Court of Appeals of Texas, Dallas.

Sharon J. PARIS & Morris W. Bridges, Jr., Appellants,

v.

OHIO CASUALTY INSURANCE CO., Appellee.

No. 05-92-00053-CV.

|

August 24, 1992.

Before STEWART, OVARD and MALONEY, JJ.

OPINION

STEWART, Justice.

*1 This summary judgment case arises from a dispute between a workers’ compensation claimant and the intervening workers’ compensation insurer over the amount of the insurer’s subrogation claim against the proceeds from the settlement of the claimant’s personal injury action against a third-party tortfeasor and over the amount of attorney’s fees to be awarded the claimant’s attorney. Sharon J. Paris and Morris W. Bridges, Jr. (Bridges), appeal from a summary judgment in favor of Ohio Casualty Insurance Company (Ohio Casualty).

Bridges complains in his first two points of error that the trial court erred by granting the summary judgment because (1) Ohio Casualty’s summary judgment proof was incompetent or raised fact questions and (2) controverting summary judgment evidence raised a genuine issue of material fact. In his last three points, he contends that the trial court erred by (3) not limiting Ohio Casualty’s subrogation recovery to the net amount of recovery, (4) not including the amount of reasonable future medical expenses to calculate the full value of Ohio Casualty’s subrogation interest for the award of attorney’s fees, and (5) failing to determine whether Ohio Casualty’s attorney actively participated in obtaining settlement with the third-party tortfeasor. For the reasons given below, we modify the judgment, and, as modified, we affirm the judgment of the trial court.

BACKGROUND FACTS

On February 13, 1990, Bridges, in the course and scope of his employment at Metro Lube, Inc., was struck by a car driven by Murray Ray Cantwell. Bridges sustained serious physical injuries in the accident. Because Bridges was a minor at the time of the accident, Paris, his mother, brought suit as next friend against Cantwell. Bridges is no longer a minor. Ohio Casualty was the workers’ compensation carrier for Bridges’ employer. It paid Bridges’ medical expenses and lost wages. Ohio Casualty intervened in the personal injury suit and pleaded that it was subrogated to Bridges’ rights against Cantwell to the extent of the benefits it paid under the workers’ compensation insurance policy.

Cantwell’s insurance carrier tendered the full policy limit of $50,000. Ohio Casualty moved for summary judgment on the ground that there were no genuine issues of material fact as to its subrogation claim and lien for $32,387.70 against any recovery by Bridges. On July 1, 1991, the trial court determined that Ohio Casualty’s subrogation lien was $32,387.70 and that Ohio Casualty had the right to recover that amount from all payments by Cantwell as settlement of Bridges’ claims. The trial court awarded Bridges’ attorney $6,000 in attorney’s fees from Ohio Casualty’s subrogation recovery. Bridges appeals these rulings.

STANDARD OF REVIEW

In reviewing a summary judgment record, this Court applies the following standards:

1. The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

*2 2. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true.

3. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor.

Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). The question on appeal is whether the summary judgment proof establishes as a matter of law that there is no genuine issue of fact as to one or more of the essential elements of the cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex. 1970).

SUMMARY JUDGMENT EVIDENCE

Bridges complains in his first and second points of error that the trial court erred by granting Ohio Casualty’s motion for summary judgment because Ohio Casualty failed to establish as a matter of law that there was no genuine issue of material fact concerning the amount of its subrogation interest. He points out that Ohio Casualty based its summary judgment motion on Dennis Ghram’s affidavit and the records attached to Ghram’s affidavit. In his affidavit, Ghram states that Ohio Casualty paid to Bridges, directly or on his behalf, the amount of $32,387.70 as medical expenses and indemnity benefits. Ghram also states that “[t]rue and correct copies of all drafts evidencing all such payments are attached hereto as Exhibit ‘B’ and incorporated herein by reference.” (Emphasis added.) Bridges contends that there is a discrepancy between the subrogation amount in Ghram’s affidavit of $32,387.70 and the total of $31,041.14 reflected in the copies of drafts attached to the affidavit, thus raising an issue of material fact as to the amount of Ohio Casualty’s subrogation lien. We agree that there is a variance in these amounts. In fact, our examination of the attached copies of drafts in Exhibit B reveals duplicate drafts and one void draft, resulting in an adjusted total of $30,849.14 as evidence of payments made by Ohio Casualty.

The company responds that any discrepancy between the subrogation amounts in the affidavit and attached records is the result of clerical error. Assuming Ohio Casualty is correct, we nevertheless agree with Bridges that, in light of Ghram’s statement in the affidavit that the attached drafts evidenced all payments made to or on behalf of Bridges, the trial court should not have awarded Ohio Casualty a greater amount than that which was demonstrated by the purported business records.

