Grim v. Anheuser-Busch, Inc.

• Decision Date: 12 March 1987
• Docket Number: INCORPORATED,CA-CIV,No. 1,ANHEUSER-BUSC,1
• Citation: Grim v. Anheuser-Busch, Inc., 740 P.2d 487, 154 Ariz. 66 (Ariz. App. 1987)
• Parties: Kathy Sprague GRIM, Plaintiff-Appellant, v., a Missouri corporation; Hensley and Company, Sales, Distributors of Anheuser-Busch, Defendants-Appellees. 8423.
• Court: Arizona Court of Appeals

Page 487

740 P.2d 487

154 Ariz. 66

Kathy Sprague GRIM, Plaintiff-Appellant, v.ANHEUSER-BUSCH, INCORPORATED, a Missouri corporation; Hensley and Company, Sales, Distributors of Anheuser-Busch, Defendants-Appellees.

No. 1 CA-CIV 8423.

Court of Appeals of Arizona Division 1, Department D.

March 12, 1987.

Reconsideration Denied May 12, 1987.

Review Denied July 14, 1987.

[154 Ariz. 68] Ron Bailly, P.C. by Matthew D. Koglmeier, Mesa, for plaintiff-appellant.

Snell & Wilmer by H. William Fox, James J. Osborne, Phoenix, for defendant-appellee Anheuser-Busch.

Gallagher & Kennedy by James W. Junker, Phoenix, for defendant-appellee Hensley and Co.

OPINION

GRANT, Presiding Judge.

Kathy Sprague Grim was injured on July 2, 1981, during the course of her employment as a bartender at the Lucky Nugget Bar.Grim applied for and received workers' compensation benefits.On June 24, 1983, Grim filed suit against Anheuser-Busch, Incorporated, and Hensley and Company alleging that her injuries were caused by an exploding beer bottle that was manufactured, bottled, sold, and distributed by the defendants.Grim's suit was filed just within the two-year limitations period provided by A.R.S. § 12-542 for personal injury claims.

A.R.S. § 23-1023 designates the procedure whereby injured employees or their compensation providers can recover against third party tort-feasors.A.R.S. § 23-1023(A) allows employees entitled to workers' compensation benefits who have been injured by the negligence or wrong of someone other than the employer to pursue their remedies against such other persons.Subsection (C), however, gives the insurance carrier or other person liable on the compensation claim a lien on the recovery from the third party tort-feasor.This lien is meant to reimburse parties who compensate the employee for the amount paid on the claim.Moreover, subsection (B) limits the time for employees to pursue their remedy against third parties to one year.Thereafter, their claims are automatically assigned to the insurance carrier or other person liable for the compensation claim.The claim may either then be pursued by the compensation provider or may be reassigned to the employee.

Grim's suit was not filed within one year after her injury; neither did she obtain a reassignment of her claim from the Industrial Commission who paid her workers' compensation claim.When the defendants learned that no reassignment had been made, they filed a motion for summary judgment.The defendants sought judgment on the basis that Grim had no interest in the claim for damages after the one-year period provided in A.R.S. § 23-1023 lapsed.The defendants cited Stephens v. Textron, Inc., 127 Ariz. 227, 619 P.2d 736(1980), as dispositive of the case.

In response to the motion for summary judgment, Grim obtained an affidavit dated March 12, 1985, from the Chief Counsel to the Industrial Commission.The affidavit indicated the Commission knew (since November 6, 1981) that Grim planned to file a third party suit, the Commission had no objection, and therefore, the Commission "ratified and authorized such action from its inception."Grim argued this ratification and authorization should be considered a reassignment of the claim by the Industrial Commission to Grim.Alternatively, Grim requested that the Industrial Commission be substituted or joined as the real party in interest and that she be allowed to so amend her complaint.The Industrial Commission joined in the request for substitution and/or joinder.

The trial court found that Grim owned no interest in the claim she asserted and was barred by the two-year statute of limitations pursuant to A.R.S. § 23-1023(B)andStephens v. Textron, Inc., 127 Ariz. at 230, 619 P.2d at 739.The trial court granted the defendants' motion for summary judgment and denied Grim's motion to amend her complaint and to substitute and/or join the Industrial Commission as the real party in interest.Grim and the Industrial Commission filed motions to reconsider; the Industrial Commission also filed a motion to intervene.The trial court denied these motions and Grim, alone, appealed the judgment.Grim makes several arguments to demonstrate why Stephens is not dispositive of the issues in this case.Therefore, we start our review by considering the facts and rationale of Stephens.

