Panzella v. Skou

• Decision Date: 14 May 1979
• Docket Number: No. 77 Civ. 4938 (HFW).,77 Civ. 4938 (HFW).
• Citation: 471 F. Supp. 303
• Parties: David PANZELLA, Plaintiff, v. Ove SKOU, Defendant.
• Court: U.S. District Court — Southern District of New York

471 F. Supp. 303

David PANZELLA, Plaintiff, v. Ove SKOU, Defendant.

No. 77 Civ. 4938 (HFW).

United States District Court, S. D. New York.

May 14, 1979.

Zimmerman & Zimmerman, New York City, by Morris Cizner, New York City, of counsel, for plaintiff.

Haight, Gardner, Poor & Havens, New York City, by Richard K. Matanle, II, John M. Toriello, New York City, of counsel, for defendant.

OPINION

WERKER, District Judge.

In this negligence action, plaintiff longshoreman, David Panzella, seeks damages from defendant shipowner, Ove Skou, for personal injuries allegedly sustained while he was working aboard defendant's vessel in New York harbor. Defendant has moved for leave to serve an amended answer and for summary judgment. Fed.R.Civ.P. 15(a), 56(b).

Motion To Amend The Answer

The rule in this circuit is that "leave to amend should be freely granted when justice so requires . . . especially where . . . there is no good reason not to grant it." Gumer v. Shearson, Hammill & Co., 516 F.2d 283, 287 (2d Cir. 1974); see Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Since plaintiff has failed to demonstrate that prejudice would result from such amendment, defendant's motion to amend its answer to assert the affirmative defense of assignment of this cause of action to the employer is granted. Fed.R.Civ.P. 15(a).

Motion For Summary Judgment

For purposes of this motion the basic underlying facts are not in dispute. On May 22, 1974, plaintiff, a longshoreman employed by the Pittston Stevedoring Corporation¹ ("stevedore"), allegedly sustained injuries while assisting in the discharge of defendant's ship, the M/S MADS SKOU. Affid. of Richard K. Matanle, II,² at 1. Since these injuries were compensable under the Longshoremen's and Harbor Workers' Compensation Act (the "Act"), 33 U.S.C. §§ 901-50, plaintiff filed a claim under the Act and received compensation from his employer, the stevedore, for both this temporary total disability³ and his permanent partial disability.⁴ Matanle affid., at 2. An informal conference was conducted by an Office of Workmen's Compensation claims examiner on September 8, 1975 to assess the nature and extent of plaintiff's damages and final payment upon this claim was made on September 26, 1975 in accordance with the recommendations made in the Memorandum of Informal Conference filed by the claims examiner on September 19, 1975. Id. at 2 & exhs. K, L. In total, plaintiff received $9,773.99 from the stevedore to compensate his loss. Id. at exh. L.

On October 11, 1977, over two years after the informal conference, plaintiff commenced this action to recover damages in negligence against the defendant for injuries sustained in the May 22, 1974 accident. Although the Act does not preclude a third party lawsuit by an injured longshoreman who has been compensated by his employer, section 933(b) of the statute mandates that any such action be commenced within six months after the longshoreman has accepted "compensation under an award in a compensation order filed by the deputy commissioner or Board." Under this provision,

acceptance of such compensation . . . shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award.

33 U.S.C. § 933(b).

In his motion for summary judgment, defendant shipowner contends that plaintiff is without standing to sue in the instant case since his acceptance of compensation without commencement of a third party action within six months operated as an assignment of his claim to the stevedore, plaintiff's employer. Defendant's Memorandum of Law, at 12. Plaintiff, however, alleges that there has been no assignment since the Memorandum of Informal Conference filed by the claims examiner does not constitute "an award" under section 933(b). According to plaintiff, only the deputy commissioner may issue a compensation order based upon a settlement between the parties. Consequently, plaintiff urges, delegation of such duty to a claims examiner is not authorized by the Act.⁵ Plaintiff's Memorandum In Opposition, at 1.

Resolution of this case, therefore, turns on what constitutes an award within the meaning of section 933(b). When the Act was passed in 1927, it required an injured employee to either pursue a third party action or accept the statutory scheme of relief thereby triggering an automatic assignment of his third party claim to his employer. Longshoremen's and Harbor Workers' Compensation Act, ch. 509, § 33(b), 44 Stat. 1440 (1927). In order to make employees aware of their election of remedies, courts construing the statute held that there could be no assignment of an employee's claim unless there was "some formal act by the Deputy Commissioner establishing an award of compensation." Grasso v. Lorentzen, 149 F.2d 127, 128 (2d Cir.), cert. denied, 326 U.S. 743, 66 S.Ct. 57, 90 L.Ed. 444 (1945). While a formal order was not required, Toomey v. Waterman S.S. Corp., 123 F.2d 718, 721 (2d Cir. 1941), these early decisions held that a document signed only by a claims examiner was not an award within the meaning of the act. See, e. g., Grasso v. Lorentzen, 149 F.2d at 129, aff'g 56 F.Supp. 51 (S.D.N.Y.1944); Sessa v. Weeks Stevedoring Co., 56 F.Supp. 50 (S.D. N.Y.1943).

