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Attorney(S)

Anil Madan ( Kathy A. Fokas with him) for American Home Assurance Company others. Norman P. Beane, Jr. ( Richard C. Bardi with him) for Home Insurance Company.

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Smart Summary

Case Summary: Paul J. Carney et al. v. Lincoln Ramirez et al. — Appeals Court of Massachusetts (March 31, 1986)

Factual and Procedural Background

This case concerns the meaning of clause 4 of a settlement agreement entered after the plaintiff employee and members of his family obtained verdicts totaling $3,000,000 in an action originally brought against certain doctors and a hospital for negligent treatment following an automobile accident. The settlement was among the plaintiffs, their lawyer, the defendants, the defendants' insurers, and the employer's workers' compensation insurer (Home Insurance Company, "Home"). Pursuant to G.L. c. 152, § 15, a judge of the Superior Court (not the trial judge) approved the settlement.

Paragraph 4 of the agreement provided, in relevant part, that the defendants' insurers "agree to discharge any and all Workers' Compensation liens, ONE HUNDRED SEVENTY THREE THOUSAND ($173,000.00) DOLLARS and Medicaid liens . . . Pertaining to this action and to hold [the employee] harmless from any such responsibilities." Paragraph 6 addressed attorneys' fees and contained a warranty by the plaintiffs' lawyer that all claims for attorneys' fees in connection with the litigation had been satisfied by payment or agreement.

The present dispute arose because Home had paid the employee $172,832 in benefits and refused to pay attorneys' fees. The defendants' insurers asserted that Home was required, under the italicized provision of G.L. c. 152, § 15, to pay its proportionate share of the plaintiff's attorneys' fees. Home denied liability and moved to enforce the settlement agreement. The trial judge (the trial judge, not the judge who approved the settlement) heard the motion and concluded that paragraph 4 was unambiguous and entitled Home to a discharge of the lien in the amount it had paid ($172,832). The Appeals Court affirmed that order.

Legal Issues Presented

What is the meaning and effect of paragraph 4 of the settlement agreement—specifically, whether the agreement discharged Home's workers' compensation lien for the amount it paid or whether Home remained liable to pay a proportionate part of the plaintiff's attorneys' fees under G.L. c. 152, § 15?
Whether paragraph 4, as interpreted to discharge Home's lien, conflicts with G.L. c. 152, § 15, or with the statutory policy underlying that section and the cases relied on by the insurers.

Arguments of the Parties

Defendants' Insurers' Arguments

Relying on G.L. c. 152, § 15, the insurers contended that Home was required to pay its proportionate part of the plaintiff's attorneys' fees because Home had paid workers' compensation benefits (they invoked the provision that "The expense of any attorney's fees shall be divided between the insurer and the employee in proportion to the amounts received by them respectively").
The insurers also relied upon cases (including Eisner v. The Hertz Corp.) to support their position that the statutory apportionment of fees should apply.
The insurers suggested that the rounded figure in paragraph 4 ($173,000) might create ambiguity as to the precise amount of Home's lien discharge (i.e., whether Home's actual payment of $172,832 was fully covered).

Home Insurance Company's Position

Home denied liability for any portion of the attorneys' fees and moved to enforce the settlement agreement as written.
Home's position, as adopted by the trial judge and affirmed by the Appeals Court, was that paragraph 4 unambiguously required the defendants' insurers to discharge any workers' compensation liens and hold the employee harmless, and that no deduction for attorneys' fees was specified or contemplated in paragraph 4.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Eisner v. The Hertz Corp., 381 Mass. 127, 133 n.8 (1980)	One of the cases relied on by the insurers in arguing for the application of the statutory apportionment of fees under G.L. c. 152, § 15.	The court noted insurers' reliance on Eisner but held that paragraph 4 did not conflict with § 15 or the cases relied on; Eisner did not require a different result where the parties had agreed to an allocation approved under the statute.
Farrell's Case, 344 Mass. 491, 494 (1962)	Used to illustrate application of § 15: the statutory apportionment applies when parties have not agreed on another arrangement subject to required approval.	The court invoked Farrell's Case to support the proposition that § 15's apportionment applies only when the parties have not agreed upon another arrangement that has received court (or board) approval.
McCally v. Hartford Acc. Indem. Co., 247 F. Supp. 444, 446 (D.D.C. 1965)	Recognizes that parties may agree to an apportionment of fees different from the statutory formula.	The court cited McCally as authority for the proposition that parties can agree to a different allocation of attorneys' fees than that prescribed by statute, supporting enforcement of the parties' agreement here.
Modeen v. Consumers Power Co., 384 Mich. 354, 361 (1971)	Also recognizes that parties may agree to an apportionment of fees other than that set out in the applicable statute.	The court cited Modeen along with McCally to show that prior decisions acknowledge the parties' ability to contractually allocate fees differently than the statutory rule, reinforcing enforcement of the settlement's terms.

