Maryland Sound Industries, Inc. v. Simmons

• Decision Date: 09 April 2003
• Docket Number: No. 4D01-4124.,4D01-4124.
• Citation: 845 So.2d 922
• Parties: MARYLAND SOUND INDUSTRIES, INC. and The Hartford, Appellants, v. Roy Alan SIMMONS, Bernadette Mooney, Pavilion Partners, a Delaware General Partnership, Innovative Stage Concepts, Inc., a Pennsylvania Corp., and Superstar Stages & Tops, Inc., a Florida corporation, Appellees.
• Court: Florida District Court of Appeals

845 So.2d 922

MARYLAND SOUND INDUSTRIES, INC. and The Hartford, Appellants, v. Roy Alan SIMMONS, Bernadette Mooney, Pavilion Partners, a Delaware General Partnership, Innovative Stage Concepts, Inc., a Pennsylvania Corp., and Superstar Stages & Tops, Inc., a Florida corporation, Appellees.

No. 4D01-4124.

District Court of Appeal of Florida, Fourth District.

April 9, 2003.

Rehearing Denied June 2, 2003.

Richard A. Sherman of Law Offices of Richard A. Sherman, P.A., Fort Lauderdale, and Michael Reidhammer of Law Offices of Alan L. Landsberg, Hollywood, for appellants.

Terrence E. Kehoe of Law Offices of Terrence E. Kehoe, Orlando, and Eric H. Faddis of Faddis, Oldham & Smith, P.A., Orlando, for Appellees Roy Alan Simmons and Bernadette Mooney.

TAYLOR, J.

In this appeal from a final judgment granting equitable distribution, a workers' compensation carrier and its insured contend that the trial court erred in holding that the carrier's lien did not attach to the injured plaintiff's jury award of non-economic damages. We agree and reverse the order granting equitable distribution.

Roy Alan Simmons, a resident of Maryland and employee of Maryland Sound Industries, Inc., was injured in Palm Beach County while working upon a stage at the South Florida Fairgrounds. Simmons and his wife, Bernadette Mooney, filed a negligence suit against three defendants: 1) Pavilion Partners; 2) Innovative Stage Concepts, Inc.; and 3) Superstar Stages and Tops, Inc. During the course of the litigation, Simmons received workers' compensation benefits from The Hartford Insurance Company (The Hartford), through a benefits policy issued by The Hartford to Maryland Sound Industries. The Hartford paid the workers' compensation amount and notified the parties of a pro-rata lien upon any judgment or settlement recovered by Simmons and Mooney. Simmons's negligence claim proceeded to trial against the three defendants. The jury found liability and awarded damages as follows:

Future Medical Expenses: $ 25,175.00 Past Lost Earnings: $ 78,000.00 Past Pain and Suffering: $ 20,000.00 Future Pain and Suffering: $ 80,000.00 TOTAL: $203,175.00

No damages were awarded to Bernadette Mooney.

While a number of post-trial motions were pending, the parties settled the case for $220,000.00. Thereafter, because of the workers' compensation lien and the parties' disagreement over allocation of the settlement proceeds, the plaintiff moved for equitable distribution. At the hearing, one main issue was whether The Hartford was permitted to calculate its lien recovery based on the entire settlement amount or whether the jury's $100,000 award for pain and suffering was to be subtracted prior to determining the proper amount of the lien. After deciding that Maryland law controlled equitable distribution, the court concluded that the $100,000 in non-economic damages were not subject to The Hartford's lien or subrogation rights. In its written order, the court first noted that Maryland law was silent on the subject. It then reasoned that because The Hartford had no obligation to pay Simmons for pain and suffering and did not advance funds for such damages, it thus had no standing to claim recoupment for those damages. Accordingly, the court held that the $100,000 for pain and suffering would be excluded from the amount available for equitable distribution.

In apportioning the amount of the lien as to the remaining $120,000, the trial court made the following calculations: it determined that 45% of plaintiff's total recovery was for non-economic damages and 55% was for economic damages; it then allocated the attorney's fees and costs in those same percentages. After deducting the allocated attorney's fees and costs from the economic damages, the court reached the following result:

Total recovery of economic damages: $ 120,000 less attorney's fees (55% of $88,000): $ 48,400 less costs (55% of $38,000): $ 20,900 TOTAL: $ 50,700

The court thus granted the plaintiff's Motion for Equitable Distribution and awarded The Hartford $50,700. The Hartford and Maryland Sound Industries appealed, contending that the trial court erred in excluding the $100,000 non-economic damages when calculating the amount of equitable distribution. According to appellants, the lien attached to the total amount of the settlement.

We first note that the trial court correctly applied Maryland law in ruling on this issue. See Carriers Ins. Co. v. LeRoy, 309 So.2d 35, 37 (Fla. 3d DCA 1975)

(noting that "matters bearing upon the execution, validity, interpretation and obligations of contracts are determined by the laws of the situs where the contract is made"). As such, the appropriate standard of review is de novo. See Transportes Aereos Nacionales, S.A. v. De Brenes, 625 So.2d 4, 5 (Fla. 3d DCA 1993)("A trial court's determination of foreign law is treated as a ruling on a question of law over which an appellate court exercises plenary review.").

Pursuant to the Maryland Workers' Compensation Act:

The employer has the exclusive right to pursue a cause of action against the third-party tortfeasor for two months. Thereafter, the employee also has a right to bring an action against the third-party, but the employer retains subrogation rights in the employee's claim. The employer's subrogation interest in the third-party claim acts as a "statutory lien" on any recovery the employee may obtain from the third-party. In other words, if the employee recovers compensation from the third-party tortfeasor, the employer is entitled to obtain reimbursement for its workers' compensation payments from the proceeds. Where recovery from the third party is less than the employee is entitled to receive in benefits, the employee retains the right to recover the difference between the amount received from the third party and the amount payable under the statute.

Franch v. Ankney, 341 Md. 350, 357-58, 670 A.2d 951, 954-55 (Md.1996) (citations omitted).

Maryland Code Annotated [Labor and Employment] § 9-902(e) (2002), which governs actions against third parties, provides:

(e) If the covered employee or the dependents of the covered employee recover damages, the covered employee or dependents:

(1) First, may deduct the costs and expenses of the covered employee or dependents for the action;

(2) Next, shall reimburse the self-insured employer, insurer, Subsequent Injury Fund, or Uninsured Employers' Fund for:

(I) The compensation already paid or awarded; and

(ii) Any amounts paid for medical services, funeral expenses, or any other purpose under Subtitle 6 of this title; and

(3) Finally, may keep the balance of the damages recovered.

Unfortunately, as both parties have recognized, Maryland law has not specifically addressed the issue of whether an insurance company or employer may base its lien on the entire amount an employee recovers from a third-party suit or whether, because the workers' compensation award did not specifically provide for pain and suffering, such amount should be subtracted prior to calculating the lien. Nevertheless, Maryland law does provide some insight into whether the trial court's holding in this case was proper.

In Keyworth v. Israelson, 240 Md. 289, 214 A.2d 168 (Md.1965), an employer obtained a lien against an injured worker's settlement fund. The...