Kitchin v. Burlington Northern, Inc., CV 73-L-236.

• Decision Date: 18 September 1974
• Docket Number: No. CV 73-L-236.,CV 73-L-236.
• Parties: Barbara J. KITCHIN, as Guardian and next friend of Theodore Mark Kitchin, Incompetent, Plaintiff, v. BURLINGTON NORTHERN, INC., and the Travelers Insurance Company, Defendants.
• Court: U.S. District Court — District of Nebraska

382 F. Supp. 42

Barbara J. KITCHIN, as Guardian and next friend of Theodore Mark Kitchin, Incompetent, Plaintiff, v. BURLINGTON NORTHERN, INC., and the Travelers Insurance Company, Defendants.

No. CV 73-L-236.

United States District Court, D. Nebraska.

September 18, 1974.

Kenneth Cobb and Richard P. Nelson, Lincoln, Neb., for plaintiff.

Richard A. Knudsen, Robert T. Grimit and James A. Snowden, Lincoln, Neb., for defendant Burlington Northern, Inc.

Fredric H. Kauffman and Kevin Colleran, Lincoln, Neb., for defendant The Travelers Ins. Co.

MEMORANDUM

VAN PELT, Senior District Judge.

This matter is before the Court upon the application filed by plaintiff, being filing 46, for approval of a settlement of the above entitled tort action for the sum of $750,000.00 and upon the separate application for expenses and fees, being filing 47, filed by Nelson, Harding, Marchetti, Leonard & Tate, and Kenneth Cobb (hereinafter referred to as the Nelson-Harding firm). Following argument on the motion an evidentiary hearing was requested, granted and held on September 11 and 12, 1974, at which both plaintiff and defendant insurance company introduced evidence. The matter is now ready for decision.

The above captioned case is the outgrowth of a head-on collision which occurred on June 10, 1973 in Richardson County, Nebraska, between a motor vehicle driven by Barbara J. Kitchin and in which her husband, Theodore Mark Kitchin, and two minor children, Twila and Mark, were passengers, and a motor vehicle driven by an employee of Burlington Northern, Inc., whom plaintiff claimed was engaged in company business. Mr. Kitchin was an employee of the law firm above named which represents plaintiff and has received benefits under the Nebraska Workmen's Compensation Law under protection furnished the law firm by The Travelers Insurance Company (hereinafter referred to as Travelers). Travelers, while nominally a party defendant, has been aligned with plaintiff in the prosecution of the suit.

Travelers objects to the application for expenses and fees and its counsel urges that it had a written agreement with counsel for plaintiff relating to fees which should govern. Travelers indicated an unwillingness to sign a release as requested by Burlington Northern, Inc. until the application for expenses and fees (filing 47) was determined but during the evidentiary hearing did sign the requested release.

The application for approval of settlement is based upon Section 48-118, Revised Statutes of Nebraska, Reissue of 1974. The application for expenses and fees is based on the same section which has been interpreted by the Nebraska Supreme Court in Gillotte v. Omaha Public Power District, 189 Neb. 444, 203 N. W.2d 163.

This statute provides for the right of subrogation to an employer in personal injury actions where a third person is liable to the employee. It also provides for notice to the employer or his insurer before action is filed on behalf of an injured employee. In Gillotte, in discussing this procedure, the Nebraska Supreme Court said:

". . . If either party fails to join in the making of the claim and the prosecution of the suit, the party bringing the claim or prosecuting the suit shall be entitled to deduct from any amount recovered the reasonable expenses of making such recovery, including a reasonable sum for attorney's fees. The expenses and fees shall be prorated to amounts payable to the employer or his insurer under the right of subrogation and to amounts in excess of the subrogation, `and which expenses and attorney's fees shall be apportioned by the court between the parties as their interests appear at the time of such recovery.'" (448, 203 N.W.2d 163, 165)

Section 48-118, supra, provides in part in the paragraph containing the above quoted language:

"Each shall have an equal voice in the claim and the prosecution of such suit and any dispute arising shall be passed upon by the court before which the case is pending and if no action is pending then by the district court in which such action could be brought. If either party after the giving of such notice fails, by and through his attorney, to join in the making of such claim and the prosecuting of the suit, such party shall waive any and all claims or causes of action for improper prosecution of such suit or inadequacy of a settlement made in accordance herewith, and the party bringing the claim or prosecuting the suit shall be entitled to deduct from any amount recovered the reasonable expenses of making such recovery, including a reasonable sum for attorney's fees, which expenses and attorney's fees shall be prorated to the amounts payable to the employer or his insurer under the above right of subrogation and to the amount in excess of such amount payable to the employer or his insurer under his right of subrogation, and which expenses and attorney's fees shall be apportioned by the court between the parties as their interests appear at the time of such recovery. If either party makes the claim or prosecutes such action without the giving of a notice to the other party, the party bringing the claim and prosecuting such action shall not deduct expenses or attorney's fees from the amount payable to the other party.

