Liberty Mut. v. Kinser

• Decision Date: 10 April 2002
• Docket Number: No. 04-01-00507-CV.,04-01-00507-CV.
• Citation: 82 S.W.3d 71
• Parties: LIBERTY MUTUAL, Appellant, v. Michael KINSER, Appellee.
• Court: Texas Court of Appeals

82 S.W.3d 71

LIBERTY MUTUAL, Appellant, v. Michael KINSER, Appellee.

No. 04-01-00507-CV.

Court of Appeals of Texas, San Antonio.

April 10, 2002.

Clifford A. Lawrence, Jr., James E. Simmons, Simmons & Lawrence, P.C., Houston, for Appellant.

Katherine M. Willis, Robert A. Allen, Allen, Stein & Durbin, P.C., Richard E. Price, Frank R. Rivas & Associations, San Antonio, for Appellee.

Sitting: PHIL HARDBERGER, Chief Justice, CATHERINE STONE, Justice and SANDEE BRYAN MARION, Justice.

Opinion by PHIL HARDBERGER, Chief Justice.

The issue presented in this appeal is whether a workers' compensation carrier, who has paid benefits to an employee for injuries suffered in an automobile accident, has a subrogation right to benefits paid the employee under the employee's personal uninsured/underinsured insurance coverage. Because we agree with the trial court that the workers' compensation carrier does not have a subrogation right to such benefits, we affirm the trial court's judgment.

BACKGROUND

In September of 1999, Michael Kinser ("Kinser") was injured in an automobile accident while in the course and scope of his employment for Southwestern Bell Telephone Company ("Southwestern Bell"). Southwestern Bell's workers' compensation carrier, Liberty Mutual, began paying Kinser's medical bills.

The driver of the other vehicle involved in the accident was at fault, and his insurance carrier, Farmers, issued a check for its policy limits of $25,000 jointly payable to Kinser and Liberty Mutual. Kinser endorsed the check over to Liberty Mutual.

Kinser had personal uninsured/underinsured motorist ("UIM") coverage through State Farm Mutual Automobile Insurance Company ("State Farm") with policy limits of $50,000. Kinser and Liberty Mutual disagreed regarding whether Liberty Mutual had a subrogation right to the UIM benefits. By on or about September 25, 2000, Liberty Mutual had paid Kinser $36,067.57 in workers' compensation benefits. Because Liberty Mutual had received $25,000 from Farmers, Liberty Mutual's outstanding lien was $11,067.57.

In view of the rival claims, State Farm interpled $11,067.57 into the court's registry and paid the balance of its policy limits, $38,932.43, to Kinser. Kinser filed an answer and a cross-claim against Liberty Mutual, asserting that the UIM benefits were the sole property of Kinser. Liberty Mutual also filed an answer and a cross-claim against Kinser, asserting that Liberty Mutual was solely entitled to the UIM benefits paid into the registry and that State Farm and Kinser had converted the UIM benefits that State Farm paid directly to Kinser.

State Farm's motion for discharge was granted as to the funds interpled into the court's registry, and the conversion claim against State Farm was abated pending the resolution of the claims between Liberty Mutual and Kinser. Kinser filed a motion for summary judgment, contending Liberty Mutual had no rights to the UIM benefits interpled into the registry and that Kinser was not liable for conversion because Liberty Mutual did not have a right or ownership interest in the UIM benefits paid to Kinser. Liberty Mutual also moved for partial summary judgment, attaching evidence that Liberty Mutual had paid $49,469.57 in workers' compensation benefits. After crediting the $25,000 received from Farmers, Liberty Mutual had an outstanding lien of $24,469.57. Liberty Mutual's motion only addressed the right to the UIM benefits interpled into the court's registry and did not address Liberty Mutual's conversion claim.

The trial court granted Kinser's motion and denied Liberty Mutual's motion. The trial court ordered that Liberty Mutual take nothing from Kinser and ordered that the funds interpled into the court's registry be paid to Kinser. The trial court then severed the claims between Liberty Mutual and Kinser from the claims pending against State Farm, making the judgment final for purposes of appeal. Liberty Mutual timely filed this appeal.

STANDARD OF REVIEW

To prevail on a motion for summary judgment, a movant must establish that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995). Where both parties move for summary judgment, we review the summary judgment evidence presented by both sides. Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex.1997). When the trial court grants one party's motion and denies the other's, the nonprevailing party can appeal both the summary judgment rendered against it, and the denial of its own motion. Holmes v. Morales, 924 S.W.2d 920, 922 (Tex.1996). The court of appeals may affirm the trial court's summary judgment or reverse and render judgment on the non-prevailing party's motion. Id.

