Tyroll v. Private Label Chemicals, Inc.

• Decision Date: 27 August 1993
• Docket Number: No. C1-92-479,C1-92-479
• Citation: 505 N.W.2d 54
• Parties: Christian TYROLL, Plaintiff, v. PRIVATE LABEL CHEMICALS, INC., Respondent, Central Machine Works, et al., Plaintiffs in Intervention, Petitioner, Appellants.
• Court: Minnesota Supreme Court

Page 54

505 N.W.2d 54

Christian TYROLL, Plaintiff, v. PRIVATE LABEL CHEMICALS, INC., Respondent Central Machine Works, et al., Plaintiffs in Intervention Petitioner, Appellants.

No. C1-92-479.

Supreme Court of Minnesota.

Aug. 27, 1993.

Syllabus by the Court

1. Error claimed for being deprived of a trial by jury may be raised on appeal from a judgment.

2. A party to an employer-insurer's subrogation action for compensation benefits paid, brought after a pretrial Naig release, is entitled to a jury trial.

3. The compensation benefits as determined by the trial court are recovered out of the common law damages awarded by the jury on the tort cause of action to arrive at the employer's damages in a subrogation action brought after a pretrial Naig settlement.

Michael D. Carr, Minneapolis, for appellants.

Thomas L. Thompson, St. Louis Park, for respondent.

Considered and decided by the court en banc without oral argument.

SIMONETT, Justice.

This appeal raises issues relating to an employer-insurer's subrogation action after the employee has made a pretrial Naig settlement. We hold that the defendant tortfeasor is entitled to a jury trial, and we clarify the measure of damages and how the damages are to be determined. We affirm in part and reverse in part the court of appeals' decision, Tyroll v. Private Label Chemicals, Inc., 493 N.W.2d 128 (Minn.App.1992).

Plaintiff-employee Christian Tyroll commenced a negligence suit for injuries sustained on the job against the third-party tortfeasor, defendant Private Label Chemicals, Inc. Plaintiff's employer, Central Machine Works, and its compensation carrier, Northwestern National Insurance Company, having paid the employee some $135,000 in compensation benefits, intervened in the lawsuit.

Shortly before trial, plaintiff entered into a Naig settlement with the defendant tortfeasor, leaving only the employer's subrogation claim to be tried. When the subrogation suit was called for trial, the court and counsel engaged in extensive discussions as to how to proceed. At the employer's urging and over the defendant's objections, the trial judge made two key rulings. First, the case would not be submitted to a jury but would be tried to the court. Second, the measure of damages was the total amount of compensation benefits paid or payable. It is evident from the record that the parties and the trial judge were having difficulty deciphering the case law as it then existed in April 1991, and that the judge, by his rulings, was hoping to fashion clear-cut issues for appellate review.

Following a bench trial, the trial court ruled in favor of the employer-insurer. The court found that the defendant tortfeasor was 100 percent at fault for plaintiff's accident; that the employer-insurer had paid $135,810.13 in compensation benefits to and on behalf of the employee; and that this sum was reasonably and necessarily required under the workers' compensation law. Judgment in the amount of $135,810.13 was entered in favor of Northwestern National, the plaintiff in intervention, as the employer's insurer.

The defendant tortfeasor, Private Label Chemicals, did not move for a new trial but instead appealed from the judgment. The court of appeals reversed, holding it was error to deny defendant a jury trial. The appeals panel also ruled the defendant tortfeasor was entitled "to a factual determination on the extent, causation and nature of damages even where there is no claim of unreasonableness [with respect to the compensation benefits paid]." Tyroll v. Private Label Chemicals, Inc., 493 N.W.2d at 132. We granted the employer-insurer's petition for further review on these two issues.

I.

The first issue is whether the defendant tortfeasor was entitled to a jury trial. But before we reach this question, we must decide if the issue was properly preserved for appellate review.

As noted above, defendant Private Label Chemicals failed to make a new trial motion assigning as error the trial court's ruling denying trial by jury. Instead, defendant appealed from the judgment where review is limited to whether the evidence sustains the verdict or the findings of fact and conclusions of law. See, e.g., Gruenhagen v. Larson, 310 Minn. 454, 458, 246 N.W.2d 565, 569 (1976). This court has consistently held, most recently in Sauter v. Wasemiller, 389 N.W.2d 200, 201 (Minn.1986), that "matters such as trial procedure, evidentiary rulings and jury instructions are subject to appellate review only if there has been a motion for a new trial in which such matters have been assigned as error." This rule applies whether trial is to the court or a jury.

