was a worker who furnished himself or herself to the employer, then the words “a person who is furnished to you” were unnecessary. And, if they were omitted, the definition had the same meaning.
For that reason, the court concluded that the phrase “a person who is furnished to you” as used in the definition of temporary worker meant a person who was referred from, or provided by, a third party. The court held that because the plaintiff hired Mize directly and not with the aid of a third party, Mize was not a “temporary worker” within the meaning of the policy, and coverage of his claims against the plaintiff was excluded.