Opinion
Index No. 300183/14
08-01-2019
MUHAMMAD SYDUR RAHMAN, Plaintiff, v. RAY A. BUSBY, Defendant.
DECISION AND ORDER
Upon plaintiff's June 3, 2019 notice of petition and the affirmation and exhibits submitted in support thereof; the June 18, 2019 notice of cross motion of The Hartford and the affirmation and exhibits and memorandum of law submitted in support thereof; and due deliberation; plaintiff's application for an order pursuant to Workers' Compensation Law § 29(5) is denied, and The Hartford's cross motion seeking approval of a statutory lien, reduction of the amount of expenses claimed by plaintiff, and an award of attorneys' fees pursuant to 22 NYCRR § 130-1.1(a) is granted in part.
On July 20, 2013, plaintiff was involved in a pedestrian-knockdown accident. Plaintiff was struck by a motor vehicle operated by defendant as plaintiff was crossing the street. At the time of the accident, plaintiff was acting in the course of his employment with Dunkin' Donuts.
Plaintiff commenced this personal injury action against defendant Busby to recover damages for the personal injuries he sustained as a result of the accident. Plaintiff claimed that defendant's negligence caused injuries to plaintiff's knees and lumbar spine, and bilateral carpal tunnel syndrome. Defendant interposed an answer, discovery was completed, and a note of issue was filed.
Because plaintiff was injured while acting in the scope of his employment, he applied for and received workers' compensation benefits from his employer's carrier, The Hartford. The Hartford paid plaintiff a total of $151,685.52 in benefits -- $91,307.02 for lost wages and $60,378.50 for medical bills. Pursuant to Workers' Compensation Law § 29(1), the carrier has a lien for benefits paid to plaintiff against any recovery by plaintiff. To determine the amount of the lien, The Hartford took the amount of benefits paid to plaintiff -- $151,685.52 -- and subtracted $50,000.00, representing the basic economic loss covered by the no-fault law (see Workers' Compensation Law § 29[1-a]) -- resulting in a lien of $101,685.52 ("adjusted lien").
Plaintiff and defendant have agreed in principle to a settlement of the action for $90,000.00. However, pursuant to Workers' Compensation Law § 29(5), a settlement by the employee for an amount less than the total benefits provided by the carrier (as it is here) shall be made only with written approval of the carrier or court approval. To calculate the lien of which it would demand satisfaction in the event of a $90,000.00 settlement, The Hartford used the adjusted lien amount ($101,685.52), less 34%, reflecting plaintiff's attorneys' fees and costs incurred as a result of the litigation (see Workers' Compensation Law § 29[1]). Based on its calculation, The Hartford sought $59,054.48, approximately two-thirds of the settlement proceeds.
Defendant's liability coverage apparently has a $100,000.00 limit.
In response, plaintiff's counsel made a counter-proposal seeking an apportionment of the settlement proceeds in equal thirds among plaintiff, plaintiff's counsel, and The Hartford. Under plaintiff's approach, he would receive a direct recovery that he would not enjoy under The Hartford's approach; The Hartford would receive approximately half of the sum sought in its proposal; and plaintiff's attorney would receive substantially the same attorneys' fees allocated to him under The Hartford's proposal.
The Hartford rejected the proposal, and plaintiff previously moved pursuant to Workers' Compensation Law § 29(5) seeking a compromise order as the carrier's written approval need not be obtained if the plaintiff obtains a compromise order from the court. Plaintiff sought an order applying the plaintiff's one-third, one-third, one-third approach. Plaintiff argued that The Hartford's proposed allotment of funds would leave him with little to no direct recovery, which would be unfair to plaintiff. Plaintiff also maintained that the court had the power to equitably apportion the settlement proceeds and to modify the lien, and should do so in the manner proposed by his counsel. The Hartford opposed plaintiff's motion, arguing that its calculation of the adjusted lien amount of $101,682.52 and amount of which it would demand in the case of a $90,000.00 settlement ($59,054.52) comport with Workers' Compensation Law § 29 and relevant case law.
In an order dated November 23, 2018, the court denied plaintiff's motion. As to the aspect of plaintiff's motion seeking relief under Workers' Compensation Law § 29(5), the court found that plaintiff failed to provide the requisite documents required when seeking a compromise order, as specified in Workers' Compensation Law § 29(5), and, thus, the application was incomplete.
With respect to the aspect of plaintiff's motion seeking relief under Workers' Compensation Law § 29(1), the court relied, in part, on Fernandez v Toyota Lease Trust (156 AD3d 435 [2017]), in which the First Department held that a court does not have the authority to arbitrarily divide a proposed settlement equally between a plaintiff, plaintiff's counsel, and a carrier. In light of the First Department's decision in Fernandez and the pertinent language of Workers' Compensation Law § 29(1), plaintiff's contention that the court can direct the settlement proceeds be divided into thirds and distributed equally to plaintiff, plaintiff's counsel, and The Hartford was without merit.
