Cannon Cochran Management Services, Inc. v. Duncan, A08-0807 (Minn. App. 4/14/2009)
| Decision Date | 14 April 2009 |
| Docket Number | A08-0807 |
| Parties | Cannon Cochran Management Services, Inc., individually and as subrogee for Landes Trucking, Plaintiff, v. Kurt Duncan, et al., Respondents, Charles Connor, Defendant, Kurt Duncan, et al., defendants and third party plaintiffs, Respondents, v. John M. Steele, third party defendant, Appellant. |
| Court | Minnesota Court of Appeals |
Appeal from the District Court, Hennepin County, File No. 27-CV-07-13075.
Richard P. Wright, Cheryl Hood Langel, McCollum, Crowley, Moschet & Millet, Minneapolis, MN (for respondents Kurt Duncan and USAA Casualty Insurance Company)
John M. Steele, Ft. Lauderdale, FL (pro se attorney)
Considered and decided by Johnson, Presiding Judge; Peterson, Judge; and Poritsky, Judge.
UNPUBLISHED OPINION
John Steele appeals from the district court's order granting partial summary judgment to Cannon Cochran Management Services, Inc. (CCMSI), and USAA Casualty Insurance Company (USAA). Steele argues that the district court should have dismissed CCMSI's suit to recover its lien on workers' compensation benefits paid because the court lacked subject-matter jurisdiction. Steele also contends that disputed issues of material fact preclude summary judgment on the issue of whether his letter to USAA created a binding guarantee. Finally, Steele argues that CCMSI's suit should be dismissed because CCMSI is not the real party in interest. The district court declined to dismiss the suit and ruled that (1) CCMSI had a valid lien, and (2) Steele's letter to USAA constituted a binding guarantee that CCMSI's lien would be satisfied. We affirm.
On October 29, 2004, Charles Connor was injured in an automobile collision with Kurt Duncan near Elk River, Minnesota. Duncan's liability insurer was USAA. At the time of the collision, Connor, a resident of Illinois, was driving a truck for Landes Trucking, his Illinois-based employer. Connor sustained injuries in the collision and claimed workers' compensation benefits in Illinois for lost wages and medical bills. CCMSI, the administrator of Landes's workers' compensation programs, paid workers' compensation benefits to Connor.
Immediately after the collision, Connor was taken to a hospital in St. Cloud, Minnesota. While in the hospital, he hired John Steele as his attorney. On November 9, 2004, Steele sent a letter notifying Landes that he represented Connor for injuries sustained in the collision. In the letter, Steele wrote:
I believe that [Connor] should be entitled to workers compensation benefits and trust that you have made a first report of injury to the appropriate comp carrier. . . .
Due to the statutory lien for reimbursement of comp benefits (partial) that your comp carrier most likely has under Illinois law you should advise them that I am representing your employee for his claims against the third party tortfeasor, Kurt Joseph Duncan. . . . Please so advise the comp carrier so that wage substitute, most likely in the form of temporary total disability, can be started at the earliest possible time.
On January 21, 2005, CCMSI wrote back to Steele, notifying him that Connor had made a claim against his employer, that CCMSI had paid benefits to Connor, and that "[p]ursuant to . . . Section 5 of the Illinois Workers' Compensation Act, this letter will serve as notice to you that [CCMSI] hereby claims a lien against you for any and all sums of money incurred in the payment of this claim." On February 3, 2005, Steele wrote to CCMSI questioning why it had not paid Connor's workers' compensation benefits for two or three weeks and asking: "Why do you think that your lien rights under Illinois law have extraterritorial reach thereby giving rise to any obligation on my part to protect your alleged lien rights?" After Steele's letter in February, the correspondence between Steele and CCMSI ceased for several months.
On August 1, 2005, CCMSI sent a letter to USAA and Steele, which stated: USAA had previously acknowledged CCMSI's notice of lien on any personal injury settlement on June 2, 2005, and requested "any and all documentation related to Mr. Connor's workers compensation claim, so we may be able to properly evaluate and set our reserve."
In September 2005, Steele and USAA agreed to settle Connor's claim against Duncan for Duncan's policy limit of $100,000. On September 2, 2005, Steele sent a signed letter regarding the settlement to USAA's agent Roxane Jones. The letter states:
Per our telephone conversation of a few minutes ago please forward a draft in the amount of $100,000.00, the policy limit, together with a release.
