Town of Southbury v. Patricia Gonyea et al. (2013)

MEMORANDUM OF DECISION

By agreement, trial in this matter was bifurcated.   On September 4 and 6, 2013, the court heard testimony and received documentary evidence at a bench trial, limited to the defendants' Patricia Gonyea and Joseph Gonyea's first special defense (# 150), that the “[p]laintiff's claim is barred by Connecticut General Statutes § 31–293(a) as plaintiff assented to the underlying settlement and is therefore bound by it.”   Thereafter, pursuant to a briefing schedule, the parties submitted memoranda of law, in lieu of oral argument, the last of which was filed on December 6, 2013.   After consideration, the court issues this memorandum of decision.

I

Background

The following summary is drawn from the Supreme Court's decision in this matter, Southbury v. Gonyea, 301 Conn. 405, 21 A.3d 444 (2011).  “[I]n this action filed by the plaintiff, pursuant to General Statutes § 31–293(a) ․ [the town of Southbury seeks] to recover workers' compensation benefits that ․ it has paid or will become obligated to pay to Thomas Gugliotti, an employee of the plaintiff who, during the course of his employment, was injured in a car accident with the defendants [Patricia Gonyea and Joseph Gonyea].”  (Citation omitted;  footnote omitted.)  Id., 407–08.

“On January 16, 2006, Gugliotti, a police officer employed by the plaintiff, was involved in a car accident with Patricia Gonyea, who was operating a car owned by Joseph Gonyea.”  Id., 409.   Pursuant to the Workers' Compensation Act (act), General Statutes § 31–275 et seq., Gugliotti “applied for and received workers' compensation benefits from the plaintiff ․ Gugliotti also made a [third party] claim against the defendants, which, on December 5, 2007, was settled for the defendants' insurance policy limit of $100,000.   Before that settlement was executed, the plaintiff perfected its statutory lien rights, under § 31–293(a), by filing lien letters with the defendants.   Subsequently, on February 12, 2008, Gugliotti forwarded to the plaintiff a check for $66,624.28, which represented the net proceeds he received from the settlement ․ [T]he plaintiff commenced the present action, under § 31–293(a), to recover past and future workers' compensation benefits it had paid, or would become obligated to pay, as a result of Gugliotti's injuries.   The defendants then moved to implead Gugliotti as a third party defendant and, subsequently, filed a third party complaint against Gugliotti.”  Id., 409.

By summary judgment, the court (Sheedy, J.) “concluded that the plaintiff had assented to [the] settlement agreement between Gugliotti and the defendants (settlement), thereby barring it from pursuing its claim under § 31–293(a) against the defendants.   Because [the Supreme Court] agree[d] with the plaintiff ¹ that there is a genuine issue of material fact as to whether it had assented to the settlement, [it] reverse[d] the judgment of the trial court.”  Id., 408.

At trial, two witnesses testified, Gugliotti's counsel, Eric R. Brown, Esq. and Edward Rudnick.   In addition, the parties presented evidence through various documents.   After trial, this court finds the following facts and credits the following evidence, except as noted.

By letters dated July 18, 2007, Kevin J. Maher, Esq., now deceased, notified the Gonyeas that Connecticut Interlocal Risk Management Agency (CIRMA), the workers' compensation insurer for the Town, claimed a lien for the amount of medical and indemnity benefits paid, payable or estimated, on behalf of Gugliotti.   See Deft. Exh. C and D.

Brown and Maher communicated with one another mostly by written correspondence.   By letter dated August 28, 2007 (Deft.Exh. E), paragraph 1, Brown advised Maher that Patricia Gonyea's insurance carrier (the Hartford) had offered the policy limits, $100,000, on Gugliotti's third-party claim against the Gonyeas.   He also stated, “We are in the process of resolving that portion of the claim currently.   Would you please provide me with the current lien amount and a breakdown of that amount.”   He also posed questions concerning payments by CIRMA and other issues.

