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Tower Ins. Co. of New York v. Mike's Pipe Yard and Bldg. Supply Corp.

Other Lower Courts

December 14, 2007

Tower Insurance Co. of New York, Plaintiff,
Mike's Pipe Yard and Building Supply Corp. and Jose R. Guzman, Defendants.

Editorial Note:

This case is not published in a printed volume and its disposition appears in a table in the reporter.


Emily Jane Goodman, J.

This case has a complex history involving both litigation in the Bronx and appeals to the Appellate Division First Department. However, it is not necessary to review that history in order to determine the issue presented in this bench trial. Was Jose Guzman (Guzman) employed by Mike's Pipe Yard and Building Supply Corp. (Mike's) or Gunner Group Inc. (Gunner)? If Gunner employed Guzman, the Court must determine if Mike's was Guzman's "special employer, " thereby limiting Guzman's remedies to benefits previously received or currently received through Gunner's Workers' Compensation coverage.


It is undisputed that on June 12, 2003, Jose Guzman (Guzman) was injured while working as a laborer at 2816 Boston Road, Bronx, New York. The question is, for whom did he work? Both Mike's and Gunner are located at the single Bronx address, with Gunner paying rent to Mike's, but maintaining separate offices and telephones. They are two distinct New York corporations with the same principal, Milton Rainford (Rainford). Mike's sells plumbing supplies. Gunner does construction and demolition. They carry separate insurance policies, but, indicating that Mike's has no employees, only Gunner was in compliance with the Worker's Compensation Law and in good standing with workers' compensation insurance carriers. At times, Quan Smith (Smith) would direct Guzman to do clean up and other chores at Mike's. But Guzman was also sent by Gunner to work at other sites on an ad hoc basis, with Gunner paying Guzman cash on a daily basis. Quarterly tax returns filed by Gunner identify Gunner as the employer, but they do not reflect Guzman as an employee, though it is agreed that he worked for at least one of the entities. Nor did Guzman ever receive from either corporations a W-2 or 1099 form in conformity with the United States Internal Revenue Code and New York State and City tax laws, severely testing Rainford's credibility. Moreover, for reasons not explained, subpoenaed payroll records for the week of the accident are handwritten while there is a computerized format for other weeks all leading a reasonable finder of facts to question the authenticity of those records. The contradictory testimony as to the provision of tools and safety gear is reduced to Guzman carrying his own tools, and being provided gloves and garbage receptacles when he cleaned the yard at 2816 Boston Road.


Guzman's testimony and knowledge of the facts are essentially that he was paid by Gunner and that he was injured.

The veracity of Rainford, an interested witness as the owner of both businesses, is compromised by his lapses of compliance with state and federal requirements as relates to insurance and taxes. Furthermore, while Rainford testified that he works at this establishment seven days a week, his familiarity with certain basic, relevant aspects of these small businesses was less than satisfying or convincing, suggesting to the Court that what he did not know at trial, he did not know by choice.

Rainford's wife and bookkeeper are in charge of the Gunner payroll. Though available to Mike's, neither was called as a witness, and they are therefore deemed missing witnesses. Since no explanation was offered for their absence, the Court draws the inference that their testimony would not have supported Mike's position in this action. The payroll records are suspect because inter alia there is no explanation for the gap in the relevant week, nor any explanation as to why that week's entries are handwritten as opposed to the others being in computerized business format, leading the Court to find them unworthy of belief and leading to the imposition of the doctrine of Falsus in Uno.

The Court finds the payroll records and Rainford's testimony to be untrustworthy and unreliable and entitled to considerably diminished weight.

Smith would normally be considered an interested witness. However, he now lives in Georgia, and nothing was elicited that would tend to show that he has an ongoing interest in either Gunner or Mike's or the outcome of this litigation. While Smith is a diligent and competent individual, he was impeached with his own prior affidavit in which he stated that it was Gunner who employed Guzman and that work was being done by Gunner for Mike's, obviously the central issue in the case. The affidavit contradicted his trial testimony, a serious detriment to Mike's already fragile ability to meet its burden of proof. The affidavit is more logical and believable than the trial testimony, because, in fact, Gunner paid both Guzman and Smith, and Mike's presents no indicia of being an employer.


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