TEXAS LABOR CODE SECTION 417.001

Section 417.001 of the Texas Labor Code, which governs a workers' compensation carrier's subrogation rights, provides in pertinent part as follows:

(a) An employee or legal beneficiary may seek damages from a third party who is or becomes liable to pay damages for an injury or death that is compensable under this subtitle and may also pursue a claim for workers' compensation benefits under this subtitle.

(b) If a benefit is claimed by an injured employee or a legal beneficiary of the employee, the insurance carrier is subrogated to the rights of the injured employee and may enforce the liability of the third party in the name of the injured employee or the legal beneficiary.

TEX. LAB.CODE ANN. § 417.001 (Vernon Supp.2001).

The Texas Labor Code was enacted as part of the state's continuing statutory revision program and was intended as a recodification only. See TEX. LAB.CODE ANN. § 1.001 (Vernon 1996); Act of May 12, 1993, 73rd Leg., R.S., ch. 269, § 6, 1993 Tex. Gen. Laws 1273. No substantive change in the law was intended by the recodification. Act of May 12, 1993, 73rd Leg., R.S., ch. 269, § 6, 1993 Tex. Gen. Laws 1273. Prior to the recodification, the subrogation rights of a workers' compensation carrier were governed by section 8303-4.05 of the Texas Revised Civil Statutes, which provided in pertinent part:

SECTION 4.05. THIRD PARTY LIABILITY. (a) If a third party is or becomes liable to pay damages for an injury or death which is compensable under this Act, the employee or legal beneficiary may seek damages from the third party. An employee or legal beneficiary who seeks damages from a third party remains entitled to pursue a claim for workers' compensation benefits under this Act.

(b) If compensation is claimed under this Act by the injured employee or the employee's legal beneficiaries, the insurance carrier is subrogated to the rights of the injured employee and may enforce in the name of the injured employee or the legal beneficiaries the liability of that other person.

Act of December 11, 1989, 71st Leg., 2nd C.S., ch. 1, § 4.05, 1989 Tex. Gen. Laws 33, repealed by Act of May 12, 1993, 73rd Leg., R.S., ch. 269, § 5, 1993 Tex. Gen. Laws 1273.

CASES INTERPRETING TEXAS LAW

A. Bogart v. Twin City Fire Ins. Co.

In Bogart v. Twin City Fire Ins. Co., the Fifth Circuit considered a workers' compensation carrier's subrogation rights with respect to UIM benefits under Texas law. 473 F.2d 619 (5th Cir.1973). In that case, the workers' compensation carrier, TransAmerica Insurance Company, argued that it had subrogation rights to the UIM benefits based on the subrogation statute "which in essence provide[d] that a workmen's compensation carrier has a right of subrogation in any recovery the employee may obtain against the third person who, because of the circumstances under which the accident occurred, has a legal liability to pay damages." 473 F.2d at 627. The district court rejected TransAmerica's argument relying on a clause in the UIM policy stating that "nothing should inure to the benefit of any workmen's compensation carrier" and on the court's conclusion that the right of subrogation existed only against a third party who was a tortfeasor. Id. at 627-28.

The Fifth Circuit noted that Trans-America's argument hinged on two word choices in the statute. Id. at 628. TransAmerica argued that "the reference to a person with a `legal liability' implie[d] a class larger than the tortfeasors themselves and include[d] uninsured motorist insurance carriers ... [bolstered by] the use of the word `damages' which it asserted to be that which is paid by a carrier like [the UIM carrier] when an insured makes a claim after an accident caused by a negligent uninsured motorist." Id. The Fifth Circuit rejected TransAmerica's argument, noting that although TransAmerica's statutory construction superficially supported its position, "a reading of the statute as a whole and the applicable Texas law convinces us that the argument is not persuasive." Id. The Fifth Circuit cited a number of Texas cases which the Fifth Circuit construed as limiting the subrogation provision to actions against the actual tortfeasor. Id. at 628-29. The Fifth Circuit also discounted TransAmerica's fear of a double recovery because (1) the double recovery that the subrogation statute sought to prohibit was recovery from both the workers' compensation carrier and the tortfeasor; and (2) the plaintiffs had suffered damages in excess of the sum of the compensation benefits and the uninsured policy benefits. Id. at 629.

B. Employers Cas. Co. v. Dyess

In Employers Cas. Co. v. Dyess, the Amarillo court rejected the Fifth Circuit's decision. 957 S.W.2d 884, 890 (Tex.App.-Amarillo 1997, pet. denied). The Amarillo court noted that the subrogation statute provided a compensation carrier subrogation rights against "some person other than the subscriber" who has a "legal liability" for the injury. Id. at 889. After examining the statutory language, the Amarillo court concluded that "the clear wording of the statute" did not support the UIM carrier's position that the workers' compensation carrier is only...