By letter dated September 10, 2007 (Deft.Exh. G), Maher responded,”[r]elative to third party action,” by notifying Brown that the amount of payments made, medical bills received, and payment obligations would exceed $100,000, including that:  payments of $38,537.74 had been made, a Waterbury Hospital bill for surgery performed on July 30, 2007 exceeded $120,000, and bills received from physicians who performed fusion surgery exceeded $40,000.   He stated, “It is therefore quite obvious that, even before review and scheduling, the bills associated with recent surgical intervention will exceed $70,000 after review, not taking into consideration reinstatement of your client's entitlement to temporary total benefits commencing on July 30, 2007 and continuing for a significant period of time.”

In the next paragraph of his letter, Maher stated, “What I am therefore suggesting to you is that from the proceeds of the third-party action as set forth in paragraph number one of your letter of August 28, 2007, CIRMA will have paid and/or be obligated to make payments in excess of $100,000.   Therefore, concerning the third-party proceeds and examination of the provisions of Connecticut General Statute § 31–293, we feel that you are entitled to attorneys fees and costs associated with the litigation and we believe that CIRMA is entitled to all monies from the anticipated third party action.   As such, as settlement is accomplished, please forward to the undersigned check made payable to CIRMA in the net amount of the recovery after payment of attorneys fees and reasonable co[s]ts associated with the litigation.”   See Deft. Exh. G.

In a subsequent letter, dated October 8, 2007 (Deft.Exh. I), Maher reiterated that CIRMA would be required to expend benefits in excess of $100,000 and its position that reimbursement of the net proceeds of the third-party action, after deduction of reasonable attorneys fees and costs, should be made to CIRMA.   A follow-up letter, dated November 20, 2007 (Deft.Exh. J), again sought reimbursement after deduction of attorneys fees and costs.

Brown responded by letter to Maher dated November 27, 2007 (Deft.Exh. K), in which he stated that “[t]he third-party tortfeasor's insurance carrier has offered the policy limits of $100,000 to settle the claim.   However, my client is awaiting confirmation from the tortfeasor that she has no other assets with which to pay the claim before settling.   We are expecting such a letter based on the assurances of the adjuster, but have not received it yet.   Upon receipt, we will settle the matter and pay the lien less reasonable attorneys fees of 33 1/3 percent and costs.   Thank you for your patience in this matter.”   See Deft. Exh. K.

On December 5, 2007, Brown sent a letter to the Hartford enclosing a release and settlement agreement pertaining to Gugliotti's third-party claim against the Gonyeas, which had been signed by Gugliotti.   See Deft. Exh. L. Brown testified that he had a phone conversation with Maher on December 5, 2007, in which, for the first time, Maher stated that the Town and CIRMA were considering pursuing the assets of the Gonyeas.   Brown stated that he believes that the phone conversation occurred after the release and settlement agreement had been executed by Gugliotti.   He also stated that he may have spoken to Maher before sending the signed release and settlement agreement to the Hartford.   He characterized the telephone conversation as indicating a disagreement or difference of understanding between Maher and himself.

Brown testified that Maher made no statement in writing that the Town/CIRMA were giving up the right to sue the Gonyeas, that Maher never used those words.   Maher also never used the words “consent” or “assent.”   Brown never asked for a release of the Gonyeas by the Town or CIRMA.   Brown testified that prior to December 5, 2007, he had no conversation with Maher in which Maher stated that the Town/CIRMA would not pursue the Gonyeas for the ongoing liability.

This matter was commenced by the Town against the Gonyeas when service of process occurred on January 16, 2008.   See Marshal's return.