Bridges also argues that Ghram’s affidavit is insufficient summary judgment evidence because it does not set forth the amount of indemnity benefits or indicate that Bridges received, negotiated, or cashed the payments. Ohio Casualty replies that it is entitled to subrogation of the full amounts of the payments made without showing that it made all payments directly to Bridges or that Bridges received all of the payments. Ohio Casualty asserts that it is entitled to subrogation for the full amount of indemnity benefits and medical expenses paid and that the statute does not condition the carrier’s recovery on a showing that the claimant directly received all payments. TEX. REV. CIV. STAT. ANN. art. 8307, § 6a(c) (Vernon Supp. 1992) (Repealed). We agree.

*3 Further, Ohio Casualty argues that Bridges’ affidavit filed in response to its motion for summary judgment does not raise a fact issue. In his affidavit, Bridges stated that, to his knowledge and belief, he did not personally receive all of the checks issued by Ohio Casualty. Rule 166a(f) of the Texas Rules of Civil Procedure requires opposing affidavits be made on personal knowledge. Williams v. Conroe Indep. Sch. Dist., 809 S.W.2d 954, 958 (Tex. App.-Beaumont 1991, no writ). In the absence of any averment that the statements are made within his personal knowledge and are true and correct, the affidavit is defective. Id. Thus, we conclude that an affidavit based on knowledge and belief is defective and does not raise a fact issue.

Moreover, Bridges’ affidavit did not controvert the amount of payment or present any evidence to show that Ohio Casualty did not make the payments. Bridges asserted in his affidavit that he did not receive all the checks attached to Ohio Casualty’s motion for summary judgment. Bridges stated that he intermittently and sporadically received checks and that the checks he received did not have obliterations or alterations. Because Ohio Casualty is not required to show that Bridges received all of the payments and because Bridges does not complain that the subrogation amount is incorrect, we conclude that Bridges’ affidavit does not raise an issue of fact.

Bridges also contends that the records attached to Ghram’s affidavit do not qualify as business records because obliterations and alterations block out a portion of the bottom left-hand corner of each document. Bridges asserts that these obliterations or alterations prevent the documents from being “duplicates” because the copies are not accurate reproductions of the originals as required by rule 1001(4) of the Texas Rules of Civil Evidence. Hence, he argues that the records are inadmissible because they are in violation of the best evidence rule or that these records at least raise a genuine issue of material fact.

A duplicate is admissible to the same extent as an original unless there is a question as to the original’s authenticity or the circumstances are such that it would be unfair to admit the duplicate in lieu of the original. TEX. R. CIV. EVID. 1003. First, we discern no “alteration” on the face of the documents attached to Ghram’s affidavit. Next, we disagree with Bridges that, as a result of the obliteration of the lower left-hand corner of each document, a question was raised as to the authenticity of the original and that it was unfair for the trial court to admit the records as evidence in lieu of the originals. Each record is denominated “Triplicate” and purports to be a copy of a draft payable either to a medical provider or to Bridges himself. The date of issuance, the amount, and Metro Lube, Inc. (Bridges’ employer) as the insured, together with the policy number, loss date, claim number, and purpose of the draft, is stated on each instrument. We agree with Ohio Casualty that any portion of each draft that is otherwise covered is irrelevant for the purpose of establishing the amount of Ohio Casualty’s subrogation recovery.

*4 We overrule Bridges’ first and second points of error. However, we modify the judgment to reflect $30,849.14 as the amount of the subrogation recovery to which Ohio Casualty is entitled as a matter of law under its summary judgment evidence. TEX. R. APP. P. 81(b)(1).

NET AMOUNT

Bridges argues in his third point of error that article 8307, section 6a of the Texas Workers’ Compensation Act limits Ohio Casualty’s subrogation recovery to Bridges’ net recovery and that the trial court’s summary judgment order improperly permits Ohio Casualty to take its subrogation amount from his gross recovery. That section, prior to repeal, read as follows:

If at the conclusion of a third party action a workmen’s compensation beneficiary is entitled to compensation, the net amount recovered by such beneficiary from the third party action shall be applied to reimburse the association for past benefits and medical expenses paid and any amount in excess of past benefits and medical expenses shall be treated as an advance against future benefit payments of compensation to which the beneficiary is entitled to receive under the Act.

TEX. REV. CIV. STAT. ANN. art. 8307 § 6a(c) (Vernon Supp. 1992) (Repealed). Bridges argues that “net amount” recovered from a third-party action is the amount of the settlement or judgment, less a plaintiff’s court costs and attorney’s fees. Otherwise, he maintains, Ohio Casualty receives a windfall because it can abate future medical payments and benefits for any excess over its subrogation recovery.

