Cox v. Belmont Iron Works
| Decision Date | 12 June 1980 |
| Citation | 429 N.Y.S.2d 542,104 Misc.2d 801 |
| Parties | Kevin D. COX, Public Administrator in and for the County of Erie and State of New York, Administrator of the Estate of Harry R. Martin, Oshweken, Province of Ontario, Canada, Plaintiff, v. BELMONT IRON WORKS; Chevrolet Tonawanda Division of General Motors Corporation; Penn Central Transportation Company, Defendants. CHEVROLET TONAWANDA DIVISION OF GENERAL MOTORS CORPORATION, Defendant and Third-Party Plaintiff, v. CONSOLIDATED STEEL ERECTORS, INC., Third-Party Defendant. BELMONT IRON WORKS, Defendant and Third-Party Plaintiff, v. CONSOLIDATED STEEL ERECTORS, INC., Third-Party Defendant. PENN CENTRAL TRANSPORTATION COMPANY, Defendant and Third-Party Plaintiff, v. CONSOLIDATED STEEL ERECTORS, INC., Third-Party Defendant. CHEVROLET TONAWANDA DIVISION OF GENERAL MOTORS CORPORATION, Defendant and Third-Party Plaintiff, v. JOHN W. COWPER COMPANY, Third-Party Defendant. |
| Court | New York Supreme Court |
Tenney, Smith & Scott by Richard B. Scott, Buffalo, of counsel, for plaintiff.
Hurwitz & Fine, P. C., by James D. Gauthier, Buffalo, of counsel, for Consolidated Steel Erectors, Inc. and Liberty Mut. Ins. Co.
The plaintiff in the above entitled action moved at a trial term of this court for an order apportioning legal fees and expenses pursuant to subdivision one (1) of Section 29 of the Workmen's Compensation Law.
The action was originally commenced to recover for the wrongful death of the plaintiff's decedent which occurred as a result of an industrial accident sustained while decedent was an employee of the third-party defendant, Consolidated Steel Erectors, Inc., which was performing construction work on a building at the defendant and third-party plaintiff, Chevrolet Tonawanda Division of General Motors Corporation. The general contractor was the third-party defendant, John W. Cowper Company. Defendant Belmont Iron Works loaded the steel trusses on a gondola car which, while being removed, fatally crushed the decedent employee. Defendant, Penn Central Transportation Company, owned and exercised control over the railroad car.
In 1970 a settlement was agreed upon for One hundred sixty-five thousand dollars ($165,000.), requiring the defendant, Penn Central Transportation Company to contribute Seventy-five thousand dollars ($75,000.) and the other defendants and third-party defendants to pay the balance. Due to the subsequent insolvency and bankruptcy judgment of Penn Central, it was unable to fulfill its obligation of the settlement. Consequently, the settlement was vacated.
In 1975, after trial, a jury returned a verdict against the defendant Penn Central Transportation Company, in the amount of Three hundred ninety thousand ($390,000.) dollars. Interest accruing on that amount was disallowed. The defendant, Belmont Iron Works, Inc., entered into a settlement with the plaintiff for Fifteen thousand ($15,000.) dollars. This court, in an order granted May 4, 1979, approved the settlement and the judgment, totalling Four hundred five thousand ($405,000.) dollars. Additionally, the court allowed plaintiff's attorney fees at forty percent (40%) of the total recovery, in the amount of One hundred sixty-two thousand dollars, ($162,000.) A Workmen's Compensation lien of Forty-one thousand, five hundred four dollars and fifty cents ($41,504.50) was awarded to Liberty Mutual Insurance Co. in satisfaction of the monies paid to decedent's wife and children under its obligation as the compensation carrier of the employer. The lien of paid money was divided into one portion consisting of Twenty-two thousand, two hundred twenty-one dollars and twenty-one cents, ($22,221.21) from which 40% of its contribution to plaintiff's attorneys fees was subtracted. Forty percent (40%) of its contribution to costs was also subtracted. The lien's second portion of Nineteen thousand, two hundred eighty-three dollars and twenty-nine cents ($19,283.29) was held in a joint savings account pending determination of whether the compensation carrier was required to make further contributions to attorneys fees incurred by the plaintiff, and for expenditures incurred in effecting the judgment and settlement.