In a letter dated January 25, 2008 (Plff.Exh. 1), Brown stated to Maher, “I have received the settlement funds from the tortfeasor's insurance carrier regarding Mr. Gugliotti's third-party claim.   I have deducted my attorneys fee and costs out of the total amount of $100,000.   That leaves a little more than $66,000 which we are holding in trust as payment of the workers' compensation lien.   Would you please provide me a statement of the lien amount in this matter so that we may disburse funds against the lien.”   This letter makes no reference to any claimed difference of understanding between Brown and Maher.

In his letter to Maher, dated February 12, 2008 (Plff.Exh. 2), Brown stated, “Enclosed please find our firm check in the amount of $66,624.28 as proceeds to pay the lien pursuant to Section 31–293 of the Conn. Gen. Stats. as asserted by you on behalf of your client in your correspondence dated September 10, 2007.   We have deducted our reasonable attorneys fee of $33,333.33, and costs of $42.39 associated with pursuit of settlement.”

In Gugliotti's affidavit, dated June 27, 2008, paragraph 8 (Plff.Exh. 23), he stated, “I settled the claim with the Gonyeas in order to pay off the workers' compensation lien held by the Town of Southbury and avoid protracted litigation with the Gonyeas.”   In paragraph 9, he stated, “[w]hile I was advised that I could have proceeded against the personal assets of the Gonyeas, I chose not to do so in order to treat them kindly and avoid undue disruption in their lives.”   See Plff. Exh. 23.

Additional references to the facts are set forth below.

II

Discussion

“Section 31–293 is a detailed scheme governing the parties' rights in third party workers' compensation scenarios.   Its primary effect is to provide a mechanism for an injured employee to assert a claim against the party allegedly liable for his injury, notwithstanding the employee's statutory claim for workers' compensation.   The statute also allows an employer who is obligated to pay workers' compensation benefits either to intervene in the employee's action or, in the event that the employee fails to prosecute his claim, to bring an independent action against the alleged tortfeasor.   In either case, the rights of each party with respect to the other are set forth clearly, as is the proper disposition of any damages awarded in an action governed by § 31–293.   If the employer chooses not to intervene in an action brought by the employee, it still may recover a share of any damages in its capacity as a lienor.   In any event, the employer's recovery is limited to the amount of workers' compensation benefits that it has paid or has become obligated to pay as a result of the tortfeasor's alleged negligence or malfeasance.

“Finally, the rights of each party are protected by the following critical provision:  ‘No compromise with the [alleged tortfeasor] by either the employer or the employee shall be binding upon or affect the rights of the other, unless assented to by him.’  General Statutes § 31–293(a).   This provision protects each party, whether the intervening employer or the real party in interest, i.e., the injured employee, by permitting the nonsettling or nonassenting party to retain all of its rights under the statute despite any unilateral settlement by the other party with the alleged tortfeasor ․ In other words, if the employee chooses to settle his personal injury claim against the tortfeasor without the assent of the employer, the employer's right to recover on its lien and to pursue an independent action against the tortfeasor to recover any deficiency on that lien is unaffected.”  (Emphasis in original;  footnote omitted;  internal quotation marks omitted.)  Southbury v. Gonyea, supra, 301 Conn. 411–12.

As the Supreme Court observed, “[i]f ․ the tortfeasor sought to settle the case with the employee ․ for considerably less than the employer's potential workers' compensation liability, the employer effectively would be deprived of his right to recover on the lien if it could not pursue a separate cause of action against the tortfeasor.”  Soracco v. Williams Scotsman, Inc., 292 Conn. 86, 95 n.15, 971 A.2d 1 (2009).

As explained by the Supreme Court in Soracco and reiterated in this case:  “assent to the settlement operates as a ‘voluntarily relinquishment’ of the employer's rights, namely, the right to impose a lien on any judgment or settlement, up to the amount of its workers' compensation liability, and the right to bring an independent cause of action against the defendant through which it can recover workers' compensation payments that it has paid or has become obligated to pay as a result of the defendant's alleged negligence.”   (Internal quotation marks omitted.)  Southbury v. Gonyea, supra, 301 Conn. 412–13.   The Supreme Court found that assent could not be discerned from the written communications between Brown and Maher.   See id., 414–17.

