Kniskern v. Melkonian

• Decision Date: 13 March 2007
• Docket Number: No. 06-P-552.,06-P-552.
• Parties: Leonard KNISKERN v. Kevin MELKONIAN.<SMALL><SUP>1</SUP></SMALL>
• Court: Appeals Court of Massachusetts

862 N.E.2d 450

68 Mass. App. Ct. 461

Leonard KNISKERN v. Kevin MELKONIAN.¹

No. 06-P-552.

Appeals Court of Massachusetts.

Middlesex.

Argued January 9, 2007.

Decided March 13, 2007.

J. Michael Conley, Braintree, for the plaintiff.

Michael L. Mahoney for the defendant.

Present: KAFKER, BROWN, & GREEN, JJ.

KAFKER, J.

The issues presented in the instant case concern the scope of G.L. c. 152, § 23, the exclusivity provision in the Workers' Compensation Act (Act). After injuring his shoulder, the plaintiff, Leonard Kniskern, negotiated a workers' compensation lump sum settlement agreement. The agreement included language that purported to reserve his right to pursue a pending tort claim against the same insured party for the same injury. When the defendant, Kevin Melkonian, doing business as M & M Contractors (Melkonian)—the employer in the workers' compensation case—did not file an answer in the tort case, a default judgment was entered against him. A Superior Court judge subsequently allowed Melkonian's Mass.R.Civ.P. 60(b)(6), 365 Mass. 828 (1974), motion to vacate the judgment based on the exclusivity provision of the Act, and another judge entered summary judgment for Melkonian. Kniskern appeals, contending that he should be allowed to recover both his lump sum settlement and his default judgment. We affirm the allowance of the rule 60(b)(6) motion and the subsequent award of summary judgment based on the exclusivity provision.

Background. On February 1, 2001, Kniskern went to Plywood Plus, a lumber yard owned and operated by Toohey's Lumber Center, Inc. He had gone to Plywood Plus at Melkonian's request to pick up some large windows for a house that Melkonian was building. As he was lifting a window, Kniskern slipped and fell on the ice in the parking lot and the window fell on him, fracturing his shoulder. There was no documentation regarding Kniskern's status—either as an employee or an independent contractor. He had just begun working for Melkonian.²

Thereafter, Kniskern filed a workers' compensation claim against Melkonian. Melkonian's workers' compensation insurer originally rejected Kniskern's claim, contending he was an independent contractor.

Meanwhile, on June 26, 2001, Kniskern filed a personal injury complaint in Superior Court against Toohey's Lumber Center. After Melkonian's insurer rejected Kniskern's workers' compensation claim, Kniskern amended the complaint to add Melkonian as a defendant, alleging that Melkonian was negligent in "directing and requiring [Kniskern] to work" in the icy conditions at Toohey's Lumber Center. It alleged that "[o]n information and belief, [Melkonian] claims that [Kniskern] was an independent contractor and not an employee." Melkonian did not answer the amended complaint.

On July 26, 2002, counsel agreed to continue a hearing at the Department of Industrial Accidents (DIA) until November 7, 2002. According to counsel for Kniskern, "[t]he reason for the continuance primarily, is that the issue of employee/independent contractor is likely to be otherwise decided in pending tort litigation. The parties reasonably expect this issue to be resolved by said litigation, or by settlement at the DIA, prior to 11/7/02."

On November 7, 2002, the parties entered into an agreement for redeeming liability by lump sum pursuant to G.L. c. 152, § 48. Kniskern accepted a lump sum payment of $8,500 for the injury occurring on February 1, 2001. The lump sum settlement form states: "Please give a brief history of the case and indicate why the settlement is in the employee's best interest." In response, the parties wrote: "The claimant alleged he was employed by [Melkonian] when he fell and injured his right shoulder off premises. The employer denies the claimant was an employee, and insists instead he was an independent contractor. The employee has worked since the accident and received medical care. The employee is pursuing a tort claim at present, and the parties agree that as this is a no-liability settlement,[³] the insurer has no section 15 rights as against that suit. Both parties wish to avoid the litigation off [sic] all issues necessary to the potential maintenance of this claim at the DIA. This agreement shall not bar any party from advancing any claim or defense against one another as a result of the injuries sustained by the claimant on or about 2-1-01. Both parties agree this is a fair settlement and request board approval. By consenting to this settlement, the employer agrees to abide by its terms."

