Doyle Oliver, Et Ux. v. Tokio Marine and Fire Ins. Co., Ltd

• Court: Louisiana Court of Appeal
• Decided: April 3, 2013
• Docket: CA-0012-1414
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

12-1414

DOYLE OLIVER, ET UX.

VERSUS

TOKIO MARINE AND NICHIDO FIRE INS. CO., LTD, ET AL.

**********

APPEAL FROM THE TENTH JUDICIAL DISTRICT COURT PARISH OF NATCHITOCHES, NO. C-83090, DIV. A HONORABLE ERIC ROGER HARRINGTON, DISTRICT JUDGE

ELIZABETH A. PICKETT JUDGE

Court composed of Jimmie C. Peters, Elizabeth A. Pickett, and Phyllis M. Keaty, Judges.

AFFIRMED.

Eric J. Waltner Allen & Gooch, A Law Corporation 2000 Kaliste Saloom Road, Suite 400 Lafayette, LA 70508 (337) 291-1000 COUNSEL FOR INTERVENORS/APPELLANTS: LOCA Insurance Fund Quality Transport, Inc. Edwin Dunahoe Dunahoe Law Firm P. O. Box 607 Natchitoches, LA 71458-0607 (318) 352-1999 COUNSEL FOR PLAINTIFFS/APPELLEES: Doyle Oliver Faye Oliver

Steven D. Crews Corkern, Crews & Guillet, L.L.C. P. O. Box 1036 Natchitoches, LA 71458-1036 (318) 352-2302 COUNSEL FOR DEFENDANTS/APPELLEES: Tokio Marine and Nichido Fire Insurance Co., Ltd. Abrasive Products and Equipment, LP Brody Breaux PICKETT, Judge.

Intervening employer appeals the trial court’s holding that its intervention

recovery was subject to Moody fees,1 although the employer did not consent to the

settlement of the plaintiff’s claims. For the following reasons, we affirm.

FACTS

Dwayne Oliver 2 filed a tort suit against Tokio Marine & Nichido Fire

Insurance Co., Ltd., Abrasive Products & Equipment, LP, and Brody Breaux

(jointly hereinafter referenced as “Tokio”) to recover damages for personal injuries

and other losses he sustained in an automobile accident which occurred while he

was in the course and scope of his employment with Quality Transport, Inc.

(Quality). Quality and its workers’ compensation insurer, LOCA Insurance Fund

(LOCA), intervened into this lawsuit to recover all workers’ compensation benefits

paid to Mr. Oliver. The intervention sought to recover the $102,607.95 in workers’

compensation benefits paid to Mr. Oliver plus legal interest and court costs.

Shortly before trial, Mr. Oliver and Tokio entered into settlement

negotiations. Mr. Oliver asked Quality and LOCA to consent to the settlement;

they refused. Thereafter, Mr. Oliver settled his lawsuit for $850,000.00 without

Quality and LOCA’s consent. Upon receipt of the settlement funds, he deposited

$110,948.66, representing the workers’ compensation benefits LOCA paid and

legal interest thereon from the date the Intervention was filed, into the registry of

the court.

1 Pursuant to La.R.S. 23:1102-1103, employers and workers’ compensation insurers are responsible for a proportionate share of an employee’s reasonable legal fees and costs incurred to recover damages they suffered from a third party. These fees are commonly known as “Moody” fees. See Moody v. Arabie, 498 So.2d 1081 (La.1986). 2 Mr. Oliver and his wife filed suit. The parties, however, reference only Mr. Oliver herein, presumably because he is the workers’ compensation claimant; we do likewise. Disputing that Mr. Oliver could settle his claims without their consent,

Quality and LOCA filed a Motion for Reimbursement and Other Appropriate

Relief, seeking reimbursement of 100% of the workers’ compensation benefits

paid to him with legal interest thereon and a judgment holding that (1) Mr. Oliver

forfeited his potential entitlement to future benefits, subject to a buy back as

provided in La.R.S. 23:1102 and (2) they are entitled to a credit if Mr. Oliver

exercises his buy-back option.

Tokio filed a Rule to Show Cause to set a hearing on the Motion for

Reimbursement. After considering the parties’ arguments, the trial court

determined that Quality and LOCA were entitled to recover $102,607.95, together

with legal interest from the date of intervention, which was fixed at $5,390.78, for

a total of $107,998.73. The trial court awarded Mr. Oliver’s attorney $35,999.57,

or 1/3 of the total principal and interest on the Intervention, in attorney fees and

ordered that Quality and LOCA pay their proportionate share of expenses, which it

established was $8,081.24. The trial court further ordered that $70,972.39 of the

funds in the registry of the court be paid to Quality and LOCA and awarded a

credit in favor of Quality and LOCA of $495,694.61, together with 6% interest

thereon from the date of the judgment, against any future workers’ compensation

benefits Mr. Oliver might seek.

