Bongiorno v. Liberty Mut. Ins. Co.

• Decision Date: 31 March 1994
• Parties: Anthony BONGIORNO & another 1 v. LIBERTY MUTUAL INSURANCE COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 274

630 N.E.2d 274

417 Mass. 396

Anthony BONGIORNO & another ¹ v. LIBERTY MUTUAL INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts Middlesex.

Argued Feb. 8, 1994.

Decided March 31, 1994.

Joseph H. Aronson, for Liberty Mut. Ins. Co., intervener.

Alice J. Klein, for plaintiffs.

Before WILKINS, ABRAMS, O'CONNOR and GREANEY, JJ.

GREANEY, Justice.

This action presents a question regarding the interpretation of § 15 of the Workers' Compensation Act, G.L. c. 152 (1992 Ed.), which permits an action against a party other than an employer when that party may be liable for an employee's injury. Section 15 provides that damages recovered in a third-party action are for the benefit of the workers' compensation insurer to the extent that the insurer has paid compensation benefits. The intervener in this case, Liberty Mutual Insurance Company (Liberty Mutual), asserts that, under § 15, it has a lien on the recovery of the plaintiffs, Anthony and Joanne Bongiorno, husband and wife, in a malpractice action against Paul Vinci, Sr., and Paul Vinci, Jr. (Vincis), who are attorneys. ² The plaintiffs had retained the Vincis' firm to pursue an action against Browning-Ferris Industries, Inc. (Browning-Ferris), for damages suffered as a result of the husband's injury while at work when he used a product owned and maintained by Browning-Ferris. The action against Browning-Ferris was dismissed, however, allegedly due to the negligence of the Vincis, and the plaintiffs subsequently brought this malpractice action. Because the husband's injuries were suffered in the course of his employment, and had been compensated by Liberty Mutual, his employer's workers' compensation insurer, his claim against Browning-Ferris was governed by G.L. c. 152, § 15. In this case, however, the plaintiffs have entered into a settlement agreement on their malpractice action. Liberty Mutual asserted a lien under § 15 on the malpractice recovery and sought leave, which was granted, to intervene. Liberty Mutual moved for summary judgment. A judge in the Superior Court granted summary judgment for the plaintiffs, concluding that § 15 did not provide a lien on the malpractice recovery. See Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). ³ Liberty Mutual appealed, and we transferred the case to this court on our own motion. We conclude that § 15 is applicable to the plaintiffs' recovery in the malpractice action and that summary judgment on that issue should have been granted for Liberty Mutual. Because the record is not sufficient to determine with precision the amount to which Liberty Mutual is entitled, however, further proceedings are necessary.

Viewed in the light most favorable to the plaintiffs, see Alioto v. Marnell, 402 Mass. 36, 37, 520 N.E.2d 1284 (1988), the materials submitted on the summary judgment motion established the following facts. The husband was employed as a cook at Boston College. On November 12, 1984, he received a severe electrical shock when a metal food tray that he was emptying came into contact with an electrically operated dumpster that had a faulty 220-volt connection. The shock caused the husband serious injury, including paralysis and loss of memory. Liberty Mutual paid workers' compensation benefits, which included both initial periodic payments and a final lump sum payment. See G.L. c. 152, § 48 (providing for lump sum agreements).

The plaintiffs retained the Vincis to bring a third-party action in the Superior Court against Browning-Ferris, the owner of the dumpster. The Vincis filed the complaint on June 7, 1985. They did not, however, serve the complaint on Browning-Ferris until September 15, 1988, more than three years later. Browning-Ferris sought dismissal of the action for failure to serve the complaint in a timely fashion. Browning-Ferris's motion was granted, and the action was dismissed. The judgment of dismissal was upheld by the Appeals Court in an unpublished memorandum of decision under its Rule 1:28. See 28 Mass.App.Ct. 1116, 553 N.E.2d 559 (1990).

The plaintiffs then brought this action in the Superior Court against the Vincis, alleging multiple acts of negligence in their handling of the third-party action against Browning-Ferris. The plaintiffs and the Vincis' legal malpractice insurer have agreed to settle the malpractice action against the Vincis for $475,000. ⁴ Liberty Mutual filed a notice of lien under G.L. c. 152, § 15, "on any recovery of the plaintiff in this action."

