ACW Corporation v. Maxwell

IN THE SUPREME COURT OF THE STATE OF DELAWARE
ACW CORPORATION (a.k.a. §
ARBY’S) and EASTERN § No. 302, 2019
ALLIANCE INS. CO., as Subrogee of §
SHANARA DEVON WATERS, § Court Below: Superior Court
§ of the State of Delaware
Plaintiffs Below, §
Appellants, § C.A. No. N18C-02-004
§
v. §
§
CHRISTOPHER ROBERT §
MAXWELL, and DONEGAL §
MUTUAL INS. CO. (a.k.a. §
DONEGAL INS. GROUP), §
§
Defendants Below, §
Appellees. §
Submitted: September 9, 2020
Decided: November 18, 2020
Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and
MONTGOMERY-REEVES, constituting the Court en Banc.
Upon appeal from the Superior Court. AFFIRMED.
Scott R. Mondell, Esquire, and Andrew J. Carmine, Esquire (Argued), Elzufon
Austin & Mondell, P.A., Wilmington, Delaware, for Appellants, ACW Corporation
and Eastern Alliance Insurance Company.
Colin M. Shalk, Esquire, Casarino Christman Shalk Ransom & Doss, P.A.,
Wilmington, Delaware, for Appellees, Christopher Robert Maxwell and Donegal
Mutual Insurance Company.
VAUGHN, Justice:
I. INTRODUCTION
The Appellants, ACW Corporation, a.k.a. Arby’s, (Arby’s) and Eastern
Alliance Ins. Co. (“Eastern Alliance”), as Subrogee of Shanara Devon Waters
(“Waters”), appeal the Superior Court’s grant of summary judgment in favor of the
Appellees, Christopher Robert Maxwell (“Maxwell”) and Donegal Mutual Ins. Co.
(a.k.a. Donegal Ins. Group) (“Donegal”). Eastern Alliance is Arby’s’ workers’
compensation carrier. It paid Waters, an Arby’s employee, a $12,500 commuted,
lump-sum workers’ compensation benefit to settle her workers’ compensation
claims for injuries she received in a work-related motor vehicle accident caused by
Maxwell. Arby’s and Eastern Alliance then brought this suit against Maxwell and
his auto insurer, Donegal, under 19 Del. C. § 2363, claiming that they are entitled to
recover the $12,500 lump-sum payment from them. Maxwell and Donegal denied
liability. They acknowledged that under the Workers’ Compensation Act Arby’s
and Eastern Alliance could assert a claim against Maxwell for damages that Waters
would be entitled to recover against Maxwell in an action in tort. They argued,
however, that Maxwell is not liable for the lump-sum payment because it was a
settlement of potential or future workers’ compensation claims and did not include
any damages that Waters would be entitled to recover against Maxwell in an action
in tort. Arby’s and Eastern Alliance argued that 19 Del. C. § 2363(e) allowed them
to recover from Maxwell “any amounts paid or payable [to Waters] under the
1
Workers’ Compensation Act” in connection with the Maxwell accident, and that the
lump-sum benefit was an amount paid to Waters under the Act. The Superior Court
agreed with Maxwell, and after finding that Arby’s and Eastern Alliance failed to
offer evidence that any of the $12,500 lump-sum benefit was for damages which
Waters would be able to recover in a tort action against Maxwell, granted summary
judgment in Maxwell’s and Donegal’s favor. For the following reasons, we find no
error in the Superior Court’s judgment and affirm.
II. FACTS AND PROCEDURAL HISTORY
On February 2, 2016, Waters, while acting in the course and scope of her
employment as an Arby’s employee, was involved in an accident caused by non-
employee Christopher Maxwell.
On June 21, 2017, Waters filed a personal injury complaint against Maxwell
for injuries she allegedly received in the accident.1 She settled her claim against
Maxwell for $5,000.2
After Waters settled her personal injury claim against Maxwell, her workers’
compensation counsel contacted counsel for Arby’s and Eastern Alliance and began
1
Waters’ complaint was filed against Maxwell and another individual named Evodio Colin.
