Home Indem. Co. v. Pate

• Decision Date: 01 August 1991
• Docket Number: No. 01-90-00071-CV,01-90-00071-CV
• Citation: 814 S.W.2d 497
• Parties: The HOME INDEMNITY COMPANY, Appellant, v. Gordon R. PATE, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 497

814 S.W.2d 497

The HOME INDEMNITY COMPANY, Appellant, v. Gordon R. PATE, Appellee.

No. 01-90-00071-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Aug. 1, 1991.

Rehearing Overruled Aug. 22, 1991.

Thomas A. Laucius, Gerald J. Goodwin, Houston, for appellant.

Gerald W. Eddins, Gordon R. Pate, Beaumont, for appellee.

Before MIRABAL, DUGGAN and O'CONNOR, JJ.

OPINION

MIRABAL, Justice.

This is an appeal from a summary judgment in favor of a defendant in a suit by a worker's compensation insurance carrier to enforce a subrogation lien. We reverse and remand.

The Home Indemnity Company, appellant (Home Indemnity), was the worker's compensation carrier for Arthur Dooley & Sons, Inc., whose employee, Charles Riddle (the employee), was injured in the course and scope of his employment. Home Indemnity made payments to and for the benefit of the employee, in the amount of $37,748.49.

At the time of the events involved in this appeal, a worker's compensation insurance carrier's right to subrogation and reimbursement was governed by TEX.REV.CIV.STAT.ANN. art. 8307 (Vernon Pamph.1991). ¹ This statute allows an injured employee to proceed against a third party tort-feasor without precluding a claim against the employer's compensation carrier. Watson v. Glens Falls Ins. Co., 505 S.W.2d 793, 795 (Tex.1974). However, the claimant is prevented from getting a double recovery because the carrier is entitled to recoupment of its claims to the extent of all the compensation paid. Fort Worth Lloyds v. Haygood, 151 Tex. 149, 153, 246 S.W.2d 865, 869 (1952). The carrier has a statutory right to reimbursement out of the first monies paid to an injured employee or his representatives by a third party tort-feasor, up to the amount of compensation paid, and can recover the amount from the employee or the third party tort-feasor. Watson, 505 S.W.2d at 795; Fort Worth Lloyds, 151 Tex. at 154, 246 S.W.2d at 870. One who accepts and "benefits" from at least a portion of the proceeds, while having actual notice of the compensation lien, does so wrongfully and is subject to a cause of action for conversion. Prewitt and Sampson v. City of Dallas, 713 S.W.2d 720, 722 (Tex.App.--Dallas 1986, writ ref'd n.r.e.) (attorney for injured employee held personally liable for conversion when settlement sums distributed without regard to subrogation lien; attorney presumably "benefitted" from at least a portion of the proceeds).

The employee, Charles Riddle, brought a third party action against Allied Chemical Corporation, alleging negligence that proximately caused his injuries. The cause of action, styled Charles Thomas Riddle v. Allied Chemical Corporation, was brought in the federal district court, Eastern District of Texas, Beaumont Division, as cause no. B-82-722-CA, (hereinafter referred to as Riddle.). Appellee Gordon R. Pate (Pate) was the attorney representing defendant Allied Chemical Corporation in that cause of action.

Home Indemnity appeared before the federal district court on November 29, 1984, the day of trial, and attempted to file a petition in intervention asserting its right to reimbursement for the sums Home Indemnity had paid the employee. The court, because no leave to file had been requested or granted, directed the court clerk to remove the petition from the file and return it to counsel for Home Indemnity. Home Indemnity then filed a motion for leave to file a petition in intervention. Finding the petition not timely filed, the court denied leave to file the petition. The employee and Allied Chemical settled the lawsuit, without accounting for Home Indemnity's claim, and an agreed judgment was entered that ordered Home Indemnity "have and recover nothing by way of any intervention or subrogation interest." Home Indemnity did not appeal the judgment of the federal court, but filed a suit for subrogation in state court, naming as defendants the employee, Allied Chemical Corporation, Gordon Pate, and his law firm who represented Allied Chemical in the federal district court law suit.

After discovery was conducted in the state court suit, Pate filed a motion for summary judgment, stating as grounds that (1) the federal court judgment specifically denied Home Indemnity any recovery, and Home Indemnity was therefore barred from recovery by the doctrines of res judicata and collateral estoppel, and (2) Pate cannot be held liable because at all times Pate acted in good faith and in reliance on the rulings and judgment of the federal district court in the Riddle case. Home Indemnity's response was that it was never a party to the Riddle lawsuit, and therefore the federal court judgment was unenforceable as to Home Indemnity's rights. Accordingly, Home Indemnity argued, Pate could not avoid liability by good faith reliance upon the federal judgment, and Pate was responsible to Home Indemnity for disbursing funds without accounting for the subrogation lien. The trial court granted Pate's motion for summary judgment without stating the specific grounds for its ruling.

In point of error five, Home Indemnity complains the trial court erred when it granted Pate's motion for summary judgment based upon the federal court judgment in the Riddle case.

The standard for appellate review of a summary judgment for a defendant is whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of fact as to one or more of the essential elements of the plaintiff's cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). The movant has the burden to show that there is no genuine issue of material fact, and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). Evidence favorable to the non-movant will be taken as true in deciding whether there is a disputed material fact issue that precludes summary judgment. Id. Every reasonable inference must be indulged in favor of the non-movants and any doubts resolved in their favor. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984). A summary judgment for the defendant, disposing of the entire case, is proper only if, as a matter of law, the plaintiff could not succeed upon any theories pleaded. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex.1983). Once the defendant produces sufficient evidence to establish the right to a summary judgment, the plaintiff must set forth sufficient evidence to give rise to a fact issue to avoid a summary judgment. "Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936-37 (Tex.1972).

A summary judgment cannot be affirmed on any grounds not presented in the motion for summary judgment. Hall v. Harris County Water Control and Improvement Dist....