Sears, Roebuck and Co. v. Baca

• Decision Date: 30 April 1984
• Docket Number: No. 83SC90,83SC90
• Citation: 682 P.2d 11
• Parties: SEARS, ROEBUCK AND CO., Petitioner, v. Mike L. BACA, Richard J. Wise, Peter D. Nims, Individually and as members of the Industrial Commission of the State of Colorado, the Industrial Commission of the State of Colorado, Charles McGrath, the Director of the Division of Labor of the State of Colorado, and Mellis R. Dyson, Respondents.
• Court: Colorado Supreme Court

Page 11

682 P.2d 11

SEARS, ROEBUCK AND CO., Petitioner, v. Mike L. BACA, Richard J. Wise, Peter D. Nims, Individually and as members of the Industrial Commission of the State of Colorado, the Industrial Commission of the State of Colorado, Charles McGrath, the Director of the Division of Labor of the State of Colorado, and Mellis R. Dyson, Respondents.

No. 83SC90.

Supreme Court of Colorado En Banc.

April 30, 1984.

Richard B. Rose, John R. Frye, Jr., Denver, for petitioner.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., James R. Hubbard, Robert C. Lehnert, Asst. Attys. Gen., Denver, for respondents.

Scott W. Lawrence, Denver, for respondent Mellis R. Dyson.

ROVIRA, Justice.

We granted certiorari to review the decision of the court of appeals in Sears, Roebuck & Co. v. Baca, 670 P.2d 1244 (Colo.Ct.App.1983), dismissing an appeal brought by Sears, Roebuck & Co. (Sears) against the Industrial Commission of Colorado (Industrial Commission or Commission) and the Colorado Division of Labor (Division). The Commission denied as untimely Sears' request for participation by the subsequent injury fund (SIF or fund) in a workmen's compensation proceeding. Sears sought review of the Commission's order, claiming that the Commission's failure to promulgate rules and regulations governing SIF practice and application violated Sears' due process rights. The court of appeals dismissed Sears' appeal without discussing the due process issue, concluding that the SIF is not a legal entity capable of being joined in workmen's compensation proceedings. We granted certiorari and now affirm in part, reverse in part, and remand for further proceedings.

I.

The claimant in this case, Mellis Dyson, worked for ten years as a mechanic in the automotive department at Sears. On the advice of his doctor, Dyson discontinued his employment in mid-1979, several months after injuring his left knee in the second of two job related accidents. In 1975, after injuring his left knee for the first time, Dyson received a workmen's compensation award for a thirty-percent permanent partial disability. The second injury occurred on January 10, 1979, when Dyson tripped and fell on his left knee again. Dyson filed a workmen's compensation claim based on this later injury, and a hearing was held on August 28, 1980. At the hearing, two doctors testified as to Dyson's impaired condition. Both concluded that the 1979 accident had resulted in a permanent partial disability at the left knee, yet both felt Dyson could return to work on a limited basis. The referee from the Division disagreed, however, and issued an order on October 9, 1980, stating:

"The medical evidence indicates that the claimant is permanently and totally disabled from returning to his life long work as an automobile mechanic. He is severely limited in lifting, must alternately sit and stand in relatively short periods of time, has had four surgical operations on the knee, cannot walk normally or kneel and has ... limitation of motion of the knee." (emphasis added).

He then ordered Sears to pay Dyson permanent total disability benefits of $173.60 per week for the rest of his life.

Sears filed a petition for review of the referee's order with the Division. On February 12, 1981, while the petition was pending, Sears wrote a letter to the Director of the Division, informing him that, "[f]ollowing the hearing and Order, both parties [Sears and Dyson] have agreed that the factual situation presented falls squarely within the parameters of the subsequent injury fund." See section 8-51-106, C.R.S.1973 (1973 & 1983 Supp.). ¹ As a result, Sears expressed a desire "to set in motion whatever process is required by the Division of Labor, in order to establish the subsequent injury fund participation." On April 8, in a second letter to the Director, Sears renewed its request for "subsequent injury fund participation in [Dyson's] permanent total disability award." The Director relayed the request to the referee who presided at Dyson's hearing. On April 17, 1981, the referee responded in a letter to Sears:

"Please be advised that no request was ever made in this case prior to Order that the Subsequent Injury Fund be made a party. The Subsequent Injury Fund was not noticed with respect to the hearing held August 28, 1980, which is the only hearing at which testimony was taken. Neither party raised the question of involvement of the Subsequent Injury Fund at the hearing nor did they take the opportunity of raising this issue in position statements for which time was granted at the close of the hearing. The Order was entered on October 9, 1980, and no issue concerning the Subsequent Injury Fund was raised by the Petition for Review which was filed by [Sears]. This matter is therefore proceeding on appeal upon the issues presented by [Sears'] Petition to Review. The Subsequent Injury Fund is not a party to the proceedings nor can any issue be raised concerning its participation at this late date."

