Van Nuis v. Los Angeles Soap Co.

• Decision Date: 21 December 1973
• Citation: 111 Cal.Rptr. 398,36 Cal.App.3d 222
• Court: California Court of Appeals Court of Appeals
• Parties: Francis M. Van NUIS, Plaintiff, v. LOS ANGELES SOAP COMPANY and Richard Nehring, Defendants and Respondents, State Compensation Insurance Fund, Intervenor and Appellant. Civ. 41628.

Page 398

111 Cal.Rptr. 398

36 Cal.App.3d 222

Francis M. Van NUIS, Plaintiff, v. LOS ANGELES SOAP COMPANY and Richard Nehring, Defendants and Respondents, State Compensation Insurance Fund, Intervenor and Appellant.

Civ. 41628.

Court of Appeal, Second District, Division 4, California.

Dec. 21, 1973.

Hearing Denied March 13, 1974.

T. Groezinger, Los Angeles, James Vonk, Daly City, and Herbert Lasky, Los Angeles, for interventor and appellant.

Evelle J. Younger, Atty. Gen., Elizabeth Palmer and Edward M. Belasco, Deputy Attys. Gen., as amici curiae on behalf of intervenor and appellant.

Kinkle, Rodiger, Graf, Dewberry & Spriggs, George P. Kinkle, Jr., Los Angeles, and Marshall J. Yager, Orange, for defendants and respondents.

Robert E. Cartwright, San Francisco, Edward I. Pollock, Los Angeles, William H. Lally, Sacramento, Sanford M. Gage, Beverly Hills, Floyd A. Demanes, Burlingame, Stephen I. Zetterberg, Claremont, and Leonard Sacks, Pico Rivera, as amici curiae on behalf of defendants and respondents.

DUNN, Associate Justice.

On July 1, 1969, Francis Van Nuis commenced an action against Los Angeles Soap Company and Richard Nehring to recover damages for personal injuries allegedly sustained by plaintiff on May 8, 1969, when he was struck by an automobile negligently operated by defendants. In their answers to the complaint defendants pleaded contributory negligence, and alleged a Witt v. Jackson, 57 Cal.2d 57, 69--73, 17 Cal.Rptr. 369, 366 P.2d 641 (1961) defense, I.e.: at the time of the accident plaintiff was acting in the course and scope of his employment; plaintiff's alleged injuries were caused by the negligence of his employer who carried workmen's compensation insurance; therefore, any judgment recovered by plaintiff should be reduced by the amount of the payments made to him by the employer's workmen's compensation insurance carrier.

On March 2, 1970, State Compensation Insurance Fund, the employer's carrier, filed a notice of lien in the action, notifying that any settlement or judgment recovered by plaintiff was subject to a first lien for workmen's compensation benefits paid by the carrier to plaintiff on behalf of his employer. (Lab.Code §§ 3850--3864.)

On December 2, 1971, the carrier filed a complaint in intervention (Lab.Code § 3853) alleging that plaintiff's injuries were caused by defendants' negligence, and seeking judgment against defendants for $19,241.09, the amount of compensation benefits paid. Defendants answered the complaint in intervention, alleging that intervenor was barred from recovery by reason of the contributory negligence of plaintiff and of his employer.

On June 8, 1972, the case was called for jury trial. Before commencement of the trial, a conference was held in chambers between the judge, counsel for defendants and counsel for the intervenor wherein the court was advised that plaintiff's case was settled. Counsel stipulated to the following facts: plaintiff was injured while acting in the course and scope of his employment by Richard's Friendly Service, a gasoline station; defendant Nehring drove a vehicle owned by defendant L.A. Soap Co. onto the gas station premises where the vehicle struck plaintiff; intervenor was the workmen's compensation insurance carrier for plaintiff's employer and paid plaintiff $19,241.09 on account of his injuries. It was further stipulated that plaintiff had settled his claim against defendants for $20,000 without intervenor's consent. ¹ Intervenor then moved that the settlement be set aside. The motion was denied. Intervenor next moved that the recovery be impressed with a compensation lien for benefits paid. This motion likewise was denied. Finally, intervenor moved that, because of the settlement, the court make a finding that defendants were negligent and plaintiff was free from contributory negligence leaving as the sole remaining issue under the complaint in intervention the concurrent negligence of plaintiff's employer. The motion was denied. Intervenor then rested without presenting any evidence. Defendants moved for a nonsuit on the ground there was no evidence of negligence on their part. The motion was granted, and the jury dismissed. A judgment of nonsuit on the complaint in intervention was entered in favor of defendants. (Code Civ.Proc. § 581c.)

Intervenor appeals from the judgment and from the orders denying its motions to set aside the settlement and to impress a lien thereon. The orders are not separately appealable (Code Civ.Proc. § 904.1), but may be reviewed on appeal from the judgment. (Code Civ.Proc. § 906.)