Quality and LOCA filed a writ application and perfected a devolutive

appeal. The writ was denied because the trial court’s judgment was a final,

appealable judgment; therefore, Quality and LOCA have an adequate remedy on

appeal. Oliver v. Tokio Marine, an unpublished writ bearing docket number 12-572

(La.App. 3 Cir. 6/22/12).

2 DISCUSSION

Quality and LOCA present one issue for our consideration: Is a workers’

compensation insurer obligated to pay a Moody fee, when the case was settled

without its consent? Quality and LOCA urge that Mr. Oliver and Tokio’s failure to

obtain their consent to the settlement requires that Tokio reimburse them the full

amount of the benefits they paid to Mr. Oliver without a reduction for attorney fees

and costs of the litigation, as provided in La.R.S. 23:1102(B).

Louisiana Revised Statutes 23:1102 provides the procedures to be followed

when an employee or his employer files suit against a third party to recover

damages for injuries suffered by the employee. Subsections (B) and (C) detail the

reimbursement owed to the employer or its insurer when the employee settles his

claims with the third party without proceeding to trial. These subsections provide:

B. If a compromise with such third person is made by the employee or his dependents, the employer or insurer shall be liable to the employee or his dependents for any benefits under this Chapter which are in excess of the full amount paid by such third person, only after the employer or the insurer receives a dollar for dollar credit against the full amount paid in compromise, less attorney fees and costs paid by the employee in prosecution of the third party claim and only if written approval of such compromise is obtained from the employer or insurer by the employee or his dependent, at the time of or prior to such compromise. . . . If the employee . . . fails to obtain written approval of the compromise from the employer and insurer at the time of or prior to such compromise, the employee . . . shall forfeit the right to future compensation, including medical expenses. Notwithstanding the failure of the employer to approve such compromise, the employee’s . . . right to future compensation in excess of the amount recovered from the compromise shall be reserved upon payment to the employer or insurer of the total amount of compensation benefits, and medical benefits, previously paid to or on behalf of the employee, exclusive of attorney fees arising out of the compromise. . . . Such reservation shall only apply after the employer or insurer receives a dollar for dollar credit against the full amount paid in compromise, less attorney fees and costs paid by the employee in prosecution of the third party claim.

3 C. (1) When a suit has been filed against a third party defendant in which the employer or his insurer has intervened, if the third party defendant or his insurer fails to obtain written approval of the compromise from the employer or his insurer at the time of or prior to such compromise and the employee fails to pay to the employer or his insurer the total amount of compensation benefits and medical benefits out of the funds received as a result of the compromise, the third party defendant or his insurer shall be required to reimburse the employer or his insurer to the extent of the total amount of compensation benefits and medical benefits previously paid to or on behalf of the employee to the extent said amounts have not been previously paid to the employer or his insurer by the employee pursuant to the provisions of Subsection B of this Section. Notwithstanding such payment, all rights of the employer or his insurer to assert the defense provided herein against the employee’s claim for future compensation or medical benefits shall be reserved.

(Emphasis added). Quality and LOCA admit that although they did not consent to

the settlement, Mr. Oliver protected his rights against them for future benefits and

his right to reduce their reimbursement by attorney fees and costs by depositing the

full amount of the benefits they paid him into the registry of the court, as provided

in La.R.S. 23:1102(B). They contend, however, that the result is not the same for

Tokio under Subsection (C) because it did not obtain their written consent to the

settlement.

Quality and LOCA’s argument ignores the plain wording of Subsections (B)

and (C). Pursuant to Subsection (C), a third-party defendant is obligated to

reimburse an employer and/or its insurer if it failed to obtain their consent and the

employee did not reimburse the employer and/or insurer the total compensation

benefits and medical expenses they paid. The third-party defendant must

reimburse the employer and/or insurer: “the total amount of compensation benefits

and medical benefits previously paid . . . to the extent said amounts have not been

previously paid to the employer or his insurer by the employee pursuant to the

provisions of Subsection B.” La.R.S. 23:1102(C). Hence, a third party is only

4 required to reimburse an employer and/or insurer amounts the employee did not

pay “pursuant to the provisions of Subsection B.” Id.

