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Barilla v. Lee & Palmer Inc.

Decided: January 19, 1990.

DIEGO BARILLA, PLAINTIFF,
v.
LEE & PALMER, INC., DEFENDANT-APPELLANT: SEA-LAND SERVICE, INC., PLAINTIFF-IN-INTERVENTION-RESPONDENT V. LEE & PALMER, INC., DEFENDANT-APPELLANT AND DIEGO BARILLA, PLAINTIFF



Antell, Bilder and Ashbey. The opinion of the court was delivered by Bilder, J.A.D.

Bilder

On this appeal we are asked to decide whether an injured worker, covered by the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C.A. 901 et seq., and a third-party tortfeasor insured by a bankrupt liability carrier whose responsibilities have been assumed in part by the New Jersey Property-Liability Insurance Guaranty Association (Guaranty Association), may settle their dispute free of the employer's lien claim for reimbursement of the compensation benefits paid under the Act. A brief review of the LHWCA and the factual setting is necessary to an understanding of the issue.

An overview of the LHWCA has been succinctly furnished by Justice Marshall in Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 74-75, 100 S. Ct. 925, 925-926, 63 L. Ed. 2d 215 (1980).*fn1

Under the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat 1424, as amended, 33 USC §§ 901 et seq. [33 USCS §§ 901 et seq.], a longshoreman is entitled to receive compensation payments from his stevedore for disability or death resulting from an injury occurring on the navigable waters of the United States.

If the longshoreman believes that his injuries warrant a recovery in excess of the compensation provided under the Act, he may also bring a negligence action against the owner of the vessel on which the injury occurred. The longshoreman's recovery from the shipowner is subject to the stevedore's lien in the amount of the compensation payment.

The relevant facts can be set forth briefly. Plaintiff Diego Barilla was injured when he slipped and fell on an icy ramp while employed as a longshoreman by intervenor Sea-Land Service, Inc. As a result, he received from his employer, a self-insurer, LHWCA compensation for medical expenses and

lost wages of $35,957.64. Thereafter, plaintiff brought a third-party action against defendant Lee & Palmer, Inc., the company responsible for maintaining the area in which he fell.

Defendant was insured for this type of liability by the now bankrupt Midland Insurance Company. Pursuant to the New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 et seq., the Guaranty Association has, subject to statutory limitations, assumed the obligations of that insolvent carrier. It is the statutory limitations on the Guaranty Association's obligations which give rise to the question with which we are presented.

The Guaranty Association is a statutory creation intended to provide protection to policyholders of insurance companies that become insolvent. See Railroad Roofing, etc., Co. v. Financial Fire & Cas. Co, 85 N.J. 384, 389 (1981). It is patterned after a model bill, id. at 391; its protection, of practical necessity, is limited. Thus, for example, its coverage is limited to $300,000, see N.J.S.A. 17:30A-8a(1), and, as important to this appeal, excludes, inter alia, claims which are due to "any reinsurer, insured, insurance pool, or underwriting association, as subrogation recoveries or otherwise;", see N.J.S.A. 17:30A-5d.

Plaintiff's suit against Lee & Palmer has been tentatively settled. The settlement is contingent upon obtaining a court ruling declaring the proceeds free and clear of Sea-Land's $36,000 odd LHWCA lien. To this end, defendant brought what it entitled "a motion to protect settlement." Plaintiff joined and Sea-Land intervened. Other procedural activity ensued which did not significantly affect the issue; nor did the employment of irregular procedural techniques. Although denominated differently, we are satisfied the parties were seeking a declaratory judgment. The appellant, third-party tortfeasor, and the employee contend that the foregoing statutory bar of payments to insurers by the Guaranty Association permits such an arrangement.


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