Opinion
No. 15–P–1645.
11-18-2016
ATLANTIC CHARTER INSURANCE COMPANY v. KANTROVITZ & ASSOCIATES, P.C.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
In this legal malpractice action, the defendant law firm, Kantrovitz & Associates, P.C. (Kantrovitz), filed a motion in limine seeking to preclude the plaintiff, Atlantic Charter Insurance Company (Atlantic Charter), from offering evidence that an insured's injuries were the result of an underlying car accident—a position contrary to the position Atlantic Charter had taken in proceedings before the Department of Industrial Accidents (department). The motion was allowed and the judge dismissed the case. Atlantic Charter now appeals, arguing that, as a subrogee, it is entitled to pursue its claim for legal malpractice on behalf of the insured. Kantrovitz cross-appeals, countering that, because of the nature of the inherent conflict at issue, the malpractice action against it should have been dismissed pursuant to G.L. c. 152, § 15. We affirm.
Background. In March, 2005, while driving a car in the course of his employment, Daniel Hoegen was struck head-on by another driver who had lost control of her car. Hoegen sought workers' compensation benefits from his employer's insurer, Atlantic Charter; he retained Kantrovitz to represent him in the workers' compensation action and also to bring a third-party negligence action against the driver who hit him.
Hoegen's name is spelled "Hoegan" in the first amended complaint.
After negotiating a lump-sum settlement from Atlantic Charter on Hoegen's behalf, Kantrovitz filed a negligence action against the driver of the other vehicle. Atlantic Charter placed a lien on the action to recoup its payment pursuant to G.L. c. 152, § 15. The attorney handling Hoegen's negligence action failed to respond to requests for documents and failed to answer interrogatories, both propounded by the driver's attorney. The driver's attorney sought a dismissal for failure to respond to the request for production of documents. The motion was granted. More than one year later, Hoegen's attorney discovered that judgment had entered in the negligence action and sought to have the judgment vacated. The motion was denied. Atlantic Charter then instituted the present action against Kantrovitz alleging attorney malpractice in the negligence action.
Hoegen did not file a malpractice claim against Kantrovitz and he is not a party to this appeal.
At a pretrial hearing, the judge allowed Kantrovitz's motion in limine, precluding Atlantic Charter from arguing that the injury to Hoegen was a result of the car accident. Kantrovitz argued, and the judge agreed, that judicial estoppel precluded Atlantic Charter from taking a position at the trial of the malpractice action that was contrary to its position before the department. Because the judge's action on the motion in limine precluded evidence essential to Atlantic Charter's case, judgment entered in favor of Kantrovitz. Atlantic Charter appealed the ruling on the motion in limine.
A second Superior Court judge earlier had denied Kantrovitz's motion to dismiss, and a third judge denied a renewed motion to dismiss, filed and argued at the final pretrial conference. See Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974). A fourth judge denied Kantrovitz's motion for summary judgment. In those motions, Kantrovitz had argued that G.L. c. 152, § 15, does not permit the insurer to seek relief from the attorney representing the injured worker as there is no attorney-client relationship between the insurer and the attorney, that is, Kantrovitz. Kantrovitz appealed the motion judge's ruling on the motion to dismiss and argues in its cross appeal that the order was improper.
Discussion. Atlantic asserts that it is subrogated to the rights of the injured employee (Hoegen) and therefore has standing to file a malpractice claim against the employee's attorney. G.L. c. 152, § 15. Kantrovitz counters that the language of the statute does not give an insurer subrogation rights, rather, an insurer's rights are dictated by the statute and its language gives the insurer only an opportunity to proceed against the tortfeasor or to place a lien on the employee's action against the tortfeasor. We agree.
The language of § 15 that Atlantic Charter relies upon provides that: "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, ... [e]ither the employee or the insurer may proceed to enforce the liability of such person, but the insurer may not do so unless compensation has been paid...." G.L. c. 152, § 15, as appearing in St.1991, c. 398, § 39.
"The right of the insurer under the statute does not rest on the principle of subrogation. It does not depend upon reimbursement. It is wholly the creature of the statute. The design of the statute is to enable the insurer, who has paid the compensation due under the act, to enforce for its own benefit against third persons negligently causing the [injury to] the employee." Fidelity & Cas. Co. v. Huse & Carleton, Inc., 272 Mass. 448, 452–453 (1930) (interpreting former version of workers' compensation statute).
"Like all statutory provisions, § 15 ‘must be interpreted according to the intent of the Legislature ascertained from all its words construed by the ordinary and approved usage of the language, considered in connection with the cause of its enactment, the mischief or imperfection to be remedied and the main object to be accomplished, to the end that the purpose of its framers may be effectuated.’ "
DiCarlo v. Suffolk Constr. Co., 473 Mass. 624, 628 (2016), quoting from Galenski v. Erving, 471 Mass. 305, 309 (2015).
