Treadeau v. Wausau Area Contractors, Inc.
| Citation | 316 N.W.2d 231,112 Mich.App. 130 |
| Decision Date | 05 January 1982 |
| Docket Number | Docket Nos. 50045,56026 |
| Parties | Donald J. TREADEAU and Rose Treadeau, Plaintiffs-Appellants, v. GREAT AMERICAN INSURANCE COMPANIES, an Ohio corporation, Intervening Plaintiff-Appellee, v. WAUSAU AREA CONTRACTORS, INC., a foreign corporation; Thorp Sales Corporation, a foreign corporation; Dolly Madison Industries, Inc., a foreign corporation; and Bob Laszewski, Defendants. Donald J. TREADEAU and Rose Treadeau, Plaintiffs-Appellees, v. GREAT AMERICAN INSURANCE COMPANIES, an Ohio corporation, Intervening Plaintiff-Appellant, v. WAUSAU AREA CONTRACTORS, INC., a foreign corporation; Thorp Sales Corporation, a foreign corporation; Dolly Madison Industries, Inc., a foreign corporation; and Bob Laszewski, Defendants. |
| Court | Court of Appeal of Michigan — District of US |
Wisti & Jaaskelainen by Michael E. Makinen, Hancock, for Donald J. Treadeau and Rose Treadeau.
Corcoran & Ingleson, P.C., Sault Ste. Marie by Guy W. Lewinski, Petoskey, for Great American Ins. Companies.
Before KAUFMAN, P. J., and J. H. GILLIS and CYNAR, JJ.
Plaintiffs appeal the trial court's grant of intervening plaintiff's motion for allocation of proceeds from a settlement effected between plaintiffs and defendants and the trial court's apportionment of the proceeds between the plaintiffs and the intervening plaintiff. Intervening plaintiff appeals the same order. Both appeal as of right, and the cases have been consolidated on appeal. We affirm.
Donald J. Treadeau was injured in the course of his employment, and Great American Insurance Companies, the workers' compensation insurance carrier, paid $17,439.50 for weekly compensation benefits and medical expenses.
Plaintiff Donald J. Treadeau filed a third-party tort action against the defendants for injuries received in the course of his employment, and his wife, plaintiff Rose Treadeau, filed a cause of action for loss of consortium. After the lawsuit was instituted, Great American intervened in the cause of action pursuant to the workers' compensation statute, M.C.L. § 418.827; M.S.A. § 17.237(827), and was a silent party plaintiff represented by counsel.
Donald and Rose Treadeau are hereinafter referred to as plaintiffs and Great American Insurance Companies is hereinafter referred to as intervening plaintiff.
Trial of this case commenced on October 29, 1979. There is an indication that counsel for plaintiffs and counsel for defendants reached a tentative agreement to settle the rights of all parties for the sum of $25,000.00; however, the plaintiffs and intervening plaintiff were unable to arrive at settlement conditions agreeable to both.
On the third day of trial, the plaintiffs entered into a settlement agreement with all defendants settling this matter for the amount of $18,000.00. As part of the settlement, which was placed on the record, the trial court advised intervening plaintiff that it had until November 2, 1979, to advise the court whether it was going to proceed as the active plaintiff for the remainder of the trial. The other alternative given to the intervening plaintiff was not to proceed to trial and to seek reimbursement out of the $18,000.00 settlement and thereafter the case would be dismissed as to all defendants.
Intervening plaintiff made the decision to seek reimbursement of its workers' compensation lien from the $18,000.00 settlement between plaintiffs and defendants.
On or about November 3, 1979, intervening plaintiff filed a motion to allocate settlement proceeds, which motion was heard on February 1, 1980. On February 11, 1980, the trial judge entered an order providing that the intervening plaintiff was entitled to seek reimbursement from the proceeds of settlement between the plaintiffs and defendants for compensation benefits paid to plaintiff Donald J. Treadeau. Further the order provided that intervening plaintiff's motion for allocation of its share of the proceeds of settlement was granted and that same shall be determined in accordance with Franges v. General Motors Corp., 404 Mich. 590, 274 N.W.2d 392 (1979), however, with said determination being held in abeyance pending appellate disposition of that order.
It also should be noted that at the oral argument on the motion for allocation counsel for intervening plaintiff strongly objected to the offer of testimony by Mr. Charles R. Goodman, the trial attorney for the plaintiffs concerning settlement negotiations between the respective parties and their counsel.
