Jones v. McCullough

• Decision Date: 27 January 1998
• Docket Number: Docket No. 199502
• Citation: 576 N.W.2d 698,227 Mich.App. 543
• Parties: Daniel JONES and Merry Jones, Plaintiffs-Appellants, v. Earl McCULLOUGH, Personal Representative of the Estate of Billy Joe Causey, Jr., Deceased, Defendant-Appellee, and Auto-Owners Insurance Company, Intervening Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 698

576 N.W.2d 698

227 Mich.App. 543

Daniel JONES and Merry Jones, Plaintiffs-Appellants, v. Earl McCULLOUGH, Personal Representative of the Estate of Billy Joe Causey, Jr., Deceased, Defendant-Appellee and Auto-Owners Insurance Company, Intervening Defendant-Appellee.

Docket No. 199502.

Court of Appeals of Michigan.

Submitted Jan. 14, 1998, at Grand Rapids.

Decided Jan. 27, 1998, at 9:00 a.m.

Released for Publication April 30, 1998.

Bloom, Kavanaugh & Lonnerstater by Gary M. Bloom, Livonia, for Plaintiffs-appellants.

Ryan, Jamieson and Morris by Ronald W. Ryan, Kalamazoo, for Auto-Owners Ins. Co.

Before NEFF, P.J., and SAWYER and MURPHY, JJ.

PER CURIAM.

Plaintiffs appeal as of right from the circuit court's order holding that the entire settlement amount recovered in a third-party tort action was subject to intervening defendant, Auto-Owners Insurance Company's, worker's compensation lien pursuant to M.C.L. § 418.827(5); M.S.A. § 17.237(827)(5). We reverse and remand.

In the course of his employment with Brookside Auto Company, plaintiff Daniel Jones drove to an automobile auction. His wife, plaintiff Merry Jones, accompanied him. En route to the auction, both plaintiffs were injured when a vehicle being driven by defendant Earl McCullough's decedent collided with their vehicle. Plaintiffs filed this negligence action, seeking damages for their injuries and for loss of consortium. The parties settled the case, which was then dismissed.

The case was reopened when the court granted a motion by Auto-Owners Insurance Company, Brookside's worker's compensation insurance carrier, who had paid benefits to Mr. Jones, to intervene to obtain reimbursement for the amounts paid pursuant to statute. At issue was the $85,000 settlement paid for Mr. Jones' injuries and his wife's derivative claim for loss of consortium. Plaintiffs claimed that Auto-Owners was entitled to reimbursement from Mr. Jones' share of the proceeds but not from his wife's share, which they urged the court to apportion at fifty percent. Auto-Owners argued that the entire amount was subject to its lien, but if it was not, Mrs. Jones' share should be apportioned at no more than five percent. Without determining the portion of the proceeds attributable to Mrs. Jones' derivative claim, the trial court ruled that pursuant to Piper v. Pettibone Corp., 450 Mich. 565, 542 N.W.2d 269 (1995), Auto-Owners' lien applied to the entire settlement amount.

The statute at issue provides as follows:

In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his or her dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall immediately be paid to the employee or his or her dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits. [M.C.L. § 418.827(5); M.S.A. § 17.237(827)(5).]

When an employee sues a third-party tortfeasor on the employee's own behalf, "any recovery" for damages resulting from the employee's personal injuries is subject to the employer's or carrier's right of reimbursement. Because the derivative claim of the employee's spouse is not an amount that the employee is entitled to recover but is instead payable for the spouse's own injury, i.e., loss of consortium, the spouse's share of the recovery is not subject to the lien. See, e.g., Beaudrie v. Anchor Packing Co., 206 Mich.App. 245, 249, n. 2, 520 N.W.2d 716 (1994); Tucker v. Clare Bros. Ltd., 196 Mich.App. 513, 493 N.W.2d 918 (1992); Hearns v. Ujkaj, 180 Mich.App. 363, 370, 446 N.W.2d 657 (1989); Fritsch v. Magnaflux Corp., 150 Mich.App. 573, 389 N.W.2d 94 (1986); Treadeau v. Wausau Area Contractors, Inc., 112 Mich.App. 130, 316 N.W.2d 231 (1982); Logan v. Edward C. Levy Co., 99 Mich.App. 356, 297 N.W.2d 664 (1980); Manninen v. Warner & Swasey Co., 80 Mich.App. 253, 263 N.W.2d 341 (1977); Lone v. Esco Elevators, Inc., 78 Mich.App. 97, 259 N.W.2d 869 (1977). When, on the other hand,...