On November 22, 2002, default was entered against Melkonian for failure to answer the amended complaint filed in Superior Court. In May, 2004, Kniskern settled his claim against Toohey's Lumber Center for $42,500. On June 2, 2004, Kniskern moved for an assessment of damages. In September, 2004, Melkonian moved to remove the default, claiming that he had "incorrectly" assumed that the matter was resolved when the workers' compensation claim settled. The motion was denied on the grounds that Melkonian failed to establish good cause for his failure to file a timely responsive pleading and his reasons for failing to plead were "patently false."⁴ Melkonian then filed a motion for reconsideration, arguing that the court lacked subject matter jurisdiction to hear the claim due to the exclusivity provision. The same judge denied this motion, ruling that it was "not at all clear that the jurisdiction issue favors [Melkonian]."

In February, 2005, Melkonian and Kniskern entered into a "stipulation on assessment of damages," in which they agreed that "Kniskern's gross compensatory damages total $85,000." In March, 2005, a judgment by default upon assessment of damages was entered pursuant to Mass. R.Civ.P. 55(b)(2), as amended, 423 Mass. 1402 (1996). Melkonian immediately filed a motion to set aside the default judgment pursuant to Mass.R.Civ.P. 59(e), 365 Mass. 827 (1974), and rule 60(b)(6), relying on the exclusivity provision of the Act.

The rule 60(b)(6) motion was allowed by a different judge on the ground that Kniskern "would recover twice against the same defendant for the same injury though such a result is expressly prohibited by G.L. c. 152, § 23."⁵ The judge reasoned that "[s]uch a result seriously undermines the exclusivity provision which the Supreme Judicial Court describes as `the cornerstone of the Worker's Compensation Act.'" Thus, the judge concluded: "Despite Melkonian's `patently false' reasons for not responding to the complaint, the interests of justice demand the judgment be set aside."

Thereafter, both parties filed for summary judgment. A third Superior Court judge allowed Melkonian's motion for summary judgment based on the exclusivity provision.⁶ Kniskern then appealed.

Discussion. Effect of exclusivity provision. The exclusivity provision of G.L. c. 152, § 23, as amended by St.1985, c. 572, § 34, states:

"If an employee files any claim or accepts payment of compensation on account of personal injury under this chapter, or submits to a proceeding before the department under sections ten to twelve, ... such action shall constitute a release to the insurer of all claims or demands at common law, if any, arising from the injury. If an employee accepts payment of compensation under this chapter on account of personal injury or makes an agreement under section forty-eight, such action shall constitute a release to the insured of all claims or demands at common law, if any, arising from the injury."

In the instant case, Kniskern filed a claim and accepted payment of compensation "on account of personal injury under" G.L. c. 152 pursuant to an agreement he entered into under G.L. c. 152, § 48. The exclusivity provision by its express terms applies here, thereby precluding suit against the insured employer for the same injury for which the employee received workers' compensation.

Kniskern contends nevertheless that the exclusivity provision is limited to employees, and that that issue was left unresolved in the lump sum settlement language approved by the DIA. The problem with this argument is that employee status is a condition to recovery of the lump sum settlement under the Act; if Kniskern is an independent contractor, and not an employee, he is outside of the scope of the Act and could not have received a lump sum settlement pursuant to § 48. See Nason, Koziol & Wall, Workers' Compensation § 8.1, at 173 (3d ed.2003).

As explained by the Supreme Judicial Court, "[t]he exclusivity provision has been the cornerstone of our Workers' Compensation Act. Our exclusivity provision is very broad. The Legislature has had opportunities to narrow its scope, and has not done so. `Any change in compensation law which would permit a covered employee to recover compensation benefits and, in addition, permit litigation by the employee against his employer to recover for an injury clearly covered by the ... Act is a...