Schulz v. General Wholesale Co-op. Co., Inc.

• Decision Date: 11 February 1976
• Docket Number: No. 40052,40052
• Citation: 195 Neb. 410,238 N.W.2d 463
• Parties: Burnell O. SCHULZ, Appellant, v. GENERAL WHOLESALE COOPERATIVE COMPANY, INC., a Nebraska Cooperative Corporation, et al., Appellees.
• Court: Nebraska Supreme Court

Page 463

238 N.W.2d 463

195 Neb. 410

Burnell O. SCHULZ, Appellant, v. GENERAL WHOLESALE COOPERATIVE COMPANY, INC., a Nebraska Cooperative Corporation, et al., Appellees.

No. 40052.

Supreme Court of Nebraska.

Feb. 11, 1976.

Syllabus by the Court

1. Section 48--118, R.R.S.1943, provides in part: 'If the employee or his personal representative or the employer or his compensation insurer join in the prosecuting of such claim and are represented by counsel, the reasonable expenses and the attorney's fees shall be, unless otherwise agreed upon, divided between such attorneys as directed by the court before which the case is pending and if no action is pending then by the district court in which such action could be brought.'

2. That portion of section 48--118, R.R.S.1943, involved here, ordinarily does not apply to require a division of attorneys' fees where the subrogation interest of the employer or its insurance carrier is fully and adequately represented by its own counsel and where the services of the employee's attorney were not relied upon to effect the subrogation recovery.

Nelson, Harding, Marchetti, Leonard & Tate, Kenneth Cobb, Scott E. Daniel, Lincoln, Hutton & Garden, Norfolk, for appellant.

Jewell, Otte, Gatz, Collins & Domina, Norfolk, for appellees.

Heard before SPENCER, NEWTON, and CLINTON, JJ., and HENDRIX and BUCKLEY, District Judges. BUCKLEY, District Judge.

In this appeal, the issue is whether counsel for the injured employee in a tort claim should be allowed attorney's fees from that portion of the total settlement attributable to the workmen's compensation subrogation claim of his employer. The trial court denied such allowance and we affirm.

The plaintiff, Burnell O. Schulz, an employee of defendant General Wholesale Cooperative Company, Inc., was seriously injured on February 13, 1973, while unloading a railroad car in Norfolk, Nebraska. A door inside the car came off the track and fell on him, causing various injuries which ultimately resulted in a medical evaluation of 100 percent permanent disability.

Immediately following the accident, defendant St. Paul Fire and Marine Insurance Company, the workmen's compensation insurer for plaintiff's employer General Wholesale, retained the firm of Jewell, Otte, Gatz, Magnuson & Collins to represent its interest as to plaintiff's compensation claim and to investigate the accident with a view toward a subrogation claim against any third party responsible. This third party turned out to be Pacific Fruit Express Company, owner of the railroad car, and it was duly notified of St. Paul's subrogation claim.

From the date of the accident, February 13, 1973, until May 10, 1974, plaintiff was not represented by counsel. During this time, all investigation regarding the accident and plaintiff's medical condition, and all contact and negotiations with representatives of Pacific Fruit Express were accomplished by Arlen Magnuson from the Jewell, Otte law firm, which was done solely in connection with St. Paul's subrogation claim. On May 10, 1974, plaintiff retained counsel, including Kenneth Cobb, to represent him in his own claim against Pacific Fruit Express. On May 20, 1974, Magnuson and Cobb met to discuss and coordinate their respective interests. After that date, all further investigation and negotiations with Pacific Fruit Express were done by Cobb, which resulted in a total settlement of $125,000 in October 1974. No lawsuit was ever filed. To complete the settlement, a petition for approval of a lump sum settlement was granted by the District Court for Madison County, Nebraska. The terms of the settlement provided that St. Paul would receive $12,409.99 in refund for the medical and hospital expenses and temporary total disability payments which it had previously paid to and for the plaintiff. St. Paul would also receive full credit for its future workmen's compensation liability in the amount of $34,936.75. Plaintiff received the balance of.$112,590.01.

Cobb's basic contention is that at the time he was retained by plaintiff, Magnuson's investigation for St. Paul had not established to the satisfaction of Pacific Fruit Express either its liability for the accident of plaintiff's total disability as a result thereof; that Cobb's efforts did result in a settlement based upon agreed liability and total disability; that St. Paul benefited from those efforts in recovering in full its subrogation claim; and that, therefore, Cobb should be entitled to an attorney's fee from St. Paul for the benefit it received.

Plaintiff's claim is based upon that part of section 48--118, R.R.S.1943, which provides in part that: 'If the employee or his personal representative or the employer or his compensation insurer join in the prosecuting of such claim and are represented by counsel, the reasonable expenses and the attorney's fees shall be, unless otherwise agreed upon, divided between such attorneys as directed by the court before which the case is pending and if no action is pending then by the district court in which such action could be brought.' The statute provides no specific guidance as to what the court should consider in determining a proper division of attorneys' fees and expenses between counsel.

We have considered this question twice previously. In Gillotte v. Omaha Public Power Dist., 189 Neb. 444, 203 N.W.2d 163, the injured employee sued the third party and obtained a verdict of $79,263. The employer's compensation carrier did not retain counsel to represent its subrogation interest until suit was filed. Thereafter, employer's counsel filed the appropriate pleadings claiming subrogation interest, did not participate in the trial (at the request of plaintiff's attorney), and furnished some minor research assistance. The judgment was successfully defended on appeal, in which the employer took no part. The total advantage to the employer was over $29,000 and the trial court allowed an attorney's fee to plaintiff of $10,000. In affirming this award, we said: 'The workmen's compensation insurer contends that where the employer or his workmen's compensation insurer is represented by its own counsel and its attorney offers to assist in the preparation and trial, the...