Missouri’s High Court Favors Insured in Question of Policy Ambiguity

Is a person hired to perform seasonal, part-time tasks for a company owner, based on a referral from an employee of the company, an employee or a temporary worker? It depends, according to Missouri’s high court justices, and if there’s any ambiguity when it comes to whether or not that worker is covered under the company owner’s insurance policy the resolution favors the insured, the justices say.

In Mendenhall v. Property and Casualty Insurance Company of Hartford, the Missouri Supreme Court undertook the question of what constitutes an employee in a case that involved a man who was killed while operating a truck owned by a company while working on personal business for the owner of that company.

Chief Justice Richard B. Teitelman, writing the opinion of the majority, described the case as follows:

Len Mendenhall was hired by Jay Walker to work on Walker’s cattle farm on an as-needed basis. Walker hired Mendenhall as a result of a recommendation from an interviewer at a company owned by Walker, the Family Center of Farmington Inc. (Family Center).

Although Family Center did not hire Mendenhall after he interviewed for a job with the company, the interviewer subsequently told Walker that Mendenhall would be a good person to hire. Based on that recommendation, Walker hired Mendenhall to work for him personally at the farm Walker co-owned with his wife.

Mendenhall was always paid by the farm, but on occasion, Walker asked Mendenhall to perform tasks for the Family Center and allowed Mendenhall use of the company-owned truck and trailer.

“This truck and trailer was covered under a business automobile liability policy (the Hartford policy) provided by Hartford and issued to the Family Center,” the Court noted.

While using the Family Center’s truck and trailer on March 8, 2007, to haul rock at the farm, Mendenhall was killed when the truck overturned as he was unloading the rock.

In a wrongful death suit, Mendenhall’s surviving spouse, Ruth Mendenhall, “obtained an $840,000 judgment against Mr. Walker and a $50,000 judgment against the Family Center. Prior to the judgment, Mr. Walker and Mrs. Mendenhall entered an agreement … which provided that any judgment against Mr. Walker would be collected from the proceeds of the Hartford policy,” according to the court’s written opinion.

(In a footnote, the court clarified that as a farm worker, Mendenhall was not covered by workers’ compensation.)

The Hartford maintained that its commercial auto liability policy excluded employees of the insured from coverage.

However, Hartford policy’s “definition of ’employee’ specifically includes a ‘leased worker’ but does not include a ‘temporary worker,'” the court explained.

The court recognized that the “dispositive issue is whether Les Mendenhall was an ’employee’ or a ‘temporary worker.'”

The trial court concluded that Mr. Mendenhall was an employee at the time of his death and excluded from coverage by the Hartford policy.

“The trial court found that Mr. Mendenhall was not a covered ‘temporary worker’ because he was not ‘furnished to’ Mr. Walker by an employment service or similar organization,” Chief Justice Teitelman explained.

The parties agreed that Mendenhall worked for Walker on a short-term, seasonal basis. They also agreed that the Hartford’s policy covered temporary workers.

What they didn’t agree on was whether Mendenhall was an employee or a temporary worker.

“Hartford asserts that the Family Center could not have furnished Mr. Mendenhall because the Family Center was not an employment agency and did not employ Mr. Mendenhall. Mrs. Mendenhall asserts that an agency or employment relationship is unnecessary and that Mr. Mendenhall was ‘furnished to’ Mr. Walker by Family Center’s referral,” Teitelman wrote.

The court concluded that whether or not an agency relationship existed between Family Center and Mendenhall was not particularly relevant. What was relevant, the court found, “is the undisputed fact that Mr. Walker did not interview Mr. Mendenhall and relied solely on the Family Center’s referral in making his decision to hire Mr. Mendenhall. The Family Center’s referral supplied and provided Mr. Walker with the information he used to hire Mr. Mendenhall on an as-needed basis.”

Without that referral, Walker would not have hired Mendenhall, Teitelman wrote, clarifying: “It was through the Family Center’s referral that Mr. Mendenhall was ‘furnished to’ Walker as a temporary worker.”

The court acknowledged the opinion of the dissenting judge, Laura Denvir Stith, who asserted “that providing coverage in this case is tantamount to a holding that one who recommends a potential employee to another must be considered to have furnished the employee.”

Stith also maintained that the court’s decision could have the potential “consequence of denying workers’ compensation coverage to scores of other workers who otherwise would have been covered as employees under the workers’ compensation act.”

Ultimately, the court’s majority decided that “under the facts of this case, the phrase ‘furnished to’ is susceptible to plausible, alternative interpretations, and this ambiguity is resolved in favor of the insured.”

The case was remanded to the lower court.

Topics Auto Workers' Compensation Agribusiness Missouri