Eakin v. United Technology Corp.
| Decision Date | 08 January 1998 |
| Docket Number | No. 87-1723-CIV-HOEVELER.,87-1723-CIV-HOEVELER. |
| Citation | 998 F.Supp. 1422 |
| Court | U.S. District Court — Southern District of Florida |
| Parties | John J. EAKIN, d/b/a Cypress Helicopter Company, Plaintiff, v. UNITED TECHNOLOGY CORP., d/b/a Sikorsky Helicopter, Defendant. |
Ron A. Sprague, Gendry & Sprague, San Antonio, TX, for plaintiff.
Howard E. Barwick, Barwick, Dillian, Lambert & Ice, P.A., Miami, FL, for defendant.
Richard McAlpin, Mitchell, McAlpin, Brias & Associates, P.A., Miami, FL, for intervenor.
ORDER ON PENDING MOTIONS AND DISMISSAL WITH PREJUDICE
THIS CAUSE comes before the Court upon the following motions: (1) Plaintiff John J. Eakin's ("Eakin") Motion for Partial Reconsideration of Order Determining Intervenor's Lien, filed July 8, 1997; (2) Attorneys Howard M. Acosta ("Acosta") and Myron P. Papadakis' ("Papadakis") Motion to Enforce Charging Lien,1 filed June 24, 1997; and (3) Intervenor Insurance Company of North America's ("INA" or "Intervenor") Motion to Tax Costs and for Entry of Final Judgment, filed June 24, 1997.
On February 13, 1984, Plaintiff John Eakin and former Plaintiff Thomas Turner were injured in a helicopter crash during a logging operation. Defendant, United Technology Corp. d/b/a Sikorsky Helicopter ("Sikorsky"), manufactured the helicopter involved in the accident in 1958.
On January 15, 1985, Eakin filed this action in the United States District Court for the Eastern District of Louisiana to recover damages for the injuries he suffered as a result of the February 1984 crash. On January 25, 1987, INA, Eakin's workers' compensation insurance carrier, filed a Complaint of Intervention seeking to recover workers' compensation benefits it had paid to Eakin as a result of the accident.
The case was transferred to the Southern District of Florida in 1987 and was finally scheduled to go to trial on February 24, 1997. Less than one week before trial, however, Eakin and Sikorsky informed the Court that they had settled their dispute. As represented to the court at that time, the settlement agreement called for Sikorsky to pay Eakin a lump sum of $600,000 in exchange for Eakin's dismissal of all claims against Sikorsky.
After the agreement was announced, INA voiced its objection and claimed it was entitled to a lien on the settlement proceeds under Louisiana law. Despite negotiation efforts between Eakin and INA to settle the amount of the Intervenor's lien, the two were unable to reach a compromise. As a result, Sikorsky refused to tender the $600,000 settlement figure until either this Court or both Eakin and INA agreed to hold it harmless for any outstanding lien claims. On March 12, 1997, Eakin moved the Court to determine if INA was entitled to a lien under Louisiana law, and if so, in what amount.
In an Order Determining Intervenor's Lien, dated May 30, 1997, this Court awarded INA a $226,197.68 workers' compensation insurance lien against any recovery by Eakin. The Court found that INA was entitled to the full amount requested because Eakin failed to obtain INA's authorization of the settlement with Defendant as required under Louisiana law. The Court further determined that Eakin was not entitled to have INA assume a proportionate share of Eakin's attorney's fees and costs.
On June 24, 1997, Eakin's former counsel, Acosta and Papadakis, moved this Court to establish a charging lien for attorney's fees. Eakin's former counsel, who were working on a contingency basis, claimed that they were entitled to their contingency fee since they negotiated the settlement with Sikorsky on Eakin's behalf. Eakin refuses to pay the fee, arguing that his former attorneys are not entitled to a fee because the settlement proceeds have never been distributed.
Also on June 24, 1997, INA moved this Court to enter a final order and to tax costs for amounts expended by INA in connection with its experts' testimony.
Finally, on July 8, 1997, Eakin's new attorney, Ron A. Sprague, filed a Motion for Partial Reconsideration of the Order Determining Intervenor's Lien. The Motion asked the Court reconsider its earlier ruling denying Eakin the right to have INA assume a proportionate share of Eakin's attorney's fees.
The Court will first discuss Eakin's Motion for Partial Reconsideration, then Acosta's Motion to Enforce Charging Lien, and finally INA's Motion to Tax Costs and for Final Judgment.
