Campion v. Montgomery Elevator Co.

• Court: Wisconsin Court of Appeals
• Writing for the Court: ANDERSON
• Citation: Campion v. Montgomery Elevator Co., 493 N.W.2d 244, 172 Wis.2d 405 (Wis. App. 1992)
• Decision Date: 18 November 1992
• Docket Number: No. 92-0758,92-0758
• Parties: Ann B. CAMPION, Plaintiff, v. MONTGOMERY ELEVATOR COMPANY and Liberty Mutual Insurance Company, Defendants-Appellants, d Ozaukee County, Defendant-Respondent.

Page 244

493 N.W.2d 244

172 Wis.2d 405

Ann B. CAMPION, Plaintiff, v. MONTGOMERY ELEVATOR COMPANY and Liberty Mutual Insurance Company, Defendants-Appellants, ^d Ozaukee County, Defendant-Respondent.

No. 92-0758.

Court of Appeals of Wisconsin.

Submitted on Briefs Oct. 14, 1992.

Opinion Released Nov. 18, 1992.

Opinion Filed Nov. 18, 1992.

On behalf of the defendants-appellants the cause was submitted on the briefs of Jeffrey A. Schmeckpeper and Cecilia M. McCormack of Kasdorf, Lewis & Swietlik, S.C., Milwaukee.

On behalf of the defendant-respondent the cause was submitted on brief of Dennis E. Kenealy, Ozaukee County Corp. Counsel.

Before BROWN, ANDERSON and SNYDER, JJ.

ANDERSON, Judge.

Montgomery Elevator Company and Liberty Mutual Insurance Company, its insurer (collectively referred to as Montgomery), appeal from the trial court's order finding that Ozaukee county (county) did not waive its right of reimbursement from Montgomery for worker's compensation paid by the county and that the county did not violate its examination and maintenance agreement with Montgomery relative to the naming of Montgomery as an additional insured under the county's insurance policy. We conclude that the county's right under sec. 102.29(1), Stats., to be reimbursed for worker's compensation paid to Ann Campion as a result of injuries caused by Montgomery's negligence is not a right of subrogation waived by the parties. We also conclude that the contract between Montgomery and the county did not require the county to name Montgomery as an additional insured in a policy covering the negligence in these circumstances. Therefore, we affirm.

Montgomery was under contract with the county to inspect and maintain the county courthouse elevators. Campion, a county employee, was injured when an elevator "bounced" after reaching the floor where she was to leave the elevator. As a result of this injury, the county paid worker's compensation to Campion. Campion later commenced this suit against Montgomery alleging that Montgomery was negligent in its maintenance of the elevator. Because the county had paid worker's compensation to Campion, Campion named the county as a defendant pursuant to sec. 803.03, Stats., although in the complaint Campion expressed doubts that the county truly was a subrogated party and Campion made no claim for affirmative relief against the county.

The county filed a notice of appearance pursuant to secs. 102.29(1) and 803.03(2), Stats., with the intent to be reimbursed for the amounts it paid to Campion. Montgomery answered the complaint and cross-claimed against the county, alleging that the inspection and maintenance agreement had been violated by the county and that the county was contributorily negligent.

After a trial, the jury awarded Campion total damages of $1,000,315.30 against Montgomery and allocated the liability 70% to Montgomery and 30% to the county. With the approval of the county, Montgomery then settled with the plaintiff for total damages of $944,410.75, which included $108,463.75 owed to the county for the worker's compensation it paid to Campion.

The trial court then ruled on Montgomery's and the county's claims as presented in motions after verdict. These motions had been reserved for after the verdict because they were questions of law based on the interpretation of the inspection and maintenance agreement. The court granted the county's motion asking for reimbursement of the worker's compensation payments because the agreement waived subrogation rights only and the county's rights under sec. 102.29(1), Stats., were not subrogation rights. The court also denied Montgomery's motion to hold the county liable to Montgomery for not naming Montgomery as an additional insured pursuant to the terms of the service agreement. The court reasoned that because Montgomery's liability to Campion was based on negligence in the inspection and maintenance of the elevator and the agreement required the county to name Montgomery as an additional insured only for damages caused by the ownership, use or operation of the equipment, the agreement was not violated. Montgomery appeals both rulings. Based upon the parties' contractual obligations, the court also granted a second motion by Montgomery for contribution or indemnification allowing Montgomery to recover from the county 30% of the amount paid to Campion in settlement; Montgomery does not appeal that ruling.

