125 F. Supp.2d 375 (2000) | Cited 0 times | E.D. Missouri | September 27, 2000


In this action Ryder Integrated Logistics, Inc. is seeking to enforce astatutory Workers' Compensation lien pursuant to MO.REV.STAT. §287.150(3) (1994). Chester Royse, who received Workers' Compensationbenefits from Plaintiff, recovered from a third-party after settling aproduct liabilityaction against that party for workrelated injuries. This case has beenassigned to the undersigned United States Magistrate Judge pursuant tothe Civil Justice Reform Act and is being heard by the consent of theparties under 28 U.S.C. § 636 (c).

Currently pending is Plaintiff's Motion for Summary Judgment. (DocumentNo. 19). Defendant has filed a Motion in Opposition to Plaintiff's Motionfor Summary Judgment. (Doc. No. 20). In reply to Defendant's motion,Plaintiff filed Suggestions in Support of the Motion for SummaryJudgment. (Doc. No. 21). Defendant in turn has filed a Memorandum inClarification of points raised by Plaintiff in its Reply Brief. (Doc.No. 23).

Summary judgment under Rule 56, Fed. R.Civ.P., may seem a somewhatunusual vehicle for construction of a statute, since usually a motion forsummary judgment is fact intensive. The parties could very well havesought declaratory relief under Rule 57. However, Rule 56(a) provides inpart, "A party seeking to recover upon a claim . . . or to obtain adeclaratory judgment may . . . move . . . for a summary judgment in theparty's favor upon all or any part thereof" (emphasis supplied). Summaryjudgment is the method chosen by the parties following a meeting pursuantto the court's Order Setting Rule 16 Conference (Document #9) and FederalRule 26(f), Fed.R.Civ.P. The parties filed a Joint Report to the Court(Document #11) suggesting the use of summary judgment to seek the court'sinterpretation of § 287.150, RSMo. (1993), and its application to thecase at bar. The court following this suggestion after a Rule 16conference and in issuing its Interim Scheduling Plan (Document #14).Whether the declaratory judgment procedure or that of summary judgment isfollowed, the effect will be the same.

The court is issuing a partial summary judgment because there remainfactual issues in the case. The discrepancy between the differing amountsthe parties feel is the proper subrogation interest of Plaintiff isaddressed in footnote 1 below. This is a minor factual issue on whichPlaintiff anticipates the parties will be able to reach agreement whendocumentation is supplied. In his Suggestions in Opposition toPlaintiff's Motion for Summary Judgment, Defendant states "while thereare other issues, the parties have agreed to construe the statute first."(Sugg. in Opp., at 3).

Factual Background

In accordance with Local Rule 4.05, Ryder submitted a statement ofuncontroverted material facts in support of its motion of summaryjudgment. Viewed in the light most favorable to the Defendant, the recordreveals the following facts. Plaintiff is the successor corporation toRyder Dedicated Logistics, Inc., the employer of Defendant at the time ofhis accident. Defendant was injured on April 4, 1995, within the scope ofhis employment with Plaintiff, by a forklift manufactured by TeledynePriceton, Inc. ("Teledyne"). Workers' compensation benefits totaling$230,260.91 were paid by the Plaintiff and its insurance carrier, RyderServices Corporation, to Defendant.

Defendant subsequently filed a products liability action againstTeledyne in the United States District Court for the Eastern District ofMissouri for the injuries he sustained in his work-related accident. Thisthird party suit was settled prior to trial and under the settlementagreement entered into between the parties Mr. Royse and his wifereceived $535,000. After Defendant's settlement, Plaintiff filed thepresent action asserting its subrogation rights as a statutory lien holderover the workers' compensation benefits it paid to Defendant. Plaintiffcontends in this action that its subrogation interest equals$139,061.31. Defendant argues that the value of Plaintiff's lien is only$128,255.99.1It is agreed by the parties that the settlement document entered intobetween Defendant and Teledyne did not contain an express assessment ofthe comparative fault of Defendant nor did it mention what amount of thesettlement was attributable to the included claim of Mrs. Royse for lossof consortium. Defendant has submitted in support of his Motion inOpposition to Plaintiff's Summary Judgment Motion an affidavit of DonaldThomasson, his attorney in the third party action.2 Mr. Thomassonstates in his affidavit that the comparative fault in Defendant was takeninto account when negotiating the final amount of settlement withTeledyne and that the final settlement amount included a portionallocated to Mrs. Royse's loss of consortium claim.


