Bridges v. Texas A & M University System

• Decision Date: 24 May 1990
• Docket Number: No. A14-89-850-CV,A14-89-850-CV
• Citation: 790 S.W.2d 831
• Parties: 61 Ed. Law Rep. 368 Gordon E. BRIDGES, Individually and as Next Friend of Duane Alan Bridges and Marcia Ann Bridges, Minors, Appellants, v. TEXAS A & M UNIVERSITY SYSTEM, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 831

790 S.W.2d 831

61 Ed. Law Rep. 368

Gordon E. BRIDGES, Individually and as Next Friend of Duane Alan Bridges and Marcia Ann Bridges, Minors, Appellants, v. TEXAS A & M UNIVERSITY SYSTEM, Appellee.

No. A14-89-850-CV.

Court of Appeals of Texas Houston (14th Dist.).

May 24, 1990.

Edward J. Hennessy, Randall D. Wilkins, Houston, for appellants.

Lynette Phillips, Austin, for appellee.

Before J. CURTISS BROWN, C.J., and JUNELL and MURPHY, JJ.

OPINION

J. CURTISS BROWN, Chief Justice.

This is a Workers' Compensation case in which the trial court granted summary judgment in favor of appellee, Texas A & M University System (the University). In four points of error appellants Gordon Bridges and his minor children, Duane Alan and Marcia Ann, assert that the trial court erred in granting the summary judgment. For the reasons discussed below, we reverse the lower court's judgment and remand the case for trial on the merits.

On August 29, 1985, Diane Margaret Bridges suffered fatal injuries in an automobile accident while acting in the course and scope of her employment with Texas A & M University System. The deceased's survivors included her husband, Gordon E. Bridges, two minor children, Duane Alan and Marcia Ann, and an adult son, Michael Alan. On December 4, 1985, these four surviving family members filed suit against Julie Smith, the driver of the auto which struck the decedent, and on February 20, 1986, the parties settled the case for the $25,000 policy limit on Smith's liability insurance. After the family's attorney deducted approximately one third of the gross proceeds for attorney's fees, the Bridges received a net recovery of $16,517.66.

Subsequent to the Smith settlement, appellants notified the Texas Industrial Accident Board of Diane Bridges' death on July 18, 1986. Texas A & M University is a self-insured institution and therefore voluntarily subjects itself to Texas Workers' Compensation laws. See TEX.REV.CIV.STAT.ANN. art. 8309b § 7 (Vernon Supp.1990). On July 8th of 1987 the Board entered its award granting appellants $203 weekly, half of the sum to be distributed to Gordon Bridges until his death or remarriage, the other half to be shared between the two minor children until they reached eighteen years of age, continuing beyond their eighteenth birthdays if they maintained enrollment as full-time students in an accredited educational institution. Once a child becomes ineligible to receive his portion of the benefits, future payments would be distributed to the remaining child alone. In the event of his remarriage, Bridges would receive a final payoff equivalent to two years' compensation. The Board awarded a lump sum of $2,500 for funeral expenses, and Michael Alan, the adult son, received no recovery. The Board's judgment became final on August 13, 1987.

The University failed to make payments to appellants in compliance with the Accident Board's award, and the Bridges initiated this suit in September of 1987 to "mature" the Accident Board award and to require the University to pay the benefits stipulated in the Board's order. On May 11, 1988, the trial court granted the University's motion to deposit funds owed to appellants which had accrued pending the outcome of appellants' suit into the registry of the court. This first payment by the University consisted only of approximately $1,856, with additional checks to supplement the sum as subsequent payments to appellants became due.

In October of 1988 the trial court granted in part appellee's first motion for summary judgment, crediting the gross amount of the Bridges' $25,000 third-party recovery against any Workers' Compensation benefits owing to appellants in the past or future. On January 16, 1989, the court granted the appellee's second motion for summary judgment and dismissed the appellants' cause. Appellants subsequently perfected this appeal.

In their first two points of error appellants assert that the trial court erred in granting the summary judgment because the University did not conclusively prove that it was entitled to the full amount of the credit. We agree.

Appellants do not dispute that appellee is entitled to a set-off from the appellants' Workers' Compensation benefits equivalent to a portion of the Smith recovery. In order to determine the set-off amount, however, the trial court should have resolved two issues which the court failed to address: (1) Is the University entitled to a credit for that portion of the settlement retained by the Bridges' attorney to cover his fees in the case? (2) Since the Smith settlement included and was distributed to four members of the Bridges family, and the Industrial Accident Board granted benefits to only three members, is the University entitled to a credit for the full amount of the Smith recovery? After examining these issues, we conclude that the credit improperly included both the adult son's share of the settlement as well that portion of the settlement expended for attorney's fees. Since these fact issues were not addressed and remain unresolved, summary judgment was improper.

Under TEX.REV.CIV.STAT.ANN. art. 8307, § 6a (Vernon Supp.1990), if an injured party is eligible for compensation under Workers' Compensation law but was injured by a third-party, the employee may seek recovery against that individual without waiving his rights to workers' benefits. Id. at (a). Further, in the event that the claimant should obtain a judgment against the third-party, that judgment does not constitute an election; instead, the recovery will be used first to pay costs and attorney's fees and then to reimburse the Workers' Compensation association for up to the full amount owed the claimant. Id. From this language it is clear that a claimant's attorney's fees are not to be included in the Workers' Compensation set-off, as reimbursement is required only after the fees are deducted.

Article 8307, section 6a, further states that the net amount recovered by the beneficiary from the third-party action will be used to reimburse the association for past and future benefits and medical expenses paid. Id. at (c). The Austin Court of Appeals has defined "net" as free from charges or deductions. Holley v. Hooper, 205 S.W.2d 120, 122 (Tex.Civ.App.--Austin 1947, writ ref'd n.r.e.) (citations omitted). The "net" amount of a recovery is therefore obtained after deducting all expenses necessary for achieving the settlement or judgment. Id. The explicit language of article 8307, section 6a, dictates that the carrier will be reimbursed for the net amount recovered from the third-party action, and clearly attorney's fees and court costs would be expenses incurred by the claimant in obtaining his third-party settlement and would not be included in calculating the credit.

Appellee complains that it would be patently unfair to withhold attorney's fees from the University's subrogation interest since appellants never informed the University of their third-party action and subsequent settlement; however, appellee fails to explain why this action would be so grossly unfair, nor does the University disclose what steps it could have taken to improve its position had it been notified of the Smith proceedings. Appellee cites Prewitt and Sampson v. City of Dallas, 713 S.W.2d 720, 723 (Tex.App.--Dallas 1986, writ ref'd n.r.e.), to note that the intent of the legislature in enacting article 8307, section 6a, was to compensate attorneys for work they performed and "to prohibit the carrier from obtaining a 'free ride' from the efforts of the claimant's attorney." We agree with this sound reasoning. After noting this background, however, appellee obliquely suggests that an effortless $25,000 reduction in its obligation to appellants resulting solely from appellants' labors in pursuing the third-party action is not a "free ride." We cannot agree with appellee's logic. In demanding reimbursement for the gross amount of the settlement, we find that appellee is seeking not only a "free ride," but is also demanding complete title to the "vehicle" which generated the settlement in the first place.

Appellee cites a number of cases in an effort to confirm its right to subrogate the entire $25,000; however, these cases fail to support appellee's position and are...