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McMullen v. Maryland Casualty Co.

Decided: March 20, 1973.

MARGARET MCMULLEN, ADMINISTRATRIX OF THE ESTATE OF CHARLES MCMULLEN, DECEASED, PLAINTIFF,
v.
MARYLAND CASUALTY CO., A CORPORATION, DEFENDANT



Larner, A.j.s.c.

Larner

Plaintiff, as administratrix ad prosequendum , instituted a wrongful death action against Conforti & Eisele, Inc., an assured of defendant Maryland Casualty Co. That litigation was settled for the sum of $250,000. Thereafter, a hearing was held and an order of distribution was entered providing for the payment of attorney's fees pursuant to the schedule in R. 1:21-7 and the allocation of the balance to the next of kin.

The negligence action arose out of an accident compensable under the Workmen's Compensation Act. As of the time of the settlement Maryland Casualty Co., which was also the compensation carrier, had made voluntary compensation payments amounting to approximately $16,000. However, the projected total compensation liability of the carrier for the death claim was $39,450.

In the order of distribution the court deducted the total projected compensation liability from the gross settlement in arriving at the amount of the attorney's fee. This was done for the sole purpose of assuring that the fee on this portion of the recovery would be assessed against the workmen's compensation carrier and not against the next of kin.

In the meantime, the attorney for plaintiff filed a workmen's compensation claim in order to formalize the amount due thereunder by an appropriate judgment, and also to have the attorney's fee computed on the subrogated portion of the third-party recovery.

In the Workmen's Compensation Division counsel for Maryland Casualty Co. took the position on the record that the company had no liability for counsel fees because the order of distribution did not allocate any fee to the subrogated figure of $39,450 nor assess any fee on that sum to the administratrix or next of kin. The compensation judge thereupon refused to award a fee, but left open in equivocal language whether such a fee would be due in the future by application to the Superior Court. A subsequent application

to the Superior Court in the negligence action was unavailing, and plaintiff was shunted to the Appellate Division for relief. In the meantime, defendant, in its dual position as liability and workmen's compensation carrier, remitted to plaintiff the settlement funds of $250,000, deducting however the gross amount of its lien for paid compensation benefits amounting to $16,574.

In an effort to extricate himself from the aforesaid procedural morass, plaintiff's counsel brought this independent action against Maryland Casualty Co. for the payment of the attorney's fee due on the total projected compensation award. Both parties moved for summary judgment.

At the hearing of these motions counsel for defendant backed away from the wholly untenable position which he asserted before the Workmen's Compensation Division and conceded that defendant is legally obligated to pay an attorney's fee on the amount of the total projected compensation claim regardless of the form of the distribution order or the lack of actual payment by the client.

The parties thereupon stipulated that this court assume jurisdiction of the controversy and proceed to determine the sole issue, namely, the quantum of attorney's fees to be paid by defendant. Moreover, plaintiff's counsel committed himself to dismiss the appeal from the Workmen's Compensation Division, so that the matter could be resolved on the merits before this court.

In passing, it should be noted that the Workmen's Compensation Division and the Superior Court have concurrent jurisdiction to determine liability of a compensation carrier for legal fees arising out of a third-party recovery so long as the carrier is a party to the litigation. Cf. Caputo v. The Best Foods , 17 N.J. 259 (1955); McDermott v. Standard Accident Ins. Co. , 40 N.J. Super. 119 (App. Div. 1956). Hence, the court will now ...


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