The Communicator - Volume 1, Issue 2 - (Page 17)

ask the experts By Steven Callaway, CPA, CPCU Are Your Contractors Licensed and Insured? Heiman of Pegasus Properties to perform the management of the association. The board of the Montana Villas condominium voted to install some rain gutters on the building. Pegasus contracted with Mark Hruby of Rube’s Rain Gutter Service to install the gutters. Fred Aguilera was hired by Hruby to work on the project. On the first day of the project, Aguilera touched a gutter to a highvoltage power line. Aguilera sustained serious injuries from the electrical shock and fell to the ground. Hruby did not have Workers’ compensation insurance. He also did not have a contractor’s license. Aguilera fi led a claim against Hruby, Heiman, the Montana Villas HOA, and the owners of Montana Villas. The Workers’ Compensation Appeals Board judge ruled that “Hruby was the employer of Aguilera and was liable for Workers’ compensation, including 90 percent disability.” Since Hruby did not have insurance, the appeals board also ruled that “Hruby was hired by Pegasus, ‘a professional property management business’ and ‘an agent for the homeowners’ association,’ and therefore, under Labor Code section 2750.5, became the employer of applicant Freddy Aguilera.” This made the property manager, Heiman, responsible for the cost of Aguilera’s injuries. This is when Heiman appealed to the California Second District Court. The appeals court ruled first that Hruby and Heiman were both the employers of Aguilera. This made the two jointly and severally liable for Aguilera’s injuries. Next, the appeals court ruled that Heiman was acting as the “agent” for the Montana Villas HOA. As such, the court said, “Liability for an agent’s authorized acts may be imputed from the agent to the principal pursuant to Civil Code Section 2330.” So now, because of the unlicensed and uninsured status of Hruby, the HOA was liable for Aguilera’s injuries as well. The court said, “The legal consequences of hiring an unlicensed contractor who is injured or whose employee is injured performing the work is that different employment relationships may arise with respect to ‘employer’ liability for Workers’ compensation or tort damages.” There is a great temptation for many volunteer boards and CIDs to use the services of an unlicensed and/or uninsured contractor. Even “casual labor” looks like a good option to some. However, as this case illustrates, only licensed and insured contractors should be used. No contractor should ever be allowed to work on your property without first providing a copy of his active license and certificates of insurance. Have your CID’s insurance broker review and approve the certificate of insurance provided. The Communicator • 17 JUST BECAUSE SOMEONE says he is a contractor does not mean he truly is one. Contractors must have both a license and insurance, and a recent California court ruling highlighted the significance of these important requirements. California’s Second Appellate District Court issued a ruling in the case of Heimen v. Workers’ Compensation Appeals Board that is critical to CIDs, their boards and their managers. In the above case, the court ruled that both the association manager and the association were responsible for the injuries to a worker of an unlicensed and uninsured contractor. The facts of the case are as follows: The Montana Villas Homeowners Association contracted with Robert

Table of Contents Feed for the Digital Edition of The Communicator - Volume 1, Issue 2

The Communicator - Volume 1, Issue 2 Contents President's Message The Hammer is Broken Top 10 Mistakes That Get Board Members Sued Dealing with Bankruptcy Ask the Experts – Are Your Contractors Licensed and Insured? 2008 Events & Education Calendar Welcome to CAI BayCen Directory Updates Index to Advertisers

The Communicator - Volume 1, Issue 2

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