Mason v. Scarpuzza

147 Mich. App. 180 (1985) 383 N.W.2d 158

MASON
v.
SCARPUZZA

Docket No. 74718.

Michigan Court of Appeals.

Decided November 18, 1985.

Taylor, Carter, Butterfield, Riseman, Clark & Howell, P.C. (by Carl M. Riseman), for plaintiff.

Lacey & Jones (by Phillip G. Rosenberg), for Travelers Insurance Company.

Before: M.J. KELLY, P.J., and BEASLEY and M.R. STEMPIEN,^[*] JJ.

M.R. STEMPIEN, J.

Travelers Insurance Company appeals as of right from the trial court's denial of its motion to intervene in Mary Lou Mason's third-party tort action under MCL 418.827; MSA 17.237(827). We reverse.

On August 17, 1979, Mary Lou Mason (plaintiff) was injured in an automobile accident during the course of her employment with American Airlines. She was a passenger in an automobile owned by Martell Realty Corporation and Ann Arbor Inn Management Corporation and operated by James R. Scarpuzza. On November 9, 1981, plaintiff commenced a tort action against Scarpuzza, Martell, and Ann Arbor Inn alleging that the vehicle was being operated in a reckless and negligent manner and that, as a result, plaintiff "sustained and incurred hospital and medical expenses and will continue to incur same and she has incurred a great deal [of] pain and suffering and will continue to incur pain and suffering in the future and that her injuries are permanent in nature; [and that] * * * she sustained serious impairment of bodily function".

Plaintiff received no-fault benefits for three years following the accident. On August 17, 1982, Travelers, as the workers' compensation insurance carrier for American Airlines, began to pay plaintiff $175 a week in workers' compensation benefits. Through mid-April of 1984, Travelers paid $23,335 in weekly compensation benefits and $6,456 in medical costs. On May 17, 1982, Travelers filed a notice of lien against any settlement or judgment plaintiff might secure in her lawsuit against Scarpuzza, Martell, and Ann Arbor Inn.

On July 8, 1983, Travelers filed a motion to intervene in the lawsuit pursuant to § 827(1) of the Worker's Disability Compensation Act (WDCA), MCL 418.827(1); MSA 17.237(827)(1). The trial court ruled from the bench that it would grant Travelers's intervention request provided that the parties could agree on a cost-sharing plan. Evidently no cost-sharing agreement was entered into because on August 26, 1983, the trial court issued an order denying Travelers's request to intervene. On October 13, 1983, the trial court denied Travelers's request for a rehearing on its intervention motion and this appeal followed.

The sole issue on appeal is whether Travelers had an unconditional right to intervene in plaintiff's action against Scarpuzza, Martell, and Ann Arbor Inn under § 827 of the WDCA.^[1]

Travelers argues that its statutory right to intervene in this lawsuit is unrestricted and not subject to the trial court's discretion. It maintains that the WDCA provides that the apportionment of costs occurs after recovery and, therefore, that the trial court's condition was contrary to the WDCA.

As of the date of this appeal, plaintiff has not recovered a settlement or judgment in her cause against Scarpuzza, Martell, and Ann Arbor Inn.

The basis of the trial court's decision not to allow intervention was that it believed that plaintiff was entitled to recover her costs expended thus far in the case and, if no agreement to that effect could be reached, Travelers would not be permitted to intervene in the action.

GCR 1963, 209.1 provides in relevant part as follows:

"Intervention of Right. Anyone shall be permitted to intervene in an action

"(1) when a statute of this state or a court rule confers an unconditional right to intervene * * *."

Section 827(1) provides that "[a]ny party in interest shall have a right to join in the action". Because the statute grants a carrier who has paid compensation a substantive right to recover against a third-party tortfeasor, there is no question but that the insurance carrier is a real party in interest. See, e.g., Muskegon Hardware & Supply Co v Green, 343 Mich. 340, 346; 72 NW2d 52 (1955); Detroit v Spivey, 68 Mich. App. 295, 299-300; 242 NW2d 561 (1976). Therefore, Travelers had the statutory right to intervene in plaintiff's action against Scarpuzza, Martell, and Ann Arbor Inn.

