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Rickard v. American National Property and Casualty Co.

Superior Court of Pennsylvania

October 25, 2017

CAROLYN RICKARD, ADMINISTRATRIX OF THE ESTATE OF WILLIAM RICKARD, DECEASED, Appellant
v.
AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Appellee

         Appeal from the Order Entered April 28, 2015 In the Court of Common Pleas of Allegheny County Orphans' Court at No(s): 6805-2014

          BEFORE: BENDER, P.J.E., BOWES, PANELLA, SHOGAN, LAZARUS, OLSON, DUBOW, MOULTON, and SOLANO, JJ.

          OPINION

          SHOGAN, J.

         Appellant, Carolyn Rickard, Administratrix of the Estate of William Rickard, appeals from the order entered April 28, 2015, which denied her November 18, 2014 Petition for Order of Distribution in a Wrongful Death Action ("Distribution Petition"), for amounts secured through an insurance-claim settlement. For the reasons that follow, we reverse and remand to the common pleas court for proceedings consistent with this Opinion.

         On July 2, 2010, William Rickard ("the Deceased") and Appellant (collectively, "the Rickards"), filed for bankruptcy. Distribution Petition, 11/18/14, Attachment (In re: William J. Rickard and Carolyn M. Rickard, Bankr. No. 10-24821-JAD (Bankr. W.D.Pa. 10/20/14), Memorandum Opinion ("Bankruptcy Court Memorandum"), 10/20/14, at 1). On November 16, 2012, as he was on his way to work in his personal vehicle, the Deceased was struck from behind, rendering him paraplegic. Distribution Petition, 11/18/14, at unnumbered 1-2. At the time of the accident, the Deceased maintained a personal automobile insurance policy that included $250, 000 in underinsurance coverage through American National Property and Casualty Company ("ANPAC"). Id. at 2. Because the Deceased's accident was work related, the Western Pennsylvania Teamsters and Employers Welfare Fund ("the Welfare Fund"), a self-insured employee benefit plan governed by ERISA[1] that covered the Deceased, paid $279, 498.03 in medical bills and disability payments. Bankruptcy Court Memorandum, 10/20/14, at 2.

         While the Deceased was alive, he made a claim for underinsured benefits to ANPAC for the injuries he sustained in the accident. As noted, the Rickards were debtors in bankruptcy at the time of the motor vehicle accident.[2] Upon petition, the bankruptcy court authorized appointment of separate counsel to pursue the accident litigation but, significant to the disposition of this appeal, retained the right to approve the settlement while the matter was in bankruptcy. Bankruptcy Court Memorandum, 10/20/14, at 2. Appointed counsel had no authority to enter into a settlement without the bankruptcy court's approval. ANPAC issued a settlement check for $250, 000 on January 13, 2014, and appointed counsel placed the check in his safe. Appellant's Brief at 7. The Welfare Fund asserted a lien for the medical benefits it paid for the Deceased's treatment against any recovery by the Deceased for personal injury sustained in the accident. Distribution Petition, 11/18/14, at unnumbered 2. The Rickards filed a Motion to Approve Settlement of the Underinsured Motorist Claim in the Bankruptcy Court, seeking a payment of "$100, 000 (or 40% of the recovery) paid to [Appellant's counsel], payment of $1, 000 to bankruptcy counsel for [the Rickards], and payment of the remaining balance of $149, 000 to Mr. Rickard." Bankruptcy Court Memorandum, 10/20/14, at 3. Because the proposed settlement failed to offer distribution of any funds to the Welfare Fund for its subrogated interest, the Welfare Fund objected to the Rickards' motion. Id.

         On October 20, 2014, the bankruptcy court refused to approve the settlement or distribution of the accident litigation proceeds, nor did it make any distribution on its own, concluding that the Welfare Fund's plan documents[3] "unequivocally provide that the Welfare Fund is to be paid its subrogated interest first before payment to anyone else." Bankruptcy Court Memorandum, 10/20/14, at 8 (referencing an audio recording[4] of a hearing held in the bankruptcy court). The bankruptcy court further stated:

The outcome of this case should not be construed as the [c]ourt concluding that counsel does not deserve his fee. In fact, the opposite is true. The record in this case is that counsel obtained an excellent result, worked diligently, competently, and professionally. Had the [c]ourt been writing on a clean slate, the [c]ourt surely would have concluded that counsel has earned his contingent fee.