According to the complaint, on March 13, 2016, Waters was involved in a second non-work-
related accident caused by Colin. The complaint sought to hold Maxwell and Colin jointly and
severally liable for Waters’ injuries. For purposes of this appeal, Colin, and Waters’ claims
against Colin, are of no relevance.
2
Under 19 Del. C. § 2363(c), Waters’ settlement of her claim does not bar the employer or the
compensation carrier from proceeding against the third party for any claim it may have.
2
discussing Waters’ potential entitlement to workers’ compensation benefits,
including, but not limited to, benefits for permanent impairment, future total and/or
partial disability, and future medical treatment. The discussions led to an
agreement to commute all workers’ compensation benefits which might be claimed
by Waters from the Maxwell accident for the lump-sum of $12,500.3 The parties
filed a stipulation and order for commutation with the Industrial Accident Board
(“IAB”), which stated in relevant part:
3. The parties have agreed to commute any and all
workers’ compensation benefits including, but not limited
to, temporary total disability benefits, temporary partial
disability benefits, permanent impairment benefits,
disfigurement benefits, death benefits and past, present
and future medical benefits, to which [Waters] may now
be or in the future become entitled, pursuant to the
provisions of 19 Del. C. §§ 2322, 2324, 2325, 2326 and
2330.
5. Employer has also agreed to waive its lien against
Claimant in connection with her third party recovery.
However, this agreement is being made based on
Employer’s understanding that Claimant only recovered
$5,000.00 from the third party carrier. The parties agree
that Employer/Carrier retains full recovery/subrogation
rights against the third party liability carrier (to the extent
3
Commutation of compensation is permitted under § 2358 of the Act. Commutations must be
approved by the Industrial Accident Board. 19 Del. Admin. C. § 1331-22.1.
3
there are leftover policy limits), pursuant to 19 Del. C. §
2363.4
On January 5, 2018, the IAB approved the stipulation and order.
On February 1, 2018, Arby’s and Eastern Alliance brought this suit against
Maxwell and Donegal to recover the $12,500 commutation payment. 5 They
claimed that they were entitled to recover the $12,500 lump sum benefit paid to
Waters under 19 Del. C. § 2363(e). Maxwell and Donegal moved for summary
judgment, supported by an affidavit, with exhibits, from Waters’ workers’
compensation attorney. In his affidavit, Waters’ workers’ compensation attorney
stated,
At the time of the agreement and the filing of the Petition
[before the IAB] Waters had no outstanding medical
expenses and nor did she have any present claims for lost
wages. [She] did not have any expert medical reports
identifying permanent or partial impairments . . . [or]
4
App. to Appellant’s Opening Br. at A028-29 [hereinafter A__]. The provisions of § 2363 will
be discussed further below in Section IV.
5
The total amount claimed by Arby’s and Eastern Alliance was actually $13,133.25, consisting
of the $12,500 lump-sum payment and $633.25 for two medical bills. The complaint recites that
Donegal is named as a party under a provision of 19 Del. C. § 2363(e) which provides that “for
items of expense which are precluded from being introduced into evidence at trial by § 2118 of
Title 21, reimbursement shall be had only from the third-party liability insurer.” In its order
granting summary judgment to Maxwell and Donegal, the Superior Court found that Maxwell and
Donegal were liable for the two medical bills. That finding is not challenged and has no bearing
on this appeal.
4
medical reports identifying the future medical expenses or
lost wages.6
Maxwell and Donegal argued that by agreeing to the $12,500 lump-sum
settlement, Arby’s and Eastern Alliance had “paid the claimant/plaintiff (Waters)
into the future a benefit that may never occur in order to end any ongoing relationship
with the claimant/plaintiff[.]”7 They also argued that under § 2363(e) the employer
or workers’ compensation carrier could recover only those amounts that Waters
could recover against Maxwell in an action in tort. The commutation agreement,
they continued, did not set forth any actual damages which Waters could recover
from Maxwell in a tort action, and Arby’s and Eastern Alliance had no evidence of
any such damages. As mentioned, Arby’s and Eastern Alliance argued in response
that under 19 Del. C. § 2363(e), they were entitled to recover any amount they paid
to Waters under the Workers’ Compensation Act.