Neither the court rule nor the WDCA provides for a conditional right to intervene as proposed by plaintiff. The apportionment of expenses is not made by the court until after there has been a recover. MCL 418.827(6); MSA 17.237(827)(6); Glavin v Baker Material Handling Corp, 132 Mich. App. 318, 324-326; 347 NW2d 222 (1984), remanded on other grounds 422 Mich. 882 (1985). Therefore, the trial court incorrectly conditioned the grant of Travelers's intervention request upon an apportionment of plaintiff's prerecovery expenses.

Plaintiff's reliance upon Harrison v Ford Motor Co, 370 Mich. 683; 122 NW2d 680 (1963), is misplaced. Unlike the situation here, Harrison involved an insurance carrier which represented both sides to the controversy. The Court held that under those circumstances, because "[o]ne may not sue himself", the insurance carrier could not intervene but, rather, had to await reimbursement from the plaintiff's recovery in the action. Harrison, supra, p 687.

For the reasons stated, we hold that Travelers had the right to intervene in the present action.^[2]

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

M.J. KELLY, P.J., concurred.

BEASLEY, J. (dissenting).

I respectfully dissent.

It is clear that once the workers' compensation carrier is allowed to intervene under GCR 1963, 209, the apportionment of expenses cannot be made by the trial court until after there has been a recovery.^[1] But, prior to allowing the carrier to intervene, the trial court can exercise its discretion and condition intervention on the sharing of the costs and risks of litigation. In this case, the trial court properly did not permit intervening appellant, Travelers Insurance Company, to sit back and wait for plaintiff to prepare the case for trial and then to intervene and reap the benefits of plaintiff's preparation expenses.

Plaintiff, Mary Lou Mason, was required to expend over $4,000 in costs of preparation for trial. In addition, plaintiff is obligated to her counsel under a contingent fee agreement. Travelers waited for over a year from the time plaintiff filed the suit before seeking to intervene. Under these circumstances, the trial court had discretion to spell out equitable conditions under which Travelers could intervene into plaintiff's case.

There are two sources that justify the exercise of discretion by the trial court in this case. First, the right to intervene under MCL 418.827(1); MSA 17.237(827)(1) is not unconditional. In Harrison v Ford Motor Co,^[2] the Michigan Supreme Court expressly held that the right of the insurer to intervene as a party plaintiff was not absolute. While this case could be limited to its unique facts where the insurer had an interest in both sides of the litigation, it should not be so narrowly limited. A United States District Court, in applying Michigan law, used the Harrison decision to limit an insurer's right to intervene with full participatory rights as a party plaintiff where the insurer did not have an interest in both sides of the litigation.^[3]

Thus, a trial court can properly limit, or condition, the intervention of an insurer exercising its "right to join" provided in MCL 418.827(1); MSA 17.237(827)(1). Therefore, the proper court rule to apply is GCR 1963, 209.2, now MCR 2.209(B), since the statutory right to intervene involved in this case is conditional, not unconditional, as required by GCR 1963, 209.1(1), now MCR 2.209(A)(1). Under GCR 1963, 209.2, intervention is permissive, and the trial court has a great deal of discretion in granting or denying such intervention. The trial judge in the within case did not abuse his discretion or violate Travelers's statutory right to intervention by imposing equitable conditions upon its exercise.

But even if Travelers's right to intervene is "unconditional" for purposes of the court rules and GCR 1963, 209.1(1) applies, the second source of trial court discretion would allow the court to place conditions on Travelers's right to intervene. This second source of court discretion is based on the lack of timeliness in Travelers's assertion of its right to intervene. GCR 1963, 209.1(1) was modeled after the Federal Rule of Civil Procedure on intervention,^[4] except that it did not, in so many words, include the federal rule requirement of timely application. In addition, the new MCR 2.209(A)(1), which replaces GCR 1963, 209.1(1), now includes a requirement of timely application. Consequently, it has been contended that GCR 1963, 209.1 did not require timely application. However, for consideration of pragmatism and equity, there must be some point at which a prospective intervenor, even under GCR 1963, 209.1, will have lost his right of intervention if he has delayed unreasonably.

