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ORTIZ v. DUFF-NORTON CO.

August 13, 1997

ANGEL L. ORTIZ and PRISCILLA ORTIZ, h/w and THE BUCK COMPANY, Plaintiffs
v.
DUFF-NORTON COMPANY, INC., and CHESTER HOIST, INC., and LIFT TECH INTERNATIONAL, INC. d/b/a/ CHESTER HOIST, INC., Defendants.



The opinion of the court was delivered by: VAN ANTWERPEN

 Van Antwerpen, J.

 August 13, 1997

 I. INTRODUCTION

 This products liability action arose in diversity originally between Plaintiffs Angel and Priscilla Ortiz and Defendants Duff-Norton, Inc., Chester Hoist, Inc., and Lift Tech International. Plaintiff The Buck Company filed a petition to intervene, and was made a party plaintiff with the full rights of an intervenor by stipulation and agreement of all parties. On April 8, 1997 a settlement conference was convened in our chambers; on April 22, 1997 we entered a standard order marking the case settled, approving the settlement, and retaining jurisdiction for one year for enforcement purposes.

 At some point thereafter, a dispute arose as to whether a settlement had in fact been entered into. Plaintiffs filed a Petition for Enforcement of Order Approving Settlement Agreement and For Joinder of Buck Company as a Plaintiff on May 13, 1997. It is clear that a court has jurisdiction to enforce a settlement agreement if that court expressly stated in the dismissal order that it retained jurisdiction over the settlement agreement. Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 128 L. Ed. 2d 391, 114 S. Ct. 1673 (1994). As noted, we specifically so retained in our standard order. We therefore held a hearing in open court on June 13, 1997 to consider this matter. Pursuant to Federal Rule of Civil Procedure 52(a), we make the findings of fact as set forth below.

 II. FINDINGS OF FACT

 1. Angel L. Ortiz and Priscilla Ortiz, residents of Pennsylvania, originally instituted this products liability action against Duff-Norton Company, Inc., Chester Hoist, Inc. and Lift Tech International, Inc., all of other states and manufacturers of a hoist and its component parts. Angel Ortiz was severely injured while working as an employee of The Buck Company ("Buck") and using products manufactured by Defendants. Plaintiffs' counsel is Robert B. Bodzin of the law firm of Mesirov Gelman Jaffe Cramer & Jamieson ("Plaintiffs' counsel"). Kirk Wolgemuth, Esq. is counsel for The Buck Company. (Tr., p. 16). *fn1"

 2. At the time of Mr. Ortiz's accident, Buck was a self-insured employer who had a workers' compensation program that was administered by a third-party administrator, CoreSource, Inc. ("CoreSource"). CoreSource has administered the Workers' Compensation claims and conducted hearings for Buck's parent Dixon Valve & Coupling Company, Inc. ("DVCC") and its subsidiaries since 1993. (Tr., p. 38).

 3. Prior to the filing of the Complaint, Plaintiffs' counsel was contacted by Victor Warren, Senior Vice President of CoreSource, who requested that Plaintiffs' counsel represent Buck's interest in the subrogation lien, and requesting that they be advised as to the status of the litigation. (Tr. pp. 16, 81).

 4. The workers' compensation lien was approximately $ 470,000.00. (Tr., p. 65).

 5. The parties agree and stipulate that CoreSource is the general agent of Buck and CoreSource was authorized to negotiate the workers' compensation liens of Buck and its insurers. (Tr., p. 11, 12).

 6. Buck is a subsidiary of DVCC and is a Pennsylvania corporation. (Tr., p. 36). The Vice President of DVCC, James Canalichio, was the individual with authority to negotiate the workers' compensation lien on behalf of DVCC. He oversees the handling of workers' compensation claims of Buck's employees. (Tr., p. 61). There were four (4) written agreements between CoreSource and DVCC between 1993 and 1997. Plaintiffs' counsel stipulated, for purposes of this matter, that the contracts between Buck and CoreSource required that Buck consent and approve of any settlement involving a subrogation lien. (Tr., p. 13; Buck Exhibits 7, 8, 9). However, plaintiffs' counsel, Buck's counsel Mr. Wolgemuth, and defendants' counsel did not have copies of the contracts between CoreSource and DVCC at any time prior to CoreSource agreeing to compromise the lien on April 22, 1997. (Tr., pp. 12, 19, 104).

