Court of Appeals of Texas, Dallas.
CITY of Dallas, Appellant
v.
Dru King, The St. Paul Insurance Company, Hollis Lee Minter, Henry C. Beck Co., Inc., and HCB Contractors, Ltd., Appellees.
No. 05-96-01457-CV.
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June 26, 1998.
Before Justices OVARD, WHITTINGTON, and WRIGHT.
OPINION
JOHN OVARD Justice.
*1 This is an appeal of a summary judgment. In a single point of error, City of Dallas (the City) contends the trial court erred in granting summary judgment for appellees because the City pleaded a valid cause of action for conversion. Because we conclude appellees never exercised dominion and control over the property in question, we affirm.
FACTS
Gregory Ford, an employee of the City, suffered injuries when Hollis Lee Minter1, an employee of Henry C. Beck Company, Inc. (Beck) and HCB Contractors, Ltd. (HCB), struck the car Ford was driving. As a result of the injury, the City paid workers’ compensation benefits to Ford. Ford sued Minter, Beck, and HCB, who tendered the lawsuit to their insurer, The St. Paul Insurance Company (St.Paul). The parties settled the lawsuit, and St. Paul issued a settlement check to Ford’s attorney, with the agreement that Ford’s attorney would handle the City’s workers’ compensation lien. After failing to negotiate an agreement with the City, Ford’s attorney released the settlement proceeds to Ford. The City then sued Minter, Beck, HCB, St. Paul, and Dru King,2 the St. Paul claims representative in charge of Ford’s file, alleging conversion of its workers’ compensation lien, violations of the Deceptive Trade Practices Act, and violations of Article 21.21 of the Texas Insurance Code.3 Appellees moved for summary judgment on all causes of action, claiming that the City failed to plead a cause of action for conversion. The City conceded all legal issues, except those pertaining to its cause of action for conversion. The trial court, however, agreed with appellees and granted summary judgment.
STANDARD OF REVIEW
The standards for reviewing a summary judgment are well established: (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 summary judgment as a matter of law; (2) in deciding whether there is a disputed fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). A defendant who moves for summary judgment must show that the plaintiff has no cause of action. A defendant may meet this burden by either (1) disproving at least one essential element of each theory of recovery or (2) conclusively proving all elements of an affirmative defense. Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993).
CONVERSION
In its single point of error, the City contends the trial court erred in granting summary judgment for appellees because the City pleaded a valid cause of action for conversion. The City contends appellees wrongfully paid out settlement money belonging to the City when they had actual knowledge of the City’s statutory lien against the workers’ compensation benefits paid to Ford. Specifically, the City argues that when an employer pays workers’ compensation benefits to an injured employee, the employer is entitled to recover, as reimbursement of its lien, the “first money” paid to that employee by a third-party tortfeasor. See former Tex.Rev.Civ. Stat. Ann. art. 8307, § 6a (Vernon 1967), repealed by Acts 1989, 71st Leg., 2d C.S., ch. 1, § 16.01(10) to (12). The City contends that because appellees paid out the “first money” to Ford’s attorney, and not to the City, appellees are guilty of conversion. We disagree.
*2 Conversion is the wrongful exercise of dominion and control over another’s property in denial of or inconsistent with his rights. Bandy v. First State Bank, Overton, Texas, 835 S.W.2d 609, 622 (Tex.1992). An action lies for conversion of money when the money is specifically identifiable and there is an obligation to deliver the specific money. Houston Nat’l Bank v. Biber, 613 S.W.2d 771, 774 (Tex.Civ.App.-Houston [14th Dist.] 1981, writ ref’d n.r.e.). A plaintiff must prove at the time of the conversion that he was the owner of the property and had legal possession of it or was entitled to possession. Lone Star Beer, Inc. v. Republic Nat’l Bank of Dallas, 508 S.W.2d 686, 687 (Tex.Civ.App.-Dallas 1974, no writ).
