Duncan v. Wal-Mart Stores, Inc.

• Decision Date: 14 November 2017
• Docket Number: G054220
• Citation: 18 Cal.App.5th 460,226 Cal.Rptr.3d 300
• Court: California Court of Appeals Court of Appeals
• Parties: Denise Michelle DUNCAN, Plaintiff and Respondent, v. WAL-MART STORES, INC., Defendant; Hartford Accident & Indemnity Co., Claimant and Appellant.

18 Cal.App.5th 460

226 Cal.Rptr.3d 300

Denise Michelle DUNCAN, Plaintiff and Respondent,

v. WAL-MART STORES, INC., Defendant;Hartford Accident & Indemnity Co., Claimant and Appellant.

G054220

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

Filed November 14, 2017

England Ponticello & St. Clair, Barry W. Ponticello, Renee C. St. Clair and Kristina M. Pfeifer, San Diego, for Claimant and Appellant.

Karns & Karns and William M. Karns, Los Angeles, for Plaintiff and Respondent.

OPINION

ARONSON, J.

Respondent Denise Michelle Duncan sued Wal-Mart Stores, Inc. (Wal-Mart) for personal injuries she sustained at one of Wal-Mart's stores while acting within the course and scope of her employment with Acosta, Inc. (Acosta). The trial court entered judgment finding Wal-Mart liable for Duncan's injuries. Under Labor Code sections 3852 and 3856,¹ appellant Hartford Accident & Indemnity Company (Hartford) applied for a lien on Duncan's judgment to obtain reimbursement for the workers' compensation benefits it paid Duncan, including medical expenses and temporary disability payments for lost wages. Although the judgment included compensation for Duncan's medical expenses, it did not include compensation for Duncan's lost wages because she did not seek those damages at trial. The court granted Hartford a lien on Duncan's judgment, but reduced the lien amount to exclude the indemnity payments for lost wages.

Hartford appeals the trial court's postjudgment order, arguing the court exceeded its authority by reducing the lien amount for any item other than reasonable attorney fees and costs. We agree because section 3856's plain language and the case law applying it grant Hartford a first lien on the judgment in the amount it paid Duncan for worker's compensation benefits. Duncan's choice not to seek lost wages at trial does not diminish Hartford's lien rights under the workers' compensation statutory scheme. We therefore modify the order granting the lien to include the amount of lost wages Hartford paid Duncan and affirm the postjudgment order as modified.

I FACTS AND PROCEDURAL HISTORY

In August 2012, Duncan was acting within the course and scope of her employment with Acosta when she fell and injured herself on Wal-Mart's premises. Hartford was Acosta's workers' compensation insurer and paid Duncan more than $152,000 in benefits, including more than $115,000 in medical expenses and roughly $37,000 in temporary disability indemnity for Duncan's lost wages.

In July 2014, Duncan filed this lawsuit against Wal-Mart seeking recovery for her medical expenses, lost wages and earning capacity, and pain and suffering. Following a three-day bench trial, the court found Wal-Mart 100 percent at fault and entered judgment against Wal-Mart for $355,000, including $178,000 in past medical expenses, $102,000 in future medical expenses, and $75,000 in past and future pain and suffering. Although Duncan's complaint sought lost wages and earning capacity, the court did not award Duncan damages for these items because she did not ask for them at trial.

Hartford filed a notice and application for a lien on the judgment based on the workers' compensation benefits it paid Duncan. The trial court issued an order to show cause why it should not grant the requested lien. Duncan filed an opposition, arguing the court should reduce the lien amount by the nearly $37,000 Hartford sought for the temporary disability benefits it paid because Duncan did not present evidence regarding those payments at trial and therefore the court did not award her that amount as damages. According to Duncan, Hartford is entitled to a lien on the judgment solely to prevent her from recovering the same damages from both Wal-Mart and Hartford, and because she did not recover the disability indemnity from Wal-Mart, Hartford is not entitled to a lien for those payments. Duncan also argued she was entitled to an offset against the lien for the reasonable amount of attorney fees and costs she incurred in suing Wal-Mart. In reply, Hartford argued it had a statutory right to a lien in the full amount of the workers' compensation benefits it paid Duncan regardless of whether she sought and obtained those damages from Wal-Mart. Hartford also disputed the amount of Duncan's attorney fees and costs.

After a hearing, the trial court found the reasonable amount of attorney fees and costs Duncan incurred was roughly $63,000, and granted Hartford a lien on the judgment for nearly $53,000. The court provided no explanation on how it determined the amount of the lien, but the parties agree the court excluded from the lien the disability indemnity payments Hartford made because the amount Hartford sought ($152,489.99) minus both the reasonable attorney fees and costs the court found ($62,623.66) and the disability indemnity payments ($36,929.32) equals the amount of the lien allowed by the court ($52,937.01). This appeal followed.

