Texas Dot v. Anderson

Full title: TEXAS DEPARTMENT OF TRANSPORTATION, APPELLANT v. TONY R. ANDERSON…

Court: Court of Appeals of Texas, Second District, Fort Worth

Date published: Jun 22, 2000

No. 02-98-383-CV (Tex. App. Jun. 22, 2000)

Opinion

No. 02-98-383-CV.

June 22, 2000.

Appeal from the Probate Court of Denton County, Texas.

Panel A: CAYCE, C.J.; LIVINGSTON and RICHARDS, JJ.

OPINION

DAVID L. RICHARDS, Justice.

I. INTRODUCTION

This is an appeal involving a workers' compensation insurance carrier's subrogation rights. We are asked to decide whether the trial court properly apportioned the settlement proceeds and awarded attorneys' fees. Under prevailing case law, we hold that the trial court did not err.

II. BACKGROUND

Dorothy Anderson, while in the course and scope of her employment with the Texas Department of Transportation (TDOT), was hit and killed by a car while inspecting a high-occupancy-vehicle lane. Dorothy's husband, Tony R. Anderson, and their two adult children, Clifford R. Anderson and Cherie M. Engel, (collectively, the Andersons) filed a wrongful death action against the driver of the car, the driver's mother, the company that leased the car to the driver's mother, and a number of the companies involved in the construction of the high-occupancy-vehicle lane. TDOT intervened to recover its $64,316.93 workers' compensation lien. The leasing company and the drivers s mother were non-suited during discovery. The remaining defendants settled during mediation for $300,000.¹

1 The driver paid $100,000, which was the limit of his liability policy. The construction companies paid an additional $200,000.

The parties tried the issue of proper allocation of the settlement proceeds to the trial court. The trial court apportioned 50% of the settlement to Tony, 25% to Clifford, and 25% to Cherie. From Tony's $150,000 award, the court calculated his recovery and TDOT's future offset to be $30,163.98:

$ 150,000.00 (50% of settlement) — $ 8,278.64 (Tony's attorneys' expenses)

$ 141,721.36 — $ 47,240.45 (Tony's attorneys' fees)

$ 94,480.91 — $ 64,316.93 (TDOT's lien)

$ 30,163.98 (Tony's recovery and future offset)

The court then additionally awarded Tony's attorney 1/3 of TDOT's workers' compensation lien, totaling $21,438.98. See TEX. LAB. CODE ANN. § 417.003 (Vernon 1996). Considering the benefit accruing to TDOT as a result of Tony's attorneys' services, the trial court apportioned $19,438.98 to Tony's attorneys for recovery of TDOT's subrogation interest² and $2,000 to TDOT's attorneys.

2 This is approximately 30% of TDOT's offset.

Raising three points, TDOT argues that (1) the trial court erred in apportioning 50% of the settlement proceeds to Tony's adult children, (2) the trial court erred in its method of calculation of Tony's recovery, and (3) the trial court abused its discretion in awarding the Andersons' attorneys a 1/3 fee from TDOT's lien.

III. RIGHT TO REIMBURSEMENT

A workers' compensation carrier has a statutory right to reimbursement from the proceeds paid to a beneficiary by a third-party tortfeasor. See id. § 417.001 (Vernon Supp. 2000), § 417.002 (Vernon 1996). The statute does not limit reimbursement to only those benefits that were reasonable and necessary. See Texas Workers' Compensation Ins. Fund v. Serrano, 962 S.W.2d 536, 538 (Tex. 1998).

Neither the employee nor his representatives have any right to any funds received from a third-party tortfeasor until the carrier receives payment in full. See Capitol Aggregates, Inc. v. Great Am. Ins. Co., 408 S.W.2d 922, 923 (Tex. 1966); Insurance Co. of N. Am. v. Wright, 886 S.W.2d 337, 341 (Tex. App.-Houston [1^st Dist.] 1994, writ denied). The carrier's right to reduce its liability from a payment of a third-party must not be compromised. See Capitol Aggregates, 408 S.W.2d at 924. However, the carrier has subrogation rights only over that portion of an award or settlement that represents the interest of the beneficiary. See Wright, 886 S.W.2d at 341; Bridges v. Texas A M Univ. Sys., 790 S.W.2d 831, 834 (Tex. App.-Houston [14^th Dist.] 1990, no writ). The proper division of settlement proceeds is a question of fact. See U.S. Fire Ins. Co. v. Hernandez, 918 S.W.2d 576, 579 (Tex.App.-Corpus Christi 1996, writ denied). Thus, subrogation and reimbursement of the carrier when there are multiple plaintiffs, some of whom are workers' compensation beneficiaries and some of whom are not, may create an apportionment problem.

