Eastman v. Messner

• Decision Date: 15 December 1998
• Docket Number: No. 1-98-1013,1-98-1013
• Citation: 236 Ill.Dec. 204,707 N.E.2d 49,302 Ill.App.3d 526
• Parties: , 236 Ill.Dec. 204 Dennis EASTMAN, Plaintiff-Appellee, v. Steven MESSNER, Defendant-Appellee (Gates McDonald, for the use and benefit of Meyer Material Company, Intervening Petitioner-Appellant).
• Court: United States Appellate Court of Illinois

Page 49

707 N.E.2d 49

302 Ill.App.3d 526, 236 Ill.Dec. 204

Dennis EASTMAN, Plaintiff-Appellee, v. Steven MESSNER, Defendant-Appellee (Gates McDonald, for the use and benefit of Meyer Material Company Intervening Petitioner-Appellant).

No. 1-98-1013.

Appellate Court of Illinois First District, Second Division.

Dec. 15, 1998.

William J. Cook & Associates, Chicago (Wm. J. Cook and Anthony Cacchillo, of counsel), for appellant.

Serpico, Novelle & Navigato, Ltd., Chicago (John E. Navigato and Kevin J. O'Shea, of counsel), for appellees.

Justice RAKOWSKI delivered the opinion of the court:

Pursuant to the Workers' Compensation Act (Act) (820 ILCS 305/5 (West 1996)), an

                [236 Ill.Dec. 205] employer who has paid workers' compensation benefits to an injured employee is entitled to reimbursement where the employee recovers damages from a third party who caused the injuries.  In addition, the employer may directly file suit against the third party if the employee fails to do so.  In this case, plaintiff sustained injuries at work and was paid workers' compensation benefits.  Plaintiff's counsel failed to file suit against the third-party tortfeasor within the statute of limitations.  Further, neither the employer nor its insurance administrator filed suit against the tortfeasor.  Plaintiff then filed the instant legal malpractice action against counsel.  Under these circumstances, is the employer or insurance administrator entitled to be reimbursed from the proceeds of the malpractice action?   Based upon the clear language of section 5(b) of the Act, the answer is no
                

BACKGROUND

Plaintiff, Dennis Eastman, was injured while working for Meyer Material Company (employer). He was paid workers' compensation benefits by Gates McDonald, Meyer's insurance administrator. Plaintiff retained the services of attorney Steven Messner to prosecute a personal injury action arising out of the incident. However, the attorney failed to file suit within the statute of limitations and plaintiff filed this legal malpractice action against the attorney. The insurance administrator filed a petition to intervene, on behalf of employer, alleging a lien pursuant to section 5(b). The motion was denied. The insurance administrator appeals, contending that it is entitled to a lien upon any legal malpractice recovery. We have jurisdiction pursuant to Supreme Court Rule 304(a). 155 Ill.2d R. 304(a).

ANALYSIS

Section 5(b) of the Act provides, in pertinent part:

"Where the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer's payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee * * * and judgment is obtained and paid, or settlement is made with such other person, * * * then from the amount received by such employee * * * there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee * * *.

* * *

* * * [T]he employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party.

* * * The employer may, at any time thereafter join in the action upon his motion so that all orders of court after hearing and judgment shall be made for his protection. * * *

In the event the employee or his personal representative fails to institute a proceeding against such third person at any time prior to 3 months before such action would be barred, the employer may in his own name or in the name of the employee, or his personal representative, commence a proceeding against such other person for the recovery of damages on account of such injury or death to the employee." 820 ILCS 305/5(b) (West 1996).

Two lines of cases have emerged on this issue. One line allows a lien to attach to a legal malpractice action. See Bongiorno v. Liberty Mutual Insurance Co., 417 Mass. 396, 630 N.E.2d 274 (1994); Frazier v. New Jersey Manufacturers Insurance Co., 142 N.J. 590, 667 A.2d 670 (1995); Toole v. EBI Cos., 314 Or. 102, 838 P.2d 60 (1992); Tallerday v. Delong, 68 Wash.App. 351, 842 P.2d 1023 (1993). The courts in these jurisdictions look beyond the words of the relevant statute to what they perceive to be the legislative intent. The second line prohibits a lien form attaching to legal malpractice actions. See Fink v. Dimick, 179 F.Supp. 354 (D.Conn.1959); Travelers Insurance Co. v. Breese, 138 Ariz. 508, 675 P.2d 1327 (1983); Mt. Pleasant Special School District v. Gebhart Illinois law has been interpreted to recognize both lines. The Fifth District Appellate Court in Woodward v. Pratt, Bradford & Tobin, P.C., 291 Ill.App.3d 807, 226 Ill.Dec. 32, 684 N.E.2d 1028 (1997), held that a section 5(b) lien does not apply to legal malpractice recoveries. Conversely, the seventh circuit in Williams v. Katz, 23 F.3d 190 (7th Cir.1994), held that the statutory lien does apply to legal malpractice recoveries.