WAIVER OF THE REIMBURSEMENT OF WORKER'S COMPENSATION PAYMENTS

On appeal, Montgomery argues that the county waived its right to be reimbursed for the worker's compensation payments made based on a provision in the inspection and maintenance agreement which reads:

You hereby waive any and all rights of subrogation, arising as a matter of law or otherwise which you might hereafter have against Montgomery Elevator Company or its affiliates.

Central to Montgomery's argument is whether the county's right to reimbursement under sec. 102.29(1), Stats., is subrogation. The interpretation of a statute is a question of law on which we owe no deference to the trial court. Central Nat'l Bank v. Dustin, 107 Wis.2d 614, 617, 321 N.W.2d 321, 322 (Ct.App.1982).

Chapter 102, Stats., sets forth the rules and procedures regarding worker's compensation. Section 102.29(1), Stats., provides that the application for or receipt of worker's compensation by an employee does not affect the tort liability of third parties to the employee. It also provides that any employer or insurer who has paid the compensation has a direct cause of action against the third party. The section reads in part:

The employer or compensation insurer who shall have paid or is obligated to pay a lawful claim under this chapter shall have the same right [as the employee] to make claim or maintain an action in tort against any other party for such injury or death.... However, [the employer or compensation insurer, or the employee making a claim] shall give to the other reasonable notice and opportunity to join in the making of such claim or the instituting of an action and to be represented by counsel.... Each shall have an equal voice in the prosecution of said claim, and any disputes arising shall be passed upon by the court before whom the case is pending.... If notice is given as provided in this subsection, the liability of the tortfeasor shall be determined as to all parties having a right to make claim, and irrespective of whether or not all parties join in prosecuting such claim, the proceeds of such claim shall be divided as follows....

Section 102.29(1).

Montgomery asserts that this court and our supreme court have "expressly recognized that the right to recover worker's compensation payments is a right which arises through subrogation." Montgomery states the rule too broadly--subrogation is only one of the ways employers can recover such payments. Of the three published cases which Montgomery cites in support of its assertion, New Amsterdam Casualty Co. v. Acorn Products Co., 42 Wis.2d 127, 166 N.W.2d 198 (1969), Kottka v. PPG Industries, Inc., 130 Wis.2d 499, 388 N.W.2d 160 (1986), and Berna-Mork v. Jones, 165 Wis.2d 661, 478 N.W.2d 301 (Ct.App.1991), only Kottka involved an employer seeking reimbursement under sec. 102.29(1), Stats. The employer in New Amsterdam was seeking recovery under the theory of subrogation because the third party was not a tortfeasor, making sec. 102.29(1) inapplicable. See New Amsterdam, 42 Wis.2d at 131 n. 1, 166 N.W.2d at 200. In Berna-Mork, the employer was seeking recovery under a contract theory. Berna-Mork, 165 Wis.2d at 664, 478 N.W.2d at 303. New Amsterdam and Berna-Mork are not authorities for an interpretation of the type of right granted through sec. 102.29.

Even in Kottka, our supreme court never explicitly held that the right to recover against third parties under sec. 102.29(1), Stats., is a subrogation right. In reciting the undisputed underlying facts of the case, the court stated: "[Kottka's] employer and its worker's compensation insurers also joined as subrogated parties in [the third party] actions." Kottka, 130 Wis.2d at 503, 388 N.W.2d at 162. We think that this shorthand referral to the employer as a "subrogated party", when the facts were not in dispute and when that fact was not a basis for the court's decision, is not sufficient to state a rule that rights under sec. 102.29(1) are subrogation rights. This statement was not an opinion of the court; it does not even rise to the level of dicta in an opinion, to which we also are not bound. ¹

A careful reading of sec. 102.29(1), Stats., reveals that the rights granted by the statute are distinct from subrogation. Section 102.29(1) provides for a direct cause of action by an employer against a third party. The employee is not a necessary party to the action, although he or she must be given notice and the opportunity to join if he or she wishes. Id. The statute also provides that the employer and employee have equal voices in the prosecution of the claim, with the court passing upon any disputes between them. The statute then provides its own rules for the distribution of the recovery. Id. Since the employee might not be a party in the action, these rules ensure that all parties with an interest participate in the proceeds, according to the statutory formula.

Section 803.03(2), Stats., and the common law of subrogation provide a different procedure for subrogated parties to recover. First, subrogated parties must be joined by all parties asserting claims. See sec. 803.03(2)(a). Subrogated parties may bring their own actions against a third party without joining the injured party, see, e.g., Blue Cross & Blue Shield United v. Fireman's Fund Insurance Co., 140 Wis.2d 544, 547, 411 N.W.2d 133, 134 (1987); but in order to state a claim for subrogation, the complaint must state that the injured party has settled with the third party, see, e.g., id., has been made whole, ...