Elwell v. American Smelting & Refining, Inc.

711 P.2d 819, 219 Mont. 248, 1985 Mont. LEXIS 990
CourtMontana Supreme Court
DecidedDecember 31, 1985
Docket85-022
StatusPublished
Cited by2 cases

This text of 711 P.2d 819 (Elwell v. American Smelting & Refining, Inc.) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elwell v. American Smelting & Refining, Inc., 711 P.2d 819, 219 Mont. 248, 1985 Mont. LEXIS 990 (Mo. 1985).

Opinions

MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Alfred Elwell appeals from a December 12, 1984, judgment of the Workers’ Compensation Court that determined Elwell’s employer, ASARCO, was entitled to subrogation against Elwell’s third party settlement from Anthony Strainer, a co-employee. The judgment of the Workers’ Compensation Court is remanded for further proceedings.

The parties agree on the following facts:

ASARCO is a self-insured employer under Compensation Plan 1 of the Worker’s Compensation Act (hereinafter the Act). On October 17, 1979, Elwell suffered an industrial injury while working at the ASARCO plant in East Helena, Montana. ASARCO supplied stannic oxychloride to test respirator masks for leakage. The chemical was to be blown around the outside of the mask while a worker was wearing a respirator; a leak would cause the worker to cough, showing a need to refit the mask. Anthony Strainer, a co-employee who was then the plant OSHA officer, unscrewed the respirator hoses from Elwell’s oxygen tank and squirted stannic oxychloride, a toxic gas, into claimant’s respirator. Neither Elwell nor Strainer were testing at the time the injury occurred. Strainer, acting without Elwell’s knowledge, squirted the chemical into the respirator as a practical joke.

Elwell suffered serious, disabling injuries to his bronchial system as a result and has not been gainfully employed since October 17,1979. ASARCO accepted liability for the claim and paid Worker’s Compensation benefits of $41,269 temporary disability, $198 per week permanent disability and $4,639 medical.

In October 1981, pursuant to Section 39-71-413, MCA, Elwell sued Strainer alleging that Strainer’s intentional and malicious act caused Elwell’s injury. Elwell also named ASARCO as a defendant, but that [250]*250claim was dismissed because the provisions of the Act were determined to be ElwelPs exclusive remedy from ASARCO. ASARCO elected not to participate in the cost of the action against Strainer, thus waiving 50% of the subrogation rights granted by statute. Section 39-71-414(2)(c).

Prompted by Elwell’s suit, Strainer’s homeowner’s insurance company, Millers Mutual Insurance Company, sought a declaratory judgment that Strainer’s act was intentional and therefore not covered under the homeowner’s insurance policy. This Court held that the Millers’ Mutual policy provided coverage. Miller Mutual Insurance Co. v. Strainer (Mont. 1983), [204 Mont. 162,] 663 P.2d 338, 40 St.Rep. 743.

Elwell then negotiated a settlement of his claim against Strainer for $50,000, the policy limits. Elwell incurred attorneys’ fees of $16,500 and costs of $30 leaving a net recovery of $33,470. The parties agreed that pursuant to Section 39-71-414(2)(d), MCA, Elwell was entitled to one-third, or $11,157. ASARCO asserted a subrogation right to the $22,313 balance, but Elwell disagreed. The parties invested the disputed money in a tax-exempt money market fund. The balance of that account, which continues to draw interest at a variable rate, was $24,139 as of July 16, 1984.

The Workers’ Compensation Court, citing Section 39-71-414, MCA, ruled that ASARCO was statutorily entitled to subrogation for the $22,313 but gave Elwell the interest earned.

Elwell appeals, raising two issues:

Issue No. 1. Did ASARCO have a right of subrogation in Elwell’s third party settlement?

Issue No. 2 Are Elwell’s attorneys entitled to fees and costs incurred incident to the resolution of issue No. 1?

ASARCO raises one issue:

Did the Worker’s Compensation Court err in concluding that Elwell was entitled to the interest earned on the disputed amount?

The Workers’ Compensation Court, relying on the following statutory language, concluded ASARCO was entitled to subrogation:

“37-71-414(1). If an action is prosecuted as provided for in . . . 39-71-413 and except as otherwise provided in this section, the insurer is entitled to subrogation for all compensation and benefits paid or to be paid under the Workers’ Compensation Act. The insurer’s right of subrogation is a first lien on the claim, judgment or recovery.”

Strainer’s acts were intentional as that word is used in Section 39-[251]*25117-413, MCA. Elwell sued Strainer and settled for Strainer’s policy limit of $50,000 which is reduced by $16,530 attorneys’ fees and costs. Elwell contends that, although he is receiving the maximum benefits allowed under the Workers’ Compensation Act, it is not sufficient to compensate him for his injury so ASARCO is not entitled to subrogation.

Elwell concedes, and we agree, that tort concepts of negligence and full legal redress do not apply to benefits under the Workers’ Compensation Act. There is a trade-off of full redress for not requiring proof of fault. Elwell also concedes, and we agree, that ASARCO’s actions do not take them out of the exclusive remedy provisions of the Act.

But, Elwell argues this is an atypical industrial accident. Elwell’s injuries were caused by the intentional acts of his co-employee, Strainer. ASARCO’s acts did not remove it from the exclusive remedy provision of the Workers’ Compensation Act, but ASARCO’s safety officer, showing incredibly poor judgment, caused the accident. ASARCO chose Strainer to be their safety officer; ASARCO provided the noxious gas, and ASARCO gave Strainer access to it.

As the Workers’ Compensation Court recognized, Elwell raises an equitable argument against subrogation. The wrongful acts of ASARCO’s safety officer injured Elwell. The Act, however, provides that the insurer, or in this case the self-insured, is entitled to subrogation. Mr. Elwell is caught in the legal twilight zone where the Act precludes him from pursuing tort remedies from ASARCO, but a part of the tort recovery he received from Strainer may be returned to ASARCO.

This issue is controlled by our decision in Hall v. State Compensation Insurance Fund, Division of Workers’ Compensation (Mont. 1985), [218 Mont. 180,] 708 P.2d 234, 42 St. Rep. 1502. That case treated the problem of a claimant who sustained injuries the value of which exceeded amounts he would receive under Workers’ Compensation benefits and from a responsible third party. In that case the insurer claimed, as ASARCO does here, that it was entitled under subrogation to a portion of the recovery the employee made from the responsible third party.

We held in Hall that when a claimant is forced, in a case of clear liability, because of maximum limits of an insurance policy to a settlement with a third party tortfeasor, the amount of which settlement, together with claimant’s Workers’ Compensation award, does not give the claimant full legal redress, the insurer or the employer [252]*252is not entitled to subrogation rights under Section 39-71-414, MCA, until the claimant has attained full legal redress.

ASARCO indicates that the claimant here will receive in Workers’ Compensation benefits, over the course of his disability the total sum of $334,562.

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Related

State ex rel. Union Electric Co. v. Public Service Commission
765 S.W.2d 618 (Missouri Court of Appeals, 1988)
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737 P.2d 1088 (Arizona Supreme Court, 1987)

Cite This Page — Counsel Stack

Bluebook (online)
711 P.2d 819, 219 Mont. 248, 1985 Mont. LEXIS 990, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elwell-v-american-smelting-refining-inc-mont-1985.