Cruz-Morales v. Swift Beef Co.

• Decision Date: 04 April 2008
• Docket Number: No. S-07-812.,S-07-812.
• Citation: 275 Neb. 407,746 N.W.2d 698
• Parties: Maria CRUZ-MORALES, Appellee, v. SWIFT BEEF COMPANY, Appellant.
• Court: Nebraska Supreme Court

746 N.W.2d 698

275 Neb. 407

Maria CRUZ-MORALES, Appellee, v. SWIFT BEEF COMPANY, Appellant.

No. S-07-812.

Supreme Court of Nebraska.

April 4, 2008.

Jenny L. Panko, of Baylor, Evnen, Curtiss, Grimit & Witt, L.L.P., Lincoln, for appellant.

Lee S. Loudon and Ami M. Huff, of Law Office of Lee S. Loudon, P.C., L.L.O., Lincoln, for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

CONNOLLY, J.

Following an injury at work, Maria Cruz-Morales filed an action against her employer, Swift Beef Company (Swift Beef). Swift Beef failed to answer, and Cruz-Morales moved for a default judgment. After a trial judge of the Nebraska Workers' Compensation Court entered a default judgment and award, Swift Beef moved:o vacate the default judgment. Swift Beef argued that the Workers' Compensation Court lacked statutory authority to enter default judgments and, in the alternative, that Swift Beef did not receive proper notice of the default judgment motion or hearing. The trial judge overruled Swift Beef's motion, and Swift Beef appealed to the Workers' Compensation Court's review panel. The review panel affirmed the default judgment and award.

This appeal presents the question whether the Workers' Compensation Court has statutory authority to enter default judgments and, if so, whether Swift Beef was entitled to notice of the default judgment motion and hearing. We reverse, and remand. We conclude that the compensation court has authority to enter a default judgment when a party fails to answer or appear. But the defaulting party must be given notice of the motion for default judgment under Workers' Comp. Ct. R. of Proc. 3 (2006).

BACKGROUND

In September 2006, Cruz-Morales filed a petition against Swift Beef in the Workers' Compensation Court. The petition alleged that she injured her back in a slip-and-fall accident while working for Swift Beef in September 2005. In November 2006, Cruz-Morales moved for default judgment because Swift Beef had not filed an answer. Attached to the motion was an affidavit stating the Workers' Compensation Court had issued summons to Swift Beef and its registered agent. The affidavit also stated that the court had received signed returned receipts from Swift Beef and the agent.

The trial judge held a hearing on Cruz-Morales' motion for default judgment. Swift Beef did not appear. Cruz-Morales testified. She offered, and the trial judge received, 13 exhibits. These exhibits included medical records and a list of weekly earnings. In addition, the record reflects a loss of earning capacity analysis by David Utley, a court-appointed vocational rehabilitation counselor, and a loss of earning capacity rebuttal report by Gayle Hope, Cruz-Morales' expert. Utley opined that Cruz-Morales sustained a loss of earning capacity of about 15 percent. Hope concluded that Cruz-Morales had sustained a 69-percent loss of earning capacity.

On December 8, 2006, Swift Beef moved to stay entry of the order on Cruz-Morales' default judgment motion. The motion to stay alleged that Swift Beef did not attend the default judgment hearing because it had not received notice of the motion or the hearing. According to Swift Beef's motion to stay, Swift Beef learned of the default judgment motion on December 8. The motion to stay requested that the trial judge stay entry of an order to allow Swift Beef the opportunity to assess and defend its interests in the matter.

That same day, however, the trial judge entered a default judgment and award against Swift Beef. The judge decided Cruz-Morales was entitled to, among other things, future medical care and vocational rehabilitation. She also determined that Utley's opinion as to Cruz-Morales' loss of earning capacity had been rebutted by Hope. The judge adopted Hope's opinion that Cruz-Morales had suffered a 69-percent loss of earning capacity.

