Romero v. Cotton Butane Co., Inc.
| Decision Date | 28 October 1986 |
| Docket Number | 9163,Nos. 9082,s. 9082 |
| Citation | 105 N.M. 73,728 P.2d 483,1986 NMCA 106 |
| Parties | Fred A. ROMERO, Plaintiff-Appellant, v. COTTON BUTANE CO., INC., and Northwestern National Casualty Company, its insurer, Defendants, and Vicente B. Jasso, Superintendent of Insurance of the State of New Mexico, and the New Mexico Subsequent Injury Fund, Defendants-Appellees. William HATHAWAY, Plaintiff-Appellant, v. The ZIA COMPANY, United States Fidelity & Guaranty Company, insurer, Defendants, and Vicente B. Jasso, Superintendent of Insurance of the State of New Mexico, and the New Mexico Subsequent Injury Fund, Defendants-Appellees. |
| Court | Court of Appeals of New Mexico |
This consolidated appeal from the granting of motions for summary judgment in favor of the New Mexico Subsequent Injury Fund raises a question of first impression with regard to the Subsequent Injury Act, NMSA 1978, Sections 52-2-1 through -13.1 That question is: may a worker, who brings a workmen's compensation action against his employer and its insurer and who also alleges his right to payment from the Subsequent Injury Fund, continue his action against the Fund following a settlement with the employer and insurer? We reverse and remand.
Each worker filed an amended complaint for workmen's compensation benefits from his respective employer, the employer's compensation carrier, and the Fund. See Sec. 52-2-5(A). Each worker alleged that, as a result of his prior injury and disability, his present disability is materially and substantially greater than that which would have resulted solely from his second injury, and thus he was entitled to contributions from the Fund.
Each worker subsequently entered into a stipulation with his employer and its compensation carrier. Each stipulation provided for the settlement of the claims and liabilities of those parties by the payment of workmen's compensation benefits for the injury that arose out of a specified second employment accident. Each stipulation also provided that any rights that the worker may have against the Fund were not to be prejudiced or diminished. The Fund was not a party to and did not sign either stipulation.
Each stipulation for a lump-sum settlement was approved and adopted by the trial court by the entry of judgment. Each judgment also barred any further action by the employer and its insurance carrier against the Superintendent of Insurance and the Fund.
The Superintendent and the Fund then filed a motion for summary judgment against each worker. The motions sought the dismissal of the amended complaints on the theory that the Fund's "liability is derivative from that of the employer and no action can be maintained solely against [the Fund] by [the workmen.]" The trial court found that no issues of material fact existed and that summary judgment would be appropriate as a matter of law. It then granted each motion. Both workers appeal from these orders.
The workers maintain that the Subsequent Injury Act provides a cause of action against the Fund that is separate and distinct from a cause of action against the employer. In support of this contention, the workers distinguish the Fund's liability from that of the employer. In reliance on this contention, the workers reason that in settling their claims against their employers they did not affect their own rights against the Fund. They also maintain that the Fund should be estopped from denying its liability because it now takes a position inconsistent with the position taken during the settlement process. As this last contention was not presented to the trial court by either worker, it will not be considered for the first time on appeal. Wolfley v. Real Estate Commission, 100 N.M. 187, 668 P.2d 303 (1983). The remaining arguments will be discussed below.
The Fund maintains that the Subsequent Injury Act does not permit an injured worker to recover additional compensation benefits from the Fund once he has settled for a lump-sum compensation payment with his employer. This premise is based upon the Fund's interpretation of the Act and upon various appellate decisions. Our interpretation of the Act will follow our discussion of those decisions.
The Fund has referred to various out-of-state decisions for the propositions that the Act only establishes a means to reimburse an employer rather than to pay a worker directly and that the Fund's liability derives only from the employer's liability. The Fund's argument, in effect, is that the Act creates limited rights against the Fund and the workers' claim is not among those rights. We note that Arduser v. Daniel International Corp., 7 Kan.App.2d 225, 640 P.2d 329 (1982), does support these propositions in a factual setting similar to ours. The court determined that the statutory language regarding payments from the fund to the worker was procedural only and did not disclose any right to maintain an action directly against that fund. Thus, the fund's liability was dependent upon and derived from the employer's liability.