Also please be advised that I will hold USAA harmless from any and all subro claims and will deal directly with the workers comp carrier that has paid benefits to Mr. Connor.
The district court noted that "USAA wanted this personal guarantee from Steele because Steele instructed USAA not to prepare two separate settlement checks, one being payable to CCMSI, and instructed USAA not to include CCMSI as a payee on the settlement check."
Also on September 2, 2005, Jones sent a letter to Steele which confirmed that USAA considered Connor's claim against Duncan settled and directed Steele to do several things before USAA would pay the $100,000. The letter directed Steele to have Connor sign the enclosed release, have the signature witnessed, and return the release in the envelope provided. The short letter also contained the statement: "This will confirm John Steele and Charles Connor are responsible for the lien from workers' comp." On October 31, 2005, Steele returned the release and hold harmless agreement, signed by Connor, to USAA. USAA then sent the $100,000 check to Steele, who kept 33% in attorney fees for himself, sent the remainder to Connor, and disbursed nothing to CCMSI. Thereupon, CCMSI brought the present lawsuit.
CCMSI sued USAA, Duncan, and Connor in Hennepin County District Court. CCMSI sought to recover its statutory lien for $48,179.17 in workers' compensation benefits it paid to Connor. USAA denied liability for CCMSI's statutory lien and cross-claimed against Connor, asserting that the settlement agreement between USAA and Connor for Duncan's policy limit of $100,000 included a signed release providing that Connor would hold Duncan and USAA harmless for any future claims or subrogated causes of action arising out of the October 29th collision. USAA also initiated a third-party complaint against Steele, asserting that Steele was liable to CCMSI because Steele had agreed to hold USAA harmless for any future claims—specifically any "subro claims"—from the workers' compensation carrier. Steele denied liability and sought to have the third-party complaint dismissed, arguing that he did not sign a binding guarantee with USAA to satisfy CCMSI's lien, and that the Illinois lien statute cannot be applied to a "Minnesota settlement" between USAA/Duncan and Connor/Steele.
The parties brought multiple motions for declaratory and summary judgments to the district court. CCMSI moved the court to declare that the settlement agreement between USAA/Duncan and Connor/Steele was invalid and should not be binding on CCMSI and that CCMSI still had a cause of action for reimbursement of its statutory lien against Duncan/USAA. USAA argued that if CCMSI was eligible to collect its statutory lien for the workers' compensation benefits, it had to collect from Connor and Steele because under the terms of the settlement agreement, Connor agreed to release USAA from future claims in exchange for USAA paying Duncan's policy limit of $100,000, and Steele had agreed to "hold USAA harmless for any and all subro claims" and to "deal directly with the workers comp carrier that has paid benefits to Mr. Connor." Steele argued that the district court should dismiss the case because it involved claims based on Illinois workers' compensation laws and Minnesota could not give "extraterritorial" effect to rights created by the Illinois legislature.
The district court denied CCMSI's request to invalidate the settlement agreement, but concluded that the settlement agreement was not binding on CCMSI. Thus, CCMSI was not barred from bringing its action as a result of the settlement agreement. The district court also denied USAA's motion to dismiss CCMSI's claims against Duncan and USAA concluding that, "it is premature to dismiss the claims . . . until Connor and Steele have actually indemnified CCMSI as they agreed to do." The district court determined that there was no just reason for delay and directed entry of judgment on these claims under Minn. R. Civ. P. 54.02.
Steele appeals the district court's decision granting partial summary judgment to CCMSI and USAA.
Steele asserts that Minnesota does not have subject-matter jurisdiction over CCMSI's claim. The district court concluded that it had subject-matter jurisdiction to decide this case. Whether subject-matter jurisdiction exists is a question of law subject to de novo review. Hale v. Viking Trucking Co., 654 N.W.2d 119, 123 (Minn. 2002).
"Subject-matter jurisdiction is a court's power to hear and determine cases of the general class or category to which the proceedings in question belong." Bode v. Minn. Dep't of Natural Res., 594 N.W.2d 257, 259 (Minn. App. 1999) (citation omitted), aff'd, 612 N.W.2d 862 (Minn. 2000). Minnesota district courts have "original subject-matter jurisdiction over civil and criminal cases" as provided by statute and the state constitution. Id.; Murphy Motor Freight Lines, Inc. v. Interstate Motor Freight Sys., 384 N.W.2d 196, 199 (Minn. App. 1986), review denied ...
To continue reading
Request your trial