IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR KENT COUNTY
DIVISION OF UNEMPLOYMENT )
INSURANCE, ) C.A. No. 00A-07-001
)
Appellant, )
)
)
)
HERBERT HARVEY and )
UNEMPLOYMENT INSURANCE )
APPEALS BOARD, )
)
Appellees. )
Submitted: February 6, 2001
Decided: May 31, 2001
Thomas H. Ellis, Esq., Wilmington, Delaware. Attorney for Appellant.
Herbert R. Harvey, Jr., Pro Se.
Upon Consideration of Appeal Form of
Unemployment Insurance Appeals Board
REVERSED
VAUGHN, Resident Judge
ORDER
Upon consideration of the parties’ briefs, and the record, it appears that:
1. The claimant in this case started a small logging company with his brother.
Within a few months the company experienced financial distress because there was
no logging work to be done, at least none at that time. Since there was no money
available to pay wages, the claimant laid himself off. An appeals referee determined
that the claimant had voluntarily left his work without good cause attributable to such
work and was therefore not qualified to receive benefits. The Unemployment
Insurance Appeal Board, however, decided that the claimant was entitled to benefits,
noting that "(t)he claimant was separated from his work because of lack of work."
The Division of Unemployment Insurance then filed this appeal. I conclude that the
appeals referee was correct and that the UIAB’s decision is legally incorrect.
2. The facts, all of which are undisputed, are as follows. In September 1999,
the claimant, Herbert R. Harvey, Jr., formed a small logging company with his
brother, Charles. They incorporated as High-Vue Logging, Inc. Herbert was
president. Charles was vice-president. Another brother, Robert, was an employee but
apparently not an officer or owner. A friend, Judith West, served as bookkeeper and
secretary-treasurer. The exact ownership of the corporation is not clear from the
record but it appears that either Herbert was the owner, or he and Charles were coowners.
Initially, the three Harvey’s were all working employees of the company.
The claimant was paid $600 per week. Business was apparently good at first, but by
February 2000 they had run out of logging jobs. In February the claimant and Charles
accepted a loan from a friend of $2000 to try to keep the business going. At some
point, apparently at the end of February, Robert left and got a job elsewhere. In early
March the claimant laid himself off because there was no money available for him to
take a salary. His account of his laying off is as follows:
Well our company, we got to where we didn’t have the
money to pay for both of us working so I decided to for the
company to, my company to lay me off and draw benefits
and my brother was going to keep working. And the reason
for him to keep working he was going to try to find work
for us because we have to find tracts of timber and stuff to
cut that’s how we you know make our living and stuff.
And so cause the company didn’t have the money to pay
me.
Charles apparently drew one more salary check on March 24. By the time of the
hearing in April 2000 no one was receiving any wages from the company. At the
April hearing before the appeals referee, the claimant explained that they were
supposed to have timber coming through but that rain was holding it up. He was
hopeful that work could be resumed when the weather got better. Whether or not the
claimant and his brother ever were able to resume active logging business is not stated
in the record.
3. In reviewing the decisions of the UIAB, this Court must determine whether
the findings and conclusions of the Board are free from legal error and supported by
substantial evidence in the record.1 The function of the reviewing court is to
See Unemployment Insurance Appeal Board v. Martin, Del. Supr., 431 A.2d 1265
(1981); Ponchvatilla v. United States Postal Service, Del. Super., C.A. No. 96A-06-19, Cooch, J.
(June 9, 1997), Mem. Op. At 2; 19 Del. C. §3323(a) ("In any judicial proceeding under this
section, the findings of the [UIAB] as to the facts, if supported by evidence and in the absence of
fraud, shall be conclusive, and the jurisdiction of the Court shall be confined to questions of
determine whether the agency’s decision is supported by substantial evidence.2
Substantial evidence means such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.3 The appellate court does not weigh the
determine whether the agency’s decision is supported by substantial evidence.2
Substantial evidence means such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.3 The appellate court does not weigh the
evidence, determine questions of credibility, or make its own factual findings.4 It
merely determines if the evidence is legally adequate to support the agency’s factual
findings.5 It also determines if the Board made any errors of law.
3. The findings, conclusions and decision of the UIAB, in pertinent part, are
as follows:
The Appeals Referee found that the claimant voluntarily
quit his employment without good cause attributable to his
work. The Board disagrees and reverses the Referee for the
following reasons.
The Board finds that the company that had paid
unemployment had no work and no money and laid off the
claimant. He is entitled to unemployment benefits.
The decision of the Appeals Referee is reversed. The
claimant was separated from his work because of lack of
work.
4. While the UIAB’s findings, conclusions and decision are factually correct,
they do not give due regard to the statutory language regarding disqualification from
benefits relied upon by the appeals referee. In this case the claimant commenced his
own business, and then, within a reasonably short period of time, was not able to earn
an income because his new business was not profitable. Although the issue has
apparently not been addressed in Delaware, other jurisdictions with statutory
provisions the same or substantially the same as ours have held that business owners
who decide to close their business or otherwise terminate their own employment
because of business failure act voluntarily, even where the failure is due to adverse
economic circumstances.6 Although the decision to close one’s business or
discontinue one’s own employment may be made under adverse circumstances, it
retains its character as a voluntary act. I am persuaded that this reasoning applies
here, particularly when one considers that only about five months passed from when
the claimant decided to start his own business to when an interruption in business
profits prompted him to lay himself off and seek unemployment. Although the
claimant’s decision to discontinue his own employment was driven by the fact that
there was no work, his decision to lay himself off at that time and seek unemployment
benefits nonetheless was a voluntary act on his part.
5. The facts here also support the appeals referee’s finding that the claimant
left his employment without good cause attributable to such work. The
Unemployment Compensation Act is intended to provide relief to workers and their
families who suffer involuntary unemployment through no fault of their own.7 The
possibility of failure is a known and foreseeable risk in almost any new business
venture. The claimant attributed his business problems to weather and an inability to
find tracks of timber to cut. There is nothing in the record to suggest that such risks
are not normal risks associated with a new logging business. I am persuaded that the
term "good cause" for leaving employment was not intended to protect people who
voluntarily set out on a business venture which in a relatively short time succumbs,
at least temporarily, to risks associated with the new venture.8 The claimant’s
inability to find work in March and April, therefore, does not constitute good cause
for leaving work within the intent of the statute, and the appeals referee was correct
to conclude that the claimant was disqualified from benefits.
6. Therefore, the decision of the UIAB is reversed.
IT IS SO ORDERED.
__________________________
Resident Judge
oc: Prothonotary
cc: Order Distribution
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