"If the employee or his personal representative or the employer or his compensation insurer join in the prosecuting of such claim and are represented by counsel, the reasonable expenses and the attorney's fees shall be, unless otherwise agreed upon, divided between such attorneys as directed by the court before which the case is pending and if no action is pending then by the district court in which such action could be brought. A settlement of any lawsuit commenced under the provisions of this section shall be void unless (1) such settlement and the distribution of the proceeds of the settlement thereof are agreed upon in writing by the employee or his personal representative and the insurer of the employer if there be one, and if there be no insurer, then by the employer, or (2) in the absence of such agreement, such settlement is approved by the court before which the action is pending."

This case is a tort action to recover damages for substantial and permanent injuries to Theodore Mark Kitchin, born October 30, 1934 and who it is claimed is incompetent, and to recover medical and hospital expense which exceeded $45,000.00 to date of trial, and for pain and suffering, past and future. Mr. Kitchin was a senior law student at the University of Nebraska law college in Lincoln, with an unusual background in labor law, who was employed by the Nelson-Harding firm at their Lincoln office and earning $26,000.00 per year at the time of the accident. The offer of settlement hereinbefore mentioned is some indication of the strength of plaintiff's claim and as to the possible liability of the Burlington Northern, Inc. Mrs. Kitchin was the driver of the vehicle in which her husband and two minor children were riding. Mrs. Kitchin and the two minor children received only minor cuts and bruises and have no permanent disability. No suit has been filed by Mrs. Kitchin or the minors as individuals.

After a jury was examined on voir dire, and during the noon adjournment before the final exercise of challenges by the parties, a settlement was arrived at wherein Burlington Northern, Inc. tendered to plaintiff $750,000.00 in full payment of all injuries and damage to plaintiff and to Mrs. Kitchin and to the two children. The offer was accepted by counsel for plaintiff and for Travelers and by Mrs. Kitchin, individually and as mother of the two minor children, as being a fair and reasonable settlement. Subsequently, as the Court is advised, the proposed settlement was submitted to the County Court of Lancaster County, Nebraska, in which the guardianship proceedings of Theodore Mark Kitchin are pending and which in Nebraska is the probate and guardianship court. The Court is advised that the following distribution was proposed to and approved by the County Court:

To Barbara J. Kitchin and as wife of Theodore Mark Kitchin the sum of $50,000.00.

To Barbara J. Kitchin as mother and next friend of Twila Kitchin, daughter, age 14, and Mark Anthony Kitchin, son, age 13, the sum of $1,000.00.

To The Travelers Insurance Company the sum of $45,674.80, which is the amount they have paid pursuant to the Nebraska Workmen's Compensation Court.

To Citibank & Trust Company the sum of $225,000.00 in trust for the medical expense of Theodore Mark Kitchin and then to his heirs (See Exhibit 11 for exact terms).

To Barbara J. Kitchin, as guardian of Theodore Mark Kitchin, incompetent, the sum of $428,325.20.

The Court has considered the proposed distribution and given particular weight to the fact that it has been approved by a distinguished and long time Judge of the County Court of Lancaster County, Nebraska, who is well versed in guardianship matters (See Exhibit 12). The Court is also advised that Mrs. Kitchin approves the proposed distribution. Counsel for plaintiff likewise recommend its approval.

The Court finds the settlement of $750,000.00 tendered by Burlington Northern, Inc., and the distribution thereof as hereinbefore set forth, is fair and reasonable and that such such settlement and distribution of the proceeds of settlement should be and is hereby approved by this court.

The application for expenses and fees is based upon the above mentioned section of the Nebraska statutes. The Gillotte case, above mentioned, is relied upon by counsel for plaintiff, who claims that under the teachings of the Gillotte case, this Court has discretion to prorate and apportion the reasonable expenses and fees between an employer and employee as their interests appear at the time of recovery. Such is the statement of the Gillotte case. It is the claim of Travelers that the Gillotte case is not applicable herein and that the agreement between counsel for plaintiff and counsel for defenda...