Brown v. Superior Court
| Decision Date | 06 November 1970 |
| Citation | 90 Cal.Rptr. 737,3 Cal.3d 427,476 P.2d 105 |
| Court | California Supreme Court |
| Parties | , 476 P.2d 105 Joseph Hunter BROWN, Petitioner, v. The SUPERIOR COURT OF SAN BERNARDINO COUNTY, Respondent; Michael O. SULLIVAN et al., Real Parties in Interest. L.A. 29775. |
Sprague & Milligan, and Wallace B. Farrell, San Bernardino, for petitioner.
No appearance for respondent.
T. Groezinger, Loton D. Wells, San Francisco, Edwin J. Dubiel, Ventura, James J. Vonk, San Francisco, Melanie Schodde, San Bernardino, Herbert Lasky, Los Angeles, and James R. Dunn, San Bernardino, for real parties in interest.
Petitioner in this mandamus proceeding seeks to compel respondent superior court to approve a settlement agreement reached between petitioner as plaintiff and real parties in interest Sullivan et al. as defendants in a third-party tortfeasor action, but which settlement lacked the consent of the workmen's compensation insurance carrier (carrier) of petitioner's employer. As will appear, we have concluded that the trial court ruled correctly that the proposed settlement improperly undertook to exclude the carrier's claimed reimbursement lien, and that the writ sought should be denied.
After petitioner (plaintiff) had filed his action against the Sullivans (defendants) seeking to recover for personal injuries, plaintiff's employer and the latter's carrier filed notices of lien in the action, claiming a lien upon any settlement or judgment recovered by plaintiff, pursuant to sections 3850 through 3863 of the Labor Code. 1
Those sections provide, inter alia, that an employer (or carrier) who becomes obligated to pay workmen's compensation benefits to an employee may recover the amount so expended against a negligent third party. He may do so in several ways. He may bring an action directly against the third party (§ 3852), join as a party plaintiff or intervene in an action brought by the employee (§ 3853), or allow the employee to prosecute the action himself and subsequently apply for a first lien against the amount of the employee's judgment, less an allowance for litigation expenses and attorney's fees (§ 3856, subd. (b)). (See Witt v. Jackson (1961) 57 Cal.2d 57, 69, 17 Cal.Rptr. 369, 366 P.2d 641.)
The employer may also seek recoupment from any settlement reached with the third party. Section 3859 declares that no release or settlement of any claim against the third party 'as to either the employee or the employer is valid without the written consent of both.' Section 3860, subdivision (b), states that 'The entire amount of such settlement, with or without suit, is subject to the employer's full claim for reimbursement * * *.'
In the present case, before the employee's action came on for trial he and defendants arrived at a settlement agreement which failed to provide for reimbursement to the carrier of its claimed lien; the carrier accordingly did not consent to the settlement. On the date set for trial plaintiff's counsel informed the court that a settlement had been obtained which provided that plaintiff 'would receive a specified sum independent of, and in addition to, any amounts the lien claimants might receive.' The trial court at first approved the settlement, but upon motion of the carrier the court vacated the settlement on the ground that court approval thereof was precluded by the holding of Smith v. Trapp (1967) 249 Cal.App.2d 929, 58 Cal.Rptr. 229, and by sections 3859 and 3860. Plaintiff then instituted this mandamus proceeding.
Smith v. Trapp involved the effect upon a settlement agreement between plaintiff and defendant, of the rules laid down by this court in Witt v. Jackson, Supra, 57 Cal.2d 57, 72--73, 17 Cal.Rptr. 369, 366 P.2d 641, with respect to situations in which the concurrent negligence of the employer is an issue. In Witt we held that it was not the intent of the Labor Code that an employer whose concurrent negligence had contributed to the employee's injuries could take advantage of the statutory reimbursement remedies; that accordingly a negligent employer may not recover against a third party tortfeasor; and that since the injured employee may not be allowed double recovery his damages against the third party must be reduced by the amount of workmen's compensation benefits he received.
Four Court of Appeal opinions have dealt with the bearing of the Witt rules upon the Labor Code provisions which require consent of Both employer and employee to any settlement with the third party and which state that the entire amount of any settlement is subject to the employer's reimbursement claim. (§§ 3859, 3860.)
The first of such cases (Smith v. Trapp, Supra, 249 Cal.App.2d 929, 58 Cal.Rptr. 229), a wrongful death action brought by an employee's widow, holds that a settlement reached by plaintiff and defendant without the consent of the employer's carrier should not have been approved by the trial court. There the carrier filed a complaint in intervention seeking reimbursement for benefits paid. Defendant pleaded contributory negligence of the employee and concurrent negligence of the employer. Plaintiff and defendant arrived at a written settlement which did not cover or include the claim of the carrier, but instead provided that the latter's complaint-in-intervention 'for damages shall not be affected or at all prejudiced by this settlement, but shall be completely preserved,' thereby protecting 'the carrier's right to collect its lien if it could prevail in the subsequent litigation.' (Pp. 929, 933, of 249 Cal.App.2d, p. 233, of 58 Cal.Rptr.) Over the carrier's objections, the trial court approved the settlement. The Court of Appeal reversed, holding that the section 3859 provisions requiring the consent of both employee and employer to any release or settlement were mandatory. (P. 938(7) of 249 Cal.App.2d, 58 Cal.Rptr. 229.) Nothing in the Smith opinion suggests that the issue of defendant's liability to plaintiff, (i.e., the issues of defendant's negligence and of plaintiff's contributory negligence) had been determined adversely to defendant either prior to or as an incident of the proposed settlement between plaintiff and defendant, leaving open only the issue of the employer's concurrent negligence.
Thereafter, the other three Court of Appeal decisions--relied upon by plaintiff in the present case--approved actions of trial courts, taken after trial had commenced, in permitting plaintiff and defendant to settle or to stipulate to defendant's liability to plaintiff and the amount of damages plaintiff should recover over and above the carrier's claim for reimbursement. However, in each of such decisions (LaBorde v. McKesson & Robbins, Inc. (1968) 264 Cal.App.2d 363, 367, 70 Cal.Rptr. 726; Bennett v. Unger (1969) 272 Cal.App.2d 202, 206, 77 Cal.Rptr. 326; Garrett v. Shenson Meat Co. (1970) 5 Cal.App.3d 69, 74, 85 Cal.Rptr. 65), it appears that the Only issue remaining in the case after the proposed settlement or stipulation was that of the employer's alleged concurrent negligence which, if established, would defeat the reimbursement claim. Additionally, in Garrett the appellate court notes that the record presented on appeal supported Only a finding that negligence of the employer had proximately contributed to the employee's injuries; that accordingly the trial court had been legally bound to deny the carrier any lien upon the judgment in the employee's favor, entered upon a stipulation which had excluded the carrier's claim for reimbursement but had expressly provided that the claim should be added to the judgment in the event the employer's lack of negligence was established.
We are persuaded that each of the four Court of Appeal cases arrived at a holding consonant with the intent and practical application of the pertinent Labor Code sections in the light of the Witt rules relating to concurrent negligence of the employer.
The purpose of section 3859 in requiring the written consent of both employee and employer to any release or settlement of a claim against...
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CHAPTER 6
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