The opinion of the court was delivered by
HIGBEE, J.A.D.
Respondents, Jack DiPiazza and D&P Real Estate, L.L.C. ("D&P"), appeal from a May 5, 2015 order holding respondents responsible for reimbursement of workers' compensation payments paid on behalf of petitioner, Mauricio Mendoza, for disability and medical benefits for injuries sustained by him while working as a roofer on respondents' property. Respondents argue:
We agree and reverse.
We discern the following history from the record. DiPiazza started Royal Baking/Leonard Novelty Baking ("LNB"), a family owned and operated manufacturer of Italian baked goods, in 1959. All three of DiPiazza's adult children and his wife participate in the day-to-day operations of LNB, along with approximately sixty-five to seventy other employees. LNB has workers' compensation insurance. The corporation currently operates out of a property located in Moonachie, which it rents from respondent D&P.
D&P was formed in 1999 by DiPiazza for the sole purpose of purchasing the Moonachie property for use by LNB. DiPiazza, his wife, and his three children are the only members of the LLC. DiPiazza himself is the president of LNB and the managing member of D&P. At no point since its creation has D&P conducted any business other than owning the Moonachie property and leasing it to LNB. D&P has no employees and does not maintain workers' compensation insurance.
The ten-year lease between D&P and LNB provides that the tenant, LNB, has the responsibility to maintain the premises "in good repair" at all times during the term of the lease. As such, LNB maintains the interior and exterior of the building, including daily cleaning, regular maintenance of the equipment, and lawn care. According to the testimony of DiPiazza, however, D&P was responsible for maintaining the building itself, including repairing any structural damage, such as a leaky roof. As the chief officer of both corporations, DiPiazza signed the lease on behalf of both parties.
DiPiazza entered into a contract with Skippy Ely, owner of Conte Roofing, to repair leaks in the roof and apply an aluminum coating to it. Conte Roofing prepared the contract, naming "D&P Bakery" as the recipient of the roofing services. There is no entity known as "D&P Bakery." DiPiazza's daughter, LNB's primary administrator, wrote a check for $30,000 from D&P to Conte Roofing as a deposit.
Prior to the repairs, DiPiazza inquired of Ely as to Conte Roofing's workers' compensation coverage. Ely claimed he had full insurance coverage and that he would provide proof of insurance. He failed to do so prior to starting the repairs.
On October 9, 2012, the first scheduled day of repairs, a Conte Roofing van stopped in Union City looking for laborers to work on the roofing job. The company hired Mauricio Mendoza at $100 per day and transported him to the site in Moonachie. After working for approximately five hours, Mendoza was seriously injured when he fell through a covered hole in the roof, landing on a table and then the floor of the building.
After the accident, DiPiazza again asked Ely to provide proof of Conte Roofing's workers' compensation insurance. Ely did so, but when DiPiazza submitted the certificate to D&P's insurance company, it was discovered that the certificate was fraudulent and that Conte Roofing did not have any insurance coverage.
On April 9, 2013, Mendoza filed employee claim petitions with the Department of Labor Division of Workers' Compensation, one naming LNB as the employer and the other naming both D&P and DiPiazza.
The judge heard testimony on July 2 and 17, 2013. Before the judge rendered a decision, Mendoza died. His attorney did not seek a permanency award, leaving only the issue of who was liable for benefits already paid to Mendoza by the UEF. On April 28, 2015, the judge dismissed the claim against LNB with prejudice.
On May 5, 2015, the judge entered an order declaring DiPiazza and D&P general contractors:
In explaining her decision, the judge reasoned that because DiPiazza testified that D&P is solely responsible for maintaining the structure of the building and they alone managed the hiring of labor to do any necessary structural repairs, D&P acted as a general contractor. The judge held that when D&P entered into the contract with Conte Roofing, the roofing company became D&P's subcontractor; and in accordance with
The judge rejected respondents' argument that D&P's ownership of the property was not its business in-and-of itself, but only incidental to the family bakery business. She held that this argument creates a "slippery slope" in which the creation of a separate LLC "with all its legal obligations and implications is essentially illusory."
She acknowledged that an abundance of case law supports the respondents' proposition that mere ownership of a property does not make the owner a general contractor for purposes of workers' compensation. However, she reasoned those cases are distinguishable because they do not involve a real estate LLC whose sole business is to own, lease, and maintain a certain property. The judge further noted that while her ruling would have a negative impact on the DiPiazza family and their business, the statutory mandate is to liberally interpret the statute to provide injured workers access to compensation.
In reaching her decision, the judge mistakenly stated that a "general contractor" is defined as "[o]ne who has entered into a contract, express or implied, for the [purpose of performing] an act with [a] person who has already contracted for its performance," citing
On May 26, 2015, DiPiazza and D&P filed this appeal, asking this court to resolve the legal question of whether D&P is a general contractor within the intended meaning of
To ensure injured workers have some source of recovery, and as an incentive for general contractors to hire insured subcontractors, "a general contractor may be called on to provide workers' compensation to the employee of a subcontractor that has violated its statutory obligation to provide workers' compensation coverage."
We have previously concluded that "the purpose of [
In
Similarly, in
Against this legal framework, we analyze respondents' assertion that the workers' compensation judge erred in concluding that an LLC created with the sole purpose of owning and renting a piece of property to its own members' business constitutes a general contractor under
While the workers' compensation judge's concern for the injured worker and recognition of the complexities of her decision are commendable, there is no legal precedent in which to ground her decision. It has been made clear that a property-owning business is not the equivalent of a general contractor pursuant to
Reversed.