Missouri Highway and Trans. Com. v. Merritt

• Decision Date: 12 September 2006
• Docket Number: No. ED 87198.,ED 87198.
• Parties: MISSOURI HIGHWAY AND TRANSPORTATION COMMISSION, Respondent, v. David MERRITT, Appellant.
• Court: Missouri Court of Appeals

Page 278

204 S.W.3d 278

MISSOURI HIGHWAY AND TRANSPORTATION COMMISSION, Respondent, v. David MERRITT, Appellant.

No. ED 87198.

Missouri Court of Appeals, Eastern District, Division One.

September 12, 2006.

Motion for Rehearing and/or Transfer to Supreme Court Denied October 24, 2006.

Application for Transfer Denied November 21, 2006.

COPYRIGHT MATERIAL OMITTED

Alan S. Mandel, St. Louis, MO, for appellant.

Debbie S. Champion, St. Louis, MO, for respondent.

CLIFFORD H. AHRENS, Presiding Judge.

David Merritt ("Employee") appeals from the judgment of the trial court ordering that the Missouri Highway and Transportation Commission ("Employer") be paid $66,666.67 on its subrogation claim for workers' compensation benefits paid to Employee, from a sum of $100,000 held in the court registry, the proceeds from a settlement of Employee's claim for damages against third parties.

Employee was injured while operating a truck for Employer when the truck was struck by a vehicle operated by Brian Lacey, an employee of Bates Sales Company ("Bates Sales"). Employee filed a statutory claim for workers' compensation for injuries that occurred within the course and scope of his employment. Employer paid $122,380.68 in workers' compensation benefits to Employee for his injuries and losses resulting from the accident of March 10, 1998.

Employee filed a common law action against Lacey and Bates Sales for his damages resulting from the accident. Employee's attorney, Alan Mandel, agreed to protect Employer's subrogation interest in Employee's claim against Lacey and Bates Sales. Employee subsequently settled his claim against Lacey and Bates Sales for $100,000, the full amount of the insurance coverage available, and he and his attorney, collected $100,000 from the insurer. The attorney's fees were $33,333.33.

On May 6, 2003, Employer filed a petition against Employee claiming subrogation and conversion, and against Mandel alleging breach of fiduciary duty. Employee and Mandel filed answers. Mandel also filed a motion for interpleader, paid the disputed funds into the registry of the trial court, and was dismissed as a defendant. The parties filed a joint stipulation of facts, and the trial court held a hearing.

The trial court issued a judgment on September 29, 2005. Pursuant to Employee's motion to amend the judgment, which the trial court granted in part and denied in part, the trial court issued an amended judgment on October 17, 2005. In the amended judgment, the trial court ordered that of the money in the court registry, $66,666.67 be paid to Employer and $33,333.33 be paid to Mandel as his attorney's fees. Employee now appeals.

In his first point relied on, Employee contends that the trial court erred in entering judgment in favor of Employer because it misapplied section 287.150 RSMo 2000¹ in that "the plain meaning of the statute leads to an ambiguous and illogical result, the legislative intent was not considered in applying the statute, and the underlying equitable nature of the statute was not applied in entering judgment."²

We will sustain the judgment of the trial court in a bench-tried case unless it is not supported by substantial evidence, is against the weight of the evidence, or the trial court erroneously declared the law or misapplied the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Statutory construction is a matter of law, not of fact, and accordingly our review is de novo, and we give no deference to the trial court's determination of law. Westwood Partnership v. Gogarty, 103 S.W.3d 152, 158 (Mo.App.2003).

This Court uses rules of statutory construction "`that subserve rather than subvert legislative intent.'" Oberreiter v. Fullbright Trucking Co., 117 S.W.3d 710, 714 (Mo.App.2003) (quoting Kincade v. Treasurer of State of Missouri, 92 S.W.3d 310, 311 (Mo.App.2002)). We will not construe a statute so as to work unreasonable, oppressive, or absurd results. Id. In the absence of a statutory definition, the words contained in a statute will be given their plain and ordinary meaning. Id. Provisions of a whole legislative act must be construed together, and all provisions must be harmonized if it is reasonably possible to do so. Id. If the language of the statute is clear and unambiguous, there is no room for statutory construction. Owsley v. Brittain, 186 S.W.3d 810, 815 (Mo.App.2006).

"The workers' compensation statutes provide a no-fault system of compensation for workers." Bi-State Development Agency v. Watson, 40 S.W.3d 403, 405 (Mo.App.2001). The purpose of the subrogation statute is to benefit and protect the employer liable for compensation, and it is designed to provide indemnity for compensation payable by the employer. Id. The statute is designed to insure that there is not a double recovery by the injured employee, i.e. recovery from both an employer and from a third-party tortfeasor. See id.; Rose v. Falcon Communications, 6 S.W.3d 429, 431 (Mo.App. 1999).