 7. Throughout the course of this litigation, CoreSource had represented itself to plaintiff and plaintiffs' counsel as being the administrator for Buck's workers' compensation program and "representing" Buck. (Tr., p. 16; Plaintiffs' Exhibit 20).

 8. On December 22, 1994, Buck's counsel Mr. Wolgemuth notified Mr. Bodzin that Buck was very interested in following the status of this case because of the extent of its subrogation lien. (Buck Exhibit 4). Plaintiffs' counsel informed Mr. Wolgemuth that they would keep him advised of all developments and provide him with copies of all reports and pleadings. (Buck's Exhibit 5). However, Mr. Wolgemuth noted that this was Buck's first subrogation case, (Tr., p. 113), and that he did not contact Plaintiffs or Defendants for any further updates. (Tr. p. 96, 97, 111, 115, 116).

 9. Prior to this case being placed on the trial list, Mr. Warren represented to Plaintiffs' counsel that he had the authority to monitor the subrogation aspects of this claim. Throughout the course of this litigation, Mr. Warren called plaintiffs' counsel, who provided him with progress reports on the status of the litigation. (Tr., p. 16). At no point were defendants or plaintiffs informed by Buck that either CoreSource or Mr. Warren did not have authority to compromise the subrogation lien. (Tr., pp. 109-111).

 10. Mr. Bodzin at one point early in the litigation contacted Buck's counsel Mr. Wolgemuth and asked permission to speak with CoreSource directly. (Tr., p. 106). Permission was given, and Mr. Warren and CoreSource thereafter communicated directly with Mr. Bodzin concerning the subrogation claim and copied Mr. Wolgemuth on the correspondence between Mr. Warren and Mr. Bodzin. (Tr., p. 106; Plaintiffs' Exhibits 12, 14, 26). Neither Mr. Wolgemuth nor anyone from his office ever asked to attend nor did they attend any type of settlement meeting between DVCC and CoreSource. (Tr., p. 55).

 11. At some point, plaintiffs' counsel called Mr. Warren and notified him of both the trial date and the fact that a settlement conference might be scheduled. After a settlement conference date was selected, plaintiffs' counsel was contacted by Sandra Girifalco, counsel for Lift Tech, who suggested that the participation of a person with authority to negotiate the workers' compensation lien would be helpful at the settlement conference. Plaintiffs' counsel agreed with this suggestion and advised Ms. Girifalco that he had already contacted Mr. Warren and asked him to participate in the conference. Ms. Girifalco then wrote to this court and requested that a person with authority to compromise the workers' compensation lien be present at the settlement conference. (Tr., p. 17; Plaintiffs' Exhibit 1).

 12. On April 4, 1997, this court entered an Order requiring that a person with "full authority" to compromise the workers' compensation lien be present by telephone for the settlement conference. Plaintiffs' counsel then transmitted by facsimile a copy of the order to Mr. Warren. (Tr., pp. 16-19; Plaintiff's Exhibit 2).

 13. Neither plaintiffs' nor defense counsel notified Buck's counsel Mr. Wolgemuth that an order had been entered by the Court requiring a person with full authority from CoreSource to attend the settlement conference. (Tr., p. 78). Mr. Wolgemuth did not have any conversations with plaintiff's counsel between the date of that order through early May of 1997 about the proposed Settlement Agreement. (Tr., pp. 13-14).

 14. On April 8, 1997, a full-day settlement conference occurred in our chambers. During the course of that settlement conference, Mr. Bodzin spoke to Mr. Warren on several occasions from the court and negotiated the workers' compensation lien with Mr. Warren. Mr. Warren's initial position was that he would not compromise the workers' compensation lien at all. This was consistent with Buck's original representations to Mr. Bodzin. (Tr., pp. 93-94). Mr. Bodzin and Mr. Warren also discussed the issue of future compensation for medical and indemnity. From the beginning to the negotiations, Mr. Warren said that there would be a continuation of future medical payments without any credits, but he wanted to talk about a compromise of the future indemnity payments. Mr. Bodzin and Mr. Warren arrived at two alternative ways to compromise the lien. One was a ...


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