A. Plaintiff's Allegation that Defendant Did Not Abide by Local Rule7-4.01

As a threshold matter, Plaintiff argues the court should treatDefendant's factual contentions in ¶ 1 and 2 of his Suggestions inOpposition as waived because Defendant failed to specifically controvertPlaintiff's Statement of Uncontroverted Facts. Local rule 7-4.01(E)provides, in relevant part, "[e]very memorandum in opposition shallinclude a statement of material facts as to which the party contends agenuine issue exists . . . [t]he opposing party also shall note for alldisputed facts the paragraph number from movant's listing of facts."E.D.Mo.L.R. 7-4.01(E). The rule further states that "[a]ll matters setforth in the statement of the movant shall be deemed admitted forpurposes of summary judgment unless specifically controverted by theopposing party." Id.

The court finds that Defendant has not waived the factual contentionsfound in his Suggestions in Opposition. Defendant in his Suggestions inOpposition incorporated Plaintiff's Statement of Uncontroverted Facts andalso stated two additional which he contends are uncontroverted.3While the semantic differences found in the parties' statements of factsregarding the content and scope of the settlement agreement are minute,Defendant has nevertheless complied with requirements of rule 7-4.01. Assuch, Defendant has not waived the factual contentions found in hisSuggestions in Opposition.

B. Standards for Motion for Summary Judgment

The standards governing a motion for summary judgment are wellsettled. Pursuant to Rule 56(c) of the Federal Rules of CivilProcedure, a court may grant a motion for summary judgment if all of theinformation before the court demonstrates that there is no genuine issueas to material fact and the moving party is entitled to judgment as amatter of law. FED.R.CIV.P.56(c). The burden initially is on the moving party. See Handeen v.Lemaire, 112 F.3d 1339, 1346 (8th Cir. 1997). After the moving partydischarges this burden, the nonmoving party must do more than show thatthere is some doubt as to the facts. See Matsushita Elec. Indus. Co. v.Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d538 (1986). Instead, the nonmoving party bears the burden of settingforth specific facts showing that there is sufficient evidence in itsfavor to allow the trier of fact to return a verdict for it. SeeFED.R.CIV.P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249,106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett,477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Inpassing on a motion for summary judgment, the court must view the facts inthe light most favorable to the party opposing the motion. See Adickesv. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d142 (1970).

C. The Statute at Issue

An employer has a right of subrogation, under § 287.150(3),against a tortfeasor responsible for its employee's injury, death oroccupational disease. See Mo. REV.STAT. § 287.150(3) (1994). When anemployee obtains a recovery against a third party for his/herwork-related injuries, the employee "becomes a trustee of an expresstrust for the benefit of the employer to the extent of the employer'sproportionate share of the recovery." Consolidated Freightways v. Batton,673 S.W.2d 96, 98 (Mo.Ct.App. 1984) (citation omitted). The end result isthat an employer's subrogation interest is limited to what compensationhas been paid or is payable under the workers' compensation law. SeeHacon, Inc. v. Chandeysson Elec. Co., 466 S.W.2d 157, 159 (Mo.Ct.App.1971). The employee and employer in effect have a contractualarrangement. See State ex. rel. Missouri Pac. R.R. Co. v. Haid, 332 Mo.616, 59 S.W.2d 690, 692 (1933); B. MICHAEL KORTE, 29 MISSOURI PRACTICE§ 8.30 (1997).