Ohio Casualty argues that there is no statutory provision for deducting the beneficiary’s attorney’s fees to arrive at a “net amount”; it also notes that there is no provision in the Workers’ Compensation Act for the recovery or sharing of litigation costs. Aetna Casualty & Surety Co. v. Harjo, 766 S.W.2d 583, 583 (Tex. App.-Beaumont 1989, no writ). Ohio Casualty contends that net amount, as used in the statute, can only mean the amount recovered by Bridges, less any offsets or credits the tortfeasor may be allowed. We agree.

When a compensation carrier pays compensation to an injured employee, the “first money” recovered in a subsequent suit against a third-party tortfeasor belongs to the compensation carrier until it is repaid in full. Fort Worth Lloyds v. Haygood, 246 S.W.2d 865, 869 (Tex. 1952). Here, the settlement with Cantwell resulted in the recovery of $50,000. Ohio Casualty, therefore, had the right to recover its subrogation lien from that amount until it was repaid in full. Id.; Prewitt & Sampson v. City of Dallas, 713 S.W.2d 720, 722 (Tex. App.-Dallas 1986, writ ref’d n.r.e.). We overrule Bridges’ third point of error.

FUTURE MEDICAL EXPENSE

Bridges contends in his fourth point of error that the trial court erred by failing to include the amount of reasonable future medical expenses in arriving at the full value of Ohio Casualty’s subrogation interest for the purpose of awarding attorney’s fees to his attorney from Ohio Casualty’s subrogation recovery. Bridges argues that, for the purpose of awarding attorney’s fees, the full subrogation amount includes the amount previously paid by the carrier and the amount of future liability that the carrier has been relieved from paying. Chambers v. Texas Employers Ins. Ass’n, 693 S.W.2d 648, 650 (Tex. Civ. App.-Dallas 1985, writ ref’d n.r.e.).

*5 Ohio Casualty argues that, despite Chambers, the trial court should not consider the carrier’s relief from liability for future medical payments for the purpose of awarding attorney’s fees. It contends that future benefits are not referred to in the statute that provides for attorney’s fees and that the legislature never intended to allow recovery of attorney’s fees based on relief from future liability. Ohio Casualty relies on the recodification of the Texas Workers’ Compensation Act which provides that, for purposes of determining attorney’s fees, only the amount recovered for past benefits and medical expenses paid by the carrier may be considered. TEX. REV. CIV. STAT. ANN. art. 8308-4.05(g) (Vernon 1992). This statute applies only to injuries that occurred after January 1, 1991, the effective date of the Act; it is inapplicable here because Bridges’ injuries occurred on February 13, 1990.

However, we need not re-evaluate our decision in Chambers because we agree with Ohio Casualty’s alternative argument, namely, that there is no evidence that the trial court did not consider future medical payments. On February 28, 1991, the trial court admitted evidence of future medical expenses at a hearing on Bridges’ motion for attorney’s fees. At this hearing, the trial court overruled Ohio Casualty’s objections and admitted Dr. Frank Gottschalk’s deposition, where he testified that the reasonable costs of Bridges’ future medical expenses was $20,000. The trial court awarded Bridges’ attorney $2,000 in attorney’s fees after that hearing. A second hearing on attorney’s fees was held on May 31, 1991. At this hearing, the trial court stated that it would look at the evidence presented at both hearings to determine if it needed to reconsider the amount of attorney’s fees awarded to Bridges’ attorney. The trial court ultimately awarded Bridges’ attorney $6,000 in attorney’s fees. Thus, there is no evidence that the trial court did not consider future medical payments as part of the subrogation amount for the purpose of calculating and awarding Bridges’ attorney $6,000 in attorney’s fees, and there is some evidence that he did.

Further, the allowance of attorney’s fees is within the trial court’s discretion and its judgment will not be reversed without a clear showing of abuse of discretion. Vanguard Ins. Co. v. Humphrey, 729 S.W.2d 344, 348 (Tex. App.-Houston [14th Dist.] 1987, no writ). Bridges has not shown that the trial court abused its discretion. We overrule his fourth point of error.

ACTIVE PARTICIPATION

In his fifth point of error, Bridges maintains that the trial court erred in failing to determine whether or not Ohio Casualty’s attorney actively participated in obtaining the settlement with Cantwell. The provisions for attorney’s fees in article 8307, section 6a have been held to apply in three situations:

(1) where the carrier has an attorney, but the attorney does not actively represent the carrier;

*6 (2) where the worker’s attorney represents both the worker and the carrier;

(3) where the carrier has an attorney who actively represents the carrier and participates in obtaining a recovery.

