HAMILTON v. WORKERS COMPENSATION APPEALS BOARD

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Court of Appeal, Fourth District, Division 2, California.

H. Trevor HAMILTON, et al., Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD of the State of California, State of California, et al., Respondents.

No. E004386.

Decided: November 23, 1987

Cantrell, Green, Pekich & Zaks and Richard J. Cantrell, Long Beach, for petitioners. Mullen & Filippi and James T. Ponzio, San Francisco, for amicus curiae County of Sonoma on behalf of petitioners. Krimen, Hershenson, Da Silva & Daneri and Louis Harris, Los Angeles, for respondent State of Cal., State Bd. of Control. DeWitt W. Clinton, County Counsel, Milton J. Litvin, Asst. County Counsel and Daniel E. McCoy, Principal Deputy County Counsel, Los Angeles, as amicus curiae on behalf of petitioners.

H. Trevor Hamilton (applicant) and Blue Cross of California (Blue Cross) seek review of a decision, after reconsideration by the Workers' Compensation Appeals Board (Board), determining that applicant, as a municipal court judge, was an employee of the County of San Bernardino (the County) and not of the State of California (the State) at the time of his alleged industrial injury.   We issued a writ of review and the matter is now before us for decision.   We conclude the determination of the Board was correct and that its decision should be affirmed.

FACTS

Applicant was employed as a municipal court judge at Victorville, California, from 1979 through August 15, 1981, and from April 1982 to June 22, 1984.   In June and October 1984, at the age of 53, he filed applications for adjudication of a WCAB claim.   In each of the applications, he named the County as his employer, and alleged that he had sustained certain injuries caused by stress and strain arising out of and in the course of his employment.

The County filed answers to applicant's applications in which it denied several of their allegations.   However, it did not deny that applicant was employed by the County.   Several months later, the County changed its position as to applicant's employment, and, contending that applicant was an employee of the State and not of the County, amended its answer to place employment in issue.   Applicant then amended his petition to name both the County and the State as employers.

Thereafter, applicant, Blue Cross (a lien claimant) and the County submitted for approval an executed compromise and release by which applicant, in consideration of $42,500, settled his claim against the County “for workers' compensation benefits ․ caused by ․ any ․ activity during his employment as a judge.”   The compromise and release agreement also included the following recitations:

“It is the contention of the County of San Bernardino that applicant was not an employee, that he was paid pursuant to statute but that full control and direction of the applicant's activities were pursuant to the State of California, and he was under the direction of the Judicial Counsel [sic]․

“This Compromise and Release Agreement is entered into by and between the applicant [and Blue Cross] and the County of San Bernardino under the rules of Labor Code Section 5005 [1 ] with the applicant [and Blue Cross] specifically reserving any and all rights to proceed against the State of California․ it is the intention of the parties that this settlement will have no effect on applicant's [or Blue Cross's] pursuing their claims against the State of California.”

The Workers' Compensation Judge (WCJ) then issued an order approving the compromise and release, and awarding $23,082.09 to applicant, $10,000 to Blue Cross in partial satisfaction of its lien, and the remainder of the $42,500 to other lienholders and to applicant's attorneys.

Thereafter, a hearing was held before the WCJ, and, after briefing by the parties, the following issues were reserved for submission:  “1.   Employment by the State of California, including dual employment between the County of San Bernardino and the State of California, and the applicability of Insurance Code Section 11663.[2 ]  [¶] 2. Jurisdiction of the W.C.A.B. to hear a case or make an award against the State for a Municipal Court Judge because the State Legislature has not allocated funds to pay for the injuries to Municipal Court Judges.”

Thereupon, the WCJ issued a decision finding that:  (1) applicant was at all relevant times an employee of the State;  (2) applicant was not an employee of the County;  and (3) the Board had jurisdiction to hear the case, and, if appropriate, to make an award against the State.   The principal basis for the WCJ's decision, as recited in the “OPINION ON DECISION” which accompanied the findings, was that “The state did not grant to the County of San Bernardino the power to direct or control the municipal court judges in any way.   The state retained all of said power to itself.”