Id. at 10. The order entered by the bankruptcy court provided: "And now, this 20th day of October, 2014, for the reasons set forth in the Memorandum Opinion filed herewith, the Motion to Approve Settlement of the Underinsured Motorist Claim is denied." Bankruptcy Court Order, 10/20/14 ("Bankruptcy Court Order") (italics in original; emphasis added). Thus, there existed no settlement of the case.

         Two days later, October 22, 2014, the day Appellant's counsel avers she received the Bankruptcy Court Memorandum, William Rickard died, allegedly from the injuries he sustained in the accident. Distribution Petition, 11/18/14, at unnumbered 3; Appellant's Brief at 7. The next day, October 23, 2014, because there was no settlement, no distribution, and no living payee, counsel for Appellant returned the ANPAC check. Appellant's Brief at 7. The bankruptcy proceedings terminated one week later on October 29, 2014, when the Rickards' case was dismissed from bankruptcy with no settlement or distribution having been made. Distribution Petition, 11/18/14, at unnumbered 3.

         Appellant then submitted a wholly new claim for underinsurance benefits to ANPAC pursuant to the Pennsylvania Wrongful Death Act, 42 Pa.C.S. § 8301, on behalf of herself and the Deceased's daughter, Sarah Rickard.[5] Exhibit E attached to Appellant's "Brief in Support of the Wrongful Death Claim of Decedent's Widow and Minor Child" filed in the orphans' court is a letter from Appellant's counsel to ANPAC. That letter states, in relevant part:

Enclosed please find a copy of the Short Certificate evidencing the granting . . . of Letters of Administration on the Estate of William J. Rickard to Carolyn Rickard on October 29, 2014.
As I previously informed you, on October 22, 2014, Mr. Rickard succumbed to the injury and illness suffered as a result of his automobile accident.
Claim is hereby made, by Carolyn Rickard, Administratrix, under the Pennsylvania Wrongful Death Act, 42 Pa.C.S.A. § 8301 and Pa.R.C.P. 2202(a) for the full amount of the underinsurance coverage under the Rickards' auto policy.

         Brief in Support of the Wrongful Death Claim of Decedent's Widow and Minor Child, Exh. E; Reproduced Record at 84A.

         Under this wrongful-death claim, ANPAC issued a check made payable to counsel and Appellant. Upon receipt of the ANPAC check, Appellant filed the within Distribution Petition before the orphans' court division of the common pleas court pursuant to Allegheny County Local Rule 2039 seeking distribution of the underinsurance settlement funds. The orphans' court, in denying the Distribution Petition, determined that it was bound by collateral estoppel because the "issue before it [is] virtually identical to the issue decided by" the bankruptcy court. Orphans' Court Opinion, 4/28/15, at unnumbered 2. In the alternative, the orphans' court concluded that the Welfare Fund's subrogated interest was superior to that of Appellant and her counsel.

         Appellant filed a timely appeal. The orphans' court did not direct Appellant to file a Pa.R.A.P. 1925(b) statement, and none was filed. Following oral argument, a panel of this Court, with one judge dissenting, filed a memorandum opinion affirming the orphans' court's decision. Rickard v. American National Property and Casualty Co., 774 WDA 2015 (Pa. Super. filed August 9, 2016) (unpublished memorandum). Thereafter, Appellant filed an application for reargument en banc. On October 20, 2016, this Court granted en banc reargument and withdrew the August 9, 2016 decision. Following the filing of new briefs, we entertained oral argument on March 21, 2017. This matter is now ripe for disposition. Appellant raises the following three issues:

