Gutierrez v. City of Albuquerque

• Decision Date: 06 November 1995
• Docket Number: No. 15573,15573
• Citation: 909 P.2d 732,121 N.M. 172,1995 NMCA 139
• Parties: Connie GUTIERREZ, Worker-Appellee, v. CITY OF ALBUQUERQUE, Self-Insured, Respondent-Appellant.
• Court: Court of Appeals of New Mexico

Page 732

909 P.2d 732

121 N.M. 172

Connie GUTIERREZ, Worker-Appellee, v. CITY OF ALBUQUERQUE, Self-Insured, Respondent-Appellant.

No. 15573.

Court of Appeals of New Mexico.

Nov. 6, 1995.

Certiorari Granted Dec. 14, 1995.

[121 N.M. 173] Ann M. Conway, Deborah S. Dungan, Padilla, Riley & Shane, P.A., Albuquerque, for respondent-appellant.

Josephine D. Rohr, George W. Weeth, Albuquerque, for worker-appellee.

OPINION

PICKARD, Judge.

1. The City of Albuquerque challenges a decision of the workers' compensation judge applying Montoya v. AKAL Security, Inc., 114 N.M. 354, 838 P.2d 971 (1992), to this case although both the work-related accident and the settlement with the third-party tortfeasor occurred before Montoya was decided. The City also challenges the judge's decision to apply Montoya in such a way that the City is not reimbursed for all compensation benefits it paid to the extent of the settlement with the third-party tortfeasor. As a preliminary matter, however, the City contends that the release Worker signed with the third-party tortfeasor extinguishes the City's liability to Worker under general principles of the law governing construction of releases. We hold that the City did not properly preserve its issue concerning the release; that the judge misconstrued the holding of Montoya and that, properly construed, Montoya does not permit the equitable allocation of settlement proceeds under the facts of a case like this one; but thatMontoya does operate retroactively to allow Worker to continue to recover compensation benefits notwithstanding her settlement of the third-party tort claim.

I. FACTS

2. Worker was a plumbing inspector for the City. On July 9, 1987, while inspecting a residential construction site, Worker slipped and fell on two pieces of cardboard and injured her back. The cardboard was left on the site by Thermal Control, Inc., a job contractor. The City paid Worker substantial compensation and medical benefits.

3. Due to a dispute over the amount of compensation and other benefits due, on April 13, 1990, Worker filed a workers' compensation claim against the City and soon thereafter a third-party negligence suit against Thermal. On January 10, 1992, Worker settled her claim against Thermal for $140,000 and executed a full release. The settlement may not have been disclosed to the City until shortly after the Montoya opinion was filed, in September 1992. The City then asserted a claim to full reimbursement for all compensation benefits paid Worker pursuant to NMSA 1978, Section 52-5-17 (Repl.Pamp.1991) (effective until Jan. 1, 1991). The City contended that Worker was no longer eligible for compensation benefits because she had elected her remedy by settling the lawsuit with Thermal. See Castro v. Bass, 74 N.M. 254, 259-60, 392 P.2d 668, 672-73 (1964) (holding that a resolution of third-party action constituted an election of remedies thereby freeing the employer from paying any further benefits under workers' compensation). Worker claimed a right to continuing benefits because, by then, Castro had been overruled by Montoya.

4. Because Castro was still in effect when the accident and settlement occurred, the City moved for summary judgment against Worker's claim for continuing benefits. The judge applied Montoya retroactively and denied the motion. The judge then heard evidence on the extent of Worker's damages. As a foundation for calculating the amount of the City's reimbursement, the judge determined that Worker had sustained $24,969.13 in medical expenses, $220,640 ($27,580 X 8 years) in total lost wages (only a portion paid by workers' compensation), and $122,000 in pain and suffering (none paid by workers' compensation), totalling $367,609.13 in actual tort damages. Because Worker had settled her third-party claim for only $140,000, the judge calculated that she had been compensated for only 38% of her total damages. Applying equitable principles, the judge limited the City's reimbursement to that same percentage of its total pay-out. Accordingly, the judge awarded the City reimbursement of 38% of the amounts it had paid and would pay to Worker thereafter for compensation benefits.

II. DISCUSSION

A. Third-Party Release

5. The City initially argues that Worker's claim for future compensation benefits is barred by the "Full Release" incorporated within the settlement agreement between Worker and Thermal. Worker responds that the City failed to preserve this issue for our review on appeal. We agree with Worker.