Plaintiff's attorney now moves this court to order the compensation carrier to contribute to plaintiff's attorney fees and costs in an amount derived from both the amount of compensation already paid, and also the present value of future obligations the carrier would be obligated to pay had there been no third-party recovery. To make such a determination, the court is asked to find the present value of the amount the carrier would be liable for under an award provided by the Workmen's Compensation Law. The plaintiff's attorney suggests what that amount and its present value should be.
The compensation carrier, Liberty Mutual Insurance Co., and the employer, Consolidated Steel Erectors, Inc., opposed the plaintiff's attorneys' request for relief. They contend that their reasonable contribution to the attorneys fees should only extend to compensation payments already made; that should the court require the carrier to contribute from an amount comprised of payments made and those estimated under a compensation award, the present value of that award is substantially less than suggested by plaintiff's attorneys; and, that since the plaintiff's action forced Liberty Mutual Insurance Co., as the employer's insurer, to pay a sum to the plaintiff greater than the compensation payments returned to it, because the jury found it to be approximately two-thirds (2/3) negligent, it should not have to contribute at all towards paying for an attorney who brought it, in reality, no benefits.
Before discussing the merits of the above-mentioned arguments, this court chooses to affirm its award of attorneys fees in the ratio of forty percent (40%) to the total award that was made a part of the order granted May 4, 1979. The plaintiff's attorneys provided extraordinary legal services that were commensurate with the award. Those services were set forth in an affidavit of Eugene C. Tenney, Esq., sworn to April 24, 1979. The compensation carrier's share of expenses was also properly apportioned at 40% of the benefits it received. This, too, was based upon the high quality and quantity of the legal services provided by the plaintiff's attorney together with the complexity of the action. (Becker v. Huss, 43 N.Y.2d 527, 543, 402 N.Y.S.2d 980, 373 N.E.2d 1205.)
Turning to the central issue before this court of whether the compensation carrier's share of expenses should be apportioned only from the payments paid to date, or from the total benefits received because of the action, the court determines that because the compensation carrier not only received its money paid, but was also saved from paying future payments, the compensation carrier received a benefit of that total amount and should pay attorney's fees apportioned from that amount. The court will not discuss the development of the compensation carrier's obligation to share in the expenses of an action brought by the injured employee or his dependents against a negligent non-employee, in which the carrier is entitled to receive back any monies paid to the plaintiff as compensation. That has been done elsewhere. (Becker v. Huss, 43 N.Y.2d 527, 402 N.Y.S.2d 980, 373 N.E.2d 1205; Matter of Curtin v. City of New York, 287 N.Y. 338, 39 N.E.2d 903; Castleberry v. Asphalt Corp., 70 A.D.2d 228, 420 N.Y.S.2d 911; O'Connor v. Lee Hy Paving Corp., D.C., 480 F.Supp. 716.) Suffice it to say that the compensation carrier must pay some cost for the benefit it receives from the plaintiff-injured employee's suit.
The few judicial decisions that have addressed this issue differ in their conclusions. The Castleberry case holds that the compensation carrier is limited in its contribution to plaintiff's expenses to the amount of compensation paid to the date of judgment which it claims comprises the lien. This lien is allegedly the extent of its benefits received from the plaintiff's action. However, the dissenting opinion holds to the contrary, in that the carrier's expenses should be based on a combination of both the lien and the remainder of the compensation award it is saved from paying. The O'Connor case held essentially to the same point of view as the dissent in Castleberry. This court does not consider itself constrained by the majority decision in Castleberry, and elects to follow the conclusion reached in O'Connor and the Castleberry dissent for the reasons to follow.
Of prime importance is the language of the statute for determining this issue. In the controlling statute, Workmen's Compensation Law, Section 29-1, the compensation carrier is given a lien from which plaintiff's expenses and attorneys fees are deducted. Significantly, the lien is comprised of total amount of compensation awarded or estimated, and for medical expenses paid or to be paid. The words of the statute do not limit the lien to amounts paid. Rather, it clearly states the lien, or the amount from which expenses are to be deducted, is to contain both the amount already paid and the unpaid portion of the award established under the compensation law. No more definitive explanation of the statute could be provided under such plain language. Again, there is no limitation that attorneys fees be deducted only from the amount already paid to the plaintiff.
The legislative intent in drafting this statute is also prominent in the court's decision. Fairness to the employee was an overriding concern of the legislature in creating an obligation for the compensation carrier to share legal expenses with the plaintiff, (McKinney's 1975 Session Laws of New York, p. 1551). This regard for the injured employee stems from what must be the meager compensation awards that are paid.
Professor Atleson states that compensation benefits are determined on a...
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