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In re Yang's

Appeals Court of Massachusetts, Suffolk

August 13, 2019

XUDONG YANG'S[1] (dependents') CASE.

          Heard: May 8, 2019.

         Workers' Compensation Act, Decision of Industrial Accident Reviewing Board, Street risk. Insurance, Workers' compensation insurance.

         Appeal from a decision of the Industrial Accident Reviewing Board.

          Beth R. Levenson for the claimant.

          Richard L. Neumeier (John C. White also present) for the insurer.

          Present: Milkey, Hanlon, & Sacks, JJ.

          MILKEY, J.

         Xudong Yang (the decedent) was the principal of a family-owned business known as Oriental International Trading Corp. (OITC). On February 4, 2014, he died in an automobile accident. His widow, Chuan Zhang, [2] filed a claim seeking death benefits from Norfolk & Dedham Mutual Fire Insurance Company, OITC's workers' compensation insurer (the insurer).[3] An administrative judge at the Department of Industrial Accidents (department) denied the claim after a three-day hearing, concluding that the trip during which the decedent was killed was not undertaken in the course of OITC's business.[4] After the department's reviewing board summarily adopted the administrative judge's decision, Zhang appealed to this court pursuant to G. L. c. 152, § 12 (2) .[5] For the reasons that follow, we affirm.


         According to its articles of organization, OITC was formed "[t]o own and operate [an] import and export business in Norwood, Massachusetts, and to generally engage in and carry on any business related thereto." OITC specifically served as a "manufacturer's representative" that imported chemicals from China for sale to domestic companies that manufactured pharmaceuticals, food supplements, and animal feed. The decedent was "solely responsible for running [OITC's] business at all times prior to his death." In Zhang's own words, the decedent "called all the shots." Zhang also worked at OITC, and she and the decedent were OITC's sole officers, directors, and shareholders.

         In 2005, OITC purchased a workers' compensation policy from the insurer to cover its employees. On its application for the policy, OITC listed four employees (including the decedent and Zhang), two in sales and two doing clerical work. No out-of-State travel was indicated on the application, which also stated that OITC was not "engaged in any other type of business." OITC renewed its workers' compensation policy annually, and the insurer performed "premium audits" to review whether its premiums should be adjusted based on the risks presented.[7] According to the insurer's underwriter, OITC's being engaged in "any other business . . . was never indicated at any point in the file including [through] subsequent premium audits that were done over the course of the policy." Premiums periodically were adjusted to reflect up-to-date information regarding the number of employees, their job classifications, and their current salaries.

         The decedent also was engaged in various other commercial enterprises. One of those businesses was a restaurant in Belmont, New Hampshire, known as the Garden Oasis Family Restaurant (the restaurant).[8] The restaurant was operated by Garden Oasis Family Restaurant LLC, a limited liability corporation that the decedent formed and incorporated in New Hampshire. The New Hampshire property formally was managed by a separate entity, 223 DW Highway, LLC.[9]

         The restaurant, which opened in 2010, had its own New Hampshire-based staff (a manager, cooks, and waiters). However, the restaurant's bookkeeping was done out of OITC's Norwood offices by the person who served as OITC's accounts manager. OITC itself entered into the construction contracts for the restaurant, and "[t]he funds to build the restaurant came from the main checking account at OITC." Moreover, although the restaurant had its own bank account, at the direction of the decedent, OITC's accounts manager frequently used OITC's bank account to pay the restaurant's ongoing bills, including mortgage payments, utility bills, and the like. Such financial intermingling extended beyond the decedent's corporate entities to his personal finances as well. For example, "OITC paid bills personal to the [decedent] including but not limited to his daughter's college tuition, personal loans[, ] and his mother's funeral."

         The restaurant venture was short-lived, and it closed by the end of 2010, the same year it opened. According to Zhang's testimony, the decedent eventually decided to sell the property on which the restaurant had been located, because the failed venture had become a financial drain.[10] While driving to New Hampshire to ...

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