Although The Hartford did not move for any relief pursuant to CPLR 2214 or 2215, The Hartford requested in its opposition papers that the court issue an order setting the carrier's lien (based on a $90,000.00 settlement) at $59,054.48 and declaring that lien valid. The court declined to grant affirmative relief to The Hartford. Putting aside any potential procedural issues in granting The Hartford affirmative relief, the court could not determine the carrier's equitable share of the costs of the litigation. The court was not informed of the precise attorneys' fee that would be generated by the settlement and was not provided the information regarding the expenses incurred by plaintiff in litigating this action. Thus, the court could not accurately gauge the proper lien amount.
In the instant motion, plaintiff seeks a compromise order pursuant to Workers' Compensation Law § 29(5). Plaintiff has attached to his petition the documents required by Workers' Compensation Law § 29(5). However, those documents do not suggest that plaintiff is entitled to the relief he seeks.
See Order of November 23, 2018, p.3-4 FN 4.
Plaintiff makes essentially the same claim that he made in the prior motion: that the court can and should allocate the settlement proceeds in equal thirds to plaintiff, plaintiff's attorney, and the carrier. As the court determined in the November 23, 2018 order,
"In light of Workers' Compensation Law § 29(1) and the First Department's decision in Fenandez, plaintiff's contention that the court can direct that the settlement proceeds be divided into thirds and distributed equally to plaintiff, plaintiff's counsel and The Hartford is without merit (see Batista v Dong Zhu Wu, 59 Misc.3d 1203[A] [Supreme Court, Bronx County 2018, Brigantti, J.])."
In the instant motion, plaintiff fails to raise any new points, rely on any relevant sources or case law, and fails to address the Fernandez decision. Plaintiff also claims that The Hartford is benefitting from the settlement to plaintiff's detriment as plaintiff has been in litigation for years to settle this action. However, The Hartford proposes to pay the total amount of attorneys' fees and permissible court expenses. (Satisfying the requirement under New York law that the workers' compensation carrier contribute the costs of litigation in proportion to the benefit it has received, The Hartford will cover attorneys' fees and recoverable litigation expenses in their entirety [see Matter of Kelly v Commissioners of the State Insurance Fund, 60 NY2d 791 (1983)].)
Addressing the aspect of The Hartford's cross motion seeking approval of its statutory lien, The Hartford, pursuant to Workers' Compensation Law § 29, has a valid lien on plaintiff's tort action in the amount of $151,685.52. Pursuant to the Workers' Compensation Law, The Hartford has reduced its statutory lien by $50,000.00 to account for no-fault benefits. After the reduction, the statutory lien totals $101,685.52, which is greater than the $90,000.00 settlement. Reducing the $90,000.00 settlement by the permissible litigation expenses, which the carrier has agreed to pay, in the amount of $945.52, leaves an attorneys' fee for plaintiff's lawyer of $29,684.83, and the lien for purposes of effecting a $90,000 settlement is $59,369.65.
Plaintiff requested litigation expenses in the amount of $2,042.28 (see Bompart affirmation at ¶ 10). The Hartford argues that plaintiff is not entitled to costs incurred from plaintiff's refusal to pay its lien and instead bringing the instant petition twice. Plaintiff's counsel alleges an additional $1,096.96 of expenses--$1,000.00 for a "narrative report" from Dr. Sinha, $45.00 for an order to show cause filing fee, and $51.96 for overnight mailing expenses (id.). The court agrees with The Hartford that these expenses were not incurred as part of the litigation against defendant in the third-party action and that these expenses were unnecessary. Accordingly, The Hartford's request to reduce the litigation expenses by $1,096.96 is granted. The calculation of the statutory lien above reflects this decision.
The Hartford is seeking $59,054.48, but the court's calculations lead it to a different figure, one that results in a lien-for-settlement purposes that is $315.17 greater.
Finally, The Hartford requests attorneys' fees and expenses pursuant to 22 NYCRR § 130.1-1 for having to respond to plaintiff's allegedly frivolous petition. While the court appreciates The Hartford's argument, in light of the minimal case law on the subject of whether a court can equitably apportion settlement proceeds and plaintiff's counsel's otherwise dutiful representation of his client in this matter, the court declines, in the exercise of discretion, to impose sanctions (see generally Pickens v Castro, 55 AD3d 443 [1st Dept 2008]).
Accordingly, it is
ORDERED, that plaintiff's motion is denied; and it is further
ORDERED, that the aspect of The Hartford's cross motion requesting a reduction in litigation expenses claimed by plaintiff is granted to the extent indicated in footnote 3; and it is further
ORDERED, that the aspect of The Hartford's cross motion seeking approval of a statutory lien is granted and the statutory lien, for the purposes of effecting a $90,000.00 settlement of the underlying action, is $59,369.65; and it is further
ORDERED that the aspect of The Hartford's cross motion requesting attorneys' fees pursuant to 22 NYCRR § 130.1-1 is denied.
This constitutes the decision and order of the court. Dated: August 1, 2019
/s/_________
John R. Higgitt, A.J.S.C