| Matter of Friedman v New York City Dept. of Transp. |
| 2010 NY Slip Op 00047 [69 AD3d 1020] |
| January 7, 2010 |
| Appellate Division, Third Department |
| In the Matter of the Claim of Laszlo Friedman,Appellant, v New York City Department of Transportation et al., Respondents. Workers'Compensation Board, Respondent. |
—[*1] Michael A. Cardozo, Corporation Counsel, New York City (Ronald E. Sternberg ofcounsel), for New York City Department of Transportation and another, respondents.
Garry, J. Appeal from a decision of the Workers' Compensation Board, filed July 23, 2008,which ruled that claimant was not entitled to an award of reduced earnings subsequent toNovember 22, 1987.
Claimant sustained work-related back injuries in 1979 and 1983 while working for theself-insured employer. The Workers' Compensation Board classified him as permanentlypartially disabled and awarded him reduced earning benefits beginning in 1985, when he stoppedworking for the employer. The benefits were suspended in November 1987, when the employer'sinvestigation revealed that claimant owned his own business, LAF Construction Corporation,and was also serving as a corporate officer for at least one other business. Claimant's case wasclosed in 1989 after he failed to comply with the direction of a Workers' Compensation LawJudge (hereinafter WCLJ) to produce personal and corporate tax returns. The case was reopenedin 1990. The employer conducted an audit of claimant's tax returns, but the auditor determinedthat the audit could not be successfully completed without the records of the businesses in whichclaimant was serving or had served as a corporate officer. Claimant was ordered in 1993 and[*2]1995 to provide the employer with contact information andauthorizations for these corporations. He did not do so and, in 1998, the WCLJ directed theemployer to subpoena the companies' records. The employer appealed and the Board affirmedand also directed claimant to subpoena the records. The subpoenas were fruitless and, in 2000, aWCLJ again directed claimant to produce corporate and personal tax returns to the employer.Claimant did not do so, and the WCLJ directed the parties to conduct another audit. Theemployer appealed. The Board rescinded the decision, finding that claimant had failed to providesufficient evidence entitling him to reduced earnings, and closed the case pending his productionof such evidence.
In 2003, after claimant requested that the case be reopened, the WCLJ directed the parties toarrange another audit. The employer appealed and the Board affirmed. The WCLJ directed theemployer to conduct the audit at the office of claimant's accountant. The employer againappealed, the Board affirmed, and the audit occurred in 2006. At a 2007 hearing, the employer'saccountant testified that he was unable to conduct a meaningful audit because claimant providedreturns only for the years 2000 through 2005 and schedules and supporting information weremissing from the returns that were provided. Claimant testified that he had owned and operatedLAF since 1985, that he was LAF's only employee, and that LAF's business consisted of thesupervision and inspection of electrical contracting work. Claimant testified that between 1985and 1988 he had operated a company called Q Electric in which his supervisory duties includedthe physical inspection of electrical work performed by the company's employees. Thereafter, hehad acted as a corporate officer for a series of electrical firms where he served as a licensedmaster electrician, with duties consisting of the inspection and review of electrical workperformed by the firms' employees. Claimant testified that the firms paid retainers to LAF forthese services and that the amount of one such retainer was $2,500 per month. Claimant furthertestified that he owned and managed three rental properties and performed some repair work onthe properties. After the hearing, the WCLJ determined that claimant was actively engaged ingainful activity as an electrician and home improvement contractor and had not demonstrated adiminution of earning capacity. Upon claimant's appeal, the Board affirmed. Claimant nowappeals.
The amount of compensation to be paid in cases of permanent partial disability is two thirds"of the difference between the injured employee's average weekly wages and his or herwage-earning capacity thereafter in the same employment or otherwise" (Workers'Compensation Law § 15 [3] [w]; see Burns v Varriale, 34 AD3d 59, 64 [2006], affd 9 NY3d207 [2007]). Pursuant to Workers' Compensation Law § 15 (5-a), an injured employee'swage earning capacity is determined by his or her actual earnings, and " '[t]he established rule isthat profits from a business venture are not earnings for [this] purpose[ ]' " (Matter of Fisherv Combined Life Ins., 272 AD2d 823, 823 [2000], quoting Matter of Roberge v UnitedBd. & Carton Corp., 21 AD2d 713, 713 [1964]). Claimant contends that his income from hisbusiness ventures constituted profits rather than actual earnings because the work was allegedlysupervisory in nature and "a self-employed claimant's work primarily in a supervisory capacityhas been found to be profits from an investment" (Matter of Fisher v Combined Life Ins.,272 AD2d at 823). The fundamental question is not, however, whether a claimant's work issupervisory in nature but whether the claimant's income "[can] be considered earnings forservices performed rather than return on investment" (Matter of Cozzi v Christensen &Nielson, 48 AD2d 720, 721 [1975]). Unlike a business owner who passively supervisesemployees who carry out the actual work of the business, claimant's testimony reveals that theinspection and review services that he performed for LAF constituted that company's actualwork. The supervisory component of the work was inherent in the service that LAF provided andfor which it was paid. "[W]hether an [*3]individual's income isbased on profits or a salary for services performed is a factual determination for the Board" (Matter of Calise v Hillside Carting,Inc., 38 AD3d 968, 969 [2007]). Here, the record supports the Board's determinationthat claimant's income from LAF was actively earned from his labor and constituted actualearnings rather than a passive return on investment (see Matter of Fisher v Combined LifeIns., 272 AD2d at 823; Matter of Joyce v European Auto Serv., 226 AD2d 952,952-953 [1996]).
The Board further found that claimant was not credible with regard to his involvement withhis business interests and that he failed to provide sufficient evidence to permit an evaluation ofhis alleged reduced earnings. Claimant challenges these findings, contending that the financialrecords he failed to provide were not withheld to conceal the sources of his income but, instead,that some records were inaccessible, others posed security concerns, and still others, in his view,were irrelevant. "The Board is vested with the discretion to weigh conflicting evidence andevaluate the credibility of witnesses, and its resolution of such matters must be accorded greatdeference" (Matter of Donovan vBOCES Rockland County, 63 AD3d 1310, 1312 [2009] [citation omitted]). If theBoard's findings are supported by substantial evidence, they will be upheld (see Matter of Guifarro v Zalman, Reiss &Assoc., 52 AD3d 1126, 1127 [2008]; Matter of Calise v Hillside Carting, Inc.,38 AD3d at 969). The Board's credibility assessments are amply supported by the 22-yearhistory of absent and incomplete disclosures, evasiveness, and lack of cooperation revealed inthe record (see generally Matter ofCronk v Lyndaker Excavating & Trucking, 57 AD3d 1204, 1204 [2008]; Matter ofGuifarro v Zalman, Reiss & Assoc., 52 AD3d at 1127). The determination that claimantfailed to provide sufficient evidence to permit a determination of his entitlement toreduced-earning benefits is similarly well supported (see Matter of Virtuoso v CampbellChevrolet, 292 AD2d 731, 731-732 [2002], lv denied 98 NY2d 608 [2002]).
Spain, J.P., Rose, Malone Jr. and McCarthy, JJ., concur. Ordered that the decision isaffirmed, without costs.