Suntrust Bank v. Travelers Prop. Cas. Co. of Am.

• Decision Date: 12 April 2013
• Docket Number: No. A12A2042.,A12A2042.
• Parties: SUNTRUST BANK v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA.
• Court: Georgia Court of Appeals

321 Ga.App. 538

740 S.E.2d 824

SUNTRUST BANK

v.TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA.

No. A12A2042.

Court of Appeals of Georgia.

March 28, 2013.

Reconsideration Denied April 12, 2013.

McDonald, Cody & Cook, Matthew Evan Cook, for Appellant.

Forrester & Brim, Weymon H. Forrester, Gainesville, Tracy Morgan Baker, for Appellee.

ELLINGTON, Chief Judge.

In this appeal arising from a personal injury lawsuit, SunTrust Bank (“SunTrust”), as the administrator of the estate of Michael Patrick, appeals from the trial court's order granting a motion to enforce a subrogation lien that was filed by Travelers Property Casualty Company of America (“Travelers”), the workers' compensation insurer for Patrick's employer, Unique Industry Corporation. Patrick was injured in a collision while working for his employer, and he received workers' compensation benefits before filing suit against two third-party tortfeasors, Associated Grocers of the South, Inc. (“Associated Grocers”) and Larry Granger, whose negligence caused the collision. Although- Travelers timely intervened in the suit in order to protect its workers' compensation subrogation lien, Patrick and the tortfeasors settled the case for a confidential “lump sum” without Travelers' knowledge, participation or consent. Among other terms, the settlement agreement included a conclusory statement that the proceeds of the settlement did not fully and completely compensate Patrick for his injuries. On appeal, SunTrust contends that the trial court erred in finding that the express terms of the settlement agreement did not extinguish Travelers' right to enforce its subrogation lien. For the following reasons, we find no error and affirm.

The record shows the following relevant, undisputed facts. On March 27, 2007, Patrick was driving a pickup truck on Interstate 985 when a tractor-trailer driven by Granger struck his truck from behind and caused Patrick to suffer severe, permanent injuries. At the time of the collision, Granger was working for Associated Grocers, while Patrick was working for Unique Industry Corporation. As a result of Patrick's injuries, Unique Industry's workers' compensation insurance carrier, Travelers, paid him over $800,000 in workers' compensation benefits for medical costs and lost wages.

In November 2008, Patrick filed a negligence and personal injury suit against Granger and Associated Grocers (collectively, “AG”).¹ Travelers moved to intervene in the suit in order to protect its workers' compensation subrogation rights under OCGA § 34–9–11.1(b),² and the trial court granted the motion.

On February 2 or 3, 2010, an employee of the law firm representing AG notified Travelers' counsel that a mediation session had been scheduled in an effort to settle Patrick's suit. On February 8, however, an attorney with that law firm told Travelers' counsel that AG and Patrick were not going to allow Travelers to attend or participate in the mediation. In response, Travelers' attorney insisted that, as a party to the suit pursuant to its intervention, a representative of Travelers should be allowed to attend and represent its interests during the mediation. Later that day, AG's attorney told Travelers' attorney that the mediation session with Patrick had been cancelled and that, at trial, his clients (AG) would admit their liability for Patrick's injuries.

Unbeknownst to Travelers, however, Patrick and AG actually proceeded with the mediation on February 10, 2010, during which they executed a confidential, “lump sum” settlement of the suit. The next day, AG's attorney notified Travelers that his clients and Patrick had settled the suit and that he could not disclose the terms of the settlement to Travelers because they were confidential.

Patrick then filed a motion to extinguish Travelers' workers' compensation subrogation lien. In response, Travelers filed a motion to protect and enforce its lien interest. Patrick filed a motion for a protective order to keep the terms of the settlement agreement confidential, while Travelers filed a motion to compel discovery of, inter alia, the agreement's terms. Following a hearing on the motions, the trial court granted Travelers' motion to compel and denied Patrick's request for a protective order.

The terms of the settlement agreement were then disclosed, and, in addition to the settlement amount,³ they included the following provisions: that the settlement amount would remain confidential, except as required by law or by court order; ⁴ that Patrick would indemnify AG for any workers' compensation subrogation claims that Travelers may assert against AG; and that Patrick would sign a general release as to AG's liability and would dismiss his suit against AG. In addition, the settlement agreement stated that “[a]ll parties acknowledge that [Patrick] has not been made whole or fully compensated for his claims” by the settlement.

