Nestle Food Co. v. Crews

• Decision Date: 18 July 2000
• Docket Number: No. 92,858.,92,858.
• Citation: 11 P.3d 205,2000 OK 58
• Parties: NESTLE FOOD COMPANY and Constitution State Service Company, a subsidiary of Travelers Property Casualty Corp., Plaintiffs/Appellants, v. Patricia L. CREWS and American States Insurance Company, Defendants/Appellees.
• Court: Oklahoma Supreme Court

11 P.3d 205

2000 OK 58

NESTLE FOOD COMPANY and Constitution State Service Company, a subsidiary of Travelers Property Casualty Corp., Plaintiffs/Appellants, v. Patricia L. CREWS and American States Insurance Company, Defendants/Appellees.

No. 92,858.

Supreme Court of Oklahoma.

July 18, 2000.

Mark T. Koss, McNulty, Koss & Associates, Oklahoma City, Oklahoma, for the appellants.

Mark E. Bialick and Rodney D. Stewart, Oklahoma City, Oklahoma, for the appellee.¹ OPALA, Justice:

¶ 1 The issue presented on certiorari is whether the statute-based district court claim brought against the tortfeasor's insurer by the employer and its workers' compensation carrier was erroneously dismissed as time-barred. We answer in the affirmative.

I

ANATOMY OF LITIGATION

¶ 2 In an action by Nestle Food Company (Employer or Nestle) and its workers' compensation carrier, Constitution State Service Company (CSSC), against the insurer of a third-party tortfeasor, American States Insurance Company (tortfeasor's insurer, ASIC) and against the claimant-employee,² the procedural posture of the claim now before us is virtually identical to that recently addressed in ACCOSIF v. American States Insurance Co.³ Like the claim in ACCOSIF, this demand also falls within the provisions of 85 O.S.1991 § 44(a).⁴ Nestle and CSSC seek to recover a portion of the amount paid to an employee/claimant in an earlier compensation claim's settlement. As in ACCOSIF, the correct theory of the pressed claim against the claimant is that of the compensation carrier's statutory pro tanto recoupment of claimant's tort recovery. As against the tortfeasor's insurer (ASIC), the demand stems from wrongful payout.⁵ The terms of 85 O.S.1991 § 44(a) explicitly provide a remedy against a tortfeasor's insurer's wrongful payout in breach of its duty to a known statutory assignee of a chose in action⁶ still in insurer's hands.⁷ Both here and in ACCOSIF the "theoretical underpinnings" of the actionable statute_based demand against the third-party actor's insurer are "akin to those advanced in Shebester v. Triple Crown Insurers⁸ and in a trilogy of attorney's lien cases."⁹

Antecedent Litigation

¶ 3 Patricia Crews (Crews or claimant), while working for Nestle, was involved in a vehicular accident on 25 August 1993, which is alleged to have resulted from the negligence of a third party. The latter was insured by ASIC at the time of the collision. Soon after the accident, the employer notified ASIC by letter of its subrogation interest and subsequently received an acknowledgment of notice coupled with denial that ASIC's insured bore any responsibility.

¶ 4 Crews, who sought workers' compensation benefits for her injuries, was paid $70,317.07 by CSSC, the employer's carrier. Exactly one day before the two-year statute of limitation would have expired, Crews sued the third-party actor and his insurer, ASIC, to recover in tort.¹⁰

¶ 5 In April 1998, nearly three years after CSSC's discharge of its compensation liability to Crews, the claimant settled her tort action with ASIC (the tortfeasor's insurer) for the amount of $25,000.00. This action by the employer (Nestle) and its carrier (CSSC), was brought on 5 February 1999, ten months after the settlement payout.

History of Present Litigation

¶ 6 Declaring it time-barred as a subrogation claim,¹¹ the trial court, acting on ASIC's motion, dismissed the action brought by the employer and CSSC against ASIC.¹² The Court of Civil Appeals (COCA), joining in characterizing the claim against the tortfeasor's insurer (ASIC) as one for subrogation, affirmed the nisi prius dismissal.

¶ 7 We granted certiorari to provide, once again, precedential guidance for the correct analysis of the claim in contest.

II

AS IN ACCOSIF V. AMERICAN STATES INS. CO., THIS ACTION, WHICH FALLS WITHIN THE TERMS OF 85 O.S.1991 § 44(A), AND IS PRESSED FOR A STATUTE-BASED PRO TANTO RECOUPMENT OF A WORKERS' COMPENSATION PAYOUT, IS NOT A SUBROGATION CLAIM PRESCRIBED BY THE PROVISIONS OF 85 O.S.1991 § 44(C)

¶ 8 As this case presents a fact pattern which is strikingly similar to that in ACCOSIF, the same analysis must be applied.¹³ ASIC argues that because this claim stood mischaracterized by the pleadings of the plaintiff (Employer and CSSC), its incorrect nisi prius label (that of subrogation) should now be forced upon the confusion's originator — the plaintiff below.

