Moyer v. Douglas & Lomason Co., 44414

• Decision Date: 22 October 1982
• Docket Number: No. 44414,44414
• Citation: 325 N.W.2d 648,212 Neb. 680
• Court: Nebraska Supreme Court
• Parties: George H. MOYER, Jr., et al., Appellants, v. DOUGLAS & LOMASON COMPANY et al., Appellees.

Page 648

325 N.W.2d 648

212 Neb. 680

George H. MOYER, Jr., et al., Appellants, v. DOUGLAS & LOMASON COMPANY et al., Appellees.

No. 44414.

Supreme Court of Nebraska.

Oct. 22, 1982.

Syllabus by the Court

Workmen's Compensation: Jurisdiction: Attorney Fees: Costs. Under Neb.Rev.Stat. § 48-118 (Reissue 1978), where an action is filed before a particular court and prosecuted to a final conclusion, whether by settlement or judgment, that court alone has jurisdiction to resolve any controversy relating to division of fees and expenses.

George H. Moyer, Jr. of Moyer, Moyer & Egley, Madison, Thomas J. Monaghan of Monaghan, Tiedeman, Lynch & Gidel, Omaha, and C.J. Gatz of Jewell, Otte, Gatz, Collins & Domina, Norfolk, for appellants.

Mark M. Sipple and Luckey, Sipple & Hansen, Columbus, for appellees.

Heard before KRIVOSHA, C.J., and BOSLAUGH, McCOWN, and HASTINGS, JJ.

PER CURIAM.

This case involves the allocation of expenses and attorney fees between employer and employee under Neb.Rev.Stat. § 48-118 (Reissue 1978). George H. Moyer, Jr., counsel for the injured employee, appeals from an order of the District Court for Platte County, Nebraska, requiring the repayment of attorney fees and expenses deducted from a portion of a total settlement attributable to the workmen's compensation subrogation claim of the employer. We reverse and dismiss.

Shirley TePoel was injured on September 19, 1974, while operating a machine on the production line for her employer, Douglas & Lomason Company, one of the appellees. The compensation case was settled and a lump sum payment approved by the District Court for Platte County.

Mrs. TePoel then filed suit against Florida Production Engineering Company, the manufacturer of the machine, in the U.S. District Court for the District of Nebraska. The employer, Douglas & Lomason, was asked to join as plaintiff because of its subrogation interest. On its refusal, the company was joined as defendant. During the jury trial, negotiations on September 7, 1979, produced an offer of a settlement of $50,000. Further negotiations ensued and, at the suggestion of the trial judge, Douglas & Lomason's attorney was asked whether the company and its compensation carrier would reduce the amount of their subrogation interest. An agreement was ultimately reached that reduced the subrogation interest to $7,500. No discussion occurred as to allocation of attorney fees and expenses from this amount. Counsel stipulated that Florida Production Engineering Company would pay the total sum of $50,000 plus costs to Mrs. TePoel and the suit would be dismissed.

On December 17, 1979, Moyer, counsel for Mrs. TePoel, transmitted the subrogation recovery to Douglas & Lomason less an attorney fee of one-third and 15 percent of the expenses.

On December 27, 1979, the order of dismissal was entered in the U.S. District Court. On March 13, 1980, counsel for Douglas & Lomason demanded repayment of the deduction for attorney fees and expenses from Moyer.

On April 9, 1980, Moyer filed a declaratory action in the District Court for Platte County. After a trial, the court found generally for the appellees and specifically that the appellants had not complied with the requirements of § 48-118. The District Court entered judgment on a counterclaim for the appellees in the amount of $3,328.09, with interest and costs. The instant appeal followed.

The appellant Moyer maintains that based upon equitable principles of subrogation as set forth in Cagle, Inc. v. Sammons, 198 Neb. 595, 254 N.W.2d 398 (1977), he is entitled to receive an attorney fee from the fund he created which benefited the subrogees. We find it unnecessary to reach this issue, for we hold that the District Court for Platte County did not acquire jurisdiction to resolve the dispute.

Section 48-118 clearly encourages agreement between counsel as to the division of attorney fees in order to avoid disputes of this very nature. Kitchin v. Burlington Northern, Inc., 382 F.Supp. 42 (D.Neb.1974). In the absence of an agreement, as in this case, the appropriate court has jurisdiction to determine all disputes between the employer and the employee, including the setting and allocation of attorney fees and expenses. Schulz v. General Wholesale Coop. Co., Inc., 195 Neb. 410, 238 N.W.2d 463 (1976).

In the instant case Moyer's right to receive an attorney fee from the subrogees of a workmen's compensation award is controlled by § 48-118. The statute sets forth the procedure to be followed: "If either party after the giving of such notice fails, by and through his attorney, to join in the making of such claim and the prosecuting of the suit, such party shall waive any and all claims or causes of action for improper prosecution of such suit or inadequacy of a settlement made in accordance herewith, and the party bringing the claim or prosecuting the suit shall be entitled to deduct from any amount recovered the reasonable expenses of making such recovery, including a reasonable sum for attorney's fees, which expenses and attorney's fees shall be prorated to the amounts payable to the employer or his insurer under the above right of subrogation and to the amount in excess of such amount payable to the employer or his insurer under his right of subrogation, and which expenses and attorney's fees shall be apportioned by the court between the parties as their interests appear at the time of such recovery....

"If the employee or his personal representative or the employer or his compensation insurer join in the prosecuting of such claim and are represented by counsel, the reasonable expenses and the attorney's fees shall be, unless otherwise agreed upon, divided between such attorneys as directed by the court before which the case is pending and if no action is pending then by the district court in which such action could be brought...." (Emphasis supplied.)

In the present case the trial court ruled that Moyer had not complied with § 48-118 and yet proceeded to exercise jurisdiction. There were two possible reasons for Moyer's noncompliance, and the District Court did not state the basis for its findings.

In viewing the notice requirement of § 48-118, we find that although there was substantial evidence presented that Douglas & Lomason had notice that suit was to be filed, opposed the filing, and declined to cooperate with Mrs. TePoel, it is conceded that literal compliance with the notice provisions was not obtained. However, we note that literal compliance is not jurisdictional and that only substantial compliance, as in this case, was necessary. Versch v. Tichota, 192 Neb. 251, 220 N.W.2d 8 (1974).

The only other remaining issue regarding Moyer's compliance is whether the statute placed a mandatory duty upon him to seek an allocation of attorney fees and expenses before the proper court. This court cannot acquire subject matter jurisdiction if it was...