In Stephens, the plaintiff received workers' compensation benefits and later sued the third party tort-feasor.The suit was filed within the requisite two-year statute of limitations of A.R.S. § 12-542, but not within the first year before the claim was automatically assigned to the compensation carrier pursuant to A.R.S. § 23-1023(B).The plaintiff did not receive a reassignment of the claim until the two-year limitations period for personal injury actions had run.When the plaintiff finally did obtain a reassignment from the State Compensation Fund, who paid her workers' compensation benefits, the assignment included an addendum.The addendum provided that the parties intended the assignment to be retroactive to the date of the filing of the plaintiff's complaint.The addendum also noted that the State Compensation Fund wanted the plaintiff to proceed and successfully conclude the action so the State Compensation Fund could assert its lien rights over her recovery.

In determining whether the plaintiff was barred from bringing suit, the Arizona Supreme Court in Stephens first noted that the plaintiff's failure to initiate suit within the one-year period provided by A.R.S. § 23-1023(B) caused her claim to be automatically assigned to the State Compensation Fund by operation of law.Hence, the court found that at the time the plaintiff filed her complaint she lacked any interest in the cause of action because the State Compensation Fund was the owner of the claim.

The court then considered whether the Fund's reassignment of the claim to the plaintiff after the statute of limitations had run cured her lack of interest.The court held that it did not.The court in Stephens held that since the Fund was barred by the statute of limitations, so was the plaintiff because an assignee stands in no better position than the assignor.The court also noted that the attempt to make the assignment retroactive to the date that the complaint was filed was ineffective as to third parties because an assignment cannot alter the defenses or equities of third parties.The court then concluded that the plaintiff's complaint was barred by the statute of limitations.

Grim, like the plaintiff in Stephens, failed to bring suit against the third party tort-feasor within one year after her injury.She allowed the two-year statute of limitations for filing personal injury actions to lapse before obtaining a reassignment of her claim.Yet, Grim would have us find the Stephens rationale should not bar her suit.We now examine each of Grim's contentions.

Grim argues that the Stephens case is not valid today because it was decided before A.R.S. § 23-1023(B) was amended to allow reassignment of claims to the employee from the workers' compensation provider.It is true that when Stephens was decided, the statute was silent on whether the claim could ever be reassigned to the employee after it passed, by operation of law, to the compensation provider.Despite the silence, this court in Henshaw v. Mays, 20 Ariz.App. 300, 512 P.2d 604(1973), concluded that the compensation provider had the right to reassign the claim to the employee.In Stephens, the Arizona Supreme Court had the opportunity to approve the holding regarding reassignments in Henshaw v. Mays.Instead, the court withheld its approval and stated that "[i]t is an open question whether a claim may be reassigned and what interest is conveyed thereby."Stephens v. Textron, Inc., 127 Ariz. at 230, 619 P.2d at 739.Five months later in Ross v. Superior Court, 128 Ariz. 301, 625 P.2d 890(1981), the Arizona Supreme Court held that a claim assigned to an insurance carrier, by operation of law, is neither assignable to a third person nor reassignable to the claimant because an unliquidated claim for damages arising out of tort is not assignable in the absence of authorization by the legislature.The following month, the legislature amended A.R.S. § 23-1023(B) and expressly authorized reassignment of a claim to the employee.SeeLaws 1981, ch. 226, § 1, effective April 27, 1981.The Arizona Supreme Court subsequently upheld the constitutionality of the amended statute.Chevron Chem. Co. v. Superior Court, 131 Ariz. 431, 641 P.2d 1275(1982).

We do not believe that any of these changes in the law invalidate the holding in Stephens.Grim's argument might have merit if Stephens was decided on the basis that reassignment of a claim was not allowed; but, it was not so decided.The Arizona Supreme Court expressly left the question open of whether a claim could be reassigned.In other words, while the Stephens court decided that a reassignment made after the statute of limitations had run was ineffective, the court did not determine whether a reassignment could ever be effective.Therefore, Stephens is unaffected by subsequent case holdings and statutory amendments regarding reassignment.

We recently concluded that reassignments are not retroactive.Dunn v. Progress Indus., Inc., 153 Ariz. 62, 734 P.2d 604(App.1986)(Froeb, C.J., specially concurring).But seeDucksworth v. Towmotor Corp., 153 Ariz. 330, 736 P.2d 813(App.1987).

We also note that Division Two of this court in Lawson v. Arnold, 137 Ariz. 304, 670 P.2d 409(App.1983), which was decided after Ross, Chevron, and the 1981amendment to A.R.S. § 23-1023(B), considered a case with facts identical in all relevant respects to those in Stephens.The employee brought suit after one year had passed from the date of his injury and he did not receive a reassignment of his claim until the two-year statute of limitations had run.The court of appeals had no...