In 1971, Lab.Code §§ 3859 and 3860 were amended (Stats.1971, ch. 485, §§ 1 and 2) to read as follows: Section 3859: '(a) No release or settlement of any claim under this chapter (Chapter 5, entitled 'Subrogation of Employer') as to either the employee or the employer is valid without the written consent of both. Proof of service filed with the court is sufficient in any action or proceeding where such approval is required by law. (b) Notwithstanding anything to the contrary contained in this chapter, an employee may settle and release any claim he may have against a third party without the consent of the employer. Such settlement or release shall be subject to the employer's right to proceed to recover compensation he has paid in accordance with Section 3852.' (Italics added.)

Section 3860 reads in pertinent part as follows: '(a) No release or settlement under this chapter, with or without suit, is valid or binding as to any party thereto without notice to both the employer and the employee, with opportunity to the employer to recover the amount of compensation he has paid or become obligated to pay and any special damages to which he may be entitled under Section 3852, and opportunity to the employee to recover all damages he has suffered and with provision for determination of expenses and attorney's fees as herein provided. (b) Except as provided in Section 3859, the entire amount of such settlement, with or without suit, is subject to the employer's full claim for reimbursement for compensation he has paid or become obligated to pay and any special damages to which he may be entitled under Section 3852, together with expenses and attorney fees, if any, subject to the limitations in this section set forth. . . .' (Italics added.)

Insofar as material to the issue on this appeal, the only change made by the 1971 amendments to these statutes was the addition of the italicized language. ²

Appellant concedes that the amendments gave plaintiff the right to settle his claim against defendants without appellant's consent. (And see: Cilibrasi v. Reiter, 103 Cal.App.2d 397, 229 P.2d 394 (1951).) However, appellant argues the amendments went no further; they did not abolish appellant's ³ right to claim reimbursement, out of the proceeds of the settlement, for benefit payments made to plaintiff. We disagree under the facts of this case.

The cardinal rule of statutory construction is that the intention of the Legislature must be ascertained and given effect. (Code Civ.Proc. § 1859; Select Base Materials v. Board of Equalization, 51 Cal.2d 640, 645, 335 P.2d 672 (1959).) An intention to change the law is indicated by a material change in the language of a statute. (Martin v. California Mut. B. & L. Ass'n, 18 Cal.2d 478, 484, 116 P.2d 71 (1941).) "The very fact that the prior act is amended demonstrates the intent to change the pre-existing law, and the presumption must be that it was intended to change the statute in all the particulars touching which we find a material change in the language of the act." (People v. Perkins, 37 Cal.2d 62, 64, 230 P.2d 353, 355 (1951); Loew's Inc. v. Byram, 11 Cal.2d 746, 750, 82 P.2d 1 (1938); People v. Weitzel, 201 Cal. 116, 118, 255 P. 792 (1927).) It will be presumed that every word, phrase and provision used in a statute was intended to have some meaning and to perform some useful office (Prager v. Isreal, 15 Cal.2d 89, 93, 98 P.2d 729 (1940)), and a construction making some words surplusage is to be avoided. (People v. Gilbert, 1 Cal.3d 475, 480, 82 Cal.Rptr. 724, 462 P.2d 580 (1969); Woodmansee v. Lowery, 167 Cal.App.2d 645, 650, 334 P.2d 991 (1959).) A statute must be read and considered as a whole, and each section must be reconciled with the others and given effect, if possible. (Code Civ.Proc. § 1858; In re Bandmann, 51 Cal.2d 388, 393, 333 P.2d 339 (1958).)

Applying these principles to sections 3859 and 3860, it appears that in enacting the 1971 amendments thereto, the Legislature intended to change the law to provide: (1) an employee may settle his claim against a third party without the employer's consent; (2) such a settlement is not, without more, subject to the employer's lien for reimbursement for compensation benefits paid to the employee whenever a Witt v. Jackson, Supra, 57 Cal.2d 57, 17 Rptr. 369, 366 P.2d 641, defense is pleaded; (3) the employer retains the right to recover such payments in case the employee settles, but he must do so by bringing an action against the third party pursuant to Lab.Code § 3852. ⁴ The employer's right to reimbursement out of the settlement proceeds remains intact only if we ignore the phrase 'Except as provided in Section 3859' appearing in section 3860, subd. (b). This we cannot do.

Appellant contends the Legislature did not intend to abolish the employer's lien on the proceeds of a settlement made without his consent, because such a result would defeat the dual purpose of the subrogation provisions (Lab.Code §§ 3850--3864) of the Workmen's Compensation Act, namely: (1) to insure full reimbursement to the employer for the amount of compensation benefits paid to the employee, and (2) to prevent the employee's double recovery of payments for the same compensable injury. (See: Jacobsen v. Industrial Acc. Com., 212 Cal. 440, 447--448, 299 P. 66 (1931); Sanstad v. Industrial Acc. Com., 171 Cal.App.2d 32, 35, 339...