There are no cases squarely addressing this issue of trial court discretion when the application for intervention under GCR 1963, 209.1(1) is substantially untimely and tardy. Many cases in this Court have held that the trial court does have discretion on whether to allow a late intervenor as of right to enter a case under GCR 1963, 209.1(3), which expressly requires timely application.^[5] Although GCR 1963, 209.1(1) does not expressly require timely application, the trial court must be allowed, at some point, to limit intervention which would unfairly allow an insurer to sit back for a period of over a year while the plaintiff incurs substantial time and expense in preparation for litigation. The trial judge is not required to allow an insurer to intervene at the last minute and share in all the gains of the plaintiff's expenses and efforts or walk away completely free if the plaintiff fails to recover.

In fact, the possibility of unfair, risk-free intervention a year down the road from the start of costly litigation justifies a trial court's application of equitable conditions to the intervention. Cases such as this, in which the statutory right to intervene is exercised, will necessarily vary greatly. The time of the attempt to intervene, promptness of investigation, the nature of damages, and other factors will enter into the question of whether conditions need to be attached to intervention. Such matters are best reviewed within the factual context of a particular case by exercise of the trial judge's discretion.

The right to intervene under GCR 1963, 290.1 or 209.2 is not unconditional. In this case, I do not consider that the trial court has violated Travelers's statutory right to intervene by imposing conditions upon its exercise. No abuse of discretion occurred here.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.

[1] There has been no claim on appeal that the workers' compensation insurance carrier would not be entitled to share in the plaintiff's recovery because of the application of the no-fault act to the present controversy. In Great American Ins Co v Queen, 410 Mich. 73; 300 NW2d 895 (1980), the Supreme Court discussed the interplay between the Worker's Disability Compensation Act and the no-fault act with respect to the issue of reimbursement for benefits paid. Given the present posture of the case, it is unknown whether the workers' compensation carrier will in fact be seeking reimbursement for payments which substitute for no-fault benefits "otherwise payable". Thus, there would be no reason to deny Travelers's request to intervene in this action on this ground. In fact, Queen permits a workers' compensation carrier to receive reimbursement from third-party tort recoveries in the same manner as the payment of workers' compensation benefits for non-motor vehicle related injuries when the workers' compensation benefits do not substitute for no-fault benefits otherwise payable. 410 Mich. 73, 97. In this case, plaintiff is suing for pain and suffering damages based upon her alleged serious impairment of bodily function. These are not the kind of damages "otherwise payable" under the no-fault act. See MCL 500.3135(1); MSA 24.13135(1). Therefore, the pleadings indicate that Travelers is not seeking reimbursement for payments which substituted for no-fault benefits otherwise payable. See and compare Bialochowski v Cross Concrete Pumping Co, Inc, 141 Mich. App. 315; 367 NW2d 381 (1985).

[2] GCR 1963, 209.1 did not make provision for inquiring into the timeliness of an intervention request. On remand, subject to MCR 1.102, the lower court may determine whether, under MCR 2.209(A)(1), Travelers's aplication to intervene was timely filed.

[1] MCL 418.827(6); MSA 17.237(827)(6); Glavin v Baker Material Handling Corp, 132 Mich. App. 318; 347 NW2d 222 (1984), remanded on other grounds 422 Mich. 882 (1985).

[2] 370 Mich. 683; 122 NW2d 680 (1963).

[3] Harris v General Coach Works, 37 FRD 343 (ED Mich, 1964).

[4] FR Civ P, 24(a).

[5] See Dudkin v Civil Service Comm, 127 Mich. App. 397, 404; 339 NW2d 190 (1983); American States Ins Co v Albin, 118 Mich. App. 201, 209; 324 NW2d 574 (1982), lv den 417 Mich. 955 (1983).