The State then petitioned the Board for reconsideration, and the Board granted the petition, issuing a unanimous decision after reconsideration amending the WCJ's finding to read:  “1. H. Trevor Hamilton was, while employed as municipal court judge from 1979, through August 15, 1981, an employee of the County of San Bernardino, and not of the State of California.  [¶] 2. All other issues are moot.”   The decision also recited that “Inasmuch as applicant has settled his industrial claims against the County, he is entitled to no further workers' compensation for the injuries alleged.”

The Board's decision on the employment issue was based on:  (1) Villanazul v. City of Los Angeles (1951) 37 Cal.2d 718, 235 P.2d 16, in which the California Supreme Court had held that a deputy marshall of the Municipal Court of the City of Los Angeles was a county rather than a state or city employee in connection with a claim that the marshall had caused personal injury to a third party;  (2) Government Code section 71220, which recites in relevant part that “The salaries of the judges, ․ and other officers ․ of each municipal court ․ shall be paid by the county in which the court is situated,” and (3) Government Code section 53200.3, which recites in relevant part:  “For the limited purpose of the application of this article [group insurance], judges of the superior and municipal courts ․ whose salaries are paid either in whole or in part from the salary fund of the county are county employees and shall be subject to the same or similar obligations and be granted the same or similar employee benefits as are now required or granted to employees of the county in which the court of said judge ․ is located.”

This petition followed.

DISCUSSION

 Applicant and Blue Cross (collectively applicant) contend first that the State did not meet its burden of proving the absence of an employment relationship, as required by Labor Code section 5705.   However, applicant's reliance on Labor Code section 5705 is misplaced.   That statute recites, in relevant part:  “[T]he burden of proof rests upon the employer to establish [the affirmative defense] ․ (a) That an injured person claiming to be an employee was an independent contractor or otherwise excluded from the protection of this division [workers' compensation and insurance] where there is proof that the injured person was at the time of his injury actually performing service for the alleged employer.”  (Emphasis added.)

In the case here, the State did not and could not contend that applicant was an independent contractor or otherwise excluded from workers' compensation benefits, in view of Labor Code section 3351, which recites in relevant part:  “ ‘Employee’ means every person in the service of an employer ․ and includes ․ (b) All elected and appointed paid public officers.”   What the State did contend was that applicant was an employee of the County and not of the State, and therefore that the responsibility for applicant's workers' compensation benefits was the County's, and not the State's.

Moreover, applicant does not deny that he had the initial burden of proving that he was “actually performing service” for the State.   On that issue, applicant argues that he met his burden by the stipulation that he was a municipal court judge during the period in question, because “a Municipal Court Judge by the very nature of the position performs services for the State of California in carrying out the duties of the position.”  (Emphasis added.)   This begs the question;  moreover, even if such were the case, which, according to Villanazul, supra, it is not (see further, infra ), the issue, which was decided in Villanazul on the basis of a demurrer, would be a legal and not factual one, and again section 5705 would not apply.

In view of all the above, applicant's contention as to Labor Code section 5705 is meritless.

 Applicant contends next that he is an employee of the State because the State's Constitution and various statutes give the State direction and control over municipal court judges.   However, this argument was rejected by the California Supreme Court in Villanazul v. City of Los Angeles, supra, 37 Cal.3d 718, 235 P.2d 16, where the court reasoned:

“The essential characteristic of employment relationship is the right to control and direct the activities of the person rendering service, or the manner and method in which the work is performed.  (Industrial Indem. Exch. v. Industrial Acc. Com., 26 Cal.2d 130, 135 [156 P.2d 926].) ․

“In the present case, the city contends that the state had the essential power of control because the Legislature created the office or position of deputy marshal and prescribed the duties and salary thereof.  [Citation.]  Attention is directed to the constitutional amendment authorizing the establishment of the municipal court which provides that, ‘The manner in which, the time at which, the term for which the judges, clerks and other attaches of municipal courts shall be elected or appointed, the number and qualifications of said judges and of the clerks and other attaches ․ shall be prescribed by the Legislature.’  (Art. VI, § 11.)