IV. PROPRIETY OF APPORTIONMENT TO ADULT CHILDREN

TDOT argues in its first point that the trial court should not have awarded Clifford and Cherie 50% of the settlement monies because the evidence did not support its finding that such a distribution was "fair and reasonable."³ TDOT asserts that the evidence does not show that Clifford and Cherie suffered damages as a result of Dorothy's death.

3 Specifically, TDOT challenges two of the trial court's findings of fact:

12. A 50% allocation to the surviving husband and 25% to each of the two adult children is fair and reasonable.

14. The dollar apportionment of the settlement is $150,000 to Tony Anderson as surviving husband and $75,000 each to Clifford Anderson and Cherie Engel, as surviving children.

Findings of fact entered in a case tried to the court have the same force and dignity as a jury's answers to jury questions. See Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence to support them by the same standards that are applied in reviewing evidence supporting a jury's answer. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).

In reviewing the legal sufficiency of the evidence, we consider all of the evidence in the light most favorable to the Andersons and indulge every reasonable inference from the evidence in their favor. See Formosa Plastics Corp. v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). If there is more than a scintilla of such evidence to support the finding, the claim is sufficient as a matter of law. See id. In reviewing the factual sufficiency of the evidence, we consider all of the evidence and determine whether the evidence supporting the finding is so weak or the evidence to the contrary is so overwhelming that the answer should be set aside and a new trial ordered. See Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407-08 (Tex.), cert. denied, 525 U.S. 1017 (1998); See Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965).

The Andersons testified concerning the damages they sustained because of Dorothy's death. Tony testified that Dorothy would do "anything" for her children and five grandchildren. She saw Clifford and Cherie every "three or four weeks," and they spent a lot of time with Dorothy. Dorothy's death affected Clifford and Cherie. Clifford testified that Dorothy "was always there" for him and frequently offered him financial support. Cherie described Dorothy as her "rock" and "best friend." Dorothy was always there for Cherie, especially when Cherie's son was diagnosed with a brain tumor.

These types of damages are difficult to quantify, and it is problematic for us to judge the damages Clifford and Cherie suffered. The trial court was in the best position to judge credibility and other intangible factors that would bear on assessing damages for mental anguish and loss of society. See Texas Workers' Compensation Ins. Fund v. Serrano, 985 S.W.2d 208, 211-12 (Tex. App.-Corpus Christi 1999, pet. denied). Tony, Clifford, and Cherie testified as to the loss Clifford and Cherie suffered after Dorothy was killed and how that affected their lives. We hold that this evidence is legally and factually sufficient to support the trial court's apportionment.

TDOT also argues that the effect of the apportionment deprives TDOT from recovering a greater offset in future death benefit payments to Tony. It is the effect of an apportionment, and not its intent, that determines its propriety. See Texas Workers' Compensation Ins. Fund v. Travis, 912 S.W.2d 895, 898 (Tex.App.-Fort Worth 1995, no writ). But the evidence here is sufficient to support a damages award in favor of Clifford and Cherie. As TDOT points out, there have been situations where apportionments have been held to improperly circumvent the statute and the carrier's right to subrogation. See, e.g., id. at 899; Wright, 886 S.W.2d at 341-42. However in those cases, the beneficiaries were awarded a disproportionately smaller part of the settlement proceeds than other individual plaintiffs. The present allocation of 25% to Clifford and 25% to Cherie is not so disproportionate as to indicate that TDOT's subrogation right has been improperly circumvented. To hold as TDOT requests would equate to a holding that nonbeneficiary plaintiffs could never recover settlement proceeds because such a recovery would lessen the carrier's subrogation. We overrule TDOT's first point.

V. METHOD OF CALCULATION

In its second point, TDOT argues that the trial court erred in calculating Tony's recovery:

[T]he [correct] method of calculation is to first subtract the workers' compensation lien from the settlement monies apportioned to the workers' compensation beneficiary. Next, subtract the beneficiary's attorney expenses. Then subtract the beneficiary's attorney fees as per the client's contract. The remaining amount belongs to the beneficiary which, in this case, will be used as an offset against his future weekly death benefits.

