Liberty Mut. Ins. Co. v. Ameta & Co.

• Decision Date: 18 October 1977
• Docket Number: Nos. 76-1961 and 76-1962,s. 76-1961 and 76-1962
• Citation: 564 F.2d 1097
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. AMETA & COMPANY, Owner of the M/V Concordia Ameta, and Maurice Melson, Appellees. LIBERTY MUTUAL INSURANCE COMPANY, Appellee, v. AMETA & COMPANY, Owner of the M/V Concordia Ameta, and Maurice Melson, Appellants.

Page 1097

564 F.2d 1097

LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. AMETA & COMPANY, Owner of the M/V Concordia Ameta, and Maurice Melson, Appellees.

LIBERTY MUTUAL INSURANCE COMPANY, Appellee, v. AMETA & COMPANY, Owner of the M/V Concordia Ameta, and Maurice Melson, Appellants.

Nos. 76-1961 and 76-1962.

United States Court of Appeals, Fourth Circuit.

Argued May 2, 1977.

Decided Oct. 18, 1977.

John R. Crumpler, Jr., Norfolk, Va. (Harry E. McCoy, Seawell, McCoy, Dalton, Hughes, Gore & Timms, Norfolk, Va., on brief), for appellants in 76-1962 and for appellees in 76-1961.

L. S. Parsons, Norfolk, Va. (Parsons, Steffen & Moore, Norfolk, Va., on brief), for appellant in 76-1961 and for appellee in 76-1962.

Before BUTZNER, Circuit Judge, FIELD, Senior Circuit Judge, and HALL, Circuit Judge.

K. K. HALL, Circuit Judge:

This case involves an appeal by the plaintiff, Liberty Mutual Insurance Company, and cross-appeals by the defendants, Ameta and Company, a shipowner, and Maurice Melson, a longshoreman, from determinations adverse to each of them made by the district court in its rulings upon the cross-motions for partial summary judgment filed by the parties. Also at issue is the judgment for the defendants entered following a trial to the court on the issues unresolved by the summary judgment motions.

The legal issues involved deal with interpretations of various of the 1972 amendments to the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 901 et seq. (hereinafter referred to as the Act) and the relationships that legally exist between the insurance carrier for a stevedoring company-employer, the shipowner, the injured longshoreman-employee, and the respective counsel in a factual setting wherein the injured employee is paid benefits under the Act, and also obtains a voluntary settlement from the shipowner whose alleged negligence caused the injury to the longshoreman-employee.

We agree in part and disagree in part with the various rulings of the district court and accordingly affirm in part, reverse in part, and remand for the entry of a judgment in conformance with this opinion.

I. FACTS

Maurice Melson (hereinafter referred to as Melson) was employed as a longshoreman by Southern Stevedoring Corporation (hereinafter referred to as stevedoring co.) on October 14, 1974. On that day, while he was working on the CONCORDIA/AMETA (hereinafter referred to as the ship), owned by Ameta and Company (hereinafter referred to as the shipowner), he sustained foot and ankle injuries.

The stevedoring co. was insured against liability for such injuries by Liberty Mutual Insurance Company (hereinafter referred to as the insurance carrier). Melson's employer promptly notified the Bureau of Employee's Compensation, U.S. Department of Labor, of the injury, ¹ and the insurance carrier for the stevedoring co. thereafter made compensation payments to Melson pursuant to the Act and the contract between the stevedoring co. and the insurance carrier. He received payments from October 14, 1974, the date of the accident, through December 12, 1974. The sum paid was $1,220.28, ² and was distributed to Melson Thereafter, Melson, through counsel, asserted a claim for damages for the personal injuries he received against the shipowner based upon negligence principles and general maritime law. ⁴ No actual litigation was ever filed, and Melson's claim was settled prior to suit. ⁵

voluntarily by the insurance carrier without a formal award. ³

Under the terms of the settlement, Melson received $1,000.00 and released the shipowner and ship from any liability which they had to him arising out of the accident. In addition to the release, Melson and the shipowner jointly executed an indemnity agreement wherein the shipowner agreed to indemnify Melson up to $1,000.00 for all claims or lawsuits brought by the insurance carrier to recover any compensation payments. It was undisputed that the shipowner was aware of the payments by the insurance carrier to Melson as compensation and its lien for such payments.

Unable to recoup its lien, the insurance carrier filed suit against the shipowner and Melson seeking to recover from them the entire sum of the payments it had made to Melson $1,220.28. In count one of the complaint, the insurance carrier alleged that by virtue of its payment of compensation benefits to Melson, any causes of action he possessed because of his injuries against the shipowner were subrogated by operation of law to it for prosecution. 33 U.S.C. §§ 933(b), (d), and (h).

