Merchant v. A & C Enercom ( 2005 )

Merchant v. A & C Enercom, No. S0965-04 CnC (Norton, J., Apr. 26, 2005)
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STATE OF VERMONT SUPERIOR COURT
Chittenden County, ss.: Docket No. S0965-04 CnC
DANIEL MERCHANT
v.
A & C ENERCOM
ENTRY
This matter concerns an appeal from a Vermont Department of Labor and Industry order
requiring the defendant, A & C Enercom, to pay a workers’ compensation claim to the plaintiff,
Daniel Merchant. Merchant had sought immediate payment of his claim despite the fact that
Enercom’s insurance carrier had filed a separate declaratory judgment action to determine its
rights to a lien on Merchant’s recovery from an uninsured/underinsured motorist policy. The
Department of Labor and Industry Commissioner granted Merchant’s request, and Enercom filed
this appeal.
The following facts are undisputed. Merchant suffered a work-related injury on July 7,
1997, when involved in an automobile accident during the course of his employment. Merchant
suffered, among other injuries, damage to his cervical spine. He reached a medical end point
with regard to the care and treatment of his cervical spine on October 29, 2001. Dr. Charles
McLean assessed his permanent impairment at 5 percent whole person. On November 5, 2001,
Merchant completed a Form 22 for permanent partial disability benefits based on the 5 percent
rating. Enercom never signed this form, contending that the rating was 3 percent.
Merchant received a settlement from the other driver and from his uninsured/under-
insured motorist policy. Merchant reimbursed the workers’ compensation carrier a certain
amount from these settlements, but Enercom claims that its full lien to these settlements is
unsatisfied. Its carrier filed a separate subrogation declaratory judgment action in Superior Court
to determine its rights to a lien.
Enercom refused to pay any of Merchant’s claim while the declaratory judgment action
was pending. Merchant therefore requested that the Commissioner order Enercom to pay the
undisputed portion of the permanent partial disability benefits. On July 20, 2004, the
Commissioner issued an order, along with interest from November 5, 2001. Enercom appealed.
After filing this appeal, Enercom requested that the Commissioner stay its order pending
the appeal. The Commissioner issued a partial stay (applying only to interest, not to the
permanency award or attorney’s fees), and Enercom filed a motion in this court seeking a full
stay of the Commissioner’s decision pursuant to V.R.C.P. 74(c). In an order dated December 9,
2004, this court denied Enercom’s motion. See Merchant v. A & C Enercom, No. S0965-04 CnC
(Dec. 9, 2004). Enercom therefore paid Merchant’s claim of $13,645.50 on December 23, 2004.
Enercom’s carrier also paid attorney’s fees related to Merchant’s claim.
Merchant now argues in a summary judgment motion that this court’s December 9 order
is dispositive of the underlying issue in this appeal, which is whether the Department’s order
regarding his claim was correct. Merchant also seeks attorney’s fees related to this appeal.
Enercom has filed a cross-motion for summary judgment, arguing that the Commissioner’s
decision violated both the Vermont Workers’ Compensation Act and the Department’s
regulations. Enercom also argues that the Commissioner’s order usurped this court’s jurisdiction.
The court first addresses Merchant’s summary judgment motion. Merchant notes that the
court’s December 9, 2004 order stated that Enercom “has . . . not challenged or disputed the
critical findings of the Commissioner that employee was in fact permanently injured to at least a
rating of 3%. As 21 V.S.A. § 648 states, notwithstanding employer’s legal theories, this
undisputed fact requires immediate compensation.” From this statement, Merchant surmises that
the court has ruled on the only issue in this appeal.
Merchant takes this statement out of context. In the December 9 order, the court was
addressing the Commissioner’s findings with regard to Enercom’s likelihood of winning on
appeal, which is a factor in determining the appropriateness of a stay. The court was merely
noting that Enercom had not brought forward any new facts regarding the 3 percent disability
finding in this appeal and the separate declaratory judgment action had not provided any basis
with which to reassess the stay, either. Therefore, Enercom had not shown any greater likelihood
of success to this court than it had to the Commissioner, and the Commissioner’s partial stay
should not have been disturbed. This analysis is not necessarily applicable to the underlying
issue in this appeal, which is whether the Commissioner’s order for immediate payment despite a
pending declaratory judgment action was appropriate. In other words, whether a stay should have
issued based on this appeal does not affect whether an immediate order should have issued
pending a separate declaratory judgment action.
Enercom, however, provides no reason in its summary judgment motion as to why the
Commissioner’s order was erroneous. Enercom argues that the Commissioner misapplied the
Vermont Workers’ Compensation Act as well as the Department’s regulations by enforcing an
order despite Enercom’s claim to the lien. But the narrow question before the Commissioner and
in this appeal is whether the Commissioner properly enforced the order despite Enercom’s claim
to the lien in a separate declaratory judgment action. Even if Enercom’s interpretation of the
workers’ compensation law and regulations is ultimately correct, the question is whether the
Commissioner abused his discretion in enforcing the award pending the disposition of the
declaratory action regarding Enercom’s claim.
