William H. Pickett, P.C. v. American States Family Ins. Co., WD
| Decision Date | 04 May 1993 |
| Docket Number | No. WD,WD |
| Citation | 857 S.W.2d 309 |
| Parties | WILLIAM H. PICKETT, P.C., et al., Appellants, v. AMERICAN STATES FAMILY INSURANCE COMPANY, Respondent. 47028. |
| Court | Missouri Court of Appeals |
William H. Pickett, Kansas City, for appellants.
Daniel J. Strausbaugh, Overland Park, KS, for respondent.
Before LOWENSTEIN, C.J., and TURNAGE and BRECKENRIDGE, JJ.
This case involves an interpleader action filed by the attorney for an employee who suffered an injury on the job, recovered workers' compensation benefits and then settled a products liability claim against a third party. The issue this court must decide is the subrogation interest of the compensation carrier. Sections 287.150.1 and 287.150.3, RSMo Cum.Supp.1992, discussed infra, provide as pertinent to this case, that when a third person is liable to an employee for injury, the employer possesses a right of subrogation against the employee's recovery from the tort-feasor. When the employee effects a recovery, the employer receives reimbursement for the amount paid by workers' compensation and pays from its share of the recovery a proper limited share of expenses and attorney's fees. Sections 287.150.1, 287.150.3. Any balance is apportioned between the employer and employee in the ratio the amount due the employer bears to the total recovery. § 287.150.3.
Under § 507.060, RSMo 1986, attorney William H. Pickett filed this interpleader action against Carl E. Cunningham, Barbara Cunningham, whom he represented, and American States Insurance Company (American), Cunningham's employer's compensation carrier, to determine whether American had any subrogation interest in the Cunningham's settlement ... and if so, the extent of the interest in the civil suit. Pickett petitioned the trial court to determine the respective amounts each defendant should receive and then deposited $70,000, as claimed by American, with the court clerk.
The parties stipulated the facts in this case. On September 18, 1985, Carl Cunningham received on the job injuries when a tire rim he repaired exploded. He worked for Ron's Tire Service in Huntsville. Cunningham filed a workers' compensation claim and received $103,953.39 paid by American. On January 19, 1989, defendants, Carl and Barbara Cunningham filed a products liability suit against Firestone Tire & Rubber Company in federal court to recover for the injuries suffered by them as a result of the accident. Pickett represented the Cunninghams during all phases of the suit including the settlement negotiations. Previously, an attorney for American had sent Pickett a letter and asserted a subrogation lien for the benefit of American "on settlements, awards or judgments obtained on behalf of Carl E. Cunningham."
On October 9, 1989, the Cunninghams settled their claims against Firestone for a total of $186,000 and dismissed the suit. The parties could not agree on the proper distribution of the proceeds under § 287.150.3. Consequently, in January 1990, Pickett filed a petition of interpleader and named the Cunninghams and American as defendants. On March 28, 1990, Pickett paid into the Circuit Court of Jackson County $70,000.00 to cover the subrogation interest claimed by American and requested the clerk to put the funds in an interest-bearing account. As of June 4, 1991, the $70,000.00 with interest had grown to $75,725.09. The trial judge determined § 287.150 gave the insurance company a right of subrogation in an amount determined by the formula in Ruediger v. Kallmeyer Bros. Serv., 501 S.W.2d 56, 59 (Mo. banc 1973), despite a settlement in the third party suit. The judge also determined the Ruediger formula applied to monies awarded to Cunningham for disfigurement. The trial court then applied the Ruediger formula, but deducted $11,000 from the amount recovered by the Cunninghams for Barbara Cunningham's loss of consortium claim. The trial court awarded the parties their respective amounts plus a pro rata share of the interest earned on the funds deposited.
1. $175,000.00 amount of Carl Cunningham's products liability settlement
75,670.74 expenses and attorney fee (pro rata)
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99,329.26
2. $103,953.39 amount paid by workers' compensation
175,000.00 amount of Carl Cunningham's settlement
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.594 Ratio for apportionment
3. $ 99,329.26 Balance from # 1
.594 Ratio from # 2
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59,001.58 Amount to be paid employer
The Cunninghams and Pickett, the appellants, first appealed to the Supreme Court of Missouri and challenged the validity of § 287.150 under state and federal constitutional provisions. The supreme court transferred the case to this court. The Cunninghams assert three issues on appeal: 1) trial court erred in awarding interest to American because the insurance carrier was not entitled to post-judgment or post-settlement interest, 2) the trial court erred when it included the portion of the workers' compensation benefits attributable to Carl Cunningham's disfigurement as part of the amount included as recovery in the subrogation calculation, and 3) they challenged the constitutionality of § 287.150, as being violative of the due process clauses of the Fifth and Fourteenth amendments to the United States Constitution as well as Mo. Const. Art. I, § 10.
For their first point, the appellants contend the trial court erred when it awarded American a pro rata share of the interest accumulated during the interpleader action. Interpleader is an equitable remedy governed by equitable principles. Insurance Co. of North Am. v. Skyway Aviation, Inc., 828 S.W.2d 888, 892 (Mo.App.1992) (citations omitted). In an equitable action, an allowance of prejudgment interest is a matter of discretion. Skyway, 828 S.W.2d at 892. Similarly, an award of interest accumulated from the time the stakeholder deposited the funds to the time of distribution is a matter of discretion. This court then reviews the award by the trial court to determine whether the award amounted to an abuse of discretion.
Judicial discretion is abused when a trial court's ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration. State ex rel. Webster v. Lehndorff Geneva, Inc., 744 S.W.2d 801, 804 (Mo. banc 1988). If reasonable people can differ about the propriety of the action taken by the trial court, then it cannot be said that the trial court abused its discretion. Id. at 804. The appellants have not met their burden of establishing an abuse of discretion in this case.
The appellants rely on Cervantes v. Ryan, 799 S.W.2d 111 (Mo.App.1990), which involved an interpleader action between an employer and the attorney of the injured worker who recovered from a third party. The employer had paid the injured employee...
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