This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Linda Timmer, et al.,
Filed April 17, 2007
Affirmed in part, reversed in part, and remanded
Morrison County District Court
File No. CX-03-00261
Luke M. Seifert, Heidi N. Thoennes, Quinlivan & Hughes, P.A., 400 First Street South, Suite 600, St. Cloud, MN 56302 (for respondents)
Shamus P. O’Meara, Dale O. Thornsjo, Gabriel A. Kuhfuss, Johnson & Condon, P.A., 7401 Metro Boulevard, Suite 600, Minneapolis, MN 55439 (for appellant)
Considered and decided by Peterson, Presiding Judge; Lansing, Judge; and Worke, Judge.
U N P U B L I S H E D O P I N I O N
appeal involves a dispute between
F A C T S
Timmer was an employee of
trial on the third-party action against Shamineau, Linda Timmer entered into a
No-Naig/No-Reverse-Naig agreement with the school district
and its workers’ compensation self-insurer (collectively “school district”). See Naig
v. Bloomington Sanitation, 258 N.W.2d 891, 893-95 (
The jury returned a special verdict finding gross damages of $4,639,915 and allocating forty percent of the fault to Timmer. The net award of $2,783,949 combined Jere Timmer’s damages for loss of consortium with Timmer’s damages for medical care; past and future wage loss; and pain, disability, embarrassment, and emotional distress. The Timmers brought a motion to distribute the proceeds according to Timmer’s agreement with the school district but asked the court to exclude from the statutory formula the amounts provided for pain and suffering and Jere Timmer’s damages for loss of consortium.
that the Timmers’ motion violated the terms of their pretrial agreement, the school
district moved to intervene. The school
district argued that because its agreement with Timmer required “any recovery” in
the action to be allocated “pursuant to Minn. Stat. § 176.061, subd. 6,”
the agreement prohibited the Timmers from relying on Henning v. Wineman, 306 N.W.2d 550 (
this motion was pending, the district court resolved other postverdict motions and
issued an order for conditional remitittur.
On appeal, we affirmed the district court’s denial of a new trial or
judgment as a matter of law, and we also affirmed the conditional remitittur
that reduced future pain, disability, embarrassment, and emotional-distress damages
from $3,000,000 to $1,650,000. Timmer v. Shamineau Adventures, A04-2458
With the appeal resolved, the Timmers renewed their motion to exclude loss-of-consortium and pain-and-suffering damages from the subdivision 6 distribution formula. The district court granted the Timmers’ motion for apportionment between recoverable and nonrecoverable damages. In its order granting the motion, the district court held that the agreement between Timmer and the school district was enforceable but that Timmer had not waived her right to elect an apportionment between recoverable and nonrecoverable damages. The school district appeals.
D E C I S I O N
The school district and Timmer do not dispute that they entered into a valid agreement in April 2003 relating to the school district’s subrogation interest in Timmer’s pending cause of action against third-party tortfeasor Shamineau Adventures. Under the agreement the school district stipulated that it would not independently settle its subrogation claim and would “allocate any recovery in the [a]ction pursuant to Minn. Stat. § 176.061, subd. 6.” Timmer reciprocally agreed that she would not compromise or settle her claim “for damages not paid or payable by workers’ compensation” and would “allocate any recovery in the [a]ction pursuant to Minn. Stat. § 176.061, subd. 6.”
relating to the settlement of litigation are interpreted as contracts. Ryan v.
The school district contends that a Henning allocation is not available when parties agree to allocate “any recovery” under section 176.061, subdivision 6, because the allocation method is not an option that is inherently available under the statute. The school district also argues that the parties’ agreement resulted in a waiver of the Henning-allocation right because the agreement expressly provides for “allocating any recovery” in the action according to the statute and this promise includes any loss-of-consortium recovery because it is a derivative claim.
In Henning, the supreme court held that when a settlement between an
employee and a third-party tortfeasor divides the damages between recoverable
and nonrecoverable damages, the district court has the authority to determine
that only the proceeds allocated to recoverable damages are subject to section
176.061, subdivision 6. Henning v. Wineman, 306 N.W.2d 550, 552
This court extended Henning to permit an employer to rely on
a jury verdict rather than a settlement to petition for a posttrial allocation
between recoverable and nonrecoverable damages.