Enercom also argues that the Commissioner usurped the Superior Court’s jurisdiction by
issuing its order despite the fact that Enercom’s insurer had previously initiated a declaratory
judgment action. “In general, where two tribunals have concurrent jurisdiction, the first tribunal
to obtain jurisdiction should adjudicate the case, and the second should defer to the first.” Barnet
Hydro Co. v. Public Serv. Bd., 174 Vt. 464, 467 (2002) (mem.). The Commissioner did not,
however, have jurisdiction over a declaratory judgment action, and Enercom argued before the
Commissioner only that it had no obligation to make any disability payments while a subrogation
action was pending in the Superior Court. The Commissioner did not, therefore, face a situation
where it had concurrent jurisdiction over a declaratory judgment action or an argument regarding
Enercom’s rights to a lien.1
In reviewing the Commissioner’s decision, the court is mindful that such decisions are
“presumed valid, to be overturned only if there is a clear showing to the contrary. [Courts] must
1
As Enercom stated in its memorandum of law to the Department:
At issue in this proceeding before the Department of Labor and Industry is the
proper functioning of the worker’s compensation system, i.e., whether a claimant
should receive payment of an award before his entitlement to that award is
determined. This is distinct from the issue being litigated in Vermont Superior
court, i.e., whether Defendant is entitled to off-set an award for permanent partial
impairment pursuant to a lien on a third-party recovery. The distinct issue before
the Department focuses on the process of the workers’ compensation system, as
opposed to the substantive rights between the parties.
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defer to the Commissioner’s construction of the workers’ compensation statute absent a
compelling indication of error.” Wood v. Fletcher Allen Health Care, 169 Vt. 419, 422 (1999)
(citations omitted). The workers’ compensation statute provides merely that where, as here, a
claimant suffers a permanent partial impairment to the spine, “the percentage of impairment shall
be determined in accordance with rules adopted by the commissioner.” 21 V.S.A. § 648. The
Department’s regulations, in turn, provide that “[i]f the employer determines that compensation
is due it shall enter into a Compensation Agreement . . . with the claimant . . ., and shall
commence paying compensation immediately.” WC Rule 3.1.
Here, the employer agreed that the claimant had a 3 percent permanent partial impairment
rating. The Commissioner therefore held that it was required immediately to pay compensation
based on that rating. The Commissioner determined that the pending declaratory judgment action
had no effect on the statutory and regulatory provisions that require employers to pay disability
benefits. It also held that it had no jurisdiction over subrogation actions like the pending
declaratory judgment action.
The court finds no error in the Commissioner’s holding. Accordingly, based on the
undisputed facts provided by the parties, the court finds that summary judgment in favor of
Merchant is appropriate as a matter of law.
The parties, however, also dispute the amount of interest due to Merchant based on the
award that Enercom paid on December 23. The appropriate interest rate is set at 12 percent per
annum from the date of judgment to and including the date of satisfaction. 21 V.S.A. § 678(b);
V.R.C.P. 69. Here, the date of judgment was November 5, 2001, when Merchant completed a
Form 22 for permanent partial disability benefits.2 Thus, between November 5, 2001, and the
date of satisfaction, December 23, 2004, the accumulated interest was $5,127.13.3
2
The Commissioner’s judgment issued on July 20, 2004, but he calculated interest from
November 5, 2001. The parties do not contest that November 5, 2001, is the appropriate date
from which the interest begins to run.
3
The court arrives at this figure through a simple interest calculation. Greenmoss
Builders, Inc. v. Dun & Bradstreet, Inc., 149 Vt. 365, 369–70 (1988). The court first determined
the annual interest due (.12 x 13,645.50) and multiplied this by the three years between
November 5, 2001, and November 5, 2004, arriving at $4,912.38. The court then determined the
per diem interest rate of a 12 percent annual interest (0.12/366 [2004 was a leap year]),
multiplied this figure by $13,645.50, and then multiplied this result by the 48 days between
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Merchant argues that interest should have continued accruing after December 23, 2004,
but with the principal being the interest due at that time, or $5,127.13. The court disagrees.
Judgment interest is based on a simple interest calculation, not on compound interest. See
Greenmoss Builders, 149 Vt. at 370; see also Reporter’s Notes—1981 Amendment, V.R.C.P. 69
(providing that the rule “does not . . . allow interest on interest”). To charge interest on prior
interest would be compounding the interest due. Therefore, as soon as the judgment was
satisfied, interest ceases to accrue.
Enercom argues that the interest should cease accruing on August 25, 2004, when the
Commissioner issued a stay on Enercom’s obligation to pay interest. The purpose of post-
judgment interest is “to compensate the judgment creditor for any delay in satisfaction.”
Reporter’s Notes—1981 Amendment, V.R.C.P. 69. A claimant should not be denied the full
benefit of his or her claim merely because the employer chose to contest the claim through an
appeal. Accordingly, interest on Merchant’s claim continued to accrue during the stay up until
the claim was satisfied.
Finally, Enercom does not contest Merchant’s request for attorney’s fees related to this
appeal. Merchant is entitled to these fees pursuant to 21 V.S.A. § 678(b). He has provided
complete accounting of reasonable fees that have accrued to-date, amounting to $5,861.70.
ORDER
For the foregoing reasons, Merchant’s summary judgment motion is GRANTED in part
and DENIED in part, consistent with the above Entry, and Enercom’s summary judgment motion
is DENIED. Enercom is ORDERED to pay $5,127.13 in post-judgment interest and $5,861.70 in
attorney’s fees to Merchant.
Dated at Burlington, Vermont, April 26, 2005.
_______/s/_____________
Richard W. Norton Judge
November 5 and December 23, 2004, during which interest continued to accrue. Adding both
together results in $5,127.13 in interest.
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