Goodemote v. Mushroom Transportation Company, 18298.
| Decision Date | 27 May 1970 |
| Docket Number | No. 18298.,18298. |
| Parties | Donald GOODEMOTE v. MUSHROOM TRANSPORTATION COMPANY, Inc. Liberty Mutual Insurance Company, Intervenor, Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
Edward W. Maderia, Jr., Pepper, Hamilton & Scheetz, Philadelphia, Pa., for appellant.
Lawrence E. Grant, Richter, Lord, Toll, Cavanaugh, McCarty & Raynes, Philadelphia, Pa. (B. Nathaniel Richter, Richter, Syken, Ross, Binder & O'Neill, Philadelphia, Pa., on the brief), for appellee.
Before SEITZ and ALDISERT, Circuit Judges, and LATCHUM, District Judge.
Plaintiff, a New York resident invoking diversity jurisdiction, sued Mushroom Transportation Corporation, Inc., a Pennsylvania corporation, in the district court for the Eastern District of Pennsylvania. He sought damages for injuries sustained in an accident which occurred in Pennsylvania during the course of his employment with a New York employer. During the trial the parties agreed to settle the case for $60,000.00. Conflicting claims having been asserted to a portion of the settlement fund, the entire fund was ordered paid into court. All but $7,293.61 was subsequently distributed by the court, and the propriety of that distribution is not challenged. Claims to the remaining funds were asserted by the intervenor Liberty Mutual Insurance Company (Liberty Mutual) and by plaintiff's attorney, B. Nathaniel Richter.
Liberty Mutual, as compensation insurance carrier for plaintiff's employer, had paid plaintiff $7,293.61 in benefits under the New York Workmen's Compensation Law. It claimed that under the New York Compensation Law, when plaintiff settled with the alleged tortfeasor, the proceeds remaining after payment of the attorneys had to be devoted to full reimbursement of the compensation carrier. There is no question that Liberty Mutual's characterization of the New York Law is correct. N.Y. Workmen's Compensation Law § 29(1) (McKinney's 1965); Ocean SS Co. of Savannah v. Lumbermen's Mutual Casualty Co., 125 F.2d 925 (2d Cir. 1942).
Richter, on the other hand, contended in the district court that he personally was entitled to a fee from Liberty Mutual under Pennsylvania substantive law because he had created a fund for the benefit of the insurance carrier. He argued that since Liberty Mutual was entitled to reimbursement from plaintiff only because he, Richter, had recovered the $60,000.00 in the tort action, he was entitled to an attorney's fee based on the same contingent fee percentage the plaintiff had agreed to. The precise issue as the district court conceived it was whether it should apply Pennsylvania law, which presumably would warrant an award to Richter, or New York law, which would allow Liberty Mutual's full claim without it bearing any part of the attorney's fee. The district court found that Pennsylvania's interests in the case were controlling, applied Pennsylvania substantive law and awarded Richter a fee.1 This appeal by Liberty Mutual followed.
We emphasize that this matter was presented to and treated by the district court as a claim by Richter in his own right. Richter insists in his brief to this court that what is involved is the honoring of his fee arrangement with his client which must be resolved by reference to Pennsylvania law. It is clear, however, as his counsel agreed at oral argument, that regardless of the outcome of this appeal, Richter has received or will receive the entire fee due him under his agreement with plaintiff. His counsel also stated that Richter was not seeking compensation beyond that fee.2 The reality then is that plaintiff rather than Richter is the real party in interest. So viewed, plaintiff through Richter is seeking reimbursement from Liberty Mutual for a portion of the fee which he is required to pay Richter for his services in obtaining the $60,000.00 settlement. The question on appeal, thus, is whether a district court order which in effect requires Liberty Mutual to share plaintiff's expenses in the tort action is correct?
Since the district court was sitting in a diversity action in Pennsylvania, it follows that it was required to apply the Pennsylvania choice of law rule. Would Pennsylvania apply New York law to the issue before us? We think the answer is suggested by the analysis found in Elston v. Industrial Lift Truck Co., 420 Pa. 97, 216 A.2d 318 (1966), although we recognize it is factually dissimilar. In that case the Pennsylvania Supreme Court was concerned with a Pennsylvania resident who had received benefits under...
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