“․

“It must be conceded at the outset that a municipal court is a part of the judicial system of the state, and the constitution or control of such courts, except only the question as to whether one shall be established in a given locality is a state rather than a municipal affair.  [Citation.]  It does not follow, however, that a municipal court is an agency of state government, as distinguished from county or city government, in the sense that a deputy marshal is a state employee ․

“․

“The constitutional and statutory provisions authorizing and governing municipal courts, considered in connection with the purpose and effect of the establishment of such courts, lead to the conclusion that they have been impressed with a local character ․

“Generally speaking, the municipal court's jurisdiction extends throughout the county.  [Citations.], and in a certain class of cases that jurisdiction is exclusive.  [Citations.] ․

“The county in which a municipal court is established is charged with the cost of maintenance.   It is required to pay the salaries of the judges, officers and attaches, including deputy marshals, and must provide quarters, supplies and equipment for the court.  [Citation.]  Fines and forfeitures collected by a municipal court are deposited with the county treasurer and thereafter divided between the county and city.  [Citations.]  Fees received are paid into the county treasury in the same manner as those collected by salaried county and township officers.  [Citation.]

“In various other respects, the law places municipal court officers and attaches, ․ in the same category as recognized county officers and employees․  The municipal court or judge is represented by the district attorney if the court or judge is a party defendant in an action.   (Gov.Code, § 26524.) [3 ]  Clerks and other attaches usually are members of the county retirement system ․

“․ The fundamental basis of the [municipal] court, as fixed by the Constitution and statutes, indicates that essentially it is a creature of the county․

“Insofar as County of Los Angeles v. Industrial Acc. Com., 123 Cal.App. 12 [11 P.2d 434], is in conflict with the views expressed herein, it is disapproved.   That case involved the question of liability under the Workmen's Compensation Act, and the decision that a deputy marshal [of a municipal court] is an employee of the city [and not of the county] wherein the court is situated was based on the unfounded conclusion that the city had the right to employ, control and discharge such a deputy ․

“․ under the constitutional amendment adopted in 1950 and supplemental legislation by which the municipal courts are to be reorganized, the county character of such courts is further emphasized.   The establishment of a municipal court no longer will be optional with the voters of the city.   The judges will be elected by the voters of county subdivisions or judicial districts, the boundaries of which may or may not coincide with city limits ․”  (Id., at pp. 721–726, 235 P.2d 16, emphasis added.)

In the case here, the Board quoted extensively from Villanazul, and relied almost exclusively on its rationale.   Applicant argues that the Board erred in not considering the distinction between the deputy marshal in Villanazul and the judge in the case here.   Not so.   The Board stated in its decision that “Although the employee in Vallanzul [sic] was a municipal court deputy marshal, rather than a municipal court judge, we think the rationale for holding the marshal to be a county employee is equally applicable to municipal court judges.”  (Emphasis added.)   Moreover, a similar result was reached in Fermin v. Municipal Court (1962) 204 Cal.App.2d 519, 22 Cal.Rptr. 452, where the court held that “Section 26524, Government Code, providing for representation of the municipal court by the district attorney, and Villanazul v. City of Los Angeles ․ clearly demonstrate [ ] that the state is nowise liable for the acts of a municipal court in issuing a criminal warrant.”  (Id., at pp. 520–521, 22 Cal.Rptr. 452, emphasis added.)

Applicant also argues that the Board's decision ignored the issue of the State's right to control and direct the activities of a municipal court judge.   Not so.   As the foregoing excerpt from the Board's decision shows, the Board relied on the rationale in Villanazul.   On the issue of the “control and direct” test as applied to a municipal court judge, the Villanazul rationale, which we summarize from the excerpts we have already quoted, supra, is as follows:  (1) The essential characteristic of an employment relationship is the employer's right to control and direct the employee.  (2) The State controls municipal courts through its constitutional and statutory provisions authorizing such courts.  (3) It does not follow, however, that municipal courts are state agencies or that municipal court officials are state employees.  (4) This is because the State has designated municipal courts as entities of the counties and not of the State, and has categorized municipal court officials as employees of the counties and not of the State.

 In sum, the “control and direct” test does not operate to create an employment relationship between municipal court officials and the State, because the legislation authorizing the municipal courts demonstrates that the State intended such officials to be employees of the counties and not of the State.