In granting Maxwell’s and Donegal’s motion for summary judgment, the
Superior Court reasoned that “Plaintiffs cannot offer evidence that any of the
$12,500 commutation are damages resulting from the personal injuries Ms. Waters
6
A054.
7
A047 ¶ 9, A049.
5
suffered from the motor vehicle collision . . . [and] any damages related to the
commutation would be speculative and not proved with reasonable probability.”8
III. STANDARD OF REVIEW
“We review a grant or denial of summary judgment de novo ‘to determine
whether, viewing the facts in the light most favorable to the nonmoving party, the
moving party has demonstrated that there are no material issues of fact in dispute
and that the moving party is entitled to judgment as a matter of law.’”9 “Questions
of law, including the interpretation of statutes, are also reviewed de novo.”10
IV. DISCUSSION
19 Del. C. § 2363(a) explains the rights of an injured worker, an employer,
and a compensation insurer to enforce the liability of a third party who is legally
liable for an injured worker’s injuries. Under that section, an injured worker’s
acceptance of workers’ compensation benefits is not an election of remedies and the
injured worker “may also proceed to enforce the liability of such third party for
damages.” For the first 260 days after the accident, the injured worker has the
exclusive right to commence an action against a third party. If the injured worker
does not commence an action within that 260 day period, the employer or the
8
ACW Corp. v. Maxwell, 2019 WL 3024049, at *3 (Del. Super. Ct. July 10, 2019).
9
Henry v. Cincinnati Ins. Co., 212 A.3d 285, 288 (Del. 2019) (quoting GMG Capital Invs., LLC
v. Athenian Venture P'rs I, L.P., 36 A.3d 776, 779 (Del. 2012)).
10
City of Wilm. v. Nationwide Ins. Co., 154 A.3d 1124, 1127 (Del. 2017).
6
compensation carrier may commence an action to enforce the third party’s liability
in the name of the injured worker. Since Waters did not commence her action
against Maxwell until after 260 days from the accident, Arby’s and Eastern Alliance
have properly exercised their right to file this suit against Maxwell.11
Section 2363(e) explains what may be recovered in an action against a third
party and how such a recovery is to be applied. The pivotal language reads as
follows:
In an action to enforce the liability of a third party, the
plaintiff may recover any amount which the employee . . .
would be entitled to recover in an action in tort. Any
recovery against the third party for damages resulting from
personal injuries or death only, after deducting expenses
of recovery, shall first reimburse the employer or its
workers' compensation insurance carrier for any amounts
paid or payable under the Workers' Compensation Act to
date of recovery, and the balance shall forthwith be paid
to the employee . . . and shall be treated as an advance
payment by the employer on account of any future
payment of compensation benefits[.]
Arby’s and Eastern Alliance focus on the second sentence of § 2363(e) and
contend that the section should be construed to mean that the employer or
compensation carrier can recover from the third party “any amounts paid or payable
under the Workers’ Compensation Act[.]”12 Arby’s and Eastern Alliance, however,
11
As stated in Section II, supra, Waters’ motor vehicle accident with Maxwell occurred on
February 2, 2016, and Waters filed the third-party complaint against Maxwell and Colin on June
21, 2017.
12
Appellant’s Opening Br. at 15.
7
misconstrue § 2363(e). The amount which may be recovered from the third party
is set forth in the first sentence of § 2363(e). It provides that the amount which
“the plaintiff” may recover in an action to enforce the liability of a third party is “any
amount which the employee . . . would be entitled to recover in an action in tort.”
The “plaintiff” in the action to enforce the liability of a third party may be the injured
worker, or it may be, as here, the employer and/or the compensation carrier. The
measure of damages which may be recovered against a third party by an injured
worker, an employer, or a compensation carrier under § 2363(e) is the same, and is
plainly stated to be the “amount the employee would be entitled to recover in an
action in tort.”