II DISCUSSION

A. Legal Background

Under the workers' compensation statutes (§ 3200, et seq.), an employee who suffers an injury during the course and scope of employment may recover compensation benefits from the employer without regard to the negligence of either the employee or the employer. (§ 3600; see Abdala v. Aziz (1992) 3 Cal.App.4th 369, 374, 4 Cal.Rptr.2d 130 ( Abdala ).) With few exceptions, the employee's claim for compensation benefits is the employee's exclusive remedy against the employer; the employee generally may not sue the employer to recover in tort. (§§ 3601, 3602; see Abdala , at p. 374, 4 Cal.Rptr.2d 130.)

"The policy [underlying this system] is that workers do not have to prove fault, adjudication is swift, but the benefits are smaller than might be obtained as tort damages. [Citations.] The law: (1) spreads the cost of industrial injuries to goods and services; (2) provides prompt, limited compensation to injured workers, regardless of fault; (3) increases industrial safety; and (4) insulates employers from tort liability." ( Fremont Comp. Ins. Co. v. Sierra Pine (2004) 121 Cal.App.4th 389, 395, 17 Cal.Rptr.3d 80 ( Fremont ).)

The workers' compensation statutes, however, do not limit the injured employee's right of action for damages against any person other than his or her employer. ( Abdala , supra , 3 Cal.App.4th at p. 374, 4 Cal.Rptr.2d 130 ; Tate v. Superior Court (1963) 213 Cal.App.2d 238, 243-244, 28 Cal.Rptr. 548 ( Tate ).) "Where the tort of a third party causes injury to an employee, ... section 3852 permits the employee to sue the tortfeasor for all damages proximately resulting from the injury even though he or she has received from an employer workers' compensation benefits covering some of the same injuries and resulting disability." ( Abdala , at p. 374, 4 Cal.Rptr.2d 130.) Section 3852 also provides that any employer who pays an employee compensation benefits may bring an action against the third party tortfeasor who injured the employee.² ( Tate , at pp. 243-244, 28 Cal.Rptr. 548.)

Section 3853 requires the employee to give the employer notice if the employee sues a third party for injuries the employee suffered during the course and scope of employment. (§ 3853; Tate , supra , 213 Cal.App.2d at p. 246, 28 Cal.Rptr. 548.) The employer has an absolute right to intervene in any action brought by the employee against a third party tortfeasor, and if the employee and employer independently sue the tortfeasor, the actions must be consolidated.³ (§ 3853; Tate , at p. 244, 28 Cal.Rptr. 548.) The employer, however, is not required to intervene in the employee's lawsuit, and instead may allow the employee to prosecute the lawsuit against the tortfeasor for the benefit of both the employee and employer. ( Tate , at pp. 246-247, 28 Cal.Rptr. 548.)

"If the employee alone prosecutes the action against the third party, the employer may nevertheless recover what he has paid out by applying for a lien on the employee's judgment." ( Tate , supra , 213 Cal.App.2d at p. 244, 28 Cal.Rptr. 548.) Specifically, section 3856, subdivision (b) ( section 3856(b) ), provides: "If the action is prosecuted by the employee alone, the court shall first order paid from any judgment for damages recovered the reasonable litigation expenses incurred in preparation and prosecution of such action, together with a reasonable attorney's fee which shall be based solely upon the services rendered by the employee's attorney in effecting recovery both for the benefit of the employee and the employer. After the payment of such expenses and attorney's fee the court shall, on application of the employer, allow as a first lien against the amount of such judgment for damages, the amount of the employer's expenditure for compensation together with any amounts to which he may be entitled as special damages under Section 3852."

The Labor Code therefore permits an employer to recover workers' compensation benefits it has become obligated to pay in three ways: "(1) bringing an action directly against the tortfeasor ( § 3852 ), (2) joining as a party plaintiff or intervening in an action brought by the employee (§ 3853), or (3) allowing the employee to prosecute the action and then applying for a first lien against the resulting judgment or settlement. ( § 3856(b).)"⁴ ( Abdala , supra , 3 Cal.App.4th at pp. 374-375, 4 Cal.Rptr.2d 130, fns. omitted; see Fremont , supra , 121 Cal.App.4th at p. 396, 17 Cal.Rptr.3d 80.)

"The policy underlying [these statutory provisions] is avoidance of double recovery by the employee who elects to claim benefits under the Labor Code and also seeks compensation for his or her injuries from a negligent third party. [Citations.] Where an employer is required to provide benefits to an employee for injuries caused by a third party's negligence, the statutory scheme assures that the employer, not the employee, shall, at least ultimately, be entitled to recover the value of those benefits from the tortfeasor." ( Abdala , supra , 3 Cal.App.4th at p. 376, 4...