IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-41152

JAMES EDWIN HODGES; 

BEVERLY HODGES,

Plaintiffs - Appellees

v.

INDIANA MILLS &

MANUFACTURING INC.; ET AL,

Defendants

ABF FREIGHT SYSTEM INC,

Intervenor - Appellant

Appeal from the United States District Court

 for the Eastern District of Texas

USDC No. 2:03-CV-183

Before JONES, Chief Judge, and STEWART and SOUTHWICK, Circuit Judges.

PER CURIAM:*

I. Background

James Hodges was driving a truck for his employer, ABF Freight System,

Inc. (“ABF”), when he was hit by another vehicle and rendered paraplegic.

United States Court of Appeals

Fifth Circuit

F I L E D

November 29, 2011

Lyle W. Cayce

Clerk

 Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not *

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

Case: 10-41152 Document: 00511678860 Page: 1 Date Filed: 11/29/2011
No. 10-41152

Following the accident, ABF paid James workers’ compensation benefits. James

and his wife Beverly Hodges sued various third parties, including the company

that employed the driver responsible for the accident, Indiana Mills &

Manufacturing (“Indiana Mills”), and Mack Trucks, Inc. (“Mack”). ABF

intervened to protect its subrogation rights for the workers’ compensation

benefits it had paid (and continues to pay) to James. 

The Hodgeses settled with the other driver for $50,000. James’s suit

against Indiana Mills and Mack alleged design defects in his truck’s seatbelt and

door latch; Beverly’s suits alleged loss of consortium and loss of household

services. James and Beverly settled with Indiana Mills for $700,000 each. Their

claims against Mack went to trial, and a jury awarded James $7,910,553 in

damages and Beverly $0 in damages. This court reversed that jury verdict and

remanded for a new trial. See Hodges v. Mack Trucks (“Hodges I”), 474 F.3d 188

(5th Cir. 2006). Before reaching a second trial, Mack settled with the Hodgeses,

paying $3,075,000 to James, $800,000 to Beverly, and $475,000 to ABF for its

already-stipulated compensation lien. The settlements totaled $5.8

million–$50,000 from the driver, $1.4 million from Indiana Mills, and $4.35

million from Mack. ABF requested that the district court apportion the total

settlement recovery for the purpose of computing credit against ABF’s obligation

to pay future workers’ compensation benefits to James. Following an

evidentiaryhearing, a magistrate judge allocated $1.16 million of the settlement

to Beverly and $4.64 million to James. The district court adopted the magistrate

judge’s report.

ABF appeals this allocation, arguing that the district court erred in its

apportionment. ABF also appeals the district court’s conclusion, upholding the

2

Case: 10-41152 Document: 00511678860 Page: 2 Date Filed: 11/29/2011
No. 10-41152

magistrate judge’s report, that ABF waived its right to recalculation of the legal

expenses it owed the Hodgeses, which ABF argues it overpaid prior to the final

settlement. We reject the former appellate contention but agree with the latter

one.

II. Standard of Review

In insurance disputes arising under Texas law, “the proper division of a

settlement between beneficiaries and non-beneficiaries presents an issue for the

trier of fact.” U.S. Fire Ins. Co. v. Hernandez, 918 S.W.2d 576, 579

(Tex. App. 1996). Because the district court was the trier of fact in apportioning

the settlement, this court reviews the district court’s determination for clear

error. FED. R. CIV.P. 52(a). A court of appeals must not reverse a finding of fact

“[i]f the district court’s account of the evidence is plausible in light of the record

viewed in its entirety[.]” Anderson v. City of Bessemer, 470 U.S. 564, 573-74

(1985) (citations omitted).

However, as we explained in Hodges I, this court reviews the district

court’s calculation of legal expenses to be deducted from a carrier’s recovery for

abuse of discretion. 474 F.3d at 204; see also Erivas v. State Farm Mut. Auto.

Ins. Co., 141 S.W.3d 671, 676 (Tex. App. 2004). “A district court abuses its

discretion when its ruling is based on an erroneous view of the law or on a

clearly erroneous assessment of the evidence.” Arete Partners, L.P. v.

Gunnerman, 643 F.3d 410, 412 (5th Cir. 2011).

III. Discussion

A.

Texas law requires that “the first money recovered by an injured worker

from a tortfeasor [must] go to the worker’s compensation carrier.” Texas Mut.

3

Case: 10-41152 Document: 00511678860 Page: 3 Date Filed: 11/29/2011
No. 10-41152

Ins. Co. v. Ledbetter, 251 S.W.3d 31, 33 (Tex. 2008). When determining the

reimbursement owed to a workers’ compensation carrier as subrogation, the trier

of fact must allocate a settlement according to the relative merits and worth of

the claims involved. U.S. Fire Ins. Co. v. Hernandez, 918 S.W.2d 576, 579 (Tex.

App. 1996). Here, after an evidentiary hearing, the magistrate judge found that

the Hodgeses’ claims were of equal merit, but that Beverly’s claims were worth

approximately one-fourth as much as James’s. The magistrate judge heard

extensive evidence regarding Beverly’s post-accident life and relationship with

James and the care she provides to him. It also considered the previous jury

verdict. While acknowledging that “there is no exact science for determining the

relative worth of these claims, and reasonable minds may differ,” the magistrate

judge concluded that James’s claims were worth approximately four times as

much as Beverly’s. 