Drake v. Reile’s Transfer &
Delivery, Inc., 613 N.W.2d 428, 431 (
By their agreement, Timmer and the school district promised to “allocate any recovery in the [a]ction pursuant to Minn. Stat. § 176.061, subd. 6.” The Timmers assert that the Henning allocation method is an inherent part of section 176.061, subdivision 6, rather than an allocation method distinct from that set forth in section 176.061, subdivision 6, and therefore, the agreement did not preclude them from requesting a Henning allocation. The Timmers offer two main arguments in support of this interpretation.
The Timmers first argue that because Henning and the cases applying Henning specifically refer to section 176.061, subdivision 6, when identifying the “allocation options,” the statute itself is the source of the options. But that argument is not apparent on the face of the statute and is unsupported by the case law that recognizes the Henning variation.
In Lang v. William Bros. Boiler & Mfg. Co., the supreme court held
that an employee can settle tort claims against a third-party tortfeasor
without the employer’s consent, but the settlement does not affect the
employer’s subrogation rights. 250
Lang, Liberty Mutual, Naig, and Henning demonstrate that a Henning allocation is a mechanism for allowing employees to exercise their right to set aside nonrecoverable amounts. But more importantly, these cases also illustrate that an employee’sright to set aside nonrecoverable amounts exists—as the name implies—because section 176.061 does not grant employers and insurers subrogated interests in these proceeds. Because the right is premised on the statute’s limited scope, it cannot be said to have its origins in the statute. Cf. Locher, 411 N.W.2d at 275 (noting availability of Henning allocation absent express agreement to apportion proceeds by statute, thereby implying that options are distinct).
Timmers’ second argument is that because “[t]he proceeds of the action or
settlement of the action shall be paid in accordance with subdivision 6,” and a
Henning allocation is a means of
paying proceeds, it must be a part of
subdivision 6. Minn. Stat. § 176.061,
subd. 5(a). Again, the case law is
inconsistent with this “amalgamation” theory. Naig specifically
provides that some proceeds—those that are nonrecoverable—do not need to be
paid according to the statutory formula.
258 N.W.2d at 894. And this distinction
between the statutory and the Henning
allocation was reaffirmed in Kliniski v.
Southdale Manor, Inc., 518 N.W.2d 7, 9 (
The district court concluded that the agreement between the school district and Timmer was unenforceable to the extent that Timmer did not expressly waive her right to allocate the proceeds between recoverable and nonrecoverable damages. While we agree that the agreement does not contain an express waiver of Timmer’s allocation right, we do not believe that the lack of a waiver prevents the enforcement of the agreement.
We find no support for the contention that the right to petition for a Henning allocation must be expressly waived. Instead, the cases that have addressed this issue provide that “an express agreement to apportion the proceeds by statute” will preclude an election to allocate a third-party recovery between recoverable and nonrecoverable damages. Locher, 411 N.W.2d at 275; see also Drake, 613 N.W.2d at 434 (noting that Henning allocation is available unless employee expressly agrees that statutory method will apply).
expressly agreeing to allocate “any recovery in the [a]ction pursuant to
This analysis does not, however, require that Jere Timmer’s loss-of-consortium damages must also be allocated under section 176.061, subdivision 6. We reject the school district’s argument that “any recovery,” as provided in the agreement includes Jere Timmer’s loss-of-consortium damages because these damages derive from Timmer’s claims.
The pretrial agreement between Timmer and the school district was signed by the school district, the subrogated employer, and Timmer. Jere Timmer did not agree to have the proceeds of his claim allocated under section 176.061, subdivision 6. The school district had an interest in Timmer’s claims by virtue of its payments to her under the Workers’ Compensation Act, but it had no interest in Jere Timmer’s claims. And Timmer does not have the authority to settle the loss-of-consortium claim because, despite its derivative nature, it remains a “separate” claim. Because neither Timmer nor the school district had an interest in the claim, neither could control its distribution. As a result, the loss-of-consortium claim is not included in the category of “any recovery” referred to in the pretrial agreement, and Jere Timmer’s damages may be distributed separately from the remaining claims.
Finally, we agree with the school district’s claim that the district court’s allocation is incorrect under either the statutory or the Henning calculation because it granted Timmer both the Henning division and a residual one-third statutory share. See Henning,306 N.W.2d at 552-53 (“By selecting the [Henning allocation] the employee forfeited [the] statutory right to one-third of the recovery.”). But on remand the district court will apply the statutory formula less the loss-of-consortium damages, and it is therefore unnecessary to address more specifically the preappeal computation.
Affirmed in part, reversed in part, and remanded.