O'Dell v. Freightliner Corp.

• Decision Date: 22 October 1992
• Docket Number: No. B055910,B055910
• Citation: 10 Cal.App.4th 645,12 Cal.Rptr.2d 774
• Court: California Court of Appeals Court of Appeals
• Parties: Riley O'DELL, et al., Plaintiffs and Respondents, v. FREIGHTLINER CORPORATION, Defendant and Respondent, Rollins Leasing Corporation, Movant and Appellant. Civ.

Page 774

12 Cal.Rptr.2d 774

10 Cal.App.4th 645

Riley O'DELL, et al., Plaintiffs and Respondents, v. FREIGHTLINER CORPORATION, Defendant and Respondent Rollins Leasing Corporation, Movant and Appellant.

Civ. No. B055910.

Court of Appeal, Second District, Division 3, California.

Oct. 22, 1992.

Jones, Nelson, Ford & Haley and Richard E. Guilford, Santa Ana, for movant and appellant.

Norman Warren Alschuler, Encino, for plaintiffs and respondents.

Murchison & Cumming, Edmund G. Farrell III and Friedrich W. Seitz, Los Angeles, for defendant and respondent.

KLEIN, Presiding Justice.

Movant and appellant Rollins Leasing Corporation (RLC) appeals the order denying its motion to set aside the voluntary dismissal entered in favor of defendant and respondent Freightliner Corporation (Freightliner). By the motion RLC sought to intervene in a personal injury action brought by its employee, plaintiff and respondent Riley O'Dell (O'Dell), against Freightliner.

SUMMARY STATEMENT

O'Dell sued Freightliner for personal injuries assertedly caused as a result of his use of a truck manufactured by Freightliner. Because the injury occurred in the course of his employment, RLC paid O'Dell approximately $37,000 in workers' compensation benefits. O'Dell settled the case against Freightliner before trial and voluntarily dismissed the lawsuit. Thereafter, RLC moved to set aside the dismissal so it might file a complaint in intervention to recoup the workers' compensation benefits. ¹ RLC claimed it had not received proper statutory notice of O'Dell's action against Freightliner. ²

The trial court denied the motion on the grounds RLC lacked standing to set aside O'Dell's voluntary dismissal of the action and, in any event, RLC had notice of the third-party lawsuit against Freightliner.

Although we find O'Dell did not provide RLC formal notice of the action, the trial court properly ruled O'Dell's dismissal of the action precluded RLC's intervention. Accordingly, we shall affirm.

We reject RLC's related claim that Freightliner had a duty to notify RLC of the pending settlement. RLC's remedy at this time is limited to an action against O'Dell or a claim of credit against future workers' compensation payments to him.

FACTUAL AND PROCEDURAL BACKGROUND

1. Settlement and dismissal of O'Dell's personal injury action against Freightliner and RLC's attempt to intervene.

O'Dell suffered the employment related injury in issue here on May 31, 1988, when an allegedly defective truck ladder manufactured by Freightliner gave way as O'Dell attempted to use it. O'Dell obtained approximately $37,000 in workers' compensation benefits from RLC.

On March 7, 1989, O'Dell and his wife (the O'Dells) filed a third-party lawsuit against Freightliner.

On April 19, 1990, the O'Dells' attorney mailed a copy of the complaint to RLC and its adjuster, Continental Loss Adjusting Service (Continental), by certified mail. An accompanying letter advised the mandatory settlement conference (MSC) and trial had been set for May 25, 1990, and June 19, 1990, respectively.

On May 25, 1990, the O'Dells settled the lawsuit at the MSC for $50,000. A voluntary dismissal of the action against Freightliner with prejudice was entered on June 11, 1990.

On September 20, 1990, RLC filed a motion to set aside the dismissal on the grounds of inadvertence, surprise or excusable neglect under Code of Civil Procedure section 473 and for leave to file a complaint in intervention against Freightliner.

RLC's counsel filed a declaration in support of the motion which alleged the notice sent by certified mail on April 19, 1990, had not been addressed to any particular person and had not been received by anyone authorized to accept service of process. The workers' compensation adjuster responsible for the O'Dell claim did not receive the notice until May 21, 1990, and on June 15, 1990, the adjuster retained counsel to represent RLC's interests. Counsel immediately contacted opposing counsel and was advised the case had settled on May 25, 1990.

On June 18, 1990, one week after the lawsuit voluntarily had been dismissed with prejudice, RLC filed a notice of lien. A complaint in intervention offered for filing on the same date was rejected.

2. Opposition to the motion to set aside the dismissal.

Freightliner and the O'Dells' opposed RLC's motion. Counsel for both parties asserted RLC had failed to file a lien despite knowledge of the lawsuit. They claimed RLC knew about the action because Freightliner had sought discovery of O'Dell's employment records and had inspected the truck involved in the accident on RLC's premises. ³

The O'Dells' counsel declared he had telephoned Theresa Milen (Milen) of Continental on February 5, 1990, and again on April 17, 1990, to inquire whether RLC intended to file a lien in this case. Counsel left a message for Milen on each occasion but she failed to return the calls. When counsel received no response, he mailed the statutory notice by certified mail to RLC and Continental on April 19, 1990, and, in a cover letter accompanying the notice, advised them of the dates for the MSC and the trial. The return receipts indicated RLC and Continental had received the notices on April 23, 1990, and April 27, 1990, respectively.