Hartford Ins. Co. v. Branton & Mendelsohn, Inc., 670 S.W.2d 699, 701 (Tex. App.-San Antonio 1984, no writ) (emphasis in original). The statute provides that, if a carrier is not actively represented by an attorney in a third-party claim, the carrier shall pay the claimant’s attorney a fee not to exceed one-third of the subrogation recovery. TEX. REV. CIV. STAT. ANN. art. 8307 § 6a(a) (Vernon Supp. 1992) (Repealed). The statute also states that, if the carrier is actively represented by an attorney, the trial court “shall award and apportion an attorney’s fee allowable out of the association’s subrogation recovery between such attorneys taking into account the benefit accruing to the association as a result of each attorney’s service, the aggregate of such fees not to exceed [one-third] of the subrogated interest.” TEX. REV. CIV. STAT. ANN. art. 8307 § 6a(b) (Vernon Supp. 1992) (Repealed). Thus, regardless of whether the association’s attorney actively participates in obtaining a recovery, the one-third attorney’s fee is a maximum. The fee provided in this section compensates the claimant’s attorney for the benefit to the carrier as a result of the claimant’s effort to negotiate and settle the third-party claim. See Illinois Nat’l Ins. Co. v. Perez, 794 S.W.2d 373, 377 (Tex. App.-Corpus Christi 1990, writ denied).

Bridges argues that, although Ohio Casualty hired an attorney to represent its interest, the trial court abused its discretion by arbitrarily assigning a fee to his attorney without making the requisite findings required by section 6a. Bridges asserts that under the uncontroverted evidence his attorney was entitled to one-third of Ohio Casualty’s subrogation interest and that the trial court’s failure to determine whether or not the carrier’s attorney actively participated prevents a proper examination of the basis and reason for the trial court’s assigning his attorney only $6,000 from Ohio Casualty’s subrogation interest.

The statute does not require the trial court to award one-third of the subrogation recovery as attorney’s fees; it states only that fees cannot exceed one-third of that amount. The statute imposes a limit on attorney’s fees and leaves determination of the amount to be awarded to the trial court’s discretion. Hartford, 670 S.W.2d at 703.

The record reflects that Bridges filed requested findings of fact and conclusions of law, one of which, in part, requested a finding that the carrier’s attorney did not actively participate in obtaining the recovery from Cantwell or his insurer. Bridges has not complained on appeal of the trial court’s failure to so find, nor does he argue that the evidence is insufficient to support the trial court’s award of $6,000 as attorney’s fees. Instead, he argues that the trial court’s failure to determine whether or not the carrier’s attorney actively participated in obtaining the settlement in this cause was error. The trial court was never requested to determine whether or not the carrier’s attorney actively participated; it was only requested to find that the carrier’s attorney did not participate.

*7 Further, the statute does not mandate that the trial court enter a finding on the record regarding active participation. Article 8307, section 6a(b) only requires that the trial court take into account the benefit to the association as a result of each attorney’s service when the carrier’s attorney actively participates in obtaining a recovery from the third party. Moreover, we conclude that Bridges has not shown that the trial court did not determine whether or not Ohio Casualty’s attorney participated in the settlement when it decided on the award of attorney’s fees. We note that the order on plaintiffs’ motions for attorney’s fees recites that Bridges’ attorney, “is awarded and apportioned an attorney’s fee of $6,000.” (Emphasis added.) Thus, we conclude that the trial judge in fact found that Ohio Casualty’s attorney actively participated to some degree in obtaining the subrogated interest, because otherwise the court would not have “apportioned” a fee to Bridges’ attorney.

In University of Texas System v. Melchor, 696 S.W.2d 406, 409 (Tex. App.-Houston [14th Dist.] 1985, writ ref’d n.r.e.), the court noted the absence of statutory guidelines to assist the trial court in awarding attorney’s fees under article 8307, section 6a. A proper apportionment of attorney’s fees turns upon the facts of the individual situation, requiring an assessment of the contributions by each attorney toward the recovery of the subrogation amount. Id. at 408. When the third-party tortfeasor’s liability is uncontested, the only real issue in the litigation is the amount of damages, and active participation is measured by whether the carrier’s attorney will agree to reduce the subrogated amount to facilitate settlement. Id.

In the present case, the carrier’s attorney was not asked to agree to reduce the subrogated amount; the record reveals that Cantwell’s liability was basically uncontested and that his insurance carrier tendered as a settlement the full policy limits, which were in excess of the carrier’s subrogated interest. Ohio Casualty filed a plea in intervention and offered proof of the subrogated amount in support of its motion for summary judgment. Although the record shows that Bridges’ attorney was primarily responsible for the recovery of the subrogated amount, it also reveals limited activity by both attorneys. Under the evidence before us, the award of $6,000 in attorney’s fees to Bridges’ attorney from the subrogated interest was not an abuse of discretion. We overrule Bridges’ fifth point of error.

As modified, we affirm the judgment of the trial court.

DO NOT PUBLISH-TEX. R. APP. P. 90