Corbett v. Related Companies Northeast, Inc.

• Citation: 677 N.E.2d 1153,424 Mass. 714
• Parties: Matthew CORBETT & another 1 v. RELATED COMPANIES NORTHEAST, INC.
• Decision Date: 14 April 1997
• Court: United States State Supreme Judicial Court of Massachusetts

Page 1153

677 N.E.2d 1153

424 Mass. 714

Matthew CORBETT & another ¹ v. RELATED COMPANIES NORTHEAST, INC.

Supreme Judicial Court of Massachusetts Suffolk.

Argued Jan. 8, 1997.

Decided April 14, 1997.

Joseph H. Callahan, Jr., Assistant Corporation Counsel, for City of Boston.

Thomas B. Drohan, Quincy, for plaintiffs.

Before WILKINS, C.J., and O'CONNOR, GREANEY, FRIED and MARSHALL, JJ.

MARSHALL, Justice.

In a third-party tort action brought by an injured fire fighter and his wife, a Superior Court judge approved a settlement of the action after conducting a hearing to determine whether the settlement terms were negotiated in good faith. We are asked to decide whether the city of Boston (city) ² may object to the settlement because it effectively discharges a substantial part of the city's lien for reimbursement of medical expenses and disability wage compensation benefits paid on the fire fighter's behalf. The answer is no. The city does not have standing to bring this appeal, and the appeal must be dismissed.

1. We summarize the relevant facts. Matthew Corbett joined the Boston fire department in 1970, rising to the rank of captain by 1990. On December 20, 1990, he sustained work-related injuries when he fell through a pier owned by Related Companies Northeast, Inc. (Related), which he was inspecting in the aftermath of a fire. He was hospitalized from December 20 to 24, 1990. As a result of his injuries Corbett did not return to work, and the city granted him a disability retirement on June 30, 1992. Between December 20, 1990, and his retirement on June 30, 1992, the city paid on his behalf $17,410.76 in medical expenses, pursuant to G.L. c. 41, § 100, and tax-free wage continuation benefits of $125,267.45, pursuant to G.L. c. 41, § 111F, for a total of $142,678.21.

In December, 1993, Corbett brought a negligence action, and his wife Mary Corbett brought a loss of consortium claim, against Related in the Boston Municipal Court. The case was removed to the Superior Court. Shortly before trial the Corbetts and Related filed a joint motion for authorization of settlement, which was heard on May 16, 1995. They requested that the judge determine whether their proposed agreement was "a good faith settlement, taking into consideration the issues with respect to liability, causation and the respective rights of the City of Boston and the State [sic] Retirement Board." The proposed settlement provided that Related would pay Corbett $27,500 for his injuries, and pay Mary Corbett $85,000 for her loss of consortium, for a total settlement amount of $112,500.

The city and the retirement board of Boston (board) were present at the hearing on the motion. ³ They objected to the judge's approving the allocation of the proposed settlement because, they argued, it would interfere with their statutory lien rights and limit their recovery to $27,500, the amount to be paid to Corbett. They said they were entitled under G.L. c. 41, §§ 100 and 111F, to the entire settlement amount of $112,500 as partial reimbursement for their expenditures on behalf of Corbett. ⁴ Counsel for Related explained to the judge that Related had strong defenses to the claims of Corbett, both as to causation and as to contributory negligence. ⁵ The Corbetts' counsel explained that any recovery by Mary Corbett on her loss of consortium claim would not be affected by any finding of contributory negligence on the part of Corbett. ⁶

The judge concluded that the only issue before her was whether the settlement allocation between the Corbetts was fair in the circumstances, and that she had no authority to consider the effect of the allocation on the city's lien. She approved the settlement and ruled that the apportionment was fair and reasonable. Related and the Corbetts filed a stipulation of dismissal of the third-party action. The city then filed a notice of appeal from the allowance of the motion for authorization of the settlement. When a representative of the clerk-magistrate informed the city that it could not assemble the record because the city was not a party in the action, the city filed a motion to order the clerk-magistrate to assemble the record for appeal. Another judge in the Superior Court allowed the motion, and directed the clerk-magistrate to process the appeal. We transferred the appeal here on our own motion.

2. The city argues on appeal, as it did below, that it was error for the judge to approve the settlement because the allocation effectively discharged $85,000 of its statutory liens against Corbett. Because, it says, the relevant portions of the Massachusetts workers' compensation act, G.L. c. 152, and the statutes providing benefits for injured police officers and fire fighters, G.L. c. 41, §§ 100 and 111F, are "virtually identical" and "serve the same purpose," we are urged to apply to this case the decisional law interpreting G.L. c. 152. Were we to do so, the city claims, we would require that the city be reimbursed the full amount of the settlement, precluding any allocation to Mary Corbett for her loss of consortium claim.

