Delgado v. Texas Municipal League Intergovernmental Risk Pool, No. 13-09-00126-CV (Tex. App. 8/31/2009)
| Decision Date | 31 August 2009 |
| Docket Number | No. 13-09-00126-CV.,13-09-00126-CV. |
| Parties | JORGE DELGADO, Appellant, v. TEXAS MUNICIPAL LEAGUE INTERGOVERNMENTAL RISK POOL, Appellee. |
| Court | Texas Court of Appeals |
On Appeal from the County Court at Law No. 1 of Cameron County, Texas.
Before Justices RODRIGUEZ, GARZA, and VELA.
This case arose from a dispute over the apportionment of third-party tortfeasor settlement proceeds between an injured employee's workers' compensation insurance carrier and his trial attorney. Appellant, Jorge Delgado, appeals the trial court's summary judgment partially in favor of appellee, Texas Municipal League Intergovernmental Risk Pool ("TMLIRP"). By one issue, Delgado contends that the trial court abused its discretion by failing to award him his actual costs incurred in prosecuting the case from the settlement proceeds obtained from a third-party tortfeasor. By one cross-issue, TMLIRP asserts that Delgado's trial attorney is not entitled to any fees or costs and that this appeal is frivolous and an attempt to collect an unconscionable fee. We affirm.
On March 15, 2008, Delgado, an employee of the City of South Padre Island's police department, was riding his police motorcycle when he was struck by a vehicle driven by Julia Lee Cabin.1 As a result of his injuries, Delgado underwent surgery and continues to receive medical treatment.
The City of South Padre Island provides workers' compensation coverage to its employees through TMLIRP. As the city's workers' compensation insurance carrier, TMLIRP paid Delgado's medical bills and indemnity benefits and asserted a subrogation claim to the proceeds obtained by Delgado in his suit against Cabin. Cabin's insurance company, Home State County Mutual Insurance ("HSCMI"), ultimately settled Delgado's bodily injury claims against Cabin for the policy limit of $25,028.
After receiving the settlement proceeds from HSCMI, Delgado filed a declaratory judgment action to determine the amounts to which TMLIRP and Delgado's attorney were entitled.2 TMLIRP filed an answer and counterclaim, denying all of the allegations made in Delgado's original petition and asserting that Delgado's declaratory judgment action constituted a frivolous filing. Delgado filed a traditional motion for summary judgment, requesting a hearing and attorney's fees in the amount of $8,342.67 and expenses of $897.11 to be deducted from the settlement proceeds. Delgado also contended that his trial counsel's law firm, Touchy & Green, L.L.P., was entitled to 33% of the remaining settlement proceeds, or an additional $ 5,262.74.
TMLIRP filed a traditional motion for summary judgment and a response to Delgado's motion, arguing that Delgado's action was frivolous and that it was "entitled to first money, before anyone else collects any sum." TMLIRP further argued that the labor code entitles counsel for Delgado to no more than one-third of the recovery due to the carrier and that "[i]f the lawyer has done nothing, or actually made it harder for the carrier to recover its subrogated interests, as in this case, the Court has the discretion to award the attorney no fees."
The trial court conducted a hearing on the competing motions for summary judgment and later entered a final judgment granting in part and denying in part Delgado's motion for summary judgment and providing the following:
The Court orders that Plaintiff Jorge Delgado retain the amount of Eight Thousand Three hundred Forty-Two Dollars and Sixty Six cents ($8,342.66) from the settlement check in his possession from Home State County Mutual, as attorney's fees and Two Hundred Ninety-Five Dollars ($295.00) in taxable court costs and remit the balance of the settlement proceeds to Texas Municipal League Intergovernmental Risk Pool, to wit, $16,390.34.3
This appeal followed.
We review summary judgments de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When, as here, both parties move for summary judgment on the same issues, and the trial court grants one motion and denies the other, the appellate court determines all questions presented and, if the trial court erred, renders the judgment the trial court should have rendered. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
The questions presented in this appeal turn on statutory construction. Statutory construction is a legal question that we review de novo. State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006). In resolving an issue of statutory construction, we first look to the plain language of the statute. Tex. Health Ins. Risk Pool v. Sw. Serv. Life Ins. Co., 272 S.W.3d 797, 800-01 (Tex. App.-Austin 2008, no pet.); Gen. Motors Corp. v. Bray, 243 S.W.3d 678, 685 (Tex. App.-Austin 2007, no pet.). We read the statute as a whole and give meaning to the language that is consistent with other provisions in the statute. Dallas County Cmty. Coll. Dist. v. Bolton, 185 S.W.3d 868, 872-73 (Tex. 2005); Tex. Dep't of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 642 (Tex. 2004).