Subsection (B), and Subsection (C) by reference thereto, specifically

contemplates the payment of attorney fees and costs by the employer or insurer

when they are reimbursed by the employee as provided therein. Mr. Oliver

satisfied the requirements of Subsection B; therefore, the trial court did not err in

making Quality and LOCA pay Moody fees as provided therein.

The court in Eakin v. United Technology Corp., 998 F.Supp. 1422 (S.D.Fla.

1998), reached the same result, though not for the same reasons. In doing so, the

court considered the history of the decision in Moody v. Arabie, 498 So.2d 1081,

and the relationship between Moody and La.R.S. 23:1102-03 and aptly observed:

[T]here are two distinct policies at play here: (1) protecting an intervening workers’ compensation carrier under Louisiana’s workers’ compensation laws, and (2) reimbursing an injured worker a share of his attorney’s fees under Moody. . . . [T]hese two policies are not incompatible; there is a “false conflict” at best. In fact . . . Louisiana’s workers’ compensation scheme works in such a way as to make it practically impossible for these two policies to undermine one another.

Eakin, 998 F.Supp. at 1425. The court explained in Eakin that Subections 1102(B)

and (C) work together to insure “that an employer or insurer will not be prejudiced

by the unilateral acts of an employee.” Id. at 1425-26. If an employee and

tortfeasor fail to obtain an employer or insurer’s approval of their settlement, the

employer’s and insurer’s liability is limited in two ways: (1) they are not obligated

to pay future benefits and (2) their claim for reimbursement of benefits paid to the

employee is preserved against the employee “and the settling tortfeasor.” Id. at

1426.

5 Importantly, the court pointed out that the intent and purpose of Moody and

applicable workers’ compensation laws would be thwarted if employers or

insurers, like Quality and LOCA, were allowed to reap the benefits of the risks

taken by the employee to obtain a full recovery for them without having to pay

their proportionate share of the attorney fees and costs. Such a free ride is not

contemplated by Louisiana law and jurisprudence. See Myers v. Burger King

Corp., 92-400, 93-1626 (La.App. 4 Cir. 5/26/94), 638 So.2d 369, where the court

observed that the third-party defendant’s escrow of the full amount of the

intervention protected the employer and its insurer; therefore, the trial court’s

reduction of the intervention award by the proportionate amount of attorney fees

and costs was not error.

Quality and LOCA argue this court’s decisions in Ferrell Lavergne Eagle

Pacific Insurance Co. v. Quality Fabricators of Eunice, Inc., 02-548 (La.App. 3

Cir. 12/11/02), 832 So.2d 1176, writ denied, 03-127 (La. 3/21/03), 840 So.2d 540,

and Lavergne v. Quality Fabricators of Eunice, Inc., 04-125 (La.App. 3 Cir.

12/8/04), 888 So.2d 1147, writ denied, 05-46 (La. 3/18/05), 896 So.2d 1007,

support their claims. In the Lavergne cases, the employee and third-party

defendant reached a high-low settlement while the jury was deliberating. The jury

determined the defendant was not at fault, and pursuant to the high-low agreement,

the defendant paid the plaintiff $25,000.00. The trial court dismissed the claims of

the plaintiff and the intervenor. The intervenor, who was not present at the trial

and was not consulted before the settlement was reached, successfully appealed the

dismissal of its claims. Lavergne, 832 So.2d 1176. The intervenor then sought to

recover its lien from the third-party defendant because it did not consent to the

settlement. The third-party defendant was held liable to the intervenor for

6 $124,905.90, the full amount of the workers’ compensation benefits and medical

expenses it paid to the employee. Lavergne, 888 So.2d 1147.

The facts in the Lavergne cases are so different from the facts before us that

its result has no application here. The intervenor in Lavergne was neither notified

of the settlement discussions, nor was it asked to consent to the settlement

agreement. Most importantly, its interests were not protected as were the

intervenors’ interests here and in Eakin and Myers. Moreover, to accept Quality

and LOCA’s arguments would allow employers and their workers’ compensation

insurers to circumvent the law and avoid paying Moody fees by simply refusing to

consent to a favorable settlement offer which could easily lead to employers and

insurers never consenting to an employee’s legitimate settlement of his claims. For

these reasons, we find no error with the trial court’s reduction of Quality and

LOCA’s intervention by their proportionate share of attorney fees and costs.

DISPOSITION

The judgment of the trial court is affirmed. All costs are assessed to Quality

Transport, Inc. and LOCA Insurance Fund.