Thereafter, counsel for plaintiffs filed a claim of appeal dated February 25, 1980, from the trial court order regarding the motion for allocation entered on February 11, 1980. The claim of appeal was denied because the order was determined not to be a final order of the trial court.
On or about July 3, 1980, counsel for the intervening plaintiff filed a motion for allocation of settlement proceeds under Franges. The motion was argued on November 7, 1980. At this hearing, the trial court indicated that the matter should be renoticed for hearing and that the respective parties should present testimony in support of their positions and file whatever other pleadings they deem necessary in assistance to the court.
Thereafter, the motion for allocation of settlement proceeds was reheard by the court on December 19, 1980. At that time, the plaintiffs presented no additional testimony in support of their position. After hearing the arguments of respective counsel, the court, on January 19, 1981, entered its order apportioning the settlement proceeds according to the formula of distribution pursuant to Manninen v. Warner & Swasey Co., 80 Mich.App. 253, 263 N.W.2d 341 (1977). Thus, the order of apportionment was entered finding a balance payable to Rose Treadeau in the amount of $3,828.97 (after subtraction of the cost of disbursement and a one-third attorney fee) and a balance payable to Great American Insurance Companies of $5,743.29.
Intervening plaintiff is entitled to seek reimbursement out of the settlement between plaintiff Donald Treadeau and defendants under applicable Michigan case law construing the provisions of M.C.L. § 418.827; M.S.A. § 17.237(827). Intervening plaintiff may enforce its claim to recover workers' compensation benefits paid to the injured employee, although monies paid to plaintiff wife for loss of consortium are exempt.
In Franges, the Supreme Court adopted the pari passu approach whereby the employer or insurer under workers' compensation pay their share of the recovery costs as they receive the benefit of the plaintiff's recovery from a third-party tortfeasor. In Franges, the court set forth the procedure to be followed in Michigan suits against third-party tortfeasors under § 827 of the Worker's Disability Compensation Act of 1969, M.C.L. § 418.827; M.S.A. § 17.237(827) (hereinafter § 827).
Plaintiffs contend that because the intervening plaintiff did not attempt to settle its interest with defendants, such action amounted to lack of good faith and should deprive intervening plaintiff of its right to reimbursement under § 827. According to Arnett v. General Motors Corp., 22 Mich.App. 658, 663, 177 N.W.2d 704 (1970), the party paying the benefit is entitled to reimbursement from any recovery against the third party. See also Gamble v. American Asbestos Products Co., 381 Mich. 105, 159 N.W.2d 839 (1968), and Transamerican Freight Lines, Inc. v. Quimby, 381 Mich. 149, 160 N.W.2d 865 (1968). The intervening plaintiff has the right to reimbursement from third-party tortfeasors for plaintiff's economic loss as well as for plaintiff Donald Treadeau's pain and suffering. Pelkey v. Elsea Realty & Investment Co., 394 Mich. 485, 232 N.W.2d 154 (1975).
The plaintiffs argue, assuming intervening plaintiff may assert an interest in plaintiff Donald J. Treadeau's settlement, such interest is limited to a setoff for future compensation benefits. We do not agree. The intervening plaintiff, as the workers' compensation carrier, is entitled to reimbursement for benefits paid and to a credit against future payments. Under Franges, supra, 404 Mich. at 619-622, 274 N.W.2d 392, the formula for apportionment of the third-party recovery allows the insurer to be reimbursed for both compensation previously paid and to a future credit computed from the dollar amount actually received by the employee.
Both parties maintain that the court erred in apportioning the plaintiffs' shares of the settlement. The plaintiffs argue that the court improperly reduced plaintiff Rose Treadeau's share of the settlement from 45 percent to 40 percent. The intervening plaintiff argues that the trial court abused its discretion in finding that the plaintiff wife was entitled to 40 percent of the settlement and failed to apply the Franges formula.
In Michigan, an insurance carrier may not reach any portion of a wife's recovery for loss of consortium. Lone v. Esco Elevators, Inc., 78 Mich.App. 97, 107-108, 259 N.W.2d 869 (1977).
The trial court relied on Manninen, supra, 80 Mich.App. at 256, 263 N.W.2d 341, which holds:
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