Moreover, the original purpose of the “control and direct” test was to distinguish, on a factual basis, between an employee and an independent contractor relationship in the private sector, on the grounds that one who had never exerted or had the right to exert the slightest degree of control over the injured was not answerable under an award for indemnity.  (Pruitt v. Industrial Acc. Com. (1922) 189 Cal. 459, 466, 209 P. 31.)   In Industrial Ind. Exch. v. Ind. Acc. Com. (1945) 26 Cal.2d 130, 156 P.2d 926, the case which Villanazul and later cases have cited for the “control and direct” test, the issue was whether, for workmen's compensation purposes, the injured employee was an employee of the petitioner or an employee of an independent subcontractor retained by the petitioner.   Both the petitioner and the independent subcontractor were private entities.

In resolving the issue, the California Supreme Court reasoned “[W]here ․ the employee of an independent contractor comes under the control and direction of the other party to the contract, a dual relationship is held to exist.   [Citations.]  The right to control and direct the activities of the alleged employee or the manner and method in which the work is performed ․ gives rise to the employment relations.  [Citations.]  And, although in distinguishing between an employment and an independent contractor relationship it has been said that ‘The test of “control” ․ means “complete control” ’ [citation], it is settled that ‘a general and special employment relationship is present if there exists in each some power, not necessarily complete, of direction and control.’  [Citations.]  [¶] In the present case the ․ respondent commission could reasonably infer from the evidence before it that [petitioner] at least shared the right to control and direct the manner in which the work was to be done.”  (Industrial Ind. Exch. v. Ind. Acc. Com., supra, 26 Cal.2d 130, at pp. 134–135, 156 P.2d 926, emphasis on “ ‘ “complete” ’ ” in original, other emphasis added.)

In the case here, however, as noted in our discussion of the Labor Code section 5705 issue, the employment question is not the factual determination of whether applicant is an independent contractor or an employee who is entitled to workers' compensation benefits from his particular employer because the employer had the right to control his activities, but rather a legal determination of whether the Legislature intended everyone in applicant's position, i.e., all municipal court judges, as statutory employees, to receive workers' compensation benefits from the State or the counties.   Significantly, neither the State nor the County has ever contended that applicant is an independent contractor who is not entitled to any workers' compensation benefits whatsoever, nor, in view of Labor Code section 3351, subdivision (b), supra, could such a contention be advanced.   Accordingly, as the California Supreme Court recognized in Villanazul, the “control and direct” test is of no legal significance in determining the employment status of municipal court judges.4

Applicant argues that Villanazul does not govern the case here, because Article 6 of the California Constitution, which concerns the judicial department of the government, was revised in 1966, 15 years after Villanazul was decided, and the revised Article 6 gives the State even more direction and control over municipal courts, particularly in the area of the disqualification of judges (§ 18), than it had when Villanazul was decided.

Such argument is flawed for the following reasons.   First, in Buford v. State of California (1980) 104 Cal.App.3d 811, 164 Cal.Rptr. 264, which was decided long after the 1966 revisions to Article 6, the court cited Villanazul for the proposition that employees of a municipal court district are county employees for purposes of tort liability to third parties, “since municipal ․ courts within California are generally regarded as subdivisions of county governments.”  (Id., at p. 819, 164 Cal.Rptr. 264.)

Next, applicant's argument rests on the premise which was rejected in Villanazul, namely that the “control and direct” test defines the employment status of a municipal court judge.   Significantly, the Villanazul court noted, supra, that under the amendments to Article 6 which were to take effect after its case had been decided (and which remained in effect after the 1966 revision), the “county character” of municipal courts would be “further emphasized” by having the State, rather than the cities, provide for the establishment of such courts, and by having the judges thereof elected by the voters of county subdivisions or judicial districts, rather than cities.   Again, the test was not the State's right to control and direct municipal courts, but the State's intention that such courts assume the character of county rather than state entities, and thus that the officials of such courts be treated as employees of the counties and not of the State.

The reductio ad absurdum of applicant's “control and direct” argument is that the Legislature could enact a statute providing that municipal court judges should be considered county employees for the purposes of their right to receive worker's compensation benefits from the county.  (See, for example, Gov. Code, § 53200.3, supra ).   Although such a statute would be an illustration of the State's right to “control and direct” municipal courts, it could not conceivably follow from such an exercise of that right that municipal court judges would be State employees for the purpose of their entitlement to worker's compensation benefits.

