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Lemmons v. York International Corporation

United States District Court, Tenth Circuit

July 8, 2013

JAMES L. LEMMONS, Plaintiff,
v.
YORK INTERNATIONAL CORPORATION, Defendant.

ORDER

J. THOMAS MARTEN, District Judge.

James Lemmons settled his lawsuit against York International Corporation after the case was tried to a jury but before the parties made their closing arguments. Lemmons's employer, Ryder Integrated Logistics, paid worker's compensation benefits to him and now claims a lien against the settlement proceeds. At a hearing held on June 24, 2013, plaintiff James L. Lemmons and interested party Ryder Integrated Logistics argued the issues of whether Ryder has a lien on the settlement between Lemmons and York and the amount of the lien if it exists. After reviewing the parties' written and oral arguments, the court is prepared to rule.

I. Existence of a Lien on the Settlement Proceeds

The first issue before the court is whether, under Kansas law, Ryder is entitled to a lien on the settlement proceeds. Under KAN. STAT. ANN. § 44-504(a) (1993), an injured employee has "the right to take compensation under the workers compensation act and pursue a remedy" of damages in court against "some person other than the employer or any person in the same employ...." Under section (b) of the same statute,

[i]n the event of recovery from such other person by the injured worker... by judgment, settlement, or otherwise, the employer shall be subrogated to the extent of the compensation and medical aid provided by the employer to the date of such recovery and shall have a lien therefor against the entire amount of such recovery....

§ 44-504(b). The Kansas Supreme Court has recognized that the legislature's intent in enacting § 44-504 was two-fold: "(1) to preserve an injured worker's claim against third-party tortfeasors and (2) to prevent double recoveries by insured workers." PMA Group v. Trotter, 281 Kan. 1344, 135 P.3d 1244, 1248 (2006) (citation omitted).

The court must determine whether York is an "other person" under the statute, entitling Ryder to a lien on the settlement. Lemmons argues that York, as his statutory employer, does not qualify as an "other person" under the statute, so Ryder has no lien. Lemmons relies on Trotter, wherein the Court found that no subrogation right existed for an employer that had paid worker's compensation benefits because the plaintiff had sued a co-employee, rather than an "other person" under the statute. See id.

Ryder argues that Lemmons's position in regard to York's status is contrary to his position throughout the course of the underlying action against York and Evcon, and the court should employ equitable estoppel to prevent this change in position. Indeed, prior to this stage, Lemmons had argued that primary liability would fall on Evcon rather than York. Ryder argues that the settlement took into consideration York's statutory employer issue and was resolving liability against Evcon. If the settlement had been solely between Lemmons and Evcon, Ryder argues, Lemmons would not dispute Ryder's right to subrogation under § 44-504(b). Ryder also argues that Trotter is distinguishable because in that case, the only party sued was an immune co-employee, whereas in this case Evcon was an additional non-immune party targeted by Lemmons throughout the course of litigation as maintaining the bulk of responsibility for his injuries and damages.

The court agrees that Lemmons's position now is contrary to his prior position regarding York's liability. However, the court declines to apply equitable estoppel because Ryder has not relied to its own detriment on Lemmons's prior position. See Trotter, 135 P.3d at 1250 (explaining that equitable estoppel requires one party's reliance on the opposing party's prior position).

Regardless of Lemmons's change in position, the court holds that § 44-504(b) gives Ryder a right to subrogation in the settlement. This court already granted immunity from suit to York as a statutory employer. See Dkt. 76. However, in its December 21, 2011 order (Dkt. 93), the court made clear that York was still subject to liability for any breach of duty by Evcon as Evcon's successor-in-interest. Although any settlement between Lemmons and York as a statutory employer would be beyond Ryder's subrogation rights under the statute, this is not the issue before the court. Rather, York settled this case in its capacity as successor-in-interest to Evcon, an "other party" under Kansas law. No entity, having immunity from suit, would choose to settle the suit for any amount. With no incentive for York to settle the case in its capacity as a statutory employer, York only settled this case as a successor-in-interest to Evcon.

Lemmons sued Evcon under the theory that Evcon owed a duty as a landowner to keep its land safe. This court specifically ruled that Evcon was not entitled to York's statutory employer status even though York had eventually merged with Evcon. Dkt. 127. Thus, under § 44-504(a), Evcon was neither an employer of Lemmons, statutory or otherwise, nor a "person in the same employ" as Lemmons. Therefore, Ryder is subrogated and has a lien against any recovery against Evcon by Lemmons under § 44-504(b), and that lien is not extinguished merely because York later bought Evcon. For the same reasons that Evcon was not entitled to York's statutory employer immunity, Ryder's lien on Lemmons's settlement with York-as Evcon's successor-in-interest- remains.

II. Amount of the Lien Reduction

The second issue for this court to decide is the amount Ryder's lien interest should be reduced. An employer's subrogation rights under § 44-504(d) apply to actions against third parties that are settled as well as those that are fully litigated. See Maas v. Huxtable and Assoc's, Inc., et al., 23 Kan. App.2d 236, 929 P.2d 780, 786 (1996). Under § 44-504(d), if the court finds an employer's negligence contributed to the worker's injury, then the employer's subrogation interest against future payments of compensation and medical aid is diminished by the percentage of the recovery attributed to the employer's negligence. An employer's subrogation interest is reduced by the percentage of fault of the statutory employer. See Duarte v. DeBruce Grain, Inc., 276 Kan. 598, 78 P.3d 428, 436 (2003). The statute is to be liberally construed in favor of the worker. Nordstrom v. City of Topeka, 228 Kan. 335, 613 P.2d 1371, 1375 (1980).

Lemmons argues that the settlement in this case was based on apportioning liability by attributing 50 percent to York and 25 percent to Ryder. According to Lemmons, the parties disagreed on whether he himself bore some negligence. Lemmons contends that, ultimately, the ...


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