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Texas Mutual Insurance Co. v. Hofer Builders, Inc.

Court of Appeals of Texas, Third District, Austin

July 3, 2019

Texas Mutual Insurance Company, Appellant
v.
Hofer Builders, Inc. and Hartford Underwriters Insurance Company, Appellees

          FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT NO. D-1-GN-17-005825, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING

          Before Justices Goodwin, Baker, and Triana

          MEMORANDUM OPINION

          MELISSA GOODWIN, JUSTICE

         In this workers' compensation case, Texas Mutual Insurance Company appeals from the trial court's order granting the motions for summary judgment of Hofer Builders, Inc. (HBI) and Hartford Underwriters Insurance Company (Hartford) and denying Texas Mutual's motion for summary judgment. In two issues, Texas Mutual challenges the trial court's jurisdiction and its finding that HBI's employee, who was injured out of state, was an employee as described in section 406.071 of the Texas Labor Code. See Tex. Lab. Code § 406.071.

         For the following reasons, we affirm the portion of the trial court's order denying Texas Mutual's motion for summary judgment, but we reverse the portions of the order granting the motions for summary judgment of HBI and Hartford and remand the case to the trial court for further proceedings consistent with this opinion.

         Background

         Statutory Framework

         To give context to the parties' dispute, we begin by providing a brief overview of the relevant statutory provision. Chapter 406 of the Texas Labor Code addresses workers' compensation insurance coverage, see Tex. Lab. Code §§ 406.001-.165, and subchapter D addresses extraterritorial coverage for employees who are injured while working out of state, see id. §§ 406.071-.075. Relevant here, section 406.071 provides:

(a) An employee who is injured while working in another jurisdiction or the employee's legal beneficiary is entitled to all rights and remedies under this subtitle if:
(1) the injury would be compensable if it had occurred in this state; and
(2) the employee has significant contacts with this state or the employment is principally located in this state.
(b) An employee has significant contacts with this state if the employee was hired or recruited in this state and the employee:
(1) was injured not later than one year after the date of hire; or
(2) has worked in this state for at least 10 working days during the 12 months preceding the date of injury.

Id. § 406.071. The "principal location of a person's employment is where: (1) the employer has a place of business at or from which the employee regularly works; or (2) the employee resides and spends a substantial part of the employee's working time." Id. § 406.072.

         The Controversy

         HBI is a Texas company in the construction business that does work in many different states across the country. It was incorporated in 1995, and its office is located in Saginaw, Texas. Tom Hofer is HBI's president. In November 2014, HBI hired David Hope, who was a Florida resident, as a supervisor. After Hofer and Hope's brother, who were in Texas, discussed offering Hope a job, Hope's brother called Hope, who was in Florida, from HBI's office in Texas and offered him a job. Hope previously had been employed by HBI and a predecessor company "for many years up to 2007," working on construction jobs in Texas and other states.[1]

         After HBI mailed employment-related documents from its office in Texas to Hope in Florida, Hope began working for HBI at a construction site in Louisiana. HBI was a subcontractor on the Louisiana construction project, and Hartford was the workers' compensation carrier for the general contractor on the project. HBI paid for Hope's travel from Florida to Louisiana, lodging in Louisiana, and payroll expenses from the HBI office in Texas. According to Hofer, Hope's next assignments after the Louisiana project would have been at a project in Oklahoma and then a project in Texas. On December 29, 2014, Hope was injured while working at the Louisiana construction site. During the time period between his brother's phone call to him in November 2014 and his injury in December 2014, Hope was never physically in Texas.

         At the time of Hope's injury, HBI had a "Worker's Compensation and Employers' Liability Insurance Policy" (HBI policy) with Texas Mutual for the state of Texas. See generally Tex. Ins. Code §§ 2054.102-.553; see id. § 2054.151 (explaining that Texas Mutual serves as "insurer of last resort"). HBI's policy included an endorsement entitled "Limited Reimbursement for Texas Employees Injured in other Jurisdictions" (the Endorsement). The Endorsement stated in relevant part:

This policy does not provide "other states" insurance coverage. This endorsement provides reimbursement coverage to you for those Texas employees who are described in the Texas Labor Code §§ 406.071-.072. Therefore the coverage is for injuries to your Texas employees that occur in another state if (i) the injury would have been compensable had it occurred in Texas and (ii) the employee has significant contacts with Texas or the employment is principally located in Texas. An employee has significant contacts with Texas if the employee was hired or recruited in Texas, and (i) the employee was injured not later than one year after the date of hire; or (ii) has worked in Texas for at least ten working days during the twelve months preceding the date of injury.
Employees hired or recruited by you outside Texas to work in another state are specifically excluded from the terms and provisions of this policy. If you conduct business in states other than Texas, you must comply with those state laws. You must promptly notify your agent before you begin work in any jurisdiction other than Texas. We are not authorized to provide workers' compensation insurance in any jurisdiction other than Texas. You are responsible for all of your legal obligations for your failure to comply with requirements of the workers' compensation laws of any jurisdiction other than Texas.

         The first paragraph of the Endorsement imports statutory language from section 406.071 of the Labor Code that addresses extraterritorial coverage. See Tex. Lab. Code ยง 406.071. When the Endorsement applies, Texas Mutual agreed to reimburse HBI for benefits paid ...


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