In a case tried to the court, “[t]he ․ judge, as the trier of facts, is the sole arbiter of the credibility of witnesses and the weight to be given to their testimony.”  (Internal quotation marks omitted.)  Michael T. v. Commissioner of Correction, 307 Conn. 84, 90–91, 52 A.3d 655 (2012).  “[I]t is well established that it is the exclusive province of the trier of fact to make determinations of credibility, crediting some, all, or none of a given witness' testimony.”  (Internal quotation marks omitted.)  Gonzalez v. State Elections Enforcement Commission, 145 Conn.App. 458, 475, 77 A.3d 790 (2013).   “[T]he trier of fact can disbelieve any evidence, even if uncontradicted.”   Berchtold v. Maggi, 191 Conn. 266, 272, 464 A.2d 1 (1983).

Brown's testimony, to the effect that Maher assented to Gugliotti's settlement with the Gonyeas, is not supported by the correspondence between Maher and Brown.   The fact that Maher stated that Brown was entitled to deduct attorneys fees and costs associated with Gugliotti's third-party claim against the Gonyeas does not evidence assent within the meaning of § 31–293(a).   See Deft. Exh. G (September 10, 2007 letter from Maher to Brown).   Maher's repeated reference therein, on page 2, to the deduction thereof from the amount received as proceeds of the third-party action, “as settlement is accomplished,” does not prove assent.

In the same correspondence, Maher stated that “CIRMA will have paid and/or be obligated to make payments in excess of $100,000.00,” the amount of the Gonyeas' policy limit.   In addition, he noted that Gugliotti would have no moratorium on future workers' compensation payments, indicating the Town's continuing exposure therefor.   See Deft. Exh. G. The Town's continuing exposure weighs against a finding of assent.

Significantly, the subject of assent or a voluntary relinquishment of the Town's rights under § 31–293(a) was never raised in the correspondence between Brown and Maher, let alone documented as having been given.   According to Brown's testimony, the subject of the Town's pursuit of its claim against the Gonyeas was first discussed on December 5, 2007.   The court is unpersuaded by Brown's assertion that Maher assented to Gugliotti's settlement with the Gonyeas and thereby voluntarily relinquished the Town's rights under § 31–293(a).

Similarly, the fact that Gugliotti executed the General Release does not provide evidence of the Town's assent.   See Deft. Exh. L (General Release).   The issue of whether or not Gugliotti had exposure to potential liability does not provide evidence of the Town's assent.

After consideration of the trial testimony and exhibits, the court concludes that the defendants have not met their burden to prove their special defense.   The Supreme Court's statement concerning the evidence on summary judgment remains applicable after the evidentiary presentation at trial, in that the evidence still:  “demonstrates the plaintiff's awareness of an outstanding balance after receiving the proceeds from the settlement between the defendants and Gugliotti, which in the context of this dispute, weighs against [a] ․ finding that the plaintiff had assented to the settlement and voluntarily relinquished its rights to recover that balance through subsequent litigation.”  Southbury v. Gonyea, supra, 301 Conn. 416.

Accordingly, the court need not consider the testimony of Edward Rudnick, CIRMA's former employee;  or internal CIRMA documents as to intent;  or the extent of Maher's authority.

CONCLUSION

For the reasons stated above, the court finds that the defendants have not sustained their burden of proof as to their first special defense.   Judgment may enter for the plaintiff and against the defendants as to the first special defense.   It is so ordered.

BY THE COURT

ROBERT B. SHAPIRO

JUDGE OF THE SUPERIOR COURT

FOOTNOTES

FN1. For ease of reference, the court refers to the plaintiff below as the “Town.”.  FN1. For ease of reference, the court refers to the plaintiff below as the “Town.”

Shapiro, Robert B., J.