Prior to the amendment of § 287.150(3), the comparative fault ofthe employee was irrelevant in determining the value of an employer'ssubrogation interest on an employer's recovery from a third partytortfeasor. See Liberty Mutual Ins. Co. v. Garffie, 939 S.W.2d 484, 487(Mo.Ct.App. 1997). Courts construing the pre-amendment version of §287.150(3) held that comparative fault was not an issue when an employersought to "re-coup compensation payments from a third party tortfeasor."Akers v. Warson Garden Apartments, 961 S.W.2d 50, 56 (Mo. 1998) (citingRogers v. Home Indemnity Co., 851 S.W.2d 672, 676 (Mo.Ct.App. 1993)).

The General Assembly amended § 287.150(3) in 1993. It nowprovides:4

Whenever recovery against a third person is effected by the employee or his dependents, the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee. After the expenses and attorney fee have been paid, the balance of the recovery shall be apportioned between the employer and the employee or his dependents in the same ratio that the amount due the employer bears to the total amount recovered if there is no finding of comparative fault on the part of the employee . . .

(1) The total amount paid to the employee or his dependents shall be treated as an advance payment if there is no finding of comparative fault on the part of the employee; or

(2) A percentage of the amount paid to the employee of his dependents equal to the percentage of fault assessed to the third person from whom recovery is made shall be treated as an advance payment if there is a finding of comparative fault on the part of the employee.

MO.REV.STAT. § 287.150(3) (1994).

The issue of whether an employer's subrogation interest should bereduced if an employee's recovery from a third party tortfeasor wasreduced by his/her comparative fault appears to be one of firstimpression in Missouri. Also an issue of first impression is what effectan employee's settlement with a third party has on an employer'ssubrogation rights under § 287.150(3) whenever an employee argueshe/she was comparatively at fault in the work-related accident.

D. Statutory Interpretation of § 287.150(3)

"The primary rule of statutory construction is to ascertain the intentof the General Assembly." McCormack v. Stewart Enterprises, Inc.,916 S.W.2d 219, 225 (Mo.Ct. App. 1995) (citing Sheldon v. Bd. of Trusteesof the Police Retirement Sys., 779 S.W.2d 553, 554 (Mo. 1989)). Sinceworkers' compensation law was created solely by statute, a court is"bound by the general rules of statutory construction in interpreting"its provisions. Simpson v. Dale E. Saunchegrow Const., 965 S.W.2d 899,902 (Mo.Ct.App. 1998) (citation omitted). In deciding what effect astatutory amendment has to the statute, a "[c]ourt looks to the wordsused in the statute and the plain and ordinary meaning of those words."Hagan v. Dir. of Revenue, 968 S.W.2d 704, 706 (Mo. 1998). In so doing,the court "must give effect to [the] statute as written." Bright v.Bright, 989 S.W.2d 196, 199 (Mo.Ct.App. 1999) (citation omitted). Whenamending a statute the legislature is "presumed to have intended theamendment to have some effect or to accomplish some legislative purpose."Bennett v. Dir. of Revenue, 889 S.W.2d 166, 169 (Mo.App. 1994).

The Workers' Compensation Act was enacted for the primary purpose ofmitigating losses sustained as a result of "accidental injuries receivedin the workplace." McCormack, 916 S.W.2d at 225-26. "The purpose of[§ 287.150] is to protect and benefit the employer liable forcompensation, and the statute is designed to afford indemnity forcompensation payable by the employer." Akers, 961 S.W.2d at 56 (citingMcCormack, 916 S.W.2d at 224). Section 287.150 was enacted to cure the"evil" or "mischief" caused by an injured employee recovering forinjuries both from his employer and from a third-party tortfeasor. Rosev. Falcon Communications, Inc., 6 S.W.3d 429, 431 (Mo.Ct.App. 1999).

This court in determining the meaning of § 287.250(3) "must not beguided by a single sentence . . ., but should look to the provisions ofthe whole law, and its object and policy." Williams v. Missouri Dep't. ofSoc. Serv., 978 S.W.2d 491, 494 (Mo.Ct.App. 1998) (citations omitted)."Statutes are to be given a common-sense and practical interpretation."Concord Publ'g. House, Inc. v. Dir. of Revenue, 916 S.W.2d 186, 194 (Mo.1996) (citation omitted). When the definitions for terms are not providedby the legislature, the court must determine the meaning of thoseundefined terms from the dictionary definition existing when the statutewas enacted. Hoag v. McBride & Son Inv. Co., Inc., 967 S.W.2d 157, 169(Mo.Ct.App. 1998).

