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Davis v. United States Lines Co.

decided.: March 11, 1958.

JOHN C. DAVIS, APPELLANT,
v.
UNITED STATES LINES COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF (MURPHY-COOK & COMPANY, THIRD-PARTY DEFENDANT AND APPELLEE).



Author: Wright

Before BIGGS, Chief Judge, KALODNER, Circuit Judge, and WRIGHT, District Judge.

WRIGHT, District Judge.

This is an appeal from the judgment of the District Court for the Eastern District of Pennsylvania wherein Appellant, Plaintiff below, was denied the right to allocate between recipients of a settlement a pro rata share of the legal fees incurred in effecting the compromise with the third party tortfeasor, a remedy averred to have been granted by the applicable statutory provisions of the Longshoremen's and Harbor Workers' Act*fn1 pursuant to which the original cause accrued. The facts are not in dispute.

Appellant, John C. Davis employed as a longshoreman by Murphy-Cook and Company, a stevedoring company sustained injuries during the course of his employment while discharging cargo from a vessel owned and operated by the United States Lines.

Pursuant to the Longshoremen's and Harbor Workers' Act, 33 U.S.C.A. § 901 et seq. appellant received compensation and medical benefits of $1012.40 from the Liberty Mutual Insurance Company*fn2 (hereinafter called Liberty), the insurance carrier of Murphy-Cook and Company appellant's employer. These payments were not the product of a formal compensation award.*fn3 Thereafter, Davis gave notice that he would elect to sue the United States Lines, third party tortfeasor within the purview of 33 U.S.C.A. § 933(a).

A settlement of $7500 was effected between the principals with the acquiescence of Murphy-Cook and Company and its insurer, Liberty. Subsequently, Liberty demanded from the United States Lines, defendant below, $1012.40, the amount of compensation and medical benefits previously paid to appellant. This request was challenged by Davis unless Liberty would share ratably in counsel fees expended in negotiating the settlement. No amicable accord was reached; consequently, the United States Lines was granted leave of court to deposit the said $1012.40 into court pending judicial distribution of the fund.*fn4

For the purpose of delineating the issues it has been stipulated that the net amount of the recovery after deducting litigation costs and counsel fees incident to the recovery and all sums paid by Liberty as compensation and medical benefits, exceeded the total sums of monies the plaintiff would have been entitled to receive under the provisions of the Act.*fn5

The District Court presented with this record disallowed appellant's application to assess a portion of the litigation costs against Liberty's share in the proceeds.

The outcome of this action is pivoted on a construction of § 933 of the Act.*fn6 This section is addressed to recoveries against third parties. In pertinent part it affords an employee an election to forego a statutory award in order to prosecute an action against a third party.*fn7 Acceptance, however, of a formal compensation award acts as an assignment of all rights the employee might have against a non-employer tortfeasor.*fn8 Any recovery that the employer receives either as a result of a judgment or compromise is distributed in the following manner:*fn9

1. The employer retains:

(A) the expenses incurred by him in respect to such proceedings or compromise (including a reasonable attorney's fee as determined by the deputy commissioner);

(B) the cost of all benefits actually furnished by him to the employee under section 907 of this title;

(C) all amounts paid as compensation;

(D) the present value of all amounts thereafter payable as compensation, and the present value of the cost of all benefits thereafter to be furnished under section 907 of this title, to be estimated by the deputy commissioner, and the amounts so computed and estimated to be retained by the employer as a trust fund to pay such compensation and the cost of such benefits as they become due, and to pay any ...


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