St. Paul Fire & Marine Ins. Co. v. Smith

• Decision Date: 11 March 1992
• Docket Number: No. 90-954,90-954
• Citation: 596 So.2d 272
• Court: Court of Appeal of Louisiana — District of US
• Parties: ST. PAUL FIRE & MARINE INSURANCE COMPANY, Plaintiff-Appellant, v. E.R. SMITH, Jr. d/b/a E.R. Smith Electrical Contractor, et al., Defendants-Appellees. 596 So.2d 272

Page 272

596 So.2d 272

ST. PAUL FIRE & MARINE INSURANCE COMPANY Plaintiff-Appellant, v. E.R. SMITH, Jr. d/b/a E.R. Smith Electrical Contractor, et al., Defendants-Appellees.

No. 90-954.

596 So.2d 272

Court of Appeal of Louisiana Third Circuit.

March 11, 1992.

Writ Granted June 5, 1992.

Sutherland, Juge, Horack & Dwyer Brian Miles, Kristi Stroebet, New Orleans, for plaintiff-appellant.

Ronald F. DeFrances, Warren D. Ponder, Baton Rouge, for defendant-appellee Smith.

Woodrow W. Wyatt, and Brian L. Williams, Baton Rouge, for defendant-appellee Wagner.

Before DOMENGEAUX, C.J., and STOKER and YELVERTON, JJ.

STOKER, Judge.

These consolidated suits arise from a vehicular accident. The sole issue before this court on appeal is whether the trial judge erred, under LSA-R.S. 23:1103, in rendering a declaratory judgment holding that the injured plaintiff, Arnold Wayne Wagner, would receive all sums awarded him for his noneconomic damages arising from the accident in preference to payment of reimbursement to Wagner's employer's worker's compensation insurer, St. Paul Fire & Marine Insurance Company, (St. Paul). St. Paul sought reimbursement for worker's compensation benefits paid to Wagner. We reverse.

FACTS

On May 19, 1988, a truck owned by E.R. Smith, Jr. d/b/a E.R. Smith Electrical Contractor (Smith) and driven by Egles J. Hebert (an employee of Smith) made an allegedly improper lane change into a closed road construction zone and ran into equipment owned by the road construction company, Coastal Contractors, Inc. Arnold Wayne Wagner, a flagman for Coastal, and Joseph Jefferson, another Coastal employee, were injured in the accident. The accident caused damage to Coastal property and severe personal injuries to Wagner and Jefferson.

Boston Old Colony Insurance Co. was the liability insurer of the Smith truck. The maximum single limit of the Boston Old Colony policy was $1,000,000 for the death or injury of any person or persons.

Wagner filed suit against E.R. Smith, Jr., Egles J. Hebert, Boston Old Colony Insurance, and Hebert's unnamed liability insurer for $4,950,000 personal injury damages, which were allegedly caused by the negligence of Hebert while driving within the course and scope of his employment for Smith.

St. Paul filed suit against E.R. Smith, Jr., Egles J. Hebert, Boston Old Colony Insurance, and Hebert's unnamed liability insurer for reimbursement for worker's compensation benefits paid to Wagner.

The two suits were consolidated for trial. Boston Old Colony settled Jefferson's and Coastal's claims for damages for the sums of $170,000 and $3556, respectively. Then, desiring to be relieved of any further liability for or participation in the matter, Boston Old Colony invoked a concursus proceeding in the consolidated suits, depositing the remaining funds available under its policy ($983,151.96, including accrued legal interest) into the registry of the court. Neither Boston Old Colony nor its insured stipulated to liability for the accident or reached a settlement with any of the plaintiffs in this case.

Wagner and St. Paul then petitioned the trial court for a declaratory judgment as to the proper apportionment of the insurance proceeds. The trial court rendered a declaratory judgment on January 16, 1990 (signed on February 9, 1990) in favor of Wagner, giving him preference in payment from the insurance proceeds for his general damages before St. Paul could recover any reimbursement.

St. Paul filed a motion for supervisory writs from this court on February 22, 1990. The writs were denied on the ground that the judgment was appealable.

St. Paul appealed the judgment suspensively (on March 5, 1990), contending that LSA-R.S. 23:1103 mandates that preference be given to the employer (or his insurer) in apportionment of damages in suits against third parties regardless of how the damages are itemized or classified in the judgment.

