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Brumfield v. Gallo Wine Sales of New Jersey Inc.

Decided: February 17, 1982.

MARTHA BRUMFIELD, PETITIONER-RESPONDENT,
v.
GALLO WINE SALES OF NEW JERSEY, INC., RESPONDENT-APPELLANT



On appeal from the Workers' Compensation Division.

Bischoff, King and Polow. The opinion of the court was delivered by King, J.A.D.

King

This case presents a complex factual pattern which involves the extent of a workers' compensation insurance carrier's lien against the proceeds of a third-party tort settlement. The facts were stipulated before the judge of compensation.

On September 6, 1974 Paul Brumfield, a salesman for Gallo Wines, was injured in an automobile accident during the course of his employment. As a result of these injuries he died on September 24, 1974. He left two dependents, his 29-year-old wife Martha and his one-year-old daughter Debora. At death, Paul was earning $210 a week, entitling his dependents to the maximum benefit of $112 a week for two dependents and $105 a week for one dependent.

Shortly after the death Gallo Wines, through its workers' compensation carrier, Argonaut Insurance Company, commenced payment of $112 a week dependency benefits to Paul's survivors. These payments continued until September 14, 1976 when the dispute over the amount of credit to be given for the third-party recovery arose.

During 1975 Martha started a third-party tort action against the party allegedly responsible for Paul's death. This litigation in the Cumberland County Law Division resulted in a settlement of $75,000 during the summer of 1976. On September 24, 1976, on notice to Argonaut, Martha's counsel in the third-party death action moved "for an order setting and establishing distribution to the heirs of Paul G. Brumfield, decedent, of such sums available as a result of settlement of this litigation between the

plaintiff and the defendant" pursuant to N.J.S.A. 2A:31-4 of the Wrongful Death Act. As a result of this application Judge Miller made the following allocation of the net proceeds of the $75,000 settlement of the wrongful death claim:

Martha $46,592.97

Debora 8,139.36

Counsel fee 19,142.67

Counsel's costs 1,125.00

Thus, 85% of the net settlement was allocated to the surviving wife and 15% was allocated to the surviving child. Counsel fees and costs consumed 26% of the settlement.

As of August 31, 1976 Argonaut had paid $17,402.60 to the dependents. During the course of negotiating the death action settlement Martha's counsel negotiated a settlement of its lien under N.J.S.A. 34:15-40 as it existed on August 31, 1976 for the sum of $12,992, less counsel fees and costs, or a net amount of $8,461.33, with Argonaut's claim representative. This compromise represented 75% of Argonaut's total lien to date. Argonaut's claims manager executed a "satisfaction of lien" which clearly expressed its intention to reserve its right to credit against future compensation payments. The "satisfaction of lien" stated:

It is understood that the execution of this Satisfaction of Lien shall in no way determine the amount of credit to which Argonaut Insurance Company is entitled against the full recovery by virtue of the Worker's Compensation Statute of the ...


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