Fritsch v. Magnaflux Corp.

• Decision Date: 08 July 1986
• Docket Number: Docket No. 84637
• Citation: 150 Mich.App. 573,389 N.W.2d 94
• Parties: Joseph FRITSCH and Eileen Fritsch, Plaintiffs-Appellees, and Sentry Insurance Company, Intervening-Plaintiff-Appellant, v. MAGNAFLUX CORPORATION, Defendant-Appellee. 150 Mich.App. 573, 389 N.W.2d 94
• Court: Court of Appeal of Michigan — District of US

Page 94

389 N.W.2d 94

Joseph FRITSCH and Eileen Fritsch, Plaintiffs-Appellees and Sentry Insurance Company, Intervening-Plaintiff-Appellant, v. MAGNAFLUX CORPORATION, Defendant-Appellee.

Docket No. 84637.

150 Mich.App. 573, 389 N.W.2d 94

Court of Appeals of Michigan.

Submitted Dec. 17, 1985.

Decided April 8, 1986.

Released for Publication July 8, 1986.

[150 MICHAPP 575] Grant & Busch by David B. Grant, Southfield, for plaintiffs-appellees.

MacArthur, Cheatham, Acker & Smith by Richard L. MacArthur and Paula M. Murray, and Gromek, Bendure & Thomas by John A. Lydick, of counsel, Detroit, for Sentry Ins. Co.

Vandeveer, Garzia, Tonkin, Kerr, Heaphy, Moore, Sills & Poling, P.C. by Sheila Walsh Mooney, Birmingham, for Magnaflux Corp.

[150 MICHAPP 576] Before KELLY, P.J., and BRONSON and SIMON, ^* JJ.

PER CURIAM.

Joseph Fritsch (hereinafter plaintiff) filed this products liability action against defendant, Magnaflux Corporation, for damages suffered as a result of his exposure to atmospheric pollutants manufactured by defendant. Since plaintiff was exposed to the pollutants in the course of his employment with Massey-Ferguson, Inc., all parties and the trial court properly treated this case as a third-party tort action under Sec. 827 of the Worker's Disability Compensation Act, M.C.L. Sec. 418.101 et seq.; M.S.A. Sec. 17.237(101) et seq.

Plaintiff was employed from July, 1969, until May of 1982 at Massey-Ferguson. In July of 1982, plaintiff filed a petition for workers' compensation benefits alleging lung pathology caused by his exposure to the pollutants manufactured by defendant. Intervening-plaintiff, Sentry Insurance Company, is Massey-Ferguson's workers' compensation insurance carrier. As of the date Sentry filed its claim of appeal in this case, it had not yet paid any benefits on behalf of plaintiff inasmuch as his workers' compensation claim was still pending.

On September 15, 1982, plaintiff filed the instant action in circuit court against Magnaflux only. The case proceeded through the discovery stages and, on December 18, 1984, a mediation evaluation was returned in favor of plaintiff in the amount of $40,000. Both parties accepted the mediation award and the case was noticed for dismissal on March 1, 1985.

On February 28, 1985, plaintiff and defendant stipulated to the addition of Eileen Fritsch as a party-plaintiff and an order to this effect was entered. Plaintiffs then presented an ex parte [150 MICHAPP 577] order allocating the $40,000 judgment as follows: $26,000 to Joseph Fritsch for noneconomic losses, $12,500 to Eileen Fritsch for loss of consortium and $1,500 to Massey-Ferguson and its workers' compensation carrier "to be held in an interest bearing account until a determination has been made by the Bureau of Workers' Compensation as to whether Massey-Ferguson is in fact liable to the plaintiffs herein pursuant to the workers' compensation act, less a one-third attorney fee". Sentry had not yet intervened at the time this order was entered but has consistently asserted that the case was at all times "closely monitored" by its legal representatives.

Sentry alleges that it learned of the orders adding plaintiff Eileen Fritsch and allocating the judgment award in mid-March through communications with counsel for defendant. On March 21, 1985, Sentry filed motions to intervene and to set aside the order and judgment. Following a hearing, the trial court granted Sentry's motion to intervene but denied its motion to set aside the judgment, which is now the subject of Sentry's appeal as of right.

In its motion to set aside the February 28, 1985, order and judgment, Sentry relied on MCR 2.612(C) and alleged that the addition of Eileen Fritsch as a party-plaintiff was an act of bad faith on the part of Joseph Fritsch who was attempting to deprive Sentry of its statutory right to offset third-party tort damages. Sentry further alleged that the award of $12,500 in favor of plaintiff Eileen Fritsch is excessive and unsupported by any evidence and that her damages were never considered by the mediation panel in evaluating this case. Sentry finally alleged that its statutory lien was against the entire judgment of $40,000, minus the costs of recovery.

[150 MICHAPP 578] Following argument on Sentry's motions, the trial court ruled that it would not set aside its earlier order and judgment on grounds which could only properly be asserted by defendant Magnaflux. The court then considered Sentry's independent interests in the 1985 order, judgment and proceedings and concluded that although Sentry did have a legal interest in the allocation of a portion of the $40,000 judgment to plaintiff Eileen Fritsch, Sentry had lost its right to assert that interest in the circuit court proceeding by its failure to intervene until after entry of the judgment. The court expressly found Sentry guilty of laches and denied its motion to set aside on that basis.

We agree that Sentry cannot assert defendant's rights as a basis for obtaining relief from the order and judgment. However, we do not agree that Sentry was guilty of laches or was negligent in failing to intervene in this action until after entry of the judgment. Laches is an affirmative defense which bars a lawsuit under the proper circumstances. Technically, laches does not apply in the motion context, but we think that it was appropriate for the trial court to consider the principles underlying that doctrine in determining whether Sentry's motion to set aside should be heard on the merits.

Sentry's delay in intervening in this case is justified and easily understood under the circumstances. There is no obligation for a workers' compensation insurance carrier to intervene in a third-party tort action in order to protect the statutory lien created and guaranteed under M.C.L. Sec. 418.827(5); M.S.A. Sec. 17.237(827)(5). Ohio Farmer's Ins. Co. v. Neff, 112 Mich.App. 53, 57, 315 N.W.2d 553 (1981). Although it may have been safer and wiser for Sentry to intervene at the onset of these proceedings[150 MICHAPP 579] in order to ensure adequate notice of all developments, there was no threat to its interests until the parties stipulated to the addition of Eileen Fritsch as a plaintiff and allocated a portion of the judgment to her for her loss of consortium claim. This development occurred only one day prior to the date set for entry of the judgment and dismissal of the case. When Sentry learned of this development only 2 1/2 weeks later, motions to intervene and to set aside the judgment were promptly filed. Under these circumstances, we do not find it inequitable to allow Sentry an opportunity to be heard on its objections to the allocation of the third-party judgment. See Lothian v. Detroit, 414 Mich. 160, 168, 324 N.W.2d 9 (1982). We therefore reverse the trial court's order denying Sentry's motion to set aside the order and judgment of February 28, 1985, and remand for consideration of Sentry's motion on the merits.

On remand, the trial court will be presented with...