6. The issue of whether the release would bar Worker's claim was not encompassed in any of the pretrial pleadings; nor was it encompassed in the issues to be decided as they were listed in the pretrial order. The City did not introduce specific evidence on this issue, apart from introducing the release as an exhibit at trial. In this connection, we note that the release was equally relevant to the City's issue under Castro. When evidence is relevant to an issue within the pleadings, it will not be the basis for trial by consent for issues not raised. Schmitz v. Smentowski, 109 N.M. 386, 390, 785 P.2d 726, 730 (1990). The City did not argue this point at trial or invoke a ruling from the judge on this issue until it filed its requested findings of fact and conclusions of law. Because the issue of whether the release would bar relief against the City is one that raises factual issues concerning the intent of the parties, see generally Hansen v. Ford Motor Co., 120 N.M. 203, 900 P.2d 952 (1995), we believe that the City acted too late in first raising the issue after the trial was over and the evidence closed. See SCRA 1986, 12-216(A) (Cum.Supp.1995) (ruling must be fairly invoked); see also State v. Trujillo, 119 N.M. 772, 776, 895 P.2d 672, 676 (Ct.App.) (preservation requires that timely action be taken), cert. quashed 120 N.M. 394, 902 P.2d 76 (1995); Woolwine v. Furr's, Inc., 106 N.M. 492, 496, 745 P.2d 717, 721 (Ct.App.1987) ("To preserve an issue for review on appeal, it must appear that appellant fairly invoked a ruling of the trial court on the same grounds argued in the appellate court."); cf. Eldin v. Farmers Alliance Mut. Ins. Co., 119 N.M. 370, 376, 890 P.2d 823, 829 (Ct.App.1994) (to the extent a party may wish to rely on an applicable presumption, it should make such wish known in the trial court so party opposing the presumption may rebut it).

7. The City recognized its problems with the preservation of this issue during oral argument before this Court, and we hold that this issue has been foreclosed by lack of preservation.

B. Manner of Applying Montoya

8. Before determining whether to apply Montoya retroactively to this case, we must determine what Montoya means, which will necessarily determine whether the judge correctly applied the principles set forth in that case when he allocated the proceeds of the third-party settlement in an equitable fashion. The question raised is whether the pertinent statute contemplates an apportionment of the settlement proceeds between the City and Worker in circumstances when there is not enough to go around and in circumstances where there is no contention from either party that the settlement was an unfair or inequitable compromise of the third-party claim.

9. The facts of this case highlight the problem of when there is not enough to go around. Of $140,000 recovered in the tort settlement, Worker paid $47,530.70 for attorney fees and related costs. Worker owes another $15,221.78 for doctor's bills not covered by workers' compensation. From the balance (approximately $77,000), the City seeks reimbursement for all the benefits it has paid out as well as a credit for any benefits it may owe in the future. That reimbursement may well equal or exceed all that is left of the tort settlement. If so, Worker will retain nothing at all or a marginal sum at best.

10. The issue we confront is whether the statute or Montoya's interpretation of it contemplates such a result. Since the rights and obligations of parties in workers' compensation cases are entirely dependent on statutes in the first instance, we should look first to the applicable statute. See generally Pena v. Phelps Dodge Chino Mines, 119 N.M. 735, 738, 895 P.2d 257, 260 (Ct.App.1995). The applicable statute dealing with the subject of a worker's rights when third-party tortfeasors are involved was enacted in 1929 and, with minor changes in wording and punctuation, has remained consistent since then. The 1929 Act read as follows:

The right of any workman, or, in the case of his death, of those entitled to receive payment or damages for injuries occasioned to him by the negligence or wrong of any person other than the employer as herein defined shall not be affected by this act, but he or they, as the case may be, shall not be allowed to receive payment or recover damages therefor and also claim compensation from such employer hereunder, and in such case the receipt of compensation from such employer hereunder shall operate as an assignment to the employer, his or its insurer, guarantor or surety, as the case may be, o[f] any cause of action, to the extent of the liability of such employer to such workman occasioned by such injury which the workman or his legal representative or others may have against any other party for such injuries or death.

1929 N.M. Laws, ch. 113, § 24 (in pertinent part). The 1987 Act, under which this case should be decided, reads as follows:

The right of any worker or employee or, in the case of his death, of those entitled to receive payment or damages for injuries or disablement occasioned to him by the negligence or wrong of any person other than the employer or any other employee of the employer, including a management or supervisory employee, shall not be affected by the Workers' Compensation Act [Chapter 52, Article 1 NMSA 1978] or the New Mexico Occupational Disease Disablement Law, but the claimant shall not be...