Opinion
No. 73703
OPINION FILED: September 15, 1998
APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY, HONORABLE PHILIP J. SWEENEY, JUDGE.
Sharon Esters-Thames, Ballwin, pro se.
Ernie Brasier, St. Louis, for defendant/respondent.
Before: Mary K. Hoff, P.J., Gary M. Gaertner, J., and Mary Rhodes Russell, J.
MEMORANDUM SUPPLEMENTING ORDER
AFFIRMING JUDGMENT PURSUANT TO RULE 84.16(b)
This memorandum is for the information of the parties and sets forth the reasons for the order affirming the judgment.
THIS STATEMENT DOES NOT CONSTITUTE A FORMAL OPINION OF THIS COURT. IT IS NOT UNIFORMLY AVAILABLE. IT SHALL NOT BE REPORTED, CITED, OR OTHERWISE USED IN UNRELATED CASES BEFORE THIS COURT OR ANY OTHER COURT. IN THE EVENT OF THE FILING OF A MOTION TO REHEAR OR TRANSFER TO THE SUPREME COURT, A COPY OF THIS MEMORANDUM SHALL BE ATTACHED TO ANY SUCH MOTION.
This case arose from an automobile accident in which Annette Fortson ("claimant") was injured while on her job. In early 1992, claimant, by and through her attorney, Charles Smith, filed suit against the driver of the vehicle that struck her. Later that year, attorney Smith also filed a workers' compensation claim against her employer's insurance carrier, Employers Insurance of Wausau ("insurance company"). Claimant and attorney Smith settled the third party claim against the allegedly negligent driver on July 1, 1993, receiving $27,000 from the driver's insurer.
In January 1995, attorney Smith hired attorney Sharon Esters-Thames to assist in representation of claimant in the pending workers' compensation case. Thames negotiated a settlement with insurance company for permanent partial disability benefits for claimant in the amount of $8,542.80. Attorney Smith retained twenty-five percent of the sum, and paid Thames $711.90 in fees for her handling of claimant's case against insurance company.
Insurance company thereafter sought reimbursement from claimant and her attorneys for the amount paid to them in the workers' compensation settlement. Claimant and her attorneys refused to reimburse insurance company, and in May 1996, insurance company brought this action against claimant and attorneys Smith and Thames for breach of trust. Following a bench trial, the trial court entered judgment in the full amount of the workers' compensation settlement of $8,542.80 against claimant and Smith, but entered judgment in favor of Thames. Insurance company now appeals the judgment entered in favor of Thames.
Insurance company's sole point on appeal contends that the trial court erred in entering judgment in favor of Thames in that Thames had a duty to investigate claimant's third party claim against the allegedly negligent driver. Insurance company asserts that had Thames investigated the existence and status of claimant's third party case, she would have known that claimant was not entitled to the workers' compensation settlement.
The standard of review in this court-tried case is governed byMurphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We will affirm the judgment of the trial court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Id.; Rule 73.01.
Section 287.150.3 RSMo 1994 provides that when an employee recovers against a third party who is liable for the employee's injury, the employer shall be subrogated to the right of the employee against such third person and shall be entitled to a portion of the amount recovered. The purpose of this section is to protect and benefit the employer liable for compensation, and to ensure that there is not a double recovery by the employee.McCormack v. Stewart Enterprises, Inc., 916 S.W.2d 219, 224 (Mo. App. 1995); Schumacher v. Leslie, 232 S.W.2d 913, 919 (Mo. banc 1950).
The method of calculating the employer's share of the recovery under section 287.150.3 was set out by the Supreme Court inRuediger v. Kallmeyer Bros. Service, 501 S.W.2d 56, 59 (Mo. banc 1973). Following this formula, under section 287.150.3, the credit against future payments that insurance company was entitled to from claimant's third party settlement was $5,664. Claimant, therefore, upon receipt of the third party settlement, should have reimbursed insurance company $5,664. No additional payment was due claimant when she subsequently received the workers' compensation settlement.
An employee or employer who recovers such funds from a third party holds that amount of the recovery that belongs to the other in trust. McCormack, 916 S.W.2d at 224. Therefore, when claimant received the workers' compensation settlement from insurance company, she held that much of the third party recovery in trust for insurance company.
Insurance company, however, cites no authority for its assertion that Thames should be held personally liable for the reimbursement claimant owed insurance company. We have been presented with no evidence that Thames was ever aware that claimant had sued driver. Attorney Smith engaged Thames to act as claimant's attorney in her workers' compensation claim against insurance company only. Thames at no time interviewed or otherwise met with claimant. Neither attorney nor claimant notified Thames that a case was pending against driver, or that a settlement had been reached therein.
Insurance company was at all times aware that claimant had sued driver on its behalf, as well as on her own. Insurance company had the right to intervene in that action, had it so desired, but elected not to do so. Parker v. Laclede Gas Co., 770 S.W.2d 461, 462 (Mo. App. 1989). Whatever insurance company's reason for its failure to intervene, claimant, as insurance company admits, received the settlement as its trustee, and it is to claimant that insurance company must look for reimbursement. See O'Hanlon Reports, Inc. v. Needles, 300 S.W.2d 382 [ 360 S.W.2d 382], 385 (Mo. App. 1962).
Insurance company argues that Thames owed insurance company a direct duty to investigate claimant's third party suit. Insurance company notes that Thames signed a "Stipulation for Compromise Settlement" prepared by insurance company's lawyer. The stipulation included a clause requiring "[c]laimant to honor employer's subrogation interest pursuant toReudiger [sic] with reference to 3rd-party lawsuit."
Missouri Supreme Court Rule 55.03(b) provides that an attorney who signs a document filed with or submitted to a court represents that she has engaged in inquiry reasonable under the circumstances, and that the claim is warranted. Insurance company maintains that "a reasonable inquiry" with regard to the stipulation would have required Thames to investigate the existence and status of a third party claim. We disagree.
Thames testified, by way of deposition, that she discharged her duty by reviewing the terms of the stipulation with attorney Smith. She stated that she pointed out insurance company's subrogation interest to Smith and advised him that claimant must agree to honor that interest prior to signing the settlement agreement. Thames testified that Smith stated that he would review the stipulation with claimant and get her authority to settle the claim. In accordance with the trial court's judgment in Thames's favor, the trial court impliedly found that Thames discharged her duty by advising Smith as to insurance company's subrogation interest. We cannot say that this conclusion constitutes error.
Furthermore, insurance company has cited no authority for its assertion that where a Rule 55.03(b) violation is found, that violation can support a personal judgment against Thames and in favor of insurance company on the merits of this subsequent action. Insurance company, in the workers' compensation action, did not move for sanctions, and the court did not issue any order imposing sanctions under Rule 55.03(b). Therefore, no Rule 55.03(b) violation was found. Point denied.
The judgment is affirmed.