In the meantime, on March 5, 1990, Wagner filed a Rule to Show Cause why he should not be entitled to immediately withdraw the funds deposited in the court's registry, less the amount of worker's compensation already paid to him by St. Paul ($285,074.73 plus $37,633.52 legal interest), or $660,445.71. Wagner contended that the sum of $660,445.71 was not contested by St. Paul since St. Paul's petition asks for only preferential credit against any future compensation obligations it may have. The trial judge permitted Wagner to withdraw $660,445.71 plus accrued interest from the registry of the court in a judgment signed on March 29, 1990. ¹

OPINION

St. Paul contends on appeal that the trial judge erred in giving Wagner's non-economic damages preference over St. Paul's right to reimbursement from the insurance funds deposited by Boston Old Colony into the registry of the court. We agree.

LSA-R.S. 23:1103 states:

"Sec. 1103. Damages; apportionment of between employer and employee in suits against third persons; compromise of claims

A.(1) In the event that the employer or the employee or his dependent becomes party plaintiff in a suit against a third person, as provided in R.S. 23:1102, and damages are recovered, such damages shall be so apportioned in the judgment that the claim of the employer for the compensation actually paid shall take precedence over that of the injured employee or his dependent; and if the damages are not sufficient or are sufficient only to reimburse the employer for the compensation which he has actually paid, such damages shall be assessed solely in his favor; but if the damages are more than sufficient to so reimburse the employer, the excess shall be assessed in favor of the injured employee or his dependent, and upon payment thereof to the employee or his dependent, the liability of the employer for compensation shall cease for such part of the compensation due, computed at six percent per annum, and shall be satisfied by such payment. The employer's credit against its future compensation obligation shall be reduced by the amount of attorney fees and court costs paid by the employee in the third party suit.

(2) No compromise with such third person by either the employer or the injured employee or his dependent shall be binding upon or affect the rights of the others unless assented to by him.

B. The claim of the employer shall be satisfied in the manner described above from the first dollar of the judgment without regard to how the damages have been itemized or classified by the judge or jury. Such first dollar satisfaction shall be paid from the entire judgment, regardless of whether the judgment includes compensation for losses other than medical expenses and lost wages.

C. If either the employer or employee intervenes in the third party suit filed by the other, the intervenor shall only be responsible for reasonable legal fees and costs incurred by the attorney retained by the plaintiff. Such reasonable legal fees shall not exceed one third of the intervenor's recovery for pre-judgment payments or pre-judgment damages. The employee as intervenor shall not be responsible for the employer's attorney fees attributable to post-judgment damages nor will the employer as intervenor be responsible for the attorney fees attributable to the credit given to the employer under Paragraph A of this Section."

Wagner argues on appeal that the accident occurred prior to the 1989 amendment of LSA-R.S. 23:1103(B) by Acts 1989, No. 454, (effective January 1, 1990) which specifically provides for full reimbursement to the employer without regard to how the damages have been itemized or classified by the judge or jury. Wagner contends that St. Paul's right to reimbursement is therefore governed by the supreme court's interpretation of LSA-R.S. 23:1103(B) in Brooks v. Chicola, 514 So.2d 7 (La.1987), which limited the employer's right to reimbursement to the employee's award for special damages and prohibited the employer from obtaining reimbursement from the employee's award for general damages. We disagree with Wagner's argument.

Prior to the 1989 amendment, R.S. 23:1103 stated:

"Sec. 1103. Damages; apportionment of between employer and employee in suits against third persons; compromise of claims

In the event that the employer or the employee or his dependent becomes party plaintiff in a suit against a third person, as provided in R.S. 23:1102, and damages are recovered, such damages shall be so apportioned in the judgment that the claim of the employer for the compensation actually paid shall take precedence over that of the injured employee or his dependent; and if the damages are not sufficient or are sufficient only to reimburse the employer for the compensation which he has actually paid, such damages shall be assessed solely in his favor; but if the damages are more than sufficient to so reimburse the employer, the excess shall be assessed in favor of the injured employee or his dependent, and upon payment thereof to the employee or his dependent, the liability of the employer for compensation shall cease for such part of the compensation due, computed at six per cent per annum, and shall be satisfied by such payment.

No compromise with such third person by either the employer or the injured employee or his dependent shall be binding upon or affect the rights of the others unless assented to by him."

(Emphasis added).

The 1989 amendment revised R.S. 23:1103 to create subsections. All of former R.S. 23:1103 was incorporated into the amended version and LSA-R.S. 23:1103(B) was added. It states:

"B. The claim of the employer shall be satisfied in the manner described above from the first dollar of the judgment without regard to how the damages have been itemized or classified by the judge or jury. Such first dollar satisfaction shall be paid from the entire judgment, regardless of whether the judgment includes compensation for losses other than medical expenses and lost wages."

The clear intent of the legislative amendment was to...