Kohout v. Bennett Constr.
296 Neb. 608
Neb.2017Background
- Robert Kohout was injured falling from a barn roof while working on repairs at Brian Shook’s property in May 2015; he sued Bennett Construction and its insurer for workers’ compensation benefits.
- Bennett Construction is a sole proprietorship owned by Mark Bennett; Mark’s son, Nick, operated separate sole-proprietorships (Nick Bennett Construction and Housecraft) and performed roofing/gutter work as a subcontractor.
- Shook obtained a bid and work from Nick after a 2014 hailstorm; Nick gave Shook a business card and used an altered proposal form bearing a “Bennett’s Construction & Roofing” logo that stated workers were covered by workers’ compensation insurance.
- Nick’s sole proprietorships did not have workers’ compensation coverage; Bennett Construction did. Shook paid Nick by checks (one addressed to “Bennett’s Construction” that Mark cashed and then reimbursed Nick for).
- Kohout was hired and paid by Nick (checks from Housecraft), worked under Nick’s direction, and testified Mark visited the Shook site only once briefly; Kohout’s petition alleged Bennett Construction was his statutory employer under Neb. Rev. Stat. § 48-116.
- The Workers’ Compensation Court dismissed Kohout’s claim, finding Kohout was employed by Nick’s businesses and Bennett Construction was neither his direct nor statutory employer; the Nebraska Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bennett Construction is a statutory employer under Neb. Rev. Stat. § 48-116 (scheme/device to avoid WC liability) | Kohout: Nick acted with apparent authority and was used as an uninsured subcontractor (business cards, proposal form, check cashed), creating a device to avoid liability | Bennett: Nick contracted and supervised the job as an independent proprietor; Mark/Bennett made no representations, did not control the work, and did not benefit | Held: No. Court found no evidence Mark/Bennett manifested authority or intended a scheme; contract was with Nick alone |
| Whether Nick had apparent authority to bind Bennett Construction to contract with Shook | Kohout: Nick’s use of Bennett-branded cards/forms and Mark’s acceptance of a check made Shook reasonably believe contract was with Bennett | Bennett: No manifestations by Mark; indicia (cards/forms) were Nick’s and not traceable to Mark; Shook dealt with Nick directly | Held: No. Apparent authority requires principal’s manifestation traceable to Shook; indicia were insufficient and Shook’s conduct showed belief re: Nick |
| Whether Mark and Nick formed a joint venture to secure hailstorm work (which would make Bennett liable) | Kohout: Father-son cooperation after hailstorm, shared forms and customers, and reliance on Bennett’s insured status show joint venture to capture work | Bennett: No voluntary agreement, no profit-sharing, no substantial contribution or control by Mark on Shook job | Held: No. Plaintiff failed to prove by clear and convincing evidence intent, contribution, profit sharing, or control necessary for joint venture |
| Burden of proof and standard for finding a scheme under § 48-116 | Kohout: (implicit) facts suffice to show a scheme without fraudulent intent | Bennett: (implicit) higher showing required linking Mark to Nick’s acts | Held: Court reiterated plaintiff must prove by preponderance a scheme; scheme need not involve active fraud but must be traceable to principal’s conduct; plaintiff did not meet burden |
Key Cases Cited
- Interiano-Lopez v. Tyson Fresh Meats, 294 Neb. 586, 883 N.W.2d 676 (premise that engaging an uninsured subcontractor without compelling insurance can be a device to avoid WC liability)
- RM Campbell Indus. v. Midwest Renewable Energy, 294 Neb. 326, 886 N.W.2d 240 (apparent authority principles and tracing third party belief to principal manifestations)
- Rogers v. Hansen, 211 Neb. 132, 317 N.W.2d 905 (authority on contractor/subcontractor and insurance-related liability)
- O’Brien v. Barnard, 145 Neb. 596, 17 N.W.2d 611 (rejecting statutory employer liability where no control, profit sharing, or intent to enter business together existed)
- Thomas v. Hansen, 524 N.W.2d 145 (Iowa case recognizing joint venture liability where parties arranged to avoid insurance requirements and shared control/benefit)
- Lackman v. Rousselle, 257 Neb. 87, 596 N.W.2d 15 (family relationships may alter inference of joint venture; mere loaning of tools among relatives is insufficient)