Lauzon v. Strachan Shipping Co.

• Decision Date: 10 December 1985
• Docket Number: No. 85-2285,85-2285
• Citation: 782 F.2d 1217
• Parties: Francis E. LAUZON, III, Plaintiff-Appellee, v. STRACHAN SHIPPING COMPANY, Defendant, Texas Employers' Insurance Association, Defendant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1217

782 F.2d 1217

4 Fed.R.Serv.3d 410

Francis E. LAUZON, III, Plaintiff-Appellee, v. STRACHAN SHIPPING COMPANY, Defendant Texas Employers' Insurance Association, Defendant-Appellant.

No. 85-2285

Summary Calendar.

United States Court of Appeals Fifth Circuit.

Dec. 10, 1985.

Fulbright & Jaworski, Gray H. Miller, Houston, Tex., for defendant-appellant.

Joel W. Ellis, II, Galveston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before RUBIN, JOHNSON and JONES, Circuit Judges.

JOHNSON, Circuit Judge:

Texas Employers' Insurance Association ("Texas Employers' ") appeals from the district court's grant of summary judgment in favor of Francis Lauzon ("Lauzon") enforcing an award against the appellants of twenty percent of Lauzon's original Longshoremen's and Harbor Workers' Compensation Act award as a penalty for late payment of the original award. See 33 U.S.C. Secs. 914(f), 918(a). The judgment of the district court is affirmed in all respects. 602 F.Supp. 661.

I. FACTS AND PROCEDURAL HISTORY

On December 14, 1977, while working for Strachan Shipping Company ("Strachan"), Francis Lauzon was injured. On June 13, 1980, Strachan's insurance carrier, Texas Employers', entered into a $25,000.00 lump-sum settlement with Lauzon pursuant to the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. Secs. 901-950. The settlement was approved by and filed in the office of a deputy commissioner of the Department of Labor on June 13, 1980. Lauzon received payment on June 26, 1980, the thirteenth day after the order was filed. On that same day, Lauzon filed an application for a twenty percent penalty under 914(f) ¹, asserting that he was entitled to the penalty allowed by that statutory provision because the award had not been paid within ten days of filing.

The deputy commissioner conducted an investigation, determined that no hearing was necessary, and declared that the compensation award of $25,000.00 had been in default at the time it was paid. The deputy commissioner assessed against Strachan and Texas Employers' a penalty of twenty percent of the original amount as additional compensation for late payment. Strachan and Texas Employers' appealed to the Benefits Review Board of the Department of Labor which reversed the deputy commissioner's order. In January 1984, this Court vacated the Review Board's order and reinstated the award. ² In the same month, Lauzon filed a complaint in federal district court to enforce the order awarding additional compensation. Lauzon subsequently moved for summary judgment and the motion was granted. Texas Employers' motion for a new trial was denied. Texas Employers' then filed this appeal.

II. DISCUSSION

Texas Employers' first alleges that the district court erred in holding that its payment of the original award was untimely. Second, Texas Employers' asserts that the grant of summary judgment was improper because a factual issue was presented which raised equitable reasons for not assessing the penalty against it. Finally, Texas Employers' argues that the original award of the deputy commissioner was improper because it was made without a formal hearing before an administrative law judge. After careful consideration of Texas Employers' arguments, this Court is convinced that the district court correctly decided this case. The judgment of the district court is affirmed.

A. Timeliness of Payment

Texas Employers' makes two arguments in support of its contention that payment was made timely. First, Texas Employers' argues that Fed.R.Civ.P. 6(e) applies to this factual situation and that it gave Texas Employers' three extra days to pay the original compensation award. Second, Texas Employers' asserts that either because of the course of dealings between it and Lauzon, or by express agreement of Lauzon's wife, payment was made when the check became available to Lauzon at Texas Employers' place of business. This Court addresses these contentions in order.

(1) Application of Rule 6(e)

Texas Employers' argues that it actually had thirteen days in which to pay the award. This thirteen day period is calculated by taking the ten days permitted by the LHWCA and adding three days as provided by Fed.R.Civ.P. 6(e). According to Texas Employers', "Rule 6(e) extends by three days the ten day period that is otherwise allowed by section 14(f) to satisfy ... the award." Appellant's Brief at 30. Since it is undisputed that payment was made within thirteen days, payment would be timely under Texas Employers' theory, and the twenty percent assessment would then be improper.

Fed.R.Civ.P. 6(e) provides:

Additional Time After Service by Mail.