The need for such strict construction of the award provision became less necessary, however, when, in 1959, Congress eliminated the automatic assignment provision and amended the statute to provide an injured employee who had accepted compensation with a six month period in which to commence his third party action. Longshoremen's and Harbor Workers' Compensation Act, Pub.L.No. 86-171, § 33(b), 73 Stat. 391 (1959). The harsh result of involuntary preclusion contemplated by the Grasso and Toomey courts therefore was mitigated. See Francavilla v. Bank Line, Ltd., 470 F.Supp. 94, 96 (S.D.N.Y.1979); S.Rep.No. 428, 86th Cong., 1st Sess. 2, reprinted in 1959 U.S.Code Cong. & Admin. News, pp. 2134, 2135. Moreover, since the regulations promulgated to implement the Act permit the deputy commissioner to delegate his statutory duties to a claims examiner, 20 C.F.R. § 702.312, it appears that an informal act by an authorized claims examiner should also constitute a section 933(b) award. Since there is no evidence that the claims examiner in the instant case was acting without authority and for the reasons expressed in the carefully considered decisions of Judges Duffy, Nickerson and Carter, I join in liberally construing the award provision and agree with the recent decisions holding that a memorandum issued by a claims examiner pursuant to an informal conference attended by the parties or their representatives constitutes an award under section 933(b) without issuance of a formal compensation order. Francavilla v. Bank Line, Ltd., 470 F.Supp. 94 (S.D. N.Y. 1979) (Duffy, J.); Hernandez v. Costa Armatori, S.p.A., 467 F.Supp. 1064 (E.D.N. Y.1979) (Nickerson, J.); Rodriguez v. Compass Shipping Co., 456 F.Supp. 1014 (S.D.N. Y.1978) (Carter, J.); see Liberty Mutual Insurance Co. v. Ameta & Co., 564 F.2d 1097 (4th Cir. 1977). But cf. Perez v. Costa Armartori, S.p.A., 465 F.Supp. 1211 (S.D.N. Y.1979) (Knapp, J.) (absent evidence that claims examiner was expressly authorized to file compensation order on deputy commissioner's behalf, a Memorandum of Informal Conference signed by a claims examiner is not an award).⁶

In Francavilla, Hernandez, and Rodriguez, the plaintiff, an injured longshoreman like plaintiff David Panzella herein, had his statutory claim adjudicated at an informal conference conducted by a claims examiner. Final payment to the plaintiff was made pursuant to the Memorandum of Informal Conference and the case was closed in accordance with appropriate administrative procedures. Although a final compensation order was neither issued nor signed by the deputy commissioner in any of these cases, it was clear in each instance that the parties understood that they were settling their outstanding statutory claims. Since a court determining whether a section 933(b) award exists must look to "the realities of the situation" rather than "the labels employed," Sabol v. Merritt Chapman & Scott Corp., 241 F.2d 765, 767 (2d Cir. 1957), I can find "no reason why a `technical administrative lapse should . . . control the legal significance of the settlement agreement'" reached by the parties. Francavilla v. Bank Line, Ltd., 470 F.Supp. at 97, quoting Rodriguez v. Compass Shipping Ltd., 456 F.Supp. at 1020. Accordingly, I hold that the compensation received in the instant case constitutes "an award" under section 933(b). Plaintiff's failure to commence a third party action within six months therefore operated as an assignment of his claims to the stevedore.

Plaintiff further contends that even if it is found that he received an award under section 933(b), he should be able to prosecute his claim under the judicially-created conflict of interest exception. Czaplicki v. The Hoegh Silvercloud, 351 U.S. 525, 76 S.Ct. 946, 100 L.Ed. 1387 (1956). Defendant, on the other hand, alleges that the 1959 and 1972 amendments of the Act have eliminated the exemption. I am in accord with the recent decisions sustaining the conflict of interest exception. E. g., Hernandez v. Costa Armatori S.p.A., 467 F.Supp. at 1066-67; Rodriguez v. Compass Shipping Co., 456 F.Supp. at 1023; Bandy v. Bank Line Ltd., 442 F.Supp. 882, 884-86 (E.D.Va.1977). Consequently, I hold that where a longshoreman sufficiently demonstrates that he has a conflict of interest with his stevedore-assignee, he will be permitted to commence a third party suit in his own name even though there technically has been an assignment of his claim under section 933(b) of the Act.

Plaintiff suggests that that an inference of a conflict of interest may be drawn from the general...