ABFcontends that this apportionment was clearly erroneous in light ofthe

first trial’s jury verdict, which awarded Beverly no damages. The court relied

instead on evidence of Beverly’s loss of household damages and noneconomic

damages for loss of consortium. ABF argues that the allocation, based on the

court’s “subjective evaluation” of Beverly’s damages, including her noneconomic

damages, was arbitrary. It urges that the objective evidence of the original

vacated jury verdict, combined with actual economic damages paid out to James,

dictates a contrary conclusion. 

But “arbitrary” is not the same as “subjective.” A district court is entitled

to rely on subjective factors in its evaluation of evidence, and such reliance does

not make its conclusion arbitrary. Evaluation of a claim for loss of consortium,

in particular, depends on the trial court’s evaluation of the mental and emotional

4

Case: 10-41152 Document: 00511678860 Page: 4 Date Filed: 11/29/2011
No. 10-41152

(or “subjective”) injury incurred by spouse-claimant, and Texas courts have

upheld damage awards for consortium claims based on such evidence. See, e.g.,

Texas Workers’ Compensation Ins. Fund v. Serrano, 985 S.W.2d 208, 211-12

(Tex. App. 1999) (declining to disturb trial court’s damages finding on loss of

consortium claims because “mental anguish damages are incalculable and can

not logically be refuted because there are no objective facts by which to measure

the amount.” (citing Associated Indem. Corp. v. CAT Contracting,

918 S.W.2d 580, 602-603 (Tex. App. 1996))); N. Am. Refractory Co. v. Easter,

988 S.W.2d 904, 914 (Tex. App. 1999) (evidence of claimant’s “very close

relationship” with her husband, “plans for their 50th wedding anniversary,” and

her emotional and physical reaction to watching her husband’s health decline,

was sufficient evidence to support the claimant’s loss of consortium award).

This court will only overturn a finding as clearly erroneous if that finding

is without adequate evidentiary support or is based on an erroneous view of the

law. Pebble Beach v. Tour 18, 156 F.3d 526 (5th Cir. 1998); Johnson v. Hospital

Corp., 95 F.3d 383, 395 (5th Cir. 1996). ABF, in fact, does not argue that the

finding lacked adequate evidentiary support, but only that the vacated jury

verdict should trump the district court’s evaluation of other evidence. We 1

conclude there was sufficient evidence in the record to support the district

court’s finding that James’ claims were worth approximately four times as much

as Beverly’s, and thus affirm its settlement allocation.

ABF argues that the allocation violates Ledbetter’s warning that “a carrier’s right to 1

reimbursement is mandatory.” Ledbetter, 251 S.W.3d at 36. But to conclude that the district

court infringed on the carrier’s right to subrogation requires the prior conclusion that the trial

court erred in its factual findings regarding the merit and worth of the claims, because the

carrier only has a right to reimbursement for the worker’s portion of the settlement. We must

review those findings for clear error.

5

Case: 10-41152 Document: 00511678860 Page: 5 Date Filed: 11/29/2011
No. 10-41152

B.

ABF also argues that the district court abused its discretion when it

refused to reconsider its order requiring ABF to pay $147,101.48 in legal

expenses. Under Texas law, an insurance carrier whose interests are not

actively represented by an attorney when a beneficiary files suit against a thirdparty must pay legal expenses to the beneficiary’s attorney. 

TEX.LAB. CODE § 417.003(a). If there is an agreement between the beneficiary’s

attorney and the carrier, then the agreement governs the amount of legal

expenses the carrier must pay. Id. If there is no agreement, the court will

award reasonable attorney fees not to exceed one-third of the carrier’s recovery,

id. at (a)(1), and a “proportionate share” of litigation expenses. Id. at (a)(2). 

In Hodges I, this court instructed that “[o]n remand, when determining the

total amount recovered by Hodges for use in calculating ABF’s pro-rata share of

Hodges’ litigation costs, the district court should consider any verdict.” Hodges

I, 474 F.3d at 206. The district court concluded that by settling the amount of

its lien with Mack, ABF waived its right to have the court reconsider the award

of fees and expenses pursuant to § 417.003(a) and reduce any overpayment by

ABF . While § 417.003(a) provides that a court need not calculate legal expenses

if there is an agreement between the beneficiary’s attorney and the carrier, here

this is no such agreement. The settlement agreement between Mack and ABF

expressly covered only ABF’s right to subrogation for benefits paid by ABF and

released only its claims against Mack. Nothing about ABF’s settlement with

Mack prevented the court from recalculating the legal expenses ABF could

recoup.

6

Case: 10-41152 Document: 00511678860 Page: 6 Date Filed: 11/29/2011
No. 10-41152

Because the district court’s ruling was legally erroneous, the court abused

its discretion by refusing to recalculate its award of legal expenses against ABF. 

The amount of ABF’s proposed recalculation, $55,635.91, was offered (here and

in the district court) without objection by the Hodgeses, other than to ABF’s

underlying interpretation of the parties’ settlement agreement with Mack. 

IV. Conclusion

For the foregoing reasons, we AFFIRM the district court’s settlement

allocation pertinent to ABF’s reimbursement of benefits, VACATE the district

court’s denial of ABF’s claim for reimbursement of overpaid expenses, and

REMAND for entry of judgment for $55,635.91 in favor of ABF.

AFFIRMED in part, VACATED and REMANDED in part for entry of

judgment.

7

Case: 10-41152 Document: 00511678860 Page: 7 Date Filed: 11/29/2011