In interpreting § 287.150(3), there are four terms relevant todeciding the current motion before the court. Those four terms are"recovery," "finding," "determined" and "trier of fact." "Recovery," asDefendant points out in his Suggestions in Opposition, has been definedwithin workers' compensation law as "the amount actually collected fromthe third person." Barker v. H & J Transporters, Inc., 837 S.W.2d 537,541 (Mo.Ct.App. 1992) (holding the "recovery" under the pre-amendmentversion of § 287.150(3) includes settlement proceeds from a tortaction). This definition articulated by the Missouri Court of Appealswould include settlements by anemployee with any third party tortfeasor, including Defendant's thirdparty settlement with Teledyne.

The word "finding" has also been defined by Missouri courts. In Stateex rel. Townsend v. Holtcamp, 330 Mo. 1101, 55 S.W.2d 428 (1932), theSupreme Court defined "finding" as it pertained to probate courtappeals. The Court defined it as a "judgment finally disposing of . . . acase." Id. at 431. Although "determined" has not been specificallydefined by Missouri courts, it's dictionary definition is "having reacheda decision; firmly resolved." WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY346 (1990).

The most important term found in § 287.150(3) in relation to thiscase is "trier of fact." It is defined in Black's Law Dictionary as"commonly refer[ing] to [a] judge in jury waived trial or jury which, ineither case, has the exclusive obligation to make findings of fact incontrast to rulings of law which must be made by [the] judge." BLACK'SLAW DICTIONARY 1506 (6th Ed. 1990).

In construing and applying these definitions within the context of§ 287.150(3) it appears that the drafters of § 287.150(3)contemplated that an employee's comparative fault percentage would onlybe used to deduct an employer's subrogation recovery in instances where ajudicial determination of an employer's comparative fault has been made.That is, in instances where a judge or jury has deliberated and reached aresult as to a claimant's comparative fault. Settlement agreementsentered into by parties, without a jury's verdict or a judge's decision(in a court-tried case), would therefore not be a "finding" by a "trierof fact" within the purview of § 287.150(3). In a case with asimilar procedural history and factual circumstances as this one, a trialcourt judge ruled that a reduction of an employer's subrogation interestwould occur only if a "trier of fact" had determined that an employee wascomparatively at fault. See Garffie, 939 S.W.2d at 486 (involvingclaimant injured in work-related accident who settled prior to trial aproducts liability action against a manufacturer for those work-relatedinjuries). The court believes the trial court's ruling in Garffie is theproper interpretation and application of § 287.150(3) for this courtto follow.

Defendant contends in his Suggestions in Opposition that since the word"recovered," within the context of § 287.150(3), contemplates allproceeds from a settlement with a third party, it must be read inconjunction with the more critical portion of § 287.150(3) involvingthe determination by a "trier of fact." In regards to this argument,Defendant contends that § 287.150(3) is ambiguous due to itsreference to both "recovery" and a "finding of comparative fault,"therefore being inconsistent with the statute's purpose of making areduction in an employer's subrogation interest when an employee iscomparatively at fault.

A fundamental rule of statutory construction is that a "definite andspecific phrase or word takes precedence over the general." Short v.Short, 947 S.W.2d 67, 70 (Mo.Ct.App. 1997). "Recovery" in the context of§ 287.150(3) is a broad statement of an employer's subrogationrights over an employee's third party tort claim proceeds. The preeminentissue in this case is what did the legislature intended when they amendedthis section? The plain language of the statute suggests that thelegislature intended that a determination by a judge or jury of anemployee's comparative fault be required to reduce an employer'ssubrogation interest. There is no ambiguity found within the statutebecause the drafters were specific in articulating that a "finding ofcomparative fault" must be made to reduce the employer's subrogationinterest. Although Defendant is correct in stating that a great number ofcivil cases that settle prior to trial would be affected by therequirement that a trier of fact make a finding of comparative fault, itis the province of the legislature, not thiscourt, to change the law to deal with such cicumstances. Since no findingof employee's comparative fault was determined in his third party actionby a judge or a jury, Plaintiff is entitled to its full subrogationinterest irrespective of employee's comparative fault.