Freightliner's counsel averred "throughout the discovery process in this case, [RLC] was contacted on numerous occasions with respect to the inspection of the vehicle involved, scheduling depositions, and obtaining of documents...."

The Freightliner employee responsible for administration of the O'Dell claim filed a declaration in which she stated correspondence had been exchanged with RLC concerning the matter commencing in September, 1988.

3. The trial court's ruling.

The notice of ruling on RLC's motion indicates the trial court denied the motion for order to set aside dismissal and for leave to file proposed complaint in intervention on the grounds "(1) Roski v. Superior Court (1971) 17 Cal.App.3d 841 is controlling and (2) even if it is not, [RLC] had notice of the third party action."

RLC appeals that decision.

CONTENTIONS

RLC contends: (1) the notice of the lawsuit given by the O'Dells was untimely and insufficient to protect its subrogation rights; (2) any actual notice RLC may have had failed to notify it the action against Freightliner was based on an employment related injury or that RLC's subrogation rights were in jeopardy; (3) Freightliner failed to give notice of its intent to raise RLC's concurrent negligence as a defense; (4) O'Dell and Freightliner were obligated to notify RLC of the settlement before dismissal of the action; and, (5) RLC has standing to move to set aside the dismissal.

DISCUSSION

1. Overview of applicable workers' compensation law.

a. General principles.

An employee injured in the course of employment is entitled to receive compensation benefits from his or her employer without regard to negligence. (§ 3600, subd. (a); Jacobsen v. Industrial Acc. Com. (1931) 212 Cal. 440, 447, 299 P. 66.) This recovery is the employee's exclusive remedy as against the employer (§§ 3601, 3602, subd. (a)) but does not preclude suit by the employee against a negligent third party (§ 3852).

To prevent double recovery by the employee, an employer may recoup the benefits it has paid to the employee by utilizing any of three different means: (1) a direct action against the third party (§ 3852); (2) as a party or an intervenor in an action by the employee against the third party (§ 3853); or, (3) as a lien claimant against the employee's recovery in an action against the third party (§ 3856, subd. (b)). (Witt v. Jackson (1961) 57 Cal.2d 57, 69, 17 Cal.Rptr. 369, 366 P.2d 641; Heaton v. Kerlan (1946) 27 Cal.2d 716, 721-722, 166 P.2d 857; Brandon v. Santa Rita Technology, Inc. (1972) 25 Cal.App.3d 838, 842, 102 Cal.Rptr. 225.) ⁴

The California workers' compensation scheme seeks to ensure that, regardless of whether the employee or the employer sues the third party, both recover their due, and, as far as possible, the third party need defend only one lawsuit. (County of San Diego v. Sanfax Corp. (1977) 19 Cal.3d 862, 872, 140 Cal.Rptr. 638, 568 P.2d 363; Ventura County Employees' Retirement Association v. Pope (1978) 87 Cal.App.3d 938, 952, 151 Cal.Rptr. 695; Abdala v. Aziz (1992) 3 Cal.App.4th 369, 377, 4 Cal.Rptr.2d 130.)

"Substantively, as well as procedurally, employer and employee actions are interchangeable: regardless of who brings an action, it is essentially the same lawsuit." (County of San Diego v. Sanfax Corp., supra, 19 Cal.3d at p. 874, 140 Cal.Rptr. 638, 568 P.2d 363; State Compensation Ins. Fund v. Selma Trailer & Manufacturing Co. (1989) 210 Cal.App.3d 740, 751, 258 Cal.Rptr. 545.)

A one-year statute of limitations governs both the employee's and the employer's suit against a third party. (County of San Diego v. Sanfax Corp., supra, 19 Cal.3d at pp. 868-869, 140 Cal.Rptr. 638, 568 P.2d 363; Aetna Cas. etc. Co. v. Pacific Gas & Elec. Co. (1953) 41 Cal.2d 785, 787-788, 264 P.2d 5.) However, an employer or an employee has an unconditional right to intervene in the other's lawsuit any time prior to trial on the facts (§ 3853; Jordan v. Superior Court (1981) 116 Cal.App.3d 202, 206-207, 172 Cal.Rptr. 30) and thereby avoid the one-year statute of limitations (County of San Diego v. Sanfax Corp., supra, 19 Cal.3d at p. 885, 140 Cal.Rptr. 638, 568 P.2d 363; State Compensation Ins. Fund v. Selma Trailer & Manufacturing Co., supra, 210 Cal.App.3d at pp. 750-751, 258 Cal.Rptr. 545; DeMeo v. St. Francis Hosp. (1974) 39 Cal.App.3d 174, 177, 114 Cal.Rptr. 280).

An employee or employer who sues a third party is required to notify the other forthwith by personal service or certified The employer is also entitled to notice where a third-party tortfeasor raises the issue of the employer's concurrent negligence. Because the successful assertion of that defense defeats the employer's right of reimbursement (...