The issue presented by these motions is whether an employer who has paid worker's compensation benefits to a covered employee is entitled to a lien under N.J.S.A. 34:15-40 in an action by the employee against an attorney for failing to prosecute a third-party claim. This question has not yet been decided in any reported decision in this State.
In June 1979, Clyde Dronebarger was injured while employed by Johns-Manville when a scooter he was riding in the plant backed into a pile of shingles, crushing his right leg. Thereafter, Dronebarger retained attorney Ernest Russo regarding his claims for personal injuries suffered as a result of the scooter accident. Russo filed a worker's compensation claim petition on behalf of Dronebarger and successfully prosecuted his claim for total disability. Russo did not, however, file a third-party product-liability action against the scooter manufacturer
within the applicable statute of limitations. N.J.S.A. 2A:14-2.
On or about December 20, 1984, Dronebarger filed suit against Russo grounded in legal malpractice. That case is still pending. If successful, Dronebarger will recover damages equal to those he would have received in a third-party product-liability action against the manufacturer of the scooter. Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 342 (1980). The present action was filed by Johns-Manville on January 10, 1986 for a declaratory judgment that it is entitled to a lien pursuant to N.J.S.A. 34:15-40 on any recovery in the action between Dronebarger and Russo.
Russo has brought this motion for summary judgment pursuant to R. 4:46, or alternatively, to dismiss the complaint for failure to state a claim upon which relief may be granted pursuant to R. 4:6-2. Dronebarger has joined in Russo's application. Johns-Manville has cross-moved for summary judgment on its complaint arguing that it is entitled to a lien on the proceeds of the underlying lawsuit as a matter of law.
Because the applications do not rely upon facts beyond the pleadings, defendants' motion is properly treated as a motion to dismiss for failure to state a claim upon which relief can be granted. R. 4:6-2(e). See Slohoda v. United Parcel Serv., Inc., 193 N.J. Super. 586, 589 (App.Div.1984); Raskulinecz v. Raskulinecz, 141 N.J. Super. 148, 154 (Law Div.1976). This court views the matter as solely one of statutory construction, and as such, ripe for summary determination as a matter of law. 82 C.J.S., Statutes, § 312 at 530.
N.J.S.A. 34:15-40 preserves an injured employee's right of action against a third person who is liable for his injuries as the act was not intended to extend immunity to strangers to the employer-employee relationship. 2A Larson, Workmen's Compensation Law (1983), § 71.00. That section also gives the employer a statutory right of reimbursement, embodying the
basic concept that the ultimate loss should fall upon the wrongdoer. Id. at § 71.10.
The Workmen's Compensation Act, as enacted in 1911, did not provide for the employer's recovery from the third person alleged to be responsible for the injuries sustained. Thus, an injured employee was in some instances permitted a double recovery. However, the Legislature amended the act in 1913 to provide the employer this right and to prevent the inequity of double recovery. See Newark Paving Co. v. Klotz, 85 N.J.L. 432 (1914), aff'd 86 N.J.L. 690 (E. & A. 1914).
One of the express purposes of N.J.S.A. 34:15-40 is to avoid double recovery. See, e.g., Schweizer v. Elox Division of Colt Industries, 70 N.J. 280 (1976). See generally 2A Larson, supra at § 71.20. Plaintiff argues that to deny its lien would be contrary to this express purpose, especially in a legal malpractice action where, as here, damages would ...