Court's Reasoning and Analysis

The Appeals Court agreed with the trial judge's interpretation of the settlement agreement and applied the following reasoning:

The settlement agreement had been approved by a Superior Court judge under G.L. c. 152, § 15. The trial judge observed that the earlier approval motion recited Home's lien of $172,832 and indicated that the lien would be satisfied according to the attached settlement terms.
The court emphasized that the agreement was drafted and entered into by skilled counsel; the parties were free to specify any deductions from the lien or to designate the precise amount Home would receive, but they did not do so.
Paragraph 4 unambiguously provided that the defendants' insurers agreed to discharge any and all workers' compensation liens (stating the rounded figure of $173,000) and to hold the employee harmless; there was no language in paragraph 4 indicating that Home must reimburse or contribute toward plaintiffs' attorneys' fees.
The court rejected the insurers' contention that the rounded figure ($173,000) created an ambiguity as to Home's actual recovery of $172,832; the rounding did not alter the clear meaning of the provision.
Addressing statutory conflict, the court reasoned that the apportionment provision of G.L. c. 152, § 15 (which allocates attorneys' fees between insurer and employee in proportion to their recoveries) applies when the parties have not agreed upon another arrangement that has received the approval required by the statute. Because the parties had agreed to allocate responsibility in the settlement and that settlement had been approved, the statutory default apportionment did not control.
The court observed that the cases cited by the insurers did not preclude enforcement of an agreement that apportioned fees differently; indeed, some cited cases explicitly acknowledge that parties may agree to an alternative apportionment of attorneys' fees.

Holding and Implications

Order enforcing agreement affirmed.

Direct consequences of the decision:

The Appeals Court affirmed the trial judge's enforcement of the settlement agreement as written, concluding that paragraph 4 unambiguously required the defendants' insurers to discharge the workers' compensation lien for the amount Home had paid ($172,832), and to hold the employee harmless.
The court rejected the insurers' claim that G.L. c. 152, § 15 required Home to pay a proportionate share of the plaintiff's attorneys' fees, explaining that the statutory apportionment does not apply where the parties have agreed to another arrangement that received the required approval.
The opinion enforces the parties' contractual allocation and indicates that parties may, consistent with the authorities cited, agree to an apportionment of attorneys' fees different from the statutory default; the court did not announce any new rule beyond enforcing the approved settlement language.

This summary is based exclusively on the content of the provided opinion and does not add or infer information beyond the opinion's text.

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PAUL J. CARNEY others vs. LINCOLN RAMIREZ others.

Workmen's Compensation Act, Action against third person, settlement agreement.

The question before us is the meaning of clause 4 of a settlement agreement entered into by the parties after the plaintiff employee and members of his family had obtained verdicts of $3,000,000. The action was originally brought against certain doctors and a hospital for negligent treatment of the employee after an automobile accident. The parties to the settlement agreement were the plaintiffs, their lawyer, the defendants, their insurers, and the workers' compensation insurer of the employee's employer. Pursuant to G.L.c. 152, § 15, see note 2, infra, the settlement agreement was approved by a judge of the Superior Court.

The judge who approved the settlement was not the trial judge. The record does not reveal why a judge other than the trial judge was involved.

Paragraph 4 of the agreement provides in relevant part:

"Discharge of Liens" The insurers of the defendants "agree to discharge any and all Workers' Compensation lines, ONE HUNDRED SEVENTY THREE THOUSAND ($173,000.00) DOLLARS and Medicaid liens . . . Pertaining to this action and to hold [the employee] harmless from any such responsibilities."