The Corbetts reply that the city lacks standing to appeal from the trial judge's decision because it is not a party to the action. The city never responded directly to this argument. But it did so inferentially. The gist of its argument is that we should consider its position as analogous to that of a workers' compensation insurer seeking to protect its rights under G.L. c. 152, § 15. That section of the workers' compensation statute gives an insurer standing to challenge the allocation of a settlement award paid by a third-party to an injured worker and his or her spouse even when the insurer is not a party to the action. ⁷

We recognize that there are sound reasons why the city seeks to secure for itself the same rights as those afforded to a workers' compensation insurer under G.L. c. 152, § 15. ⁸ We conclude, however, that it may not maintain this appeal or challenge the allocation of the settlement award between Corbett and his wife.

As a general rule, only parties to a lawsuit, or those who properly become parties, may appeal from an adverse judgment. See Marino v. Ortiz, 484 U.S. 301, 304, 108 S.Ct. 586, 587-588, 98 L.Ed.2d 629 (1988); United States ex rel. Louisiana v. Jack, 244 U.S. 397, 402, 37 S.Ct. 605, 607, 61 L.Ed. 1222 (1917); Mass. R.A.P. 3(c), as amended, 378 Mass. 927 (1979) ("The notice of appeal shall specify the party or parties taking the appeal"). In certain circumstances courts have allowed a nonparty to intervene after the entry of judgment in the trial court for the purpose of appealing from the judgment. See United Airlines, Inc. v. McDonald, 432 U.S. 385, 395-396, 97 S.Ct. 2464, 2470-2471, 53 L.Ed.2d 423 (1977), and cases cited therein. Here, while the city participated in the hearing on the motion to approve the settlement, it never sought to intervene as a party in the proceeding, nor did it seek timely postjudgment intervention. The city may not claim the appellate rights afforded to those who have sought such intervention. See id. at 395-396, 97 S.Ct. at 2470-2471 ("The critical inquiry in every such case is whether in view of all the circumstances the intervenor acted promptly after the entry of final judgment").

There are limited circumstances in which a nonparty has been permitted to appeal from a judgment, despite its failure to intervene, for example, where a nonparty has a direct, immediate and substantial interest that has been prejudiced by the judgment, and has participated in the underlying proceedings to such an extent that the nonparty has intervened "in fact." Binker v. State, 977 F.2d 738, 745 (3d Cir.1992) (nonparties are permitted to appeal where the equities favor hearing the appeal, where the nonparties participated in the settlement agreement, and where the nonparties had a stake in its proceeds discernible from the record); Kenny v. Quigg, 820 F.2d 665 (4th Cir.1987). But those circumstances are rare, and merely commenting on, or objecting to, a proposed settlement, as the city did here, generally is insufficient to justify an appeal by a nonparty. See Marino v. Ortiz, supra at 304, 108 S.Ct. at 587-588. See also United States v. LTV Corp., 746 F.2d 51, 53 (D.C.Cir.1984) (nonparty "did not automatically acquire party status simply by being permitted to comment on the proposed final judgment or by filing its notice of appeal").

We have never adopted this exception to the general rule limiting appeals to the parties of the underlying case. We decline to do so here. We recognize that the city has a direct and substantial interest in the fairness of the allocation of the settlement amounts between Corbett and his wife. ⁹ But that alone does not give standing to the city to appeal the judgment. Moreover, where, as here, the Legislature has not provided the city with the same protections it has to workers' compensation insurers in similar situations, we are particularly hesitant to permit the city to appeal from the judgment. See In re Penn Cent. Transp. Co., 596 F.2d 1155, 1159-1162 (3d Cir.), cert. denied sub nom. Schafer v. Penn Cent. Corp., 444 U.S. 835, 100 S.Ct. 68, 62 L.Ed.2d 45 (1979) (shareholders who did not have a right under statute to be heard on plan of reorganization lacked standing to appeal); Hirsch v. Building & Constr. Trades Council, 530 F.2d 298, 307-308 (3d Cir.1976) (where statute did not permit charging party to join in suit to secure injunction, it would be impermissible disregard of statutory scheme to permit charging party to intervene in appeal).

To understand the city's predicament it is helpful to review the two statutory schemes relevant to this case. In 1911, the Legislature enacted the workers' compensation act to provide employees with "compensation for loss of wages or earning capacity caused by a work-related injury, regardless of the fault of their employers or the foreseeability of harm." Eyssi v....