As stated supra, this Court awarded INA the full amount of the worker's compensation lien requested because Eakin failed to obtain the Intervenor's authorization before settling with Sikorsky. The Court also denied Eakin's request to have INA contribute a proportionate share towards Eakin's attorney's fees.
The gravamen of Eakin's Motion for Partial Reconsideration is that under Louisiana law, specifically, Moody v. Arabie, 498 So.2d 1081 (La.1986), an intervening workers' compensation insurer is required to share in an employee's cost of prosecuting a claim against a third party tortfeasor, where the insurer benefits from the efforts of the worker's attorney. Eakin argues that he pursued a tort claim against Defendant Sikorsky that resulted in a settlement of $600,000; $226,198 of which INA will receive as reimbursement for benefits it has paid to Eakin. Thus, Eakin claims, INA has benefited from labor of Eakin's attorneys, and must, under Louisiana law, share in the costs of securing that benefit by assuming a proportionate share of Eakin's attorney's fees and costs.
***
As a federal district court sitting in a diversity action, this Court was, and is, charged with the duty of ascertaining and applying Louisiana's rather complex workers' compensation laws. See Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). To compound the usual problems associated with interpreting and applying a state's laws, the issue presented in this case—whether an employee is entitled to Moody's fees where he has entered into an unauthorized settlement—is a novel one that has yet to be addressed by any Louisiana court, let alone its highest court. But "no matter how difficult the task, [a Federal court] must ascertain (and then apply) what the state law is." Crowe v. Coleman, 113 F.3d 1536, 1540 (11th Cir.1997). So despite the lack of authoritative pronouncements by Louisiana's legislature or its courts, this Court set-out to determine how Louisiana's Supreme Court would rule on a request for Moody's fees where an employee entered into a settlement with a tortfeasor without first obtaining the approval of its worker's compensation carrier.
After reviewing the only case directly on point, King v. Employers Nat. Ins. Co., 928 F.2d 1438 (5th Cir.1991), this Court adopted what appeared to then be a sound conclusion:
Louisiana's workers' compensation legislative scheme which imposes penalties on the employee and tortfeasor for settling without the employer/insurer's consent is "incompatible with Moody's goal of requiring the employer (or carrier) to contribute to the employee's attorney's fees when he recovers from the tortfeasor."
Order Determining Intervenor's Lien, 20 (quoting King, 928 F.2d at 1444). This Court, however, was also aware of the Fifth Circuit's admonition in a subsequent case that:
the task of predicting the final course to be taken by the supreme court of a state is a difficult one. The Erie guesses made under circumstances such as presented in this case[—a case involving the application of Moody —] are many times wrong. We have no assurance that the predictions we make today will ultimately fare better than the notable similar forays into diversity jurisdiction that have missed the mark.
Labiche v. Legal Security Life Insurance Co., 31 F.3d 350, 354 (5th Cir.1994). Thus, when Eakin filed his Motion for Reconsideration, this Court was willing to take a critical look at its prior ruling.
Prompted by Eakin's Motion for Reconsideration, this Court reexamined the relationship between Moody and Louisiana's workers' compensation laws. The additional research and analysis revealed a well-developed body of Louisiana case law articulating a strong policy of having an intervening insurer assume a proportionate share of an employee's attorney's fees. While King remains the only case directly on point, (i.e., it is the only case dealing with a request for attorney's fees where there had been an unauthorized settlement), this Court respectfully notes that the King court did not discuss any of these cases or policies. Instead, it analyzed one section of Louisiana's workers' compensation law and reached its conclusion.
Upon closer examination of Louisiana's statutes and cases, this Court finds that there are two distinct policies at play here: (1) protecting an intervening workers' compensation carrier under Louisiana's workers' compensation laws, and (2) reimbursing an injured worker a share of his attorney's fees under Moody. More importantly though, the Court finds that these two policies are not incompatible; there is a "false conflict" at best. In fact, the Court finds that Louisiana's workers' compensation scheme works in such a way as to make it practically impossible for these two policies to undermine one another.
Louisiana's workers compensation scheme essentially guarantees that an employer or insurer will not be prejudiced by the unilateral acts of an employee. Where there has been an unauthorized settlement by an employee and a tortfeasor, Louisiana's law "caps" or "freezes" the insurer's liability by: (1) relieving it of any obligation to pay future benefits, and (2) preserving the intervenor's cause of action for past payments against both the injured worker and the settling tortfeasor. See La.R.S. 23:1102(B), (C). Thus, when an employee enters into an unauthorized settlement with a tortfeasor, Louisiana's worker's compensation scheme is designed to achieve a specific, limited purpose: it is designed to cap the...
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