OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD
DEPARTMENT OF INDUSTRIAL RELATIONS
STATE OF CALIFORNIA
In the Matter of the Appeal of:
ALFREDO ANNINO/ ALFREDO ANNINO CONSTRUCTION, INC. OF NEVADA
12616 Ventura Boulevard, Second Level
Studio City, CA 91604
Studio City, CA 91604
98-R1D3-311 and 312
The Occupational Safety and Health Appeals Board (Board), acting pursuant to authority vested in it by the California Labor Code and having granted the petition for reconsideration filed in the above entitled matter by Alfredo Annino/Alfredo Annino Construction, Inc. of Navada (Employer), makes the following decision after reconsideration.
Employer is a general contractor in several states. On July 17, 1997, Cora Gherga, Associate Industrial Hygienist for the Division of Occupational Safety and Health (Division), commenced a complaint inspection at a work place maintained by Employer at 4625 Coast Highway, Pacifica, California (the site). On January 16, 1998, the Division cited Employer for alleged violations of section 1509(c)1 [code of safe practices not posted or readily available at site], section 1529(k)(4) [failure to inform employers of other employees re the presence and quantity of asbestos at site], and section 1529(d)(5) [failure to ensure sub-contractor performing Class III asbestos work did so in compliance with § 1529].
Employer timely appealed, denying the existence of the violations and explaining its position.
The matter was heard before an Administrative Law Judge (ALJ) for the Board, at Foster City, California, on October 16, 1998.
The ALJ issued a decision on October 27, 1998 finding that the Division established violations of sections 1509(c), 1529(k)(4) and 1529(d)(5).
The Employer timely filed a petition for reconsideration on December 1, 1998, and the Board granted review.
On July 17, 1997, Cora Gherga a Division investigator went to the site to
investigate a complaint. Later, the investigator went to an office that served as
Employers site office.
On January 16, 1998, the Division cited Alfredo Annino an individual as Employer for violations of sections 1509(c), 1529(k)(4) and 1529(d)(5).
On January 23, 1998, Alfredo Annino appealed the citations. He appealed as Alfredo Annino and listed himself as President. His letterhead and stationary stated Alfredo Annino.
The appeal was docketed by the Appeals Board as against Alfredo Annino. A prehearing was held in the matter of Alfredo Annino on April 27, 1998. On October 16, 1998, a hearing was held before an ALJ. During the hearing evidence was presented by the Division of a sub-contract agreement between Alfredo Annino Construction, Inc. of Nevada and Allen Drywall and Associates for drywall work at the site.
Employer presented evidence of work done for Alfredo Annino Construction, Inc. at the site by Precision Works, Inc. a licensed asbestos abatement company. Pursuant to section 385(a), the matter was submitted by both parties at the end of the hearing.
Post hearing, based upon the evidence received at the hearing, the ALJ amended the citation, without notice to the parties, to include Alfredo Annino Construction, Inc. of Nevada as the employer.
FINDINGS AND REASONS
DECISION AFTER RECONSIDERATION
Employer filed a petition for reconsideration alleging, in essence that the evidence does not support the findings of fact and the findings of fact do not support the decision. In addition, Employer alleges the Division lacks jurisdictional authority to issue citations to Alfredo Annino because the correct entity is Alfred Annino Construction, Inc. of Nevada.
The Division opposed Employers Petition for Reconsideration arguing that:
The owner Alfredo Annino, incorporated as 'Alfredo Annino Construction, Inc. of Nevada' clearly is included as 'every person' . . . '[w]hich has any natural person in service' as defined in subsection (c). [Labor Code section 3300.] The facts produced at the hearing regarding Alfredo Anninos employer-employee status are unrefuted. Mr. Quincy Marquez was employed by the Employer as Project Superintendent when Ms. Gherga made her inspection on July 17, 1997. Clearly, Mr. Marquez is a natural person for the purposes of Labor Code section 3300(c). Therefore, Judge Melgoza did not err when he upheld the Divisions citations against Employer.
In this case, for the reasons listed in this decision, we only address the issue of whether or not a decision was properly issued against Alfredo Annino Construction, Inc. of Nevada.
The Appeals Board has consistently held that the Division has the burden of proving all elements of a violation by a preponderance of the evidence (See e.g. Howard J. White, Inc., OSHAB 78-741, Decision After Reconsideration (June 16, 1983)) since Appeals Board hearings are civil in nature. (Lee Bolin & Associates, OSHAB 80-720, Decision After Reconsideration July 29, 1981).)
Prosecuting the proper entity is an element of a violation that comes within the Divisions burden of proof. (C. C. Myers, Inc., OSHAB 00-008, Decision After Reconsideration (April 13, 2001).)
In John T. Malloy, Inc. OSHAB 81-790, Decision After Reconsideration (Mar. 31, 1983), citing Stearns v. Fair Employment Practices Com. (1971) 6 Cal.3d 205, 213, we held that "as a general rule administrative proceedings are not bound by strict civil rules of pleading". So long as the respondent is informed of the substance of the charge and afforded the basic, appropriate elements of procedural due process, he cannot complain of a variance between administrative pleadings and proof."