Following entry of the court's order, Swift Beef moved for an order (1) correcting a patent error in the default judgment and award under Neb.Rev.Stat. § 48-180 (Reissue 2004) or, in the alternative, (2) vacating the default judgment order. As the basis for both motions, Swift Beef argued that the compensation court lacked statutory authority to enter a default judgment upon a party's failure to file an answer. Swift Beef also argued in the alternative that the default judgment was improper because Swift Beef was not properly served with notice of the default judgment motion or hearing. In support of the second argument, Swift Beef explained that Cruz-Morales' motion and notice of hearing was served on the following: Swift Beef Company, P.O. Box 540010, Omaha, NE 68154-0010. Swift Beef presented evidence showing this address was the mailing address for Sedgwick Claims Management Services (Sedgwick). Sedgwick was the third-party administrator for Swift Beef's workers' compensation claims through July 31, 2006. Sedgwick, however, was no longer Swift Beef's third-party administrator when Cruz-Morales sent the notice of the default judgment motion to that address. Swift Beef also presented evidence that the proper post office box for Swift Beef claims, when Sedgwick was still Swift Beef's third-party administrator, was P.O. Box 540040. And P.O. Box 540010 was the address for claims involving ConAgra Beef Company, not Swift Beef. Although Swift Beef claimed it did not receive proper notice of the default judgment motion, the parties agreed that Swift Beef was properly served with the petition.

In a December 15, 2006, order, the trial judge overruled Swift Beef's motions. The judge concluded that "Rule 5 of the Nebraska Rules of Pleading calls into question [Swift Beef's] entitlement to notice of default when it has failed to answer." The judge further determined there was no patent and obvious error in her order granting default judgment, so Swift Beef's motion under § 48-180 was improper. Finally, the judge determined she had authority to consider and rule on motions for default judgment. The judge reasoned that Neb.Rev.Stat. § 48-162.03 (Reissue 2004) grants the compensation court general authority to hear and decide motions. But the judge concluded the compensation court did not have statutory authority to stay or vacate a default judgment.

Swift Beef appealed both the December 8 and 15, 2006, orders to the court's review panel. Swift Beef argued that the trial judge erred in granting the default judgment and in denying Swift Beef's motions to stay, to correct a patent error under § 48-180, and to vacate. To support these alleged errors, Swift Beef argued that the judge lacked authority to enter default judgments and that, in the alternative, Swift Beef was not provided proper notice of the default judgment motion. Swift Beef also claimed that the judge erred in finding Utley's opinion had been rebutted and in awarding Cruz-Morales a 69-percent loss of earning power. Finally, Swift Beef argued the judge erred in awarding Cruz-Morales payment of medical bills, future medical treatment, and vocational rehabilitation.

The review panel consolidated and reduced the errors Swift Beef had alleged to three: The trial judge erred in (1) entering a default judgment against Swift Beef, (2) denying Swift Beef's various motions to negate the default judgment, and (3) awarding benefits to Cruz-Morales. The review panel first determined that the trial judge had authority to enter the default judgment under § 48-162.03. The review panel also decided that the trial judge was correct n concluding she lacked authority to rule on a motion to vacate. The review panel rejected Swift Beef's argument that it was entitled to notice of the default judgment motion and hearing. Finally, the review panel concluded that the trial judge did not err in awarding a 69-percent loss of earning capacity, in awarding vocational rehabilitation benefits, or in awarding future medical benefits. The review panel affirmed the trial judge's orders.

ASSIGNMENTS OF ERROR

Swift Beef assigns, restated and consolidated, that the review panel erred in (1) deciding that the Workers' Compensation Court has authority to enter a default judgment, (2) deciding the trial judge did not have authority to vacate a default judgment, (3) deciding Swift Beef was not entitled to notice of the default judgment motion and hearing, and (4) affirming the trial judge's award of a 69-percent loss of earning capacity, vocational rehabilitation benefits, and future medical care.

STANDARD OF REVIEW

An appellate court may modify, reverse, or set aside a Workers' Compensation Court decision only when (1) the compensation court acted without or in excess of its powers; (2) the judgment, order, or award was procured by fraud; (3) there is not sufficient competent evidence in the record to warrant the making of the order, judgment, or award; or (4) the findings of fact by the compensation court do not support the order or award.¹

An appellate court is obligated in workers' compensation cases to make its own determinations as to questions of law.²

ANALYSIS

THE WORKERS' COMPENSATION COURT HAS AUTHORITY TO ENTER DEFAULT JUDGMENTS

As a statutorily created court, the Workers' Compensation Court is a tribunal of limited and special jurisdiction and has only such authority as has been conferred on it by statute.³ Swift Beef contends that there is no provision in the Nebraska Workers' Compensation Act granting the compensation court authority to enter a default judgment. Swift Beef argues that the "Workers' Compensation Act does not speak to default judgments anywhere."⁴ Cruz-Morales contends that § 48-162.03 gives the court the authority to grant default judgments.

Section 48-162.03(1) provides in relevant part:

The Nebraska Workers' Compensation Court or any judge thereof may rule upon any motion addressed to the court by any party to a suit or proceeding, including, but not limited to, motions for summary judgment or other motions for judgment on the...