1) Does the instant bankruptcy court order which does not address whether an ERISA Fund may extend its subrogation lien to a decedent's wife and minor daughter serve as a basis to collaterally estop an orphans' court claim for wrongful death damages made after the close of the bankruptcy matter?
2) Are the wrongful death beneficiaries, spouse and minor child, precluded from recovering benefits for their separate and distinct injury by lien language in an ERISA Health and Welfare Plan, when neither the lien amounts nor lien language apply to either of the beneficiaries?
3) Does the Supreme Court's holding in U.S. Airways v. McCutchen, 133 S.Ct. 1537 (2013) require that a subrogation lien on a decedent's recovery for medical benefits paid out during a decedent's lifetime, extend to his wife and minor daughter's separate and distinct recovery in a wrongful death action?

Appellant's Brief at 4 (issues reordered).

         The issue of whether the court applied the correct legal standard in distributing the wrongful death proceeds raises a question of law, i.e., construction of the Welfare Plan's subrogation and reimbursement clauses, which we review de novo. Moscatiello v. Hilliard, 939 A.2d 325, 327 (Pa. 2007) (questions of law are subject to de novo review, and scope of review is plenary). The basis for the orphans' court's denial of Appellant's Distribution Petition was that "it [was] barred by the doctrine of collateral estoppel, " Orphans' Court Opinion, 4/28/15, at unnumbered 2, which the court, without analysis, held applicable. We disagree.

Collateral estoppel applies if (1) the issue decided in the prior case is identical to one presented in the later case; (2) there was a final judgment on the merits; (3) the party against whom the plea is asserted was a party or in privity with a party in the prior case; (4) the party or person privy to the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding and (5) the determination in the prior proceeding was essential to the judgment. Collateral estoppel, sometimes referred to as issue preclusion, operates to prevent a question of law or an issue of fact which has once been litigated and adjudicated finally in a court of competent jurisdiction from being relitigated in a subsequent suit. Kituskie v. Corbman, 452 Pa. Super. 467, 682 A.2d 378, 382 (1996) (citations and quotation marks omitted). The decision to allow or to deny a prior judicial determination to collaterally bar relitigation of an issue in a subsequent action historically has been treated as a legal issue. As such, this Court is not bound by the trial court's conclusions of law and we may draw our own conclusions from the facts as established. Meridian Oil & Gas Enters., Inc. v. Penn Cent. Corp., 418 Pa. Super. 231, 614 A.2d 246, 250 (1992), appeal denied, 534 Pa. 649, 627 A.2d 180 (1993).

Westfield Ins. Co. v. Astra Foods Inc., 134 A.3d 1045, 1049-1050 (Pa. Super. 2016), appeal denied, 102 EAL 2016, 2016 WL 5844709 (Pa. September 30, 2016).

         In the present case, bankruptcy counsel asked the bankruptcy court to approve the settlement involving a living client in receipt of medical benefits from the Welfare Fund, but the bankruptcy court refused. In re: William J. Rickard and Carolyn M. Rickard, Bankr. No. 10-24821-JAD (Bankr. W.D. Pa., filed October 20, 2014). Thus, there was no settlement. Moreover, there currently is no bankruptcy action pending. William Rickard has died. Appellant and the Deceased's minor daughter have discrete claims under the Pennsylvania Wrongful Death Statute, and these claims did not accrue until after the bankruptcy court's memorandum and order.

         The issue before us is whether a wrongful death beneficiary's recovery under the Pennsylvania Wrongful Death Act is subject to a subrogation claim for benefits paid on behalf of the decedent for medical treatment during the decedent's lifetime. This issue was not before the bankruptcy court, nor could it have been, as all of the relevant bankruptcy proceedings occurred during the Deceased's lifetime. Thus, under the first prong of the test for collateral estoppel, the issue decided in the bankruptcy court is not identical to that presented herein.

         The second prong requires a final adjudication on the merits. A motion to approve settlement was before the bankruptcy court, and the court denied it. The Deceased's death two days later gave rise to a wholly new claim, and seven days later, the debtors' case was dismissed from bankruptcy. There was no settlement, no determination on disbursement, and the bankruptcy court did not ...


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