In this case, the ALJ in effect amended the citation to include, Alfredo Annino Construction, Inc. of Nevada as the employer after the matter had been submitted. Neither the record nor the ALJs decision reflect that the parties were given notice of the amendment.
The Board is an independent adjudicatory agency statutorily created for the purpose to resolve appeals from citations. (Ricks Electric, Inc. v. Occupational Safety and Health Appeals Board (2000) 80 Cal.App.4th 1023) The Division, on the other hand, shoulders primary responsibility for issuing and prosecuting citations issued to enforce the California Occupational Safety and Health Act of 1973. (See C. C. Myers, Inc., supra.)
We find the relationship between the two entities not conducive to the Appeals Board unilaterally amending a citation without notice to the parties.
Indeed, section 386(b) only allows the Appeals Board to amend the issues on appeal or the Division action after a proceeding is submitted for decision if each party has been given notice of the intended amendment and an opportunity to show whether the party will be prejudiced thereby.
Another reason that each party is required to be given notice prior to amending any citation is to insure that the relationship between the Board as an independent adjudicatory agency and the Division as a prosecutorial agency is, respectively, observed2.
Title 8 of the California Code of Regulations sets forth other procedural requirements for bringing and amending the issues brought before the Board. Section 361.3 limits the issues to be addressed in a hearing to those set forth in the Division action that is contested by a docketed appeal.
Section 371.2 requires that appeals be amended in accordance with the specific procedures contained in section 371. Section 371 requires, among other things, that motions be filed with the Board and served 20 days before hearing, unless the ALJ orders otherwise.
Evidence was presented at the hearing which supports the ALJs decision to amend the citation to include Alfredo Annino Construction, Inc. of Nevada." Several documents were introduced, at the hearing, most notably the sub-contract between Alfredo Annino Construction, Inc. of Nevada and Allen Drywall and Associates for drywall work at the site, that support the ALJ's conclusion that Alfredo Annino Construction, Inc. of Nevada was the employer in this case.
Section 386(a)(2) allows an ALJ to order a post-submission amendment if an issue was litigated by the parties. As noted before, section 386(b) requires that before ordering the amendment, the ALJ must give notice of the intended amendment to all parties to allow them to show prejudice. In order to give effect to the plain meaning of subsection (b) notice must be given to the parties or the amendment will not be allowed. No notice was given.
The Divisions argument that since Alfredo Annino is a person and is the owner of Alfredo Annino Construction, Inc. of Nevada overlooks several important legal concepts. For instance, Labor Code section 18 defines person as any person, association, organization, partnership, business trust, limited liability company or corporation.
Also, a corporation is a legal person or entity recognized as having an existence separate from that of its shareholders. (See generally 9 Witkin, Summary of Cal. Law, (9th ed. 1989) § 1, pg. 511 [Corporations] Erkenbrecher v. Grant, (1921) 187 Cal. 7, 9.) Shareholders are not the owners of corporate property, and the corporation and a shareholder are distinct parties in contracts made by one or the other. (Baker Divide Mining Co. v. Maxfield, (1948) 83 Cal.App.2d. 241, 248.) Corporate shareholders are not owners of corporate property. (Union Bank v. Anderson, (1991) 232 Cal.App.3d 941, 949.) As noted in Acco Contractors, Inc. v. McNamara & Peepe Lumber Co., (1976) 63 Cal.App.3d 292, 296, many small corporations are formed to limit the liability of individual owners and to take advantage of tax provisions.
Thus, we hold that significant legal differences exist between Alfredo Annino the individual and Alfredo Annino Construction, Inc. of Nevada. The most appropriate time to ascertain the correct entity to be brought before the Board by the Division is during the investigative stage by way of thorough investigation or through post citation, prehearing discovery. In those cases where the Division has failed through diligent investigation and discovery to ascertain the correct entity it may move to amend according to proof during the hearing. Only in the rarest instances can we foresee an ALJ moving to amend Employers entity after submission of the case. And then, only after proper notice to both parties to the appeal.
DECISION AFTER RECONSIDERATION
The Board reverses the ALJs decision and grants Employers appeal.
MARCY V. SAUNDERS, Member
GERALD P. OHARA, Member
OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD
FILED ON: April 25, 2001
1 Unless otherwise specified,
all references are to sections of Title 8, California Code of Regulations.
2 In the case of Tutor-Saliba-Perini, OSHAB 95-1496, Decision After Reconsideration (May 11, 2000) the Board allowed an amendment without notice to the parties. The Board held that it was preferable that the parties have the opportunity provided by section 386 to show that a post-submission amendment would be prejudicial to them. In that case Employer, the party that would have been prejudiced by the amendment, fully addressed the amended section in its petition for reconsideration. Noncompliance with section 386 was allowed under that limited circumstance because no prejudice was established. As noted later in this Decision, only in the rarest instances can we foresee an ALJ moving to amend a citation after submission of the case. And then, only after proper notice to both parties to the appeal.