By his sole issue, Delgado contends that his trial attorney is entitled to collect attorney's fees and other costs associated with obtaining the settlement proceeds before TMLIRP is entitled to collect the "net amount." TMLIRP counters by arguing that Delgado is not entitled to recover any fees or costs associated with the underlying third-party action.
It is undisputed that Delgado was provided workers' compensation coverage and that chapter 417 of the labor code applies in the instant case. See Tex. Lab. Code Ann. § 417.001 (Vernon 2006). Chapter 417 permits a covered employee to pursue a third-party lawsuit against the responsible third party. See id. § 417.001(a). In such cases, the workers' compensation carrier is subrogated4 to the rights of the employee for any benefits paid by the carrier.5 Id. § 417.001(b).
The distribution of proceeds recovered from third parties is governed by section 417.002. See id. § 417.002 (Vernon 2006). Under section 417.002, "[t]he net amount recovered by a claimant in a third-party action shall be used to reimburse the insurance carrier."6 Id. (emphasis added). In many cases, the money recovered goes first to the workers' compensation insurance carrier, and "'until [the] carrier is reimbursed in full, the employee or his representatives have no right to any of such funds.'" Tex. Mut. Ins. Co. v. Ledbetter, 251 S.W.3d 31, 36 (Tex. 2008) (quoting Capitol Aggregrates, 408 S.W.2d at 923); see Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 530 (Tex. 2002) (); see also Tex. Workers' Comp. Ins. Fund v. Travis, 912 S.W.2d 895, 897-98 (Tex. App.-Fort Worth 1995, no writ). After the carrier is fully reimbursed, then any additional money goes to the employee. See Tex. Lab. Code Ann. § 417.002(b). First-money reimbursement is essential to the workers' compensation system because it reduces costs to the carrier and, thus, to the employer and the public. Ledbetter, 251 S.W.3d at 35; Performance Ins. Co. v. Frans, 902 S.W.2d 582, 585 (Tex. App.-Houston [1st Dist.] 1995, writ denied).
However, section 417.003 of the labor code provides that, as compensation for pursuing the third-party action, the employee's attorney may recover fees and "a proportionate share of expenses" for services rendered. Tex. Lab. Code Ann. § 417.003(a) (Vernon 2006)7; see Ill. Nat'l Ins. Co. v. Perez, 794 S.W.2d 373, 377 (Tex. App.-Corpus Christi 1990, writ denied) (). The employee's attorney may recover the fees and expenses only in the following situations: (1) the insurer hires an attorney to represent it, but the attorney does not actively represent it; (2) the employee's attorney represents both the employee and the insurer; or (3) the insurer is actively represented by its attorney who participates in obtaining a recovery. See Tex. Lab. Code Ann. § 417.003; Univ. of Tex. Health Sci. Ctr. at San Antonio v. Mata & Bordini, Inc., 2 S.W.3d 312, 316 n.2 (Tex. App.-San Antonio 1999, pet. denied); see also Benchmark Ins. Co. v. Sullivan, No. 12-07-00223-CV, 2009 Tex. App. LEXIS 2947, at **12-13 (Tex. App.-Tyler Apr. 30, 2009, no pet.) (mem. op.) (citing City of Arlington v. Lummus, 871 S.W.2d 536, 537 (Tex. App.-Fort Worth 1994, writ denied)).
We first analyze the propriety of the trial court's award of attorney's fees. A trial court's award of attorney's fees under section 417.003 of the labor code is reviewed for abuse of discretion. See Erivas v. State Farm Mut. Auto Ins. Co., 141 S.W.3d 671, 676 (Tex. App.-El Paso 2004, no pet.); see also Benchmark, 2009 Tex. App. LEXIS 2947, at *11. When a trial court awards attorney's fees under section 417.003 and no findings of fact or conclusions of law are filed or requested, we imply all necessary findings to support the trial court's judgment.8 See Hartford Accident & Indem. Co. v. Buckland, 882 S.W.2d 440, 446 (Tex. App.-Dallas 1994, writ denied).
As previously mentioned, section 417.002(a) provides that the workers' compensation insurance carrier is entitled to first-money reimbursement from the "net amount recovered" by the claimant in a third-party action. The "net amount recovered" has been interpreted as "the third-party recovery less the employee's attorney's fees." Tex. Workers' Comp. Ins. Fund v. Alcorta, 989 S.W.2d 849, 852 (Tex. App.-San Antonio 1999, no pet.). "That is, by statutory design, the `first money' owed to the...
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