Allstate Indemnity Co. v. Knighten

Citations: 705 So. 2d 240; 1997 La. App. LEXIS 2865; 1997 WL 771853Docket: No. 30012-CA

Court: Louisiana Court of Appeal; December 9, 1997; Louisiana; State Appellate Court

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In this concursus proceeding initiated by Allstate, Knighten, an employee of Home Assistance Services, appeals a summary judgment that awarded $10,000 of Allstate's policy proceeds to Louisiana Worker’s Compensation Corporation (LWCC), the workers' compensation insurer that covered Knighten's medical expenses following a March 9, 1994 accident. LWCC had notified Allstate in July 1994 of its statutory lien rights after paying benefits exceeding $10,000 to Knighten. Knighten later filed a personal injury lawsuit against the tortfeasor and Allstate, informing LWCC of the action. After Allstate's concursus proceeding began in May 1995, Knighten dismissed Allstate from his earlier lawsuit in August 1995. Knighten argues that LWCC waived its rights to the policy proceeds by not intervening in his lawsuit and seeks to overturn the trial court's decision that favored LWCC's claim over his. The court found no merit in Knighten's challenges regarding LWCC's evidence and concluded that no genuine issues of material fact existed. Citing La.R.S. 23:1103, the court held that LWCC, as the workers' compensation insurer, is entitled to recover what it has paid to Knighten, despite not intervening in his suit against the tortfeasor. The court noted the permissive nature of intervention under the Workers' Compensation Law but emphasized that the statutory framework allows LWCC to assert its claim in this concursus proceeding.

Allstate recognized its potential liability regarding conflicting claims to its $10,000 policy proceeds after being notified by LWCC and subsequently sued by Knighten if it settled with one claimant. LWCC insisted on its entitlement to the proceeds, refusing to cooperate with Allstate. In response, Allstate initiated a concursus proceeding, a special legal action allowing parties with conflicting claims to assert their rights against each other. Under Louisiana law (La.C.C.P. arts. 4651 et seq.), Allstate deposited the policy proceeds in court and named Knighten and LWCC as defendants, enabling the court to resolve their claims.

In this concursus, both Knighten and LWCC were positioned as both plaintiffs and defendants regarding each other’s claims against Allstate. LWCC's failure to intervene in Knighten's action before Allstate's concursus filing does not constitute a waiver of its right to claim from Allstate for amounts paid to Knighten under workers' compensation law. Waiver requires clear intention to relinquish a known right, which was not evident from LWCC's actions. Knighten argued that the trial court erred in favoring LWCC, claiming La.R.S. 23:1103, which prioritizes employer recovery, does not apply to policy proceeds, but rather only to damage judgments. The court maintained that both the employee (Knighten) and employer (LWCC) can pursue claims against third-party tortfeasors, and the deposit of the insurance proceeds signifies an admission of liability by Allstate for at least that amount.

The casualty insurer's admission of liability and the deposit of funds in the court registry affirm the rights of the named defendants to claim damages from the policy proceeds, as outlined in La.R.S. 23:1103. In cases where multiple plaintiffs have conflicting claims, the court must resolve these conflicts, making La.R.S. 23:1103(A)(1) relevant to the distribution of Allstate’s policy proceeds. Knighten's request for a portion of the $10,000 as attorney's fees, based on his proportionate share of costs for third-party recovery, is disregarded since he did not present this demand in the trial court. Knighten acknowledges that there were no genuine issues of material fact in the concursus proceeding and admits that LWCC has received more than the awarded $10,000. The court correctly recognized LWCC’s statutory preference over Knighten's claim, as the law prioritizes the employer's claim for payments made under workers' compensation over that of the injured employee. Consequently, the appellate costs are assigned to Knighten, and the trial court's summary judgment is affirmed. Additionally, the court clarified that while the language regarding mandatory intervention was considered dicta in a referenced case, it confirmed that the employer or insurer must intervene in suits initiated by the employee.