E. Loss of Consortium Claim

The parties have submitted arguments regarding whether Plaintiff'ssubrogation interest should be reduced because Mrs. Royse's claim forloss of consortium was included in Defendant's settlement with Teledyne.Under Missouri Workers' Compensation law, a widow's wrongful death claimis independent of the spouse's claims, such that the employer cannotexercise subrogation rights over the widow's claim. See Bridges v. VanEnterprises, 992 S.W.2d 322, 325 (Mo.App. 1999). A spouse's loss ofconsortium claim under Missouri law is independent of any of the otherspouse's tort claims. Id. Thus, "[a] case of action for loss ofconsortium, while derivative of, is otherwise to be considered separateand distinct from [a] plaintiff spouse's action for damages." Rill v.Trautman, 950 F. Supp. 268, 272 (E.D.Mo. 1996) (citations omitted).

Plaintiff cites the Pennsylvania case of Darr Constr. v. Workmen'sCompensation Appeal Bd., 677 A.2d 1301 (Pa. Commw. 1996), as persuasiveauthority to support the proposition that an employer's subrogation lienmay attach to a spouse's loss of consortium claim. Although the Court'sreasoning in Darr is helpful in resolving the issue before the court,Plaintiff failed to note in his Suggestions in Opposition that thisruling was subsequently overturned by the Pennsylvania Supreme Court. SeeDarr Constr. v. Workmen's Compensation Appeal Bd., 552 Pa. 400,715 A.2d 1075, 1076 (1998).

The Darr case involved five claimants injured by an explosion thatoccurred during the course of their employment. Id. Workers' Compensationbenefits were paid and the claimants and their spouses filed civilactions against a third party seeking damages for their work-relatedinjuries. Id. at 1076-77. Included in these civil actions were spousalclaims for damages for loss of consortium. Id. at 1077. The PennsylvaniaSupreme Court held, expressly overruling the lower court, that since thespouses when settling their loss of consortium claims received separatechecks and signed-separate settlement arrangements with the tortfeasor,the employer had no subrogation interest in those spouses' recovery fortheir loss of consortium claims. Id. at 1076; see Warner Lambert Co.,Inc. v. Workmen's Compensation Appeal Bd., 133 Pa.Cmwlth. 250, 575 A.2d 956(1990) (holding that an employer's subrogation interest does not includea loss of consortium claim when there was no jury verdict attributed tothe amount of recovery).

In analyzing the Darr decision, it is apparent that it isdistinguishable from this case. From the settlement with Teledyne, Mrs.Royse did not receive a separate check for her claim of loss ofconsortium claim nor was there mention of her recovery amount as apercentage or portion of the overall settlement with Defendant. Evidencethat Mrs. Royse's loss of consortium claim was taken into account whensettling the third party claim is presented by Defendant through theaffidavit of Donald Thomasson.5 However, this evidence isinsufficient to support Defendant's assertion that the loss of consortiumclaim should reduce Plaintiff's subrogation rights. Pennsylvania courtshave held that a "unilateral declaration by [a] claimant's attorney"stating that a loss of consortium claim was allocated as part of anoverall settlement of a third party claim is insufficient to insulatethat claim from a subrogation action. Pendleton v. Workmen'sCompensation Appeal Bd., 155 Pa. Cmwlth. 440, 625 A.2d 187, 189 (1993).This court believes the Pennsylvania court's reasoning is sound and isapplicable to this case as well.

The Defendant argues, with the lower court's holding in Darr asauthority, that whether an employer's subrogation interest intends toloss of consortium claims hinges upon whether the employer was consultedduring the settlement of the third party claim. While the lower court inDarr found that giving the employer and its insurers an opportunity toparticipate in the negotiations is important in allocating a loss ofconsortium recovery, it is not dispositive on the issue. The PennsylvaniaSupreme Court found more critical in determining an employer'ssubrogation interest the potential for abuse by claimants structuring aloss of consortium settlement without employer or insurer participation.Darr, 715 A.2d at 1081. However, the non-participation of Plaintiff inDefendant's settlement with Teledyne does not remedy the fact that Mrs.Royse's loss of consortium claim was not sufficiently documented in thesettlement documents. Accordingly, Plaintiff's subrogation interest willnot be reduced by the undetermined amount of Mrs. Royse's loss ofconsortium claim.