The property that the City contends it was entitled to is the settlement check St. Paul tendered to Ford’s attorney. St. Paul tendered the check to settle a claim filed by Ford against its insureds. Prior to disbursement of the settlement check, it is clear that the City cannot point to any identifiable property to which it was entitled that appellees exercised dominion and control over. Rather, these proceeds belonged to St. Paul before they settled Ford’s claim. Once St. Paul tendered the settlement check to Ford’s attorney, the property was no longer in the possession of appellees, but in the possession of Ford’s attorney.
Likewise, after St. Paul disbursed the settlement check, the City fails to identify any property to which it was entitled that appellees exercised dominion and control over. Any claim for conversion at that point in time would involve property controlled by Ford’s attorney, not by appellees. Because appellees did not exercise dominion and control over the settlement check at a time when the City had an ownership interest in the settlement check, the City’s action for conversion against appellees must fail. Further, because we conclude that the City’s claim for conversion must fail as to St. Paul, the City’s claim for conversion against King in his individual capacity must also fail.
Although not necessary for the disposition of the appeal, we feel it is necessary to acknowledge both parties’ arguments and reliance on the Court’s previous decision in Prewitt & Sampson v. City of Dallas, 713 S.W.2d 720 (Tex.App.-Dallas 1986, writ ref’d n.r.e.). The City contends this case is factually similar to Prewitt & Sampson in which we held that an action for conversion was valid in a workers’ compensation case. However, we find the City’s comparison to Prewitt & Sampson inaccurate.
In Prewitt & Sampson, Prewitt, an attorney representing an injured employee, received a settlement check made payable jointly to herself and the injured employee. Despite having knowledge of the compensation carrier’s right to receive a portion of the funds, Prewitt refused to relinquish the compensation carrier’s funds. The Court, noting that Prewitt received a benefit by accepting the settlement check while having actual notice that the compensation carrier paid workers’ compensation to his client, held that the settlement check was specific money which Prewitt converted by accepting and then refusing to relinquish to the compensation carrier. Id. at 722. Under the City’s interpretation of Prewitt & Sampson, appellees received a benefit from the settlement proceeds paid to Ford’s attorney when they had notice of the City’s lien and were therefore liable for conversion. Contrary to the City’s arguments, the situation facing appellees is distinguishable from the circumstances which faced Prewitt. Prewitt and St. Paul were not situated similarly. Prewitt was the recipient of the settlement proceeds, whereas St. Paul issued the settlement check to settle Ford’s claim against Minter, Beck, and HCB. This is the crucial distinction. Once St. Paul tendered the settlement check, it was no longer in possession of any amount the City could claim. Further, unlike Prewitt who received a benefit adverse to the City by receiving the settlement proceeds, appellees never received any benefit by issuing the settlement check. Although the City claims appellees benefitted because Ford released them from liability, this “benefit” relates to Ford, and is not adverse to the City. St. Paul did not exercise dominion and control over the settlement proceeds, nor did St. Paul receive any benefit with regard to the City when it disbursed the settlement proceeds to Ford and his attorney. Unlike Prewitt who retained the settlement proceeds adverse to the City’s lien interest, St. Paul merely issued a settlement check in satisfaction of a claim against its insureds. We overrule appellant’s single point of error. We affirm the judgment of the trial court.
Footnotes |
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1 |
Minter was non-suited by the City on May 4, 1995 and is no longer a party to this appeal. |
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2 |
The City sued King for tortious conduct in his individual capacity. The City also alleged that King’s liability extends to each appellee because he was acting as St. Paul’s agent when he refused to satisfy the City’s lien. |
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3 |
The City also sued Ford and his attorney for conversion. The trial court granted the City’s motion for summary judgment against Ford, and received a $61,286.84 judgment against Ford. The trial court also granted partial summary judgment against Ford’s attorney, and the City later moved for a dismissal on its remaining claim against Ford’s attorney to make the judgment final for appellate purposes. |
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