Otherwise, applicant has cited no cases to support either the proposition that the rationale of Villanazul should not apply to the case here, or the proposition that municipal court judges should not be considered county employees for the purpose of their entitlement to workers' compensation benefits.

In view of all the above, we hold, on the authority of Villanazul, that the Board correctly determined that applicant was an employee of the County and not of the State.

 Finally, we note that neither party has addressed the legal significance of the compromise and release agreement between the applicant and the County.   The agreement recited that it was entered into pursuant to Labor Code section 5005, supra, and, upon approval thereof, that applicant as “employee” released the County as “employer” from all claims “for workers' compensation benefits of any type whatsoever.”   As noted, the Board characterized the agreement as a settlement of applicant's workers' compensation claims against the County.   Moreover, one of the issues submitted to the WCJ was whether or not applicant was an employee of the County and the State, and, if so, whether Insurance Code section 11663 as to the liability of general and special employers (see fn. 2, supra ) should apply.

Despite the foregoing scenario, in his petition to this court applicant seems to be contending that he was an employee of the State only, and not of the County.   However, applicant's use of the section 5005 compromise and release mechanism, plus the language of the agreement itself, precludes him from later contending that he was not an employee of the County.  “The workers' compensation system cannot be avoided by direct contract, and subterfuges designed to avoid the workers' compensation laws are not countenanced.   [Citation.]  In short, ‘[t]he contract cannot affect the true relationship of the parties to it.   Nor can it place an employee in a different position from that which he actually held.’ ”  (Truesdale v. Workers' Comp. Appeals Bd. (1987) 190 Cal.App.3d 608, 614, 235 Cal.Rptr. 754.)

In the case here, although applicant does not affirmatively contend that the compromise and release agreement shows that he was not a County employee, he does appear to contend, at least by implication, that the agreement does not show that he was a County employee.   In addition, the language in the agreement that “this settlement will have no effect on applicant's [or Blue Cross'] pursuing their claims against the State” seems to be an attempt to “affect the true relationship of the parties to it,” and to place applicant “in a different position from that which he actually held.”   However, any such attempt cannot succeed, because the agreement was made and approved pursuant to the rules of the workers' compensation system, and recites that applicant was the “employee” of the “employer” County.

Accordingly, the agreement shows that applicant was an employee of the County, and, even if he were also an employee of the State, which we have determined he was not, the County would be in the position of “the special employer [who] had the employee on his or her payroll at the time of the injury (Ins.Code, § 11663), and thus would be “solely liable” (id.) for applicant's compensation payable on account of such injury.

Based upon the foregoing analysis we hold that applicant was solely an employee of the County at the time of his injury and that he has already received all of the workers' compensation benefits to which he is legally entitled.

DISPOSITION

The decision of the Board is affirmed.

FOOTNOTES

1.   Section 5005 recites in relevant part that “Such compromise and release agreement, upon approval by the appeals board or a referee, shall be a total release as to such employer ․ for the portion or portions of the claim released, but shall not constitute a bar to a recovery from any one or all of the remaining employers ․ for the periods of exposure not so released.”  (Emphasis added.)

2.   Insurance Code section 11663 recites:  “As between insurers of general and special employers, one which insures the liability of the general employer is liable for the entire cost of compensation payable on account of injury occurring in the course of and arising out of general and special employments unless the special employer had the employee on his or her payroll at the time of the injury, in which case the insurer of the special employer is solely liable.   For the purposes of this section, a self-insured or lawfully uninsured employer is deemed and treated as an insurer of his or her workers' compensation liability.”

3.   In counties which have a county counsel, the county counsel discharges the duties vested in the district attorney by section 26524.  (Gov.Code, § 26529.)

4.   We are aware that the employment issue in Villanazul was related to liability for personal injury, and the employment issue in the case here is related to liability for compensation benefits.   However the Villanazul court disapproved of the County of Los Angeles case (see supra ), where the employment issue was related to liability for compensation benefits.

McDANIEL, Acting Presiding Justice.

HEWS, and DALES,* JJ., concur.

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