The phrase, “amounts paid or payable to the [injured worker]” in the second
sentence of § 2363(e), refers to the amounts against which a successful recovery
from a third party should first be applied, not the amount which may be recovered
from the third party.
Arby’s and Eastern Alliance have relied heavily upon this Court’s decision in
Harris v. New Castle County.13 In Harris, a New Castle County police officer was
injured in a work-related auto accident. He received workers’ compensation
benefits. He also brought suit for his injuries against the operator of the vehicle
that caused the accident. The third-party operator was found to be uninsured. The
13
513 A.2d 1307 (Del. 1986).
8
officer then filed an uninsured motorist claim with the insurance company that
insured the police car he was operating when the accident occurred and was paid
uninsured motorist policy limits of $25,000. He then filed a declaratory action
against the county seeking a decree prohibiting the county from imposing a workers’
compensation lien against the $25,000 recovered under the county’s uninsured
motorist coverage. The Superior Court ruled that § 2363 conferred upon the county
a right of subrogation against the uninsured motorist benefits for the workers’
compensation benefits received by the officer.
On appeal, this Court affirmed the Superior Court’s judgment. The officer
argued that the first sentence of § 2363(e) defined the scope and extent of an
employer’s subrogation rights against sums recovered in a third-party tort claim.
He reasoned that since uninsured motorist benefits represented a contractual
obligation of the employer or its insurer, they were not a tort recovery, and, therefore,
under the first sentence of § 2363(e), were not subject to the employer’s subrogation
rights. In rejecting the officer’s argument, this Court reasoned that “the first
sentence exists to define the measure of damages recoverable by a recipient of
workers’ compensation benefits in a suit at law against a third-party tortfeasor.”14
It found that the breadth of the employer’s subrogation right is defined in the second
sentence of § 2363 and extended to “include indirect as well as direct recovery of
14
Id. at 1309.
9
damages from a third party.” 15 The Court agreed with the Superior Court’s
characterization that “though received from the County’s uninsured motorist carrier,
the sum involved ‘represent[s] the damages the [third-party tortfeasor] would be
required to pay upon adjudication of guilt in a tort action but for his lack of
insurance[.]’” 16 In other words, the uninsured motorist benefits represented the
damages a third party would be required to pay if found liable in an action in tort.
Harris defines the breadth of the employer’s or compensation carrier’s right
of subrogation against sums recovered from a third party for damages resulting from
the worker’s personal injuries once a recovery is obtained. The question in this
case is different from the question presented in Harris. The question we address
here is what amount may be recovered from the third-party. That amount is plainly
set forth in the first sentence of § 2363(e), which, as previously stated, is “any
amount the employee . . . would be entitled to recover in an action in tort.” The
third-party’s liability does not change when the action is brought by the employer or
compensation carrier rather than the employee. Where the employer or
compensation carrier is the plaintiff, the third-party’s liability corresponds exactly
in extent to his liability to the injured worker for any amount recoverable in an action
in tort.
15
Id.
16
Id. (alterations in original) (citing State v. Donahue, 472 A.2d 824, 829 (Del. Super. 1983)).
10
Returning to the facts of this case, the question becomes whether Arby’s and
Eastern Alliance can offer any evidence of damages that Waters would be able to
recover from Maxwell in an action in tort. The commutation agreement itself does
not contain any such evidence. It refers in a general sense to various types of
workers’ compensation benefits for which Waters might at some point have
qualified, but it contains nothing that could be placed before a jury as evidence from
which a jury could assess damages for personal injuries suffered by Waters in the
accident. It does not appear from the record that Arby’s and Eastern Alliance
offered the Superior Court any other evidence of injuries suffered by Waters which
could be presented in a trial against Maxwell. We, therefore, find no error in the
Superior Court’s grant of summary judgment in favor of Maxwell and Donegal.
V. CONCLUSION
For the foregoing reasons, the judgment of the Superior Court is affirmed.
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