The Fund next cites Cabe v. Popham, 444 S.W.2d 910 (Ky.1969), which we find distinguishable on several points. The worker first received an award that, in part, ordered the Special Fund to reimburse the employer for a portion of the award. The worker then sued a third-party tortfeasor and subsequently settled that suit. The settlement relieved the employer from further liability for compensation benefits under the initial award and gave the worker an amount that exceeded the amount still owed him under the initial award. The worker then sought direct recovery from the Special Fund for the amount which the fund had previously been ordered to reimburse to the employer. The court held that since the employer's liability had been discharged by the third-party settlement and the fund's liability under the initial award was only for reimbursement to the employer, the fund could not be held liable to the worker.
While Cabe v. Popham applied the "derivative liability" principle, Kentucky also requires, by statute, that compensation awarded against the Special Fund is to be paid directly by the employer. More commonly, however, the employer is required to pay only for the disability attributable to the second injury, and the employee must apply directly to a second or subsequent injury fund for his additional compensation. See 2 A. Larson, The Law of Workmen's Compensation, Sec. 59.31(f) (1983).
From Levi v. Special Indemnity Fund, 389 P.2d 620 (Okla.1964), the Fund again extracts the proposition that a second injury fund's liability derives from the employer's liability and that a suit solely against the fund cannot be maintained. The claimant there sought to reopen a prior award from the fund because of a change in his condition, and the court held that he must first obtain a determination of greater disability against his employer before the fund could be held liable for an additional amount. The court also found that a settlement with the employer precluded the claimant from seeking a determination of additional primary liability on the part of the employer. Thus the settlement, in effect, precluded an additional award against the fund. The workers in our case, however, are not seeking to increase a prior award of compensation from the Fund. See NMSA 1978, Sec. 52-1-56.
The Fund then cites White v. Weinberger Builders, Inc., 397 Mich. 23, 242 N.W.2d 427 (1976), as further support of its propositions. Regardless of the merits of that case, the Michigan Supreme Court, in Clark v. Cadillac Gage, 416 Mich. 38, 94, 330 N.W.2d 376, 379 (1982), limited White's "derivative liability" language to that case only and further said:
The concept of "derivative liability" in Michigan has further limitations. In Truss v. Marian Manor Nursing Home, Inc., 327 N.W.2d 923 (Mich.App.1983), the court observed that the principle does not control when the fund's interests differ substantially from that of the employer. The court reaffirmed the rule that the fund's right to appeal is independent of an employer's right to appeal or admit liability.
In addition to the distinctions noted between the Fund's authorities and the circumstances of this case, one additional, primary distinction pertains--none of those authorities construe the New Mexico Subsequent Injury Act. While the decisions from other jurisdictions have been helpful in identifying the issue and suggesting an approach, our own statutory language and cases require a different result.
The legislative intent of the Act has been set forth in Fierro v. Stanley's Hardware, 104 N.M. 50, 716 P.2d 241 (1986) and in Gutierrez v. City of Gallup, 102 N.M. 647, 699 P.2d 120 (Ct.App.1984), cert. quashed, Jasso v. City of Gallup, 102 N.M. 734, 700 P.2d 197 (1985), and its legislative history has been discussed in Vaughn v. United Nuclear Corporation, 98 N.M. 481, 650 P.2d 3 (Ct.App.), cert. quashed, Jasso v Vaughn, 98 N.M. 478, 649 P.2d 1391 (1982). Neither will be reiterated here. The basic nature of the Act is to "make the employer liable for only the amount of disability attributable to the second injury, while the Fund pays the difference between that amount and the total amount to which the worker is entitled as a result of both of his injuries." Gutierrez v. City of Gallup, 102 N.M. at 650, 699 P.2d at 123.
We interpret the several provisions of the Act as it applies to this appeal in the following manner (the emphasis is added):
1. Section 52-2-2(C):...
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