Atlantic Charter argues that the language of the statute should not be interpreted narrowly, but rather should further the purpose of avoiding a double recovery by the employee. Bongiorno v. Liberty Mut. Ins. Co., 417 Mass. 396, 401–402 (1994). In Bongiorno, supra at 397, the injured employee hired an attorney to represent him in his workers' compensation action and also to proceed against the tortfeasor. As here, the negligence action was dismissed due to the alleged negligence of the attorney. Ibid. The injured employee brought a malpractice action against his attorney seeking damages due to the dismissal of the negligence action. Ibid. The insurer asserted a lien pursuant to § 15. Ibid.
On summary judgment, the motion judge ruled that the insurer was not entitled to place a lien on the proceeds of the malpractice action, reasoning that "recovery for a legal malpractice injury is distinct from the original compensable injury and is not subject to § 15." Id. at 401. The Supreme Judicial Court reversed and held that the insurer was entitled to place a lien on the action for attorney malpractice. Id. at 401–402. The court reasoned that § 15 provides that "a recovery by an employee in a third-party action is initially for the benefit of the workers' compensation insurer." Id. at 399. Atlantic Charter argues that this holding is dispositive here.
Kantrovitz, relying on DaRoza v. Arter, 416 Mass. 377 (1993), responds that there is no attorney-client relationship between Atlantic Charter and Kantrovitz that would support Atlantic Charter's malpractice claim. In DaRoza, the employer's insurer brought a negligence action against the tortfeasor responsible for the employee's injuries. Id. at 377–378. Again, due to the negligence of the (insurer's) attorneys, the tort action was dismissed. Id. at 378. The injured employee then filed a malpractice action against the attorneys, contending that an "implied attorney-client relationship resulted from the manner in which the parties conducted themselves." Id. at 381. The court disagreed, saying that, while an attorney may owe a duty to someone who is not his client,
"[s]uch a duty may arise ... only if the attorney reasonably should have foreseen reliance on the part of the third party.... When the situation involves potentially conflicting duties to the attorney's actual client and the third party claiming the benefit of reliance (as would be the case in a third-party action brought by an insurer under G.L. c. 152, § 15, for its own benefit with the possibility of an excess recovery), ‘we are less likely to impose a duty to nonclients.’ "
Id. at 382–383, quoting from Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 524, cert. denied, 493 U.S. 894 (1989). See Page v. Frazier, 388 Mass. 55, 63, 65 (1983). The court concluded in DaRoza, supra at 378, that "the defendant attorneys owed no duty to the plaintiff."
If we look only to the purpose of § 15, that is, that § 15 is intended for the benefit of the insurer who has paid benefits to the injured employee, it is clear that the insurer is entitled to place a lien on the injured employee's malpractice action against the attorney he hires. Bongiorno, 417 Mass. at 399. However, as the court concluded in DaRoza, supra at 383, the nature of the relationship between the injured worker and the insurer "involves potentially conflicting duties." Indeed, although the statute provides that the "sum recovered shall be for the benefit of the insurer," § 15 also sets out instances where the insurer and the employee have conflicting rights, as in the instances where a settlement has been reached with the tortfeasor that must be approved in the court where the action was filed "after a hearing in which both the employee and the insurer have had an opportunity to be heard." G.L. c. 152, § 15, as appearing in St.1991, c. 398, § 39.
The present action illustrates the nature of the inherent conflicts at issue under the statute. Atlantic Charter took one position before the department, i.e., that the employee's injury was "pre-existing," and a different position in this action, that is, that the employee's injury was a result of the car accident. Atlantic Charter argues that it should be permitted to step into the shoes of the employee here, and therefore cannot be estopped from asserting the position the employee took before the department.
However, "[o]ur decisions make clear that it is the potential for conflict that prevents the imposition of a duty" on Kantrovitz. Spinner v. Nutt, 417 Mass. 549, 554 (1994). As a result, and having in mind the fact that § 15 recognizes the inherent conflicts between the insurer and the injured employee, we agree with Kantrovitz that the attorney malpractice claim brought by Atlantic Charter could not stand. ,
Because we dispose of the matter on this issue, we need not reach the remaining issues raised by the parties.
The procedural basis for the consequent dismissal is not entirely clear. However, as noted supra, Kantrovitz filed two motions to dismiss and a motion for summary judgment on this ground and has, in fact, cross-appealed the rulings on those motions. In addition, the judge's order of dismissal "preserve[d] both parties['] rights to appeal any of the legal issues decided in this case."
Judgment affirmed.