Whenever a party has the right or is required to do some act or take some proceedings within a prescribed period after the service of a notice or other paper upon him and the notice or paper is served upon him by mail, 3 days shall be added to the prescribed period.

(emphasis added). Texas Employers' asserts that it was entitled to three extra days because the LHWCA provides that the employer is to be notified by mail of an award. See 33 U.S.C. Sec. 919(e).

The Federal Rules of Civil Procedure "apply to proceedings for enforcement or review of compensation orders under ... U.S.C., Title 33, Secs. 918, 921, except to the extent that matters of procedure are provided for in that Act." Fed.R.Civ.P. 81(a)(6) (emphasis added). Although section 914 is not mentioned specifically in rule 81(a)(6), this Court has held that "a 'Section 14(f) assessment,' ... [is] a 'supplementary order declaring the amount of the default' within the meaning of section 18(a) of the LHWCA." Tidelands Marine Service v. Patterson, 719 F.2d 126 128 n. 3 (5th Cir.1983). Thus, Texas Employers' presents a strong argument that the Rules apply to the instant penalty assessment. Nevertheless, this Court need not decide that issue and we expressly reserve it.

The general applicability of the Federal Rules of Civil Procedure to section 914(f) assessments need not be determined because even if the Rules of Civil Procedure apply in this context, Rule 6(e) does not afford Texas Employers' the relief it seeks. Rule 6(e) grants three additional days to a party "required to do some act or take some proceedings within a prescribed period after the service of a notice or other paper upon him" when service is by mail. Fed.R.Civ.P. 6(e). Because section 914 requires action within ten days of filing, as opposed to service, Rule 6(e) is inapplicable.

First, this Court has stated:

Section [914(f) ] is self-executing; the 20 percent additional compensation automatically becomes due immediately upon the expiration of the ten-day period following the filing of the compensation order with the deputy commissioner.

Tidelands, 719 F.2d at 128 n. 2 (emphasis added).

Second, this approach is consistent with the rationale of Welsh v. Elevating Boats, Inc., 698 F.2d 230 (5th Cir.1983), and that rationale applies equally to the instant case. According to Welsh, the fact that notice is to be served by mail is not dispositive. The correct inquiry is whether the required actions must be performed within a prescribed period of filing or of service. If the act is to be taken after filing, the time for action begins to run from that date. If the act is to be taken after service, the three day extension of either Fed.R.App.P. 26(c) or Fed.R.Civ.P. 6(e) applies. Welsh involved a notice of appeal issue, but it also cited for the stated proposition a case involving payment of costs. See Clements v. Florida East Coast Railway Co., 473 F.2d 668 (5th Cir.1973).

The statute involved in this case is clear. According to section 914(f), an award must be "paid within ten days after it becomes due," 33 U.S.C. Sec. 914(f) (emphasis added). An award becomes "effective" when "filed in the office of the deputy commissioner...." 33 U.S.C. Sec. 921(a) (emphasis added). This Court has stated that "[t]he term 'effective' in Sec. 921(a) is equivalent to the terms 'due' and 'due and payable' in Secs. 914(f) and 918(a), respectively." Tidelands, 719 F.2d at 127 n. 1. Consequently, in the instant case, the time for payment started running when the award was filed, and not when Texas Employers' was served. Rule 6(e) does not provide Texas Employers' with relief in this instance.

(2) Arrangement with Plaintiff

Texas Employers' next argues that payment was not late in this case because "payment should be considered to have been made at the time the check was made available to claimant." Appellant's Brief at 18. Texas Employers' asserts that payment was made in this case for two alternate reasons. First, Texas Employers' asserts that because of its prior course of dealings with Lauzon, it justifiably relied on its assumption that Lauzon would come to Texas Employers' office and pick up the check. Second, Texas Employers' argues that it had an express agreement with Lauzon's wife that Lauzon would pick up the check at Texas Employers' office. ³

This Court holds that a course of conduct such as the one alleged here is insufficient as a matter of law to constitute "payment" for purposes of the LHWCA. Moreover, an express agreement with some third person other than the claimant is also insufficient as a matter of law.

First, the language of the LHWCA requires that compensation "be paid ... directly to the person entitled thereto...." 33 U.S.C. Sec. 914(a) (emphasis added). This Court is hard put to understand how issuing and holding a check in the office of the insurer is payment directly to the claimant.

Second, section 915 states that no agreement by an employee to waive the employee's right to compensation shall be valid. The District of Columbia Circuit applied this provision to an alleged waiver of the section 914(e) penalty. That court stated, "it is well established that the 'right to additional compensation under section 14(e) cannot be waived.' " Director, ...