In addition to what has been said with reference to the construction of§ 287.150, other considerations would seem to support the court'sinterpretation of the statute in this case. As noted earlier, thesettlement document does not contain any assessment of comparative faultto Chester Royse, plaintiff in the personal injury and defendant in thissuit. The settlement agreement is silent as to any amount or percentageallocated to Mrs. Royse's loss of consortium. The resolution of thepersonal injury lawsuit was not the result of a jury verdict which wouldhave resulted in a finding of comparative fault or a finding of nocomparative fault. The parties reached a settlement. A settlement is theresult of negotiations, including a weighing of the parties' estimate ofwhat a jury would do, considering all the factors going into a jury'sverdict: the factual evidence, the credibility of witnesses, and theweaknesses and strengths of the Royses' case and of Teledyne's defense.The negotiations would have taken into consideration other factors suchas verdicts other juries have reached under similar facts.

It is reasonable to assume that the amount paid is the net amount whichthe parties estimate would have been awarded, discounting comparativefault, so that under such an analysis, comparative fault would no longerbe a factor. There can be no trial between Chester Royse and TeledynePrinceton, Inc. The case is settled. It is impossible to tell at thispoint what comparative fault may have existed.

The defendant in this matter seeks to have a deduction for hiscomparative fault, but there is no evidence as to what the comparativefault may have been. As a result, defendant's claim that comparativefault should be deducted, cannot be successful.

A finding in our system of justice should be clear and available forall to see. Ours is a court open to public. Rule 77, Fed. R.Civ.P. It isnot a secret system of reaching justice. The only way one could know whatamount of comparative fault is attributable to the plaintiff or whatamount of a judgment should be allocated to the loss of consortium is ifthose amounts are set out somewhere for all to see, as in a verdict. Asmentioned, no trial is possible between the Royses and Teledyne. Thatopportunity or risk, as the case may be, is gone.


For the foregoing reasons,

IT IS HEREBY ORDERED that Plaintiff's Motion for Summary Judgment(Doc. No. 19) be granted in part. A separate written Partial SummaryJudgment in favor of the Plaintiff and against the Defendant will beentered on this date.

1. Before Plaintiff's lien can be levied on Defendant's settlementamount, attorney s fees and costs must be deducted pursuant to Mo.REV.STAT. § 287.150(3) (1994). The parties are in agreement that thetotal amount of Defendant's attorney fees and costs arising from histhird party action is unclear.

2. Plaintiff's argument that Mr. Thomasson's affidavit cannot beconsidered by the court is without merit. A party opposing summaryjudgment both under Rule 56 of the Federal Rules of Civil Procedure andthis court's Local Rule 7-4.01(B) is permitted to include affidavits asevidence in support of their motion.

3. Defendant in opposing Plaintiff's Motion for Summary Judgmentincorporated Plaintiff's uncontroverted facts, including ¶ 10 whichstated:

[t]he settlement documents executed by Mr. and Mrs. Royse and the third party tortfeasor, Teledyne Princeton, Inc., does not contain any assessment of comparative fault to any of the parties. Moreover, the settlement agreement was also silent as to any amount or percentage of the settlement that was allocated toward Mrs. Royse's loss of consortium claim.

Defendant stated in his list of uncontroverted facts that "[t]hesettlement between Mr. and Mrs. Royse took into account all claims by[them] against the third party in question, including Mrs. Royse's lossof consortium claim." Defendant also stated that "[t]he settlement inquestion was reflective of Mr. Royce's comparative fault."

4. The italicized portions of this section are the portions added bySenate Bill 251 of the 87th General Assembly in 1994.

5. The affidavit states that "the settlement amount addressed theclaims of both Mr. and Mrs. Royse."

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