Following this disclosure, the trial court issued an order granting Travelers' motion to enforce its workers' compensation subrogation lien. In its order, the court concluded that Travelers' absolute right to intervene in Patrick's personal injury suit against AG, pursuant to OCGA § 34–9–11.1(b), would be rendered null and unenforceable if Patrick and AG could summarily extinguish Travelers' subrogation lien simply by executing a “lump sum” settlement agreement stating that the settlement amount did not completely compensate Patrick for his injuries. The court concluded that Travelers was entitled to a hearing, during which Travelers could attempt to enforce its subrogation lien by proving to the court, as the finder of fact, that Patrick had been “fully and completely compensated, taking into consideration both the benefits received under this chapter and the amount of the recovery in the third-party claim, for all economic and noneconomic losses [he] incurred as a result of the injur[ies],” pursuant to OCGA § 34–9–11.1(b).⁵

Before conducting the hearing, however, the trial court granted Patrick's request for a certificate of immediate review. This Court granted the interlocutory application, and this appeal followed. After this Court docketed the appeal, however, Patrick died, and SunTrust, as the administrator of his estate, was substituted as the appellant.⁶

1. In arguing that the trial court's order on Travelers' motion to enforce its subrogation lien constitutes reversible error, SunTrust contends that, given the express terms of the “lump sum” settlement agreement between Patrick and AG, it will be impossible for Travelers to meet its threshold burden for enforcing its subrogation lien under OCGA § 34–9–11.1(b), i.e., proving that the workers' compensation benefits Patrick received, plus the proceeds of his settlement with AG, “fully and completely compensated [him] ... for all [of his] economic and noneconomic losses” that resulted from his injuries. SunTrust asserts two bases for this argument: (a) the parties to the agreement specifically acknowledged in the agreement that Patrick has not been made whole or fully compensated for his injuries; and (b) the “lump sum” settlement amount fails to expressly divide the proceeds between Patrick's economic damages (i.e., his medical expenses and lost wages) and his noneconomic damages (i.e., pain and suffering).

(a) As to the first issue, it is solely for the trial court—not a jury, the employee,⁷ or third-party tortfeasors—to determine whether the insurer has met its burden of showing that the employee has been fully compensated for his or her injuries. See Austell HealthCare v. Scott, 308 Ga.App. 393, 397(4), 707 S.E.2d 599 (2011) (“If an employer has intervened in an employee's lawsuit against a third-party tortfeasor, after the employee has obtained a verdict in his favor or settled the case, it is the trial court's duty to consider evidence and determine whether the employee has been fully and completely compensated. In doing so, the trial court is required to weigh the evidence and make a factual determination as to whether the employer has carried its burden.”) (citation omitted; emphasis in original); see also Canal Ins. Co. v. Liberty Mut. Ins. Co., 256 Ga.App. 866, 870–873(1), (2), 570 S.E.2d 60 (2002) (accord); Ga. Elec. Membership Corp. v. Garnto, 266 Ga.App. 452, 453–454, 597 S.E.2d 527 (2004) (accord); see also City of Warner Robins v. Baker, 255 Ga.App. 601, 602(1)(a), 565 S.E.2d 919 (2002) (The determination of whether an employee has been fully and completely compensated is a mixed question of law and fact. Therefore, it requires the presentation of evidence.).

Moreover, “one of the fundamental rules of the law of contracts is that only those parties to the agreement are bound by it.” Leone Hall Price Foundation v. Baker, 276 Ga. 318, 320(3), 577 S.E.2d 779 (2003). Here, Travelers was intentionally excluded from the settlement negotiations, was not a party to the settlement agreement, and has never consented to the agreement. Thus, Travelers is not bound by the settlement agreement's statement that Patrick and AG “acknowledge” that Patrick has not been fully compensated for his injuries. Id.

(b) As to the second issue, SunTrust argues that Georgia's law is “clear” that an employer or insurer may never enforce a workers' compensation subrogation lien against an employee's recovery from a lawsuit against a third-party tortfeasor when that suit results in either a general, non-itemized jury verdict or a “lump sum” settlement. According to SunTrust, because a workers' compensation subrogation lien is limited to the total amount of economic benefits the insurer has paid to the employee and only applies to an employee's recovery of economic damages from the third-party tortfeasor,⁸ the lien is unenforceable as a matter of law against a jury verdict or settlement that does not apportion the proceeds between economic and noneconomic damages. In making this argument, SunTrust relies on a line of opinions from this...