In count two, the insurance carrier, seeking to stand in Melson's shoes, asserted a claim against the ship based upon general negligence principles and sought money damages.

An amended complaint added a third count which asserted that the insurance carrier was entitled to recover the monies it paid Melson on non-statutory-equitable grounds alleging that Melson was a trustee, was doubly enriched, and was unjustly enriched. Thereafter, the cross-motions for partial summary judgment were filed.

The insurance carrier filed a nonspecific motion generally seeking summary judgment in its favor and recovery of the monies it had expended. Melson responded by arguing that his financial liability, if any, was limited to the monies he actually received in the negotiated settlement which was $666.66 ($1,000.00 settlement less $333.33). ⁶

The shipowner filed its cross-motion for summary judgment raising various legal defenses. It contended that count one of the complaint was improper because the Act allows a suit by the insurance carrier ⁷ against the shipowner only after a compensation "award" had been made, and then only after six months had passed wherein the employee had not filed suit. Since the compensation claim by Melson had not been controverted, but was settled voluntarily The shipowner further argued that counts two and three were improper because the Act gave injured employees their exclusive remedy against the shipowner, 33 U.S.C. § 905(b). Since these counts sought recovery on non-statutory grounds, they were legally insufficient.

then there was no "award" under 33 U.S.C. § 933(b); no assignment under 33 U.S.C. § 933(d); and no subrogation under 33 U.S.C. § 933(h).

Judge MacKenzie held that: (1) the claims of Melson were subrogated to the insurance carrier without the need for a formal "award" relying upon the prompt pay requirements of 33 U.S.C. § 914(a) and the intent of the Act; (2) that the insurance carrier could recover in its subrogation suit by virtue of the Act itself relying upon 33 U.S.C. §§ 933(b), 907(h), and by virtue of an equitable assignment without proof of further negligence on the part of the shipowner; (3) that the insurance carrier would be granted judgment, but only for the $1,000.00 which represented the settlement proceeds; (4) that the insurance carrier could further pursue its negligence claim against the shipowner for the remainder of its lien ($1,220.28 less $1,000.00 = $220.28) if it chose to; and (5) that any damages awarded against the shipowner were not subject to any "equitable credit" or apportionment of fault between the shipowner and stevedore. ⁸

The $220.28 negligence suit was then tried to the court, and Judge Kellam entered judgment for the defendants, Melson and the shipowner. The insurance carrier appealed. Melson and the shipowner cross-appealed.

II. THE "AWARD" PROBLEM

The liability of the shipowner to the insurance carrier turns in part upon whether there was an "award" under the Act. The shipowner contends that since Melson received compensation voluntarily, without a formal award, then under 33 U.S.C. § 933(b), 933(d), and 933(h), ⁹ there was no assignment to the stevedoring co. and thence to the insurance carrier of Melson's rights against the shipowner to seek recovery for the personal injuries sustained by Melson. The insurance carrier contends: (1) that a formal award is not necessary under the Act all that is required is payment and acceptance of compensation; (2) that the various documents filed in this case ¹⁰ with the Bureau of Employees Compensation, U.S. Department of Labor, collectively constitute an "award" under the Act where the deputy commissioner has received and filed them; (3) that a voluntary settlement under analogous workmen's The key to the statutory assignment of rights created by 33 U.S.C. § 933(b) lies in the entire phrase:

compensation laws constitutes an "award"; and (4) that the policy of the Act, designed to promote settlements, would be frustrated if a stevedoring company-employer was required to controvert every claim in order to protect its lien rights. While we agree in principle with the insurance carrier, our focus under 33 U.S.C. § 933(b) is somewhat broader than the position it asserts.

"Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner or Board shall operate as an assignment to the employer . . . ."

Two decisions and reference to parallel language regarding "awards" in various sections of the Act demonstrate that an award under a compensation order does not require formal entry of an award per se. Rather, the focus should properly be upon some act of ratification of compensation, whether formal or informal, and the subsequent acceptance of compensation by the claimant.

In Didier v. Crescent Wharf & Warehouse Co., 15 F.Supp. 91 (S.D.Cal.1936), a suit wherein the court was required to interpret the term "compensation order" as contained in 33 U.S.C. § 921(a), it was held that:

". . . the phrase 'a compensation order' in clause (a) of section 921, title 33, U.S.C.A., means any order relating to compensation, whether granting it or denying it."

15 F.Supp. 91, 93. Emphasis in original.

In Grasso v. Lorentzen, 56 F.Supp. 51 (S.D.N.Y.1944), aff'd, 149 F.2d 127 (2nd Cir. 1945), cert. denied, 326 U.S. 743, 66 S.Ct. 57, 90 L.Ed. 444 (1945), a case involving 33 U.S.C. § 933(b), the court was...