Court Opinion

ID: 9698507
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:52:22.719796+00
Date Added: 2024-06-11T18:20:41.422377
License: Public Domain

QUILLEN, Justice,
with whom McNEILLY, Justice, joins, dissenting:
I respectfully dissent. In my judgment, the majority has not considered adequately that Workmen’s Compensation is an exclusive statutory remedy dependent for its proper functioning on a fixed system of statutory rights, remedies and liabilities. In its application “equitable principles” in this statutory context, the majority has concentrated on unavoidable representation conflicts of insurers to the exclusion of the substance of essential fairness.
Two factual matters deserve expanded coverage. I will state them with heavy reliance on the factual statements included in the briefs.
*509The attorneys for Dominick and Anna Baio in the tort action were originally Victor F. Battaglia, Esquire, and B. Wilson Redfearn, Esquire. Mr. Redfearn had entered his appearance in that action to represent any subrogation interest of Commercial Union. On or about July 8, 1974, Mr. Redfearn discovered that Commercial Union was both the workmen’s compensation insurer and the liability carrier for Rankin Development Company. On July 31, 1974, Mr. Redfearn sent a letter to Mr. Battaglia. In order to have a full appreciation of the position of the parties at the commencement of the lawsuit, and at the risk of burdening the record somewhat, I quote the letter at length:
“As you know I have been mulling over the problematical position of representing the insurance company which carries both the workmen’s compensation for the claimant (and thus has an interest allied to the plaintiff) and the Rankin Development Company, a defendant. You and Jim [counsel for DiSabatino Brothers, Inc.] have both been kind enough to acknowledge the fact that this conflict exists for anyone simply because the same insurance company necessarily has two different interests.
“I have determined that it would be best to withdraw as an attorney for the plaintiff and enter my appearance for the Rankin Development Company. I would only do this if all parties agreed that such a change would be proper. It seems to me to be the best course of action in light of the inherent conflict of interest which a compensation carrier has with a claimant during a period of continuing compensation, in addition to the fact that my client’s lien is preserved in the event of a plaintiff’s recovery.
“I would appreciate it if you would, after giving some thought to the matter, confirm in writing that I might enter my appearance for Rankin. I would thereafter need a week or so to obtain the file for this defendant and then to answer. The lien interest of my client would then simply have to rest on the plaintiff’s case in general, with no attorney being substituted.
“I look forward to hearing from both you and Jim regarding this matter.” (Emphasis added).
Since Mr. Redfearn subsequently entered his appearance for Rankin Development Company, the liability insured of Commercial Union Insurance Co., it is reasonable to assume, as the majority notes, that Mr. Battaglia did not object to the change suggested.1
Second as .to the facts, prior to having entered into the compensation agreement with Baio, Commercial Union, in its capacity as workmen’s compensation carrier for Frank Robino, Inc., received statements from Dominick Baio. One of such statements was offered by Rankin at the trial as a defendant’s exhibit. The following colloquy preceded its admission into evidence:
“[By Mr. Redfearn]
“Q Mr. Baio, while we do not want to belabor the issue of who you worked for at the time of the accident, we have several papers in our possession which contain statements that have been made by you and which generally refer to your employer. Now, is this, Mr. Baio, your signature?
“A This is my signature, yes.
*510“Q This says Statement of Injury, and it says Dominick Baio, and then it says employer’s name, Prank A. Robino, Inc.
“A At the time, Frank Robino, Inc.
“THE COURT: I’m sorry. Neither the jury nor I can understand. Would you step back from the witness, so he will speak loud and clear.
“THE WITNESS: Yes. At the time I assume I was working for Frank Robino, Inc.
“BY MR. REDFEARN:
“Q So at the time of the accident you were working for Frank A. Robino, Inc. Is that correct?
“A Right.
“MR. REDFEARN: Your Honor, I would like to have this paper labeled Rankin Exhibit No. 1.
“MR. BATTAGLIA: No objection, if Your Honor please. We agree that it can be admitted out of order.
“THE COURT: Mr. Kipp [counsel for DiSabatino Brothers, Inc.], do you have any objection?
“MR. KIPP: No objection.
“THE COURT: That may be marked Defendant Rankin’s Exhibit No. 1.”
There appears to be no question that this statement, which was possessed and used by Commercial Union in its capacity as the liability insurer for Rankin, was received by Commercial Union in its capacity as the workmen’s compensation carrier for Frank Robino, Inc. The statement was evidently included as part of a written report statutorily required to be made “by the employer”. The report is “exclusively for the information of the Board” in its statutory advisory role. And the report, under the statute, “shall not be evidence against the employer” in workmen’s compensation proceedings or otherwise. 19 Del.C. § 2313. It is in this context that the propriety of the use of the statement is questioned.
Finally, as a preliminary matter, one legal point should be highlighted at the risk of repetition of part of a statutory reference in the majority opinion. The subrogation statute, 19 Del.C. § 2363(e), in part, provides that “[a]ny recovery against [a] third party . . shall first reimburse the employer or its workmen’s compensation insurance carrier for any amounts paid or payable under the Workmen’s Compensation Act to date of recovery”. (Emphasis added).
It seems to me that this case operates on two levels. The first is of general policy. The second is factual on the specific facts of this case.
The majority’s view rests, in my judgment, on an incorrect general premise. There is an underlying theme that some injustice was done to the Baios by the supplying to Rankin the defense to which it was entitled by express contract. I approach the situation differently by paying tribute to our system of resolving disputes. I would assume, since the judgment has become final after full litigation in which both sides were professionally represented, that, barring some specific inequity, the result is just and that each side received the justice that the system is designed to achieve.2 The usual pre-trial and trial attributes may be “opposition tactics” but they are also litigation rights. In the substance of the matter, as I see it, there has been no inequity as a result of the normal attributes of a lