Banoski v. Moto-Crane Service, Inc.

192 N.W.2d 555, 35 Mich. App. 487, 1971 Mich. App. LEXIS 1511

• Court: Michigan Court of Appeals
• Decided: August 24, 1971
• Docket: Docket 8927
• Status: Published

Opinions

McGregor, J.

Alex Banoski met with a compensable accident in the course of his employment with the Austin Company. General Accident Fire & Life Insurance Corporation, the workmen’s compensation carrier for the Austin Company, on its behalf, paid out the sum of $14,080 as a result of said injuries.

Alex Banoski and Marjorie Banoski, his wife, instituted a common-law negligence action against the alleged tortfeasors, Moto-Crane Service, Inc. and W. H. Anderson, Inc. Pursuant to a stipulation with the plaintiffs, General Accident Fire & Life Insurance intervened¹ as a party plaintiff,² seeking to recover the workmen’s compensation payments made to Alex Banoski.

Prior to trial, Banoskis’ attorney moved the court to exclude any reference to compensation payments in the presence of the jury, and further moved that the attorney for General Accident take no active part in the trial and should be introduced to the jury as “of counsel” for the Banoskis. Although the General Accident attorney consented to these motions, he remained present at the counsel table throughout the four days of trial. Banoskis’ suit was prepared and tried without any aid or assistance from the attorney for General Accident.

The jury returned a verdict in favor of Alex Banoski in an amount of $130,000, and in favor of Marjorie Banoski in an amount of $9,000. Judgments in accord with the verdicts were entered, and the attorney for General Accident consented to the entry of said judgments. Only those judgments in favor of the Banoskis were entered.

Subsequently, the attorneys for the Banoskis and General Accident could not agree on the amount of reimbursement for each party, and on October 7, 1969, the plaintiffs’ attorney filed a motion to determine the amount of reimbursement due General Accident; said motion was heard by the trial court, which ordered the following:

(a) The total workmen’s compensation benefit paid by General Accident Fire & Life Insurance Corporation was $14,080.11.

(b) General Accident Fire & Life Insurance Corporation’s share of the expenses of recovery are: (1) one-third contingent attorney fee, amounting to $4,693,³ and (2) miscellaneous expenses in the amount of $75.90.

(c) Plaintiff Alex Banoski shall reimburse General Accident Fire & Life Insurance Corporation in the amount of $9,311.21; this amount is to be paid after Alex Banoski receives sums satisfying his judgment, with interests and costs.

(d) General Accident Fire & Life Insurance Corporation is not entitled to interest on compensation benefits it has paid.

From these determinations, the intervening plaintiff appeals.

Initially, the intervening plaintiff contends that the trial court erred reversibly by requiring it to reimburse plaintiffs’ attorney for its pro rata share of attorney fees. The applicable statute governing this issue reads:

“In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or its workmen’s compensation carrier for any amounts paid or payable under the workmen’s compensation act to date of recovery, and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payment of compensation benefits.

“Expenses of recovery shall be the reasonable expenditures, including attorney fees, incurred in effecting such recovery. Attorney fees, unless otherwise agreed upon, shall be divided among the attorneys for the plaintiff as directed by the court. The expenses of recovery above mentioned shall be apportioned by the court between the parties as their interests appear at the time of said recovery.” MOLA § 413.15 (Stat Ann 1968 Rev § 17.189).

The general rule in regard to sharing attorney fees, as stated by 2 Larson, Workmen’s Compensation Law, § 74.32, p 226.118, is that, if the sum recovered by the employee is more than enough to pay attorney’s fees and reimburse the carrier, the carrier is reimbursed in full, and, apart from special statutes on sharing attorney fees, is not required to share the legal expenses involved in effectuating recovery. It is also noted that a considerable number of statutes exist which state that, if suit is brought or recovery is effected by the employee, the carrier is obliged to pay a portion of the attorney’s fee out of his share, usually in proporation to his share of the recovery.

The primary Michigan case which has interpreted the above statutory provision was Potter v. Vetor (1959), 355 Mich 328; also Horsey v. Stone & Webster Engineering Corporation (WD Mich, 1958), 162 F Supp 649. In Potter, plaintiff was injured by a third-party tortfeasor, and the employer, through its compensation carrier, made payments therefor. Subsequently, plaintiff instituted a lawsuit in circuit court and the carrier supplied plaintiff’s attorney with the results of its investigation and medical reports. Thereafter, a settlement was reached and a judgment was entered therefor. It was noted that the carrier did not participate in the lawsuit, nor in the negotiations between plaintiff and the third-party defendant’s counsel. Plaintiff appealed the trial court’s ruling that the carrier should recover the full amount of its payments without being required to pay part of the expenses incurred by plaintiff in the circuit court law action.

The Supreme Court stated that MCLA § 413.15 used unambiguous language in providing that

“expenses of recovery shall be reasonable expenditures, including attorney fees, incurred in effecting such recovery,”

and that these expenses of recovery

“shall be apportioned by the court between the parties as their interests appear at the time of said recovery.” Potter v. Vetor, supra, 331, 332.

The Court then concluded that the trial court erred in ruling that the carrier should recover the full amount of its payment without sharing its part of the expenses incurred in the circuit court action.

In Potter, supra and in Horsey, supra, the carriers did not, prior to judgment, participate in the plaintiff’s lawsuit, nor in the negotiations between plaintiff and the third-party tortfeasor. The carriers in both cases were required to pay for their proportionate share of expenses of recovery, including attorney’s fees. In the instant case, although the carrier did intervene,⁴ the carrier’s attorney did not assist plaintiff’s attorney in this cause. Furthermore, the carrier agreed not to participate in the trial of this cause. No claim was made that plaintiffs’ attorney would not or did not adequately represent the carrier’s interests at the trial,⁵ nor does the carrier now complain that it was denied the right to participate. We find that the trial judge did not abuse his discretion in requiring the carrier to bear its pro rata share of the expenses.

The carrier also claims that it is entitled to interest on its share of the recovery. Plaintiffs contend that, inasmuch as no money judgment was entered in favor of the compensation carrier (the judgment entered in this matter was in favor of Alex Banoski), and that, since the carrier consented to the entry of the judgment, it is not entitled to any interest. The applicable statute provides, in pertinent part:

“Interest shall be allowed on any money judgment recovered in a civil action * * MCLA § 600.6013 (Stat Ann 1971 Cum Supp § 27A.6013).

In view of the fact that the aforementioned statute is remedial in nature and is in derogation of the common law, it must be strictly construed. Motyka v. Detroit, G. H. & M. R. Co. (1932), 260 Mich 396; Swift v. Dodson (1967), 6 Mich App 480.

Since the judgment was entered in favor of plaintiff Alex Banoski, the carrier does not fall within the ambit of the statute.

Affirmed. Costs to appellee.

1 MCLA §413.15 (Stat Ann 1968 Rev §17.189), since replaced by MCLA 1971 Cum Supp § 418.827 (Stat Ann 1971 Cum Supp § 17.237[827]), effective Dec. 31, 1969. Since the instant case arose prior to this enactment, the discussion will relate to the prior statutes.

2 Hereinafter designated as “intervening plaintiff”.

3 The trial court apparently assessed the intervening plaintiff 1/3 of $14,080 which was the amount claimed. If the procedure enunciated in Horsey v. Stone Webster Engineering Corporation (WD Mich, 1958), 162 F Supp 649, were used (later referred to in Mead v. Peterson-King Co. [1970], 24 Mich App 530), the figure would have been $4,680. In any event, the difference is “de minimisi”.

4 Although MCLA § 413.15 allows intervention by an employer or his insurance carrier, the nature and scope of such intervention is not clearly defined. Harrison v. Ford Motor Company (1963), 370 Mich 683; Harris v. General Coach Works (ED Mich, 1964), 37 PRD 343. Our Supreme Court said, in regard to the legislature’s failure to define the intervening plaintiff’s rights: “Undoubtedly an appreciation thereof accounts for the failure of the legislature, in providing for the insurer’s ‘right to join in said suit,’ to specify that it should,in all events, be as a party plaintiff or that, as such, it should have the right to participate as party plaintiff with the plaintiff employee in the trial of the case.” Harrison v. Ford Motor Co., supra, 688.

5 Right to Recovery by employer or carrier from monies received by employee from settlement before judgment, Transamerican Freight Lines, Inc., v. Quimby (1968), 381 Mich 149; Arnett v. General Motors Corporation (1970), 22 Mich App 658; See Gamble v. American Asbestos Products Company (1968), 381 Mich 105.