1. The legal issue turns on the interpretation of G.L. c. 152, § 15, which provides that a recovery by an employee in a third-party action is initially for the benefit of the workers' compensation insurer. The relevant portion of the statute reads as follows:

"Where the injury for which compensation is payable was caused under circumstances creating a legal liability in some person other than the insured to pay damages in respect thereof, the employee shall be entitled, without election, to the compensation and other benefits provided under this chapter. Either the employee or insurer may proceed to enforce the liability of such person.... The sum recovered shall be for the benefit of the insurer, unless such sum is greater than that paid by it to the employee, in which event the excess shall be retained by or paid to the employee. For the purposes of this section, 'excess' shall mean the amount by which the gross sum received in payment for the injury exceeds the compensation paid under this chapter."

The parties have argued diametrically opposed interpretations of § 15, each supported by cases from other jurisdictions. The plaintiffs seek a literal interpretation of § 15, under which their malpractice recovery, because it is not for the husband's employment-related injury, is not subject to Liberty Mutual's lien. Liberty Mutual, on the other hand, contends that the purposes of G.L. c. 152, and more specifically its goal of avoiding double recovery, see, e.g., Hunter v. Midwest Coast Transp., Inc., 400 Mass. 779, 783, 511 N.E.2d 615 (1987), require the application of § 15 to the malpractice recovery. Courts considering other similar workers' compensation statutes are split, with some holding that a compensation insurer is entitled to assert a lien against a malpractice recovery like the one here, see McDowell v. LaVoy, 63 A.D.2d 358, 408 N.Y.S.2d 148 (N.Y.1978), aff'd, 47 N.Y.2d 747, 417 N.Y.S.2d 255, 390 N.E.2d 1179 (1979); Toole v. EBI Cos., 314 Or. 102, 838 P.2d 60 (1992); Tallerday v. Delong, 68 Wash.App. 351, 842 P.2d 1023 (1993); and some holding that an insurer is not, see Fink v. Dimick, 179 F.Supp. 354 (D.Conn.1959); Travelers Ins. Co. v. Breese, 138 Ariz. 508, 675 P.2d 1327 (Ct.App.1983); Mt. Pleasant Special Sch. Dist. v. Gebhart, 378 A.2d 146 (Del.Ch.1977); Sladek v. K-Mart Corp., 493 N.W.2d 838 (Iowa 1992). ⁵

The judge below concluded that the language of the statute precluded application of § 15 to the malpractice recovery. In so concluding, he relied on its reference to "the injury for which compensation [was] payable" and its provision for recovery by the insurer only of amounts obtained through enforcement of "a legal liability in some person other than the insured to pay damages in respect thereof." He reasoned from this language that recovery for a legal malpractice injury is distinct from the original compensable injury and is not subject to § 15.

Although the judge's literal reading of the statute is reasonable, we believe that the result of that approach is not faithful to the general intent and purpose of the Workers' Compensation Act. "[T]ime and again we have stated that we should not accept the literal meaning of the words of a statute without regard for that statute's purpose and history." Sterilite Corp. v. Continental Casualty Co., 397 Mass. 837, 839, 494 N.E.2d 1008 (1986), and cases cited. The purpose of the Workers' Compensation Act in general, and of § 15, in particular, is better served by applying § 15 to the plaintiffs' legal malpractice recovery.

In their malpractice action, the damages sought by the plaintiffs are those that, but for the Vincis' negligence, they likely would have recovered from Browning-Ferris. As we have recently said regarding a legal malpractice claim: "The original or underlying action is presented to the trier of fact as a trial within a trial." Fishman v. Brooks, 396 Mass. 643, 647, 487 N.E.2d 1377 (1986). If the plaintiffs had tried their malpractice action, they would have been required to establish liability through proof of the Vincis' negligence, and damages through proof of the recovery they would have had in the underlying action, the third-party action against Browning-Ferris. See id.; McLellan v. Fuller, 226 Mass. 374, 379, 115 N.E. 481 (1917) (approving jury instruction in legal malpractice action that "the measure of damages is that which the plaintiff might have recovered in the former action"); 1 R.E. Mallen & J.M. Smith, Legal Malpractice § 16.4 (3d ed. 1989 & Supp.1992) ("Generally, the measure of injury to a cause of action is the value of the claim lost. In other words, the damages are what the client should have recovered ..."). The damages in the plaintiffs' malpractice claim are thus those that would have been received from Browning-Ferris, namely, precisely those that § 15 provides should be subject to a claim by a compensation insurer.

The plaintiffs dispute the conclusion that allowing them to receive the entire malpractice recovery would result in a recovery to which they are not entitled. Their basis for contesting this point is the absence of any proof that the settlement amount is sufficient to compensate the husband for all of his injuries. In enacting G.L. c. 152, the Legislature chose to favor certainty and relative administrative convenience over the opportunity for an injured party to obtain full redress in court. It may indeed be the case, as the plaintiffs argue, that they have not been fully compensated...