On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 22, 2010 - Decided Before Judges R. B. Coleman and Lihotz.
Defendant American Style Construction, Inc. (American Style) appeals from the September 8, 2009 order declaring its asserted workers' compensation lien void. At issue is whether an employer that paid a lump sum settlement pursuant to a negotiated settlement agreement that purported to reserve its lien, pursuant to N.J.S.A. 34:15-40 (Section 40) of the Workers' Compensation Act, should be reimbursed from the disbursements of a third-party tort recovery in favor of the claim petitioner. Under the facts presented, which are not in dispute, we answer in the affirmative.
Plaintiff Daniel Aquilino Calva Calle, as Administrator Ad Prosequendum of the Estate of Christian Daniel Calva Siguenza and individually (Calle), filed a complaint in the Law Division against Hitachi Power Tools, Hitachi Koki, U.S.A., Ltd., Hitachi Koki Co., Ltd. (collectively Hitachi) alleging that manufacturing and design defects in a Hitachi nail gun caused the death of decedent Christian Daniel Calva Siguenza, at a jobsite in Yonkers, New York. The complaint also alleged that decedent's employer, American Style, was liable in tort as a result of its alteration of the nail gun. While the Law Division matter was pending, Calle filed a claim petition with the Division of Workers' Compensation seeking workers' compensation benefits.
On July 25, 2006, Judge Sue Pai Yang of the Workers' Compensation Division entered an order approving a settlement for $100,000 negotiated between American Style and Calle. The order approving settlement, entered pursuant to N.J.S.A. 34:15-20 (Section 20), expressly provided that "Respondent [American Style] retains Section 40 rights on $50,000" of the amount paid, should Calle recover in the third-party action in Superior Court. The transcript of the hearing on July 25, 2006 reflects that the following agreement was placed on the record before Judge Yang:
[Respondent's Attorney]: As your Honor said, this matter is coming before you as a proposed settlement pursuant to Section 20 of the statute. The reason for the lump sum settlement is there are serious issues regarding dependency. The proposed settlement is for $100,000; however, respondent reserves its Section 40 lien rights up to $50,000 and respondent will also pay the $3,500 funeral expenses, which the carrier had not done[.] [Appellant's Attorney]: I concur, your Honor.
Under oath, Calle acknowledged that he understood the implications of the settlement:
Q. I did advise you if you were to accept this offer this would be a one time lump sum payment and you would forever [sic] barred from seeking more money from your son's former employer and that would be either death or dependency towards brothers, sisters and your family. Do you understand that?
Q. [W]e just have to put it on the record so it's clear that you voluntarily accept this settlement and that there are no other promises made other than what I advised you today; a one time lump sum of $100,000.
Out of that amount there are certain deductions
There is also what they call a Section 40 lien amount of $50,000 of the money to be reservable by the insurance company as pay back for authorized treatment. This money will come from the part of the case that was handled ...