Sears filed a supplemental petition for review of the referee's letter on May 8, 1981. It asked the referee to reverse his decision of April 17 and "grant [Sears] access to the Subsequent Injury Fund." It argued that since "no time limit for requesting Subsequent Injury Fund participation is contained in either statute or rules of procedure, ... [it appears that] either party may make the request at any time, even while [the original] Petition for Review is pending." At this point, the referee decided to refer both of Sears' petitions for review to the Industrial Commission for a final determination. On January 5, 1982, the Commission affirmed the referee's original order finding the claimant permanently and totally disabled, as well as the April 17, 1981, order "in letter form" denying Sears' "request for participation or joining" of the SIF. After citing a lack of evidence, the Commission concluded that, in any event,

"the request by the parties to join the Subsequent Injury Fund is untimely. It would require re-litigation, to allow that Fund to enter to contest however it might deem necessary. The Commission and the Director of Labor cannot determine the Fund's rights without notice; to do otherwise would be denial of due process. Finally, the delay required by joining the Fund as requested would be inordinate and inappropriate. There is no proof of the necessity to join the Fund or to require its involvement at this stage."

Sears filed a petition to review the Commission's order on January 21, 1982. It argued once again that no statute, rule, or regulation existed which explained the

"mechanics for the invocation of the Subsequent Injury Fund or even how the Fund is to be administered. [Likewise, Sears] can find no statutory or regulatory requirement for requesting joinder of the Subsequent Injury Fund, nor can [Sears] find any time limits for making such requests .... To adopt what appears to be the Commission's view of the Subsequent Injury Fund procedure would mean that any time a Claimant had a pre-existing compensable injury, a special request would have to be made for Subsequent Injury Fund participation even though the question of permanent total disability had not been decided or, may not even have been requested by the Claimant .... [Under the circumstances,] any denial of Subsequent Injury Fund participation as mandated by [section 8-51-106] would be a denial of due process ...."

On March 24, 1982, the Commission issued a final order dismissing Sears' supplemental petition. The Commission repeated its earlier conclusion that Sears' requests for SIF participation were untimely. ² It then addressed Sears' due process concerns; however, its comments were prospective in nature:

"As a guideline for future litigants, we observe that the Director or Commission does not have authority to decide issues affecting Subsequent Injury Fund liability or potential liability without that Fund being fully present as a party, with notice and opportunity to participate in accordance with its own rights to due process. All requirements of the statute that affect the Fund's liability must be considered and fulfilled; it follows that the Fund must have a chance fairly equal to any litigant's to be heard on all elements concerning its liability or potential liability. Such requirements indicate that the Fund should be put on notice, and the effort made to join it in the litigation, from the earliest appearance to a party that there is a fair potential of a finding by the referee of permanent total disability of the claimant under circumstances which could impose liability upon the Fund."

The court of appeals agreed that Sears' petition should be dismissed. However, it based its decision on a different rationale than that adopted by the Commission. Instead of focusing on the timeliness of Sears' requests for SIF participation, it characterized those requests as efforts to join the SIF as a party to the proceedings. Resolution of the issues, therefore, depended "upon the existence of the subsequent injury fund as a legal entity susceptible to suit and capable of being joined as a litigant in [workmen's compensation] proceedings." Sears, Roebuck & Co., 670 P.2d at 1245. The court then analyzed section 8-51-106, the statute governing the subsequent injury fund, and compared it to the group of statutes governing the state compensation insurance fund. See sections 8-54-101 to -127, C.R.S.1973 (1973 & 1983 Supp.). Unlike the former, section 8-54-105 specifically authorizes the manager of the state compensation insurance fund to sue and be sued on its behalf. The court of appeals concluded that "[t]his disparity of treatment between the two funds ... evidences the legislative intent that the subsequent injury fund be nothing more than a bookkeeping account," id. at 1246, rather than a legal entity subject to joinder. It then dismissed the appeal without discussing...