"The net amount recovered by a claimant in a third party action shall be used to reimburse the insurance carrier for benefits, including medical benefits, that have been paid for the compensable injury." TEX. LAB. CODE ANN. § 417.002(a). "Net amount recovered" is the amount recovered by the beneficiary after deduction of the beneficiary's attorneys' fees and expenses. See Texas Workers' Compensation Ins. Fund v. Alcorta, 989 S.W.2d 849, 852 (Tex.App.-San Antonio 1999, no pet.); Bridges, 790 S.W.2d at 833. Thus, the trial court correctly deducted Tony's portion of the Andersons' attorneys' fees and expenses before determining the amount of TDOT's reimbursement. We overrule point two.

VI. ATTORNEYS' FEES AWARDED FROM LIEN

In its final point, TDOT asserts that because the Andersons' attorneys' efforts were of no benefit at all to TDOT's recovery, and were in fact detrimental, the trial court abused its discretion in deducting the 1/3 attorneys' fees award from TDOT's lien.

As compensation for pursuing a third-party action, a beneficiary's attorney may recover fees from a governmental entity's worker's compensation lien. See TEX. LAB. CODE ANN. § 417.003; University of Tex. v. Bishop, 997 S.W.2d 350, 354 (Tex.App.-Fort Worth 1999, pet. filed). They are recoverable if (1) the carrier hires an attorney to represent it, but the attorney does not actively represent it; (2) the beneficiary's attorney represents both the beneficiary and the carrier; or (3) the carrier is actively represented by its attorney who participates in obtaining a recovery. See TEX. LAB. CODE ANN. § 417.003; Texas Dep't of Transp. v. Wilson, 980 S.W.2d 939, 941 (Tex. App.-Fort Worth 1998, pet. denied); City of Arlington v. Lummus, 871 S.W.2d 536, 537 (Tex.App.-Fort Worth 1994, writ denied).

The trial court found that TDOT's attorneys actively participated in the case; thus, the trial court was required to allocate the fees:

If an attorney actively representing the insurance carrier's interest actively participates in obtaining a recovery, the court shall award and apportion between the claimant's and the insurance carrier's attorneys a fee payable out of the insurance carrier's subrogation recovery. In apportioning the award, the court shall consider the benefit accruing to the insurance carrier as a result of each attorney's service. The total attorney's fees may not exceed one-third of the insurance carrier's recovery.

TEX. LAB. CODE ANN. § 417.003(c). Although TDOT does not challenge the finding that its attorneys actively participated, it does challenge the court's apportionment based on the benefit accruing to TDOT.

A proper apportionment turns upon the individual facts of the case and requires an assessment of the contributions of each attorney towards recovery of the subrogation amount. See University of Tex. Sys. v. Melchor, 696 S.W.2d 406, 408 (Tex.App.-Houston [14^th Dist.] 1985, no writ). We review the apportionment and amount of the attorneys' fees award under an abuse-of-discretion standard. See City of Austin v. Janowski, 825 S.W.2d 786, 788 (Tex.App.-Austin 1992, no writ).

In the present case, TDOT's attorney scheduled none of the 14 depositions in the case. In the seven depositions that TDOT attended, its attorney asked a question in one. TDOT propounded no written discovery on the defendants and did not file any motions. Although 2/3 of the settlement was paid by the construction companies, TDOT did not intervene in the case against them, did not attend any depositions pertaining to them, and did not actively participate in that portion of the case. In the case against the driver, TDOT "work[ed] with" the Andersons' attorneys. A comparison of the respective roles of the attorneys shows that the Andersons' attorneys were primarily responsible for recovery of the subrogation amount. TDOT's attorney, while active, functioned in an ancillary capacity. The contention that TDOT received no benefit from counsel's efforts is not well taken. There is ample evidence that the Andersons' counsel procured the subrogation recovery from the defendants and that the recovery would have been nonexistent but for the Andersons' counsel's efforts. See Lummus, 871 S.W.2d at 538; Vanguard Ins. Co. v. Humphrey, 729 S.W.2d 344, 347-48 (Tex.App.-Houston [14^th Dist.] 1987, writ ref'd n.r.e.); Melchor, 696 S.W.2d at 408; Houston Gen'l Ins. Co. v. Metcalf, 642 S.W.2d 79, 80 (Tex.App.-Tyler 1982, writ ref'd n.r.e.). Accordingly, the trial court did not abuse its discretion, and we overrule point three.

VII. CONCLUSION

We hold that the trial court did not err in its apportionment of the settlement proceeds among the Andersons, its method of calculation in distributing the settlement proceeds, and its discretionary award of 1/3 attorneys' fees out of TDOT's subrogation lien. Thus, we affirm the trial court's judgment.⁴

4 We would like to thank appellate counsel for their thoughtful and well-written briefs.