[236 Ill.Dec. 206] , 378 A.2d 146 (Del.Ch.1977); Sladek v. K Mart Corp., 493 N.W.2d 838 (Iowa 1992). These jurisdictions rely solely upon the plain language of the statute.

In Williams, the seventh circuit held that, under Illinois law, a workers' compensation lien attached to any recovery an employee might have, including a legal malpractice action. Although plaintiff argued that the carrier had no lien since the attorneys did not cause his bodily injury, the court stated:

"But that is not what the Act says. It recognizes an employer's lien whenever the injury occurred 'under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages.' The injury to Williams occurred in circumstances that made his lawyers potentially liable for the consequences of the injury." Williams, 23 F.3d at 192.

According to the court, Williams was seeking the same damages from his attorneys that he would have sought in the medical malpractice action that the attorneys failed to pursue. The court further reasoned that if the lien were disallowed, employee would be overcompensated. Although employee contended that the damages were different in nature, e.g., he was seeking damages due to the injury inflicted on him by his attorneys, not damages for personal injuries, the court found that he was being "excessively literal-minded." Williams, 23 F.3d at 193.

In Woodward, the fifth district held to the contrary. The carrier relied heavily upon Williams, which the Woodward court rejected, stating, "[w]hile we have great respect for that court, we respectfully disagree. There is no lien except by virtue of the statute. The court cannot create a lien not provided for by the statute, no matter how desirable the court may believe that result to be." Woodward, 291 Ill.App.3d at 814, 226 Ill.Dec. 32, 684 N.E.2d 1028. The court instead interpreted section 5(b) and looked to the plain language of the provision. First, it noted that section 5(b) grants employer two distinct rights: the right to have a lien on any recovery against the tortfeasor and the right to file suit against the tortfeasor should the employee fail to do so in the three months preceding the expiration of the statute of limitations period. Woodward, 291 Ill.App.3d at 813, 226 Ill.Dec. 32, 684 N.E.2d 1028. It concluded, based on the clear language of the statute, that the lien applied only to recoveries from a third-party tortfeasor.

"The plaintiff's allegedly negligent lawyers did not cause the injury that led to compensation payments. The third paragraph of section 5(b) states that 'the employer may have or claim a lien upon any award * * * out of which such employee might be compensated from such third party.' [Citation.] This third party is the 'injurer' whose acts or omissions caused the expenditure of medical and hospital payments [citation], not the lawyer who was allegedly negligent in failing to sue the injurer.

* * * It is important to note that the cause of action contemplated by section 5(b) is expressly stated to be a cause of action for 'injury' or 'death.' Once the limitations period expires, both the employee and the employer lose their cause of action for injury or death. The new cause of action then held by the employee against his attorney is not for injury or death. Rather, any damages recovered are for 'pecuniary injuries to intangible property interests.' [Citation.] The legal malpractice action is personal and nonassignable." (Emphasis in original.) Woodward, 291 Ill.App.3d at 814, 226 Ill.Dec. 32, 684 N.E.2d 1028.

In sum, "[i]t is obvious that the original tortfeasor or 'injurer,' as the Katz court describes him, is the party that proximately caused a workers' compensation obligation to arise." Woodward, 291 Ill.App.3d at 815, 226 Ill.Dec. 32, 684 N.E.2d 1028. We agree.

In construing statutory provisions, we must give effect to the legislature's intent. In re Application of the County Collector of Du Page County for Judgment For Delinquent Taxes for the Year 1992, 181 Ill.2d 237, 244, 229 Ill.Dec. 491, 692 N.E.2d 264 (1998). Since the language used by the legislature is the best indication and provides the best evidence of its intent, we first look to the words used in the statute. In re Application of County Collector of Du Page County, 181 Ill.2d at 244, 229 Ill.Dec. 491, 692 N.E.2d 264. The words are to be given their plain and ordinary meaning. People v. Hicks, 164 Ill.2d 218, 222, 207 Ill.Dec. 295, 647 N.E.2d 257 (1995). Where the words themselves are unambiguous, the court must give them effect without resort to external aids to glean the legislature's intent or purpose. Board of Education of Rockford School District No. 205 v. Illinois Educational Labor Relations Board, ...