Section 287.150.3 is not ambiguous. The method of apportioning the proceeds of a third-party recovery have been set forth in the statute and upheld and interpreted by case law. The Missouri Supreme Court in Ruediger v. Kallmeyer Bros. Service, 501 S.W.2d 56, 59 (Mo. banc 1973) interpreted section 287.150.3 to require the following method of calculation:

(1) the expenses of the third party litigation should be deducted from the third party recovery; (2) the balance should be apportioned in the same ratio that the amount paid by the employer at the time of the third party recovery bears to the total amount recovered from the third party; (3) the amounts due each should be paid forthwith; (4) the amount paid the employee should be treated as an advance payment on account of any future installments of compensation; and (5) in a case such as presented here, the employee should be entitled to future compensation benefits in the event the amount paid him as an advance is exhausted under the provisions of the statute.

Missouri courts have continued to use this method, and further clarified how to calculate it. See Kerperien v. Lumberman's Mutual Casualty Co., 100 S.W.3d 778, 780 (Mo. banc 2003).³ It applies when the employee and third-party tortfeasor effect a settlement as well. See id. See also Bi-State Development Agency v. Gurley, 101 S.W.3d 344 (Mo.App.2003); Parker v. Laclede Gas Co., 770 S.W.2d 461 (Mo.App. 1989).

Employee acknowledges that the trial court followed the formula set forth by the Missouri Supreme Court in Ruediger and Kerperien, but contends that this leads to an illogical result. He contends that the trial court should have followed Barker v. H & J Transporters, Inc. 837 S.W.2d 537 (Mo.App.1992), which he asserts modified the Ruediger formula, to avoid a purportedly unfair result. Assuming arguendo that Barker did purport to modify Ruediger, it would be inapplicable as we are constitutionally bound to follow the most recent controlling decisions of the Missouri Supreme Court, such as Kerperien. Custer v. Hartford Ins. Co., 174 S.W.3d 602, 609 (Mo.App.2005). We further note that the appellate court in Barker stated that it was in fact applying the language of section 287.150.3 RSMo 1986, and the formula of Ruediger. Barker, 837 S.W.2d at 540-41.⁴ It did not purport to modify the Ruediger formula.⁵ In the present case, the trial court applied the correct formula as set forth in Ruediger and Kerperien.

Applying the calculations in this case, Employer was entitled to the $66,666.67 remaining from the settlement proceeds after Mandel's attorney's fees of $33,333.33 were paid, and Employee receives nothing from the proceeds of the settlement. The issue is that Employee contends that the application of the plain, ordinary, unambiguous language of the statute to the facts in his case, as determined by the trial court, lead to an absurd result. We disagree.

Nothing in the statute indicates that the legislature did not contemplate a situation in which the Employee would, after attorney's fees have been deducted, recover from the third-party tortfeasor an amount less than the employer or its insurer has or will be obligated to pay for workers' compensation. Simply put, in that circumstance the employer is indemnified for the entire amount recovered after the deduction of attorney's fees. This is not an absurd result. Under the subrogation statute, the employee becomes the trustee of an express trust for the benefit of the employer for that part of the recovery subject to subrogation. See William H. Pickett, P.C. v. American States Family Insurance Co., 857 S.W.2d 309, 313 (Mo.App.1993); Parker, 770 S.W.2d at 463. Employee does not get a double recovery, and Employer does not receive any sort of windfall. The statute is clear and unambiguous and must be enforced as written. Point denied.

In his second point relied on, Employee argues that the trial court erred in applying section 287.150 because it violates the Missouri Constitution "in that it abrogates a remedy provided by law to injured persons, violates the open courts provision of the Missouri Constitution by barring access to a remedy and violates the equal protection laws found in Art. I, sec. [2] of the Missouri Constitution."

The question of the constitutionality of section 287.150 is not properly before this Court. Employee failed to raise this issue at the earliest opportunity and failed to have the trial court rule on the issue of the constitutionality of the statute. See Heidbrink v. Swope, 170 S.W.3d 13, 15-16 (Mo.App.2005). Timeliness is a factor of particular import when the issue involved is a constitutional one. Constitutional questions must be raised at the earliest possible opportunity that good pleading and orderly procedure will permit given the circumstances. Lindquist v. Scott Radiological Group, Inc., 168 S.W.3d 635, 654 (Mo.App.2005) (citing Callier v. Director of Revenue, 780 S.W.2d 639 (Mo. banc 1989)). To properly raise a...