¶ 9 The terms of 85 O.S.1991 § 44¹⁴ unveil the clear difference between subrogation and the claim before us.¹⁵ Had the employer and CSSC initiated their claim against the tortfeasor's insurer (ASIC) before Crews (the workers' compensation claimant) brought her suit, or had the employer and CSSC joined in her tort claim, the action would have come under the law's subrogation rubric.¹⁶ This is not the case here. The claim against ASIC is clearly for the insurer's wrongful payout in breach of its statutory duty to a known ex lege assignee of the claimant's chose in action.¹⁷

¶ 10 Neither CSSC's non-joinder in the claimant's tort litigation nor its nonparticipation in the claimant's subsequent settlement with the third-party tortfeasor can operate here as a bar to CSSC's pursuit of its present demand for the legislatively-sanctioned portion of Crews' settlement.

¶ 11 Because the CSSC's claim cannot be characterized as one for subrogation, the two-year time bar — that would have been triggered by the date of the on-the-job accident — does not extinguish CSSC's remedy now pressed before us.

III

THE THREE-YEAR LIMITATION PERIOD PROVIDED BY THE TERMS OF 12 O.S.1991 § 95(2) APPLIES HERE

¶ 12 Simply because the face of the CSSC's petition alludes to subrogation does not confine its actionable demand to that theory, nor does it operate to forfeit the insured employer's (Nestle's) opportunity to recover on the theory of statutory pro tanto recoupment.¹⁸ To saddle the plaintiffs with the two-year subrogation bar would be unwarranted. ¶ 13 In short, ASIC is not protected (from liability to CSSC) by the time bar on which the nisi prius dismissal was rested. As stated in ACCOSIF, "The terms of § 44(a)¹⁹ provide that a workers' compensation carrier may recover its pro tanto share from a settlement between the tortfeasor and the claimant .... The tortfeasor's insurer cannot escape its responsibility to the plaintiff if its settlement remittance to the claimant was in fact a wrongful payout, i.e., one that was made with notice of ACCOSIF's [the workers' compensation carrier's] § 44(a) claim."²⁰

¶ 14 The terms of 12 O.S.1991 § 95 (2) govern "an action upon a liability created by statute other than a forfeiture or penalty."²¹ According to the terms of 85 O.S.1991 § 44(a), an injured employee who recovers from a third-party tortfeasor is liable to the employer (or to an employer's insurer) who had paid the compensation benefits. ASIC's own accountability to CSSC for wrongful payout also is statute-based. The limitation to be applied is the three-year period prescribed by the terms of 12 O.S.1991 § 95(2) for one's pursuit of liability created by statute.²² The limitation period was triggered when ASIC, while on notice of CSSC's statutory recoupment claim, paid Crews the total amount of the agreed-upon settlement. CSSC's remedy would stand barred three years from the date of ASIC's payment.²³

IV

PROSPECTIVE APPLICATION OF ACCOSIF

¶ 15 The ACCOSIF decision settled a point of law that, though somewhat elusive and perhaps difficult to analyze, is nonetheless governed by a clearly-worded statute. The text of 85 O.S.1991 § 44²⁴ pertinent to this controversy has remained the same since its enactment in 1915. The underlying common-law concept embodied in the § 44 language, which operates as an ex lege assignment of a compensation claimant's chose in action to the compensator-employer (or to its carrier), has never been an instrument of confusion.²⁵

V

SUMMARY OF TODAY'S PRONOUNCEMENT

¶ 16 The claim was ill-classified (at nisi prius and by COCA) as a time-barred subrogation demand. The dismissal must be reversed insofar as it adversely affects the appealing employer (and its workers' compensation carrier), and the cause be remanded.

¶ 17 The so-called Conley²⁶ test — also invoked in ACCOSIF²⁷ — teaches that a petition "must not be dismissed for failure to state a legally cognizable claim unless the allegations indicate beyond any doubt that the pleader can prove no set of facts which would entitle him to relief."²⁸ It cannot be said here that the plaintiff's claim stands barred if it must be viewed as an action for a compensation insurer's statute-based pro tanto share of its § 44(a) assignment. After remand, the trial court, on due consideration of the law pronounced herein, must rule whether (a) the Conley²⁹ test is satisfied and (b) its shield protects the claim from dismissal.³⁰

¶ 18 On certiorari previously granted upon the petition brought by the employer and its workers' compensation carrier, the Court of Civil Appeals' opinion is vacated; the trial court's dismissal order is reversed and the cause remanded for further proceedings to be consistent with this pronouncement.

¶ 19 SUMMERS, C.J., HARGRAVE, V.C.J., and LAVENDER, BOUDREAU and WINCHESTER, JJ., concur.

¶ 20 KAUGER and WATT, JJ., concur in part and dissent in part.

¶ 21 HODGES, J., disqualified.

1. Identified herein are only those counsel for the parties whose names appear on the certiorari briefs.

2. The claimant, Patricia L. Crews, a party defendant in the district court, is not actively engaged in this cause which was brought from dismissal of the claim against the tortfeasor's insurer alone. The dismissal order was certified for immediate appeal under the terms of 12 O.S.Supp.1993 § 994. See infra note 12.

3. 2000 OK 21, 1 P.3d 987.

4. The terms of 85 O.S.1991 § 44 provide in pertinent part:

(a) If a worker entitled to compensation under the Workers' Compensation Act is injured or killed by the negligence or wrong of another...