Paragraph 6 of the agreement set forth the amounts to be paid to the plaintiffs' lawyer and provides that the lawyer's signature to the agreement "shall constitute a warranty . . . that all claims for attorneys' fees for services in connection with this litigation have been satisfied by payment or agreement."

The present dispute is between the employer's workers' compensation insurer, Home Insurance Company (Home), which had paid the employee $172,832 in benefits, and the defendants' insurers (insurers). Relying on the italicized portion of G.L.c. 152, § 15, set forth in the margin, the insurers claimed that Home was required to pay its proportionate part of the attorney's fees of the plaintiff as set out in the statute.

General Laws c. 152, § 15, as amended through St. 1980, c. 488, provides as follows: "Where the injury for which compensation is payable was caused under circumstances creating a legal liability in some person other than the insured to pay damages in respect thereof, the employee shall be entitled, without election, to the compensation and other benefits provided under this chapter. Either the employee or insurer may proceed to enforce the liability of such person. . . . The sum recovered shall be for the benefit of the insurer, unless such sum is greater than that paid by it to the employee, in which event the excess shall be retained by or paid to the employee. For the purposes of this section, `excess' shall mean the amount by which the total sum received in payment for the injury, exclusive of interest and costs exceeds the compensation paid under this chapter. The party bringing the action shall be entitled to retain any costs recovered by him. Any interest received in such action shall be apportioned between the insurer and the employee in proportion to the amounts received by them respectively, exclusive of interest and costs. The expense of any attorney's fees shall be divided between the insurer and the employee in proportion to the amounts received by them respectively under this section. Except in the case of a settlement by agreement by the parties to, and during a trial of, such an action at law, no settlement by agreement shall be made with such other person without the approval of the industrial accident board after an opportunity has been afforded both the insurer and the employee to be heard on the merits of the settlement and on the amount, if any, to which the insurer is entitled out of such settlement by way of reimbursement, which amount shall be determined by said board at the time of such approval. In the case of a settlement by agreement by the parties to and during a trial of such an action at law, the justice presiding at the trial shall have and exercise, relative to the approval of such settlement by agreement and to the protection of the rights and interests of the employee, all the powers hereinbefore granted to the industrial accident board."

Home denied that it was liable for such fees and brought a motion to enforce the settlement agreement. The motion was heard before the judge who had presided at the trial. He noted that the original motion seeking court approval of the settlement agreement pursuant to c. 152, § 15, recited that Home had a lien of $172,832 in the action and that the lien would be satisfied according to the terms of the settlement agreement which was attached to the motion. He determined that the agreement had been entered into by skilled counsel, that the parties had been free to spell out what, if any, deductions were to be made from the lien, and could have specified the precise amount Home was to receive. This was not done, and no deductions were mentioned in paragraph 4. The judge concluded that the language of paragraph 4 was not ambiguous and that Home was entitled to a discharge of the lien in the amount it had paid, namely $172,832.

We agree with the judge's interpretation. The agreement called for discharge of the lien and provided for payment of the plaintiffs' legal fees by the insurers. It did not provide for reimbursement by Home for any portion of these fees, nor did it refer to any deduction from the amount Home was to receive. Contrary to the insurers' contention, the fact that paragraph 4 contains a rounded figure ($173,000) rather than the exact figure paid by Home ($172,832) does not create ambiguity.

We also see no conflict between paragraph 4 as so interpreted and G.L.c. 152, § 15, or between that paragraph and the statutory policy underlying § 15 or the cases relied on by the insurers, including Eisner v. The Hertz Corp., 381 Mass. 127, 133 n. 8 (1980). The provision in § 15 as to apportionment of fees applies when the parties have not agreed upon another arrangement which has received the court approval required by the statute. Cf. Farrell's Case, 344 Mass. 491, 494 (1962). In fact, some of the cases cited by the insurers specifically recognize that the parties may agree to an apportionment of fees other than that set out in the applicable statute. See e.g., McCally v. Hartford Acc. Indem. Co., 247 F. Supp. 444, 446 (D.D.C. 1965); Modeen v. Consumers Power Co., 384 Mich. 354, 361 (1971).

Order enforcing agreement affirmed.

CARNEY v. RAMIREZ