While the court of appeals took notice of Sauter v. Wasemiller, it said, "Nevertheless, questions of law may be considered on appeal despite the failure to make a motion for a new trial," citing its own decision in County of Isanti v. Peterson, 469 N.W.2d 467, 469 (Minn.App.1991). The court of appeals then concluded that the jury issue was a question of law and hence reviewable. This approach however, is inconsistent with our well-settled case law. ¹ With a little ingenuity, most questions can be converted into so-called "questions of law"; if the exception were to be allowed, it would soon swallow up Sauter. Nor would orderly appellate review be served if appealability of an issue degenerated into debates over what was a question of law. We adhere to Sauter and the policy reasons therein stated, and contrary decisions of the court of appeals are overruled.

The threshold issue before us, then, is whether Sauter bars appellate review of the jury issue because it was never assigned as error in a new trial motion. Put another way, is the right to a jury trial a matter of "trial procedure" which, according to Sauter, must be assigned as error in a post-trial motion to the trial court?

It seems to us the right to a jury trial is sui generis. It is a constitutional right, guaranteed by Article 1, section 4 of the Minnesota Constitution, which states, "The right of trial by jury shall remain inviolate * * *." This inviolate right relates not to how a case is to be tried before the decisionmaker, but who is to be the decisionmaker. In other words, the jury trial is more than a procedural matter; it defines the basic nature of the decisionmaking process itself. We conclude, therefore, that a party who has raised the issue of a jury trial in the trial court can again raise that issue in the appellate court without first assigning it as error in a motion for a new trial. ²

We now reach the merits of the issue presented. We agree with the court of appeals that the defendant tortfeasor, Private Label Chemicals, had a right to a jury trial and that it was reversible error to deprive defendant of that right.

Generally speaking, our state constitution guarantees a jury trial for causes of action recognized as common law actions when our constitution was adopted. Breimhorst v. Beckman, 227 Minn. 409, 433, 35 N.W.2d 719, 734 (1949); Morton Brick & Tile Co. v. Sodergren, 130 Minn. 252, 254, 153 N.W. 527, 528 (1915). Whether there is a right to a jury trial is determined by "the nature and character of the controversy, determined from all of the pleadings." Landgraf v. Ellsworth, 267 Minn. 323, 326, 126 N.W.2d 766, 768 (1964).

Here we have a routine negligence personal injury action. The plaintiff alleges compensable injuries resulting from the defendant's failure to keep a raised platform at its warehouse safe for visitors. These are common law issues triable by jury. The fact that the Workers' Compensation Act gives the employer-insurer the right to intervene and maintain the action as a subrogee does not change the essential "nature and character of the controversy." As will be developed in Part II, certain issues relating to the reasonableness and propriety of the workers' compensation payments do not fit the common law mold, and as to these limited issues, trial is to the court.

II.

The trial judge held that the measure of damages for trial of the employer's subrogation claim is the compensation benefits paid and payable. Because this issue will reoccur on retrial, we discuss it here. ³ We hold that benefits paid and payable is not the correct measure of damages or, more precisely, it is an incomplete statement of the measure of damages. Why this is so requires consideration of the nature of the employer's subrogation action, a subject somewhat shrouded in ambiguity.

The employer has an interest, to the extent of its subrogation claim, in the employee's cause of action in tort against the third-party tortfeasor. If the cause of action proceeds to trial and judgment, the sum recovered is distributed in accordance with the subdivision 6 formula. ⁴ This statutory procedure works well enough, but sometimes plaintiff employees--after evaluating what their net recovery might be under the formula--will choose to settle their interests with a Naig settlement.

In Naig v. Bloomington Sanitation, 258 N.W.2d 891 (Minn.1977), the employee prior to trial settled with the defendant tortfeasor for only those items of damages not subject to the employer's subrogation rights. We held that the settlement proceeds were not subject to the subdivision 6 formula. We said:

[S]o long as the employee demonstrates that the settlement concerns only damages not recoverable under worker's compensation, or allocates the settlement into recoverable and nonrecoverable claims, the employer cannot credit the nonrecoverable portion of the settlement against compensation payments. By pursuing this course, however, the employee waives his statutory right to one-third of the employer's net recovery from the third-party.

Id. at 894. The Naig opinion, however, did not elaborate on how the employer's subrogation action was to be maintained.

In 1981, this court decided Henning v. Wineman, 306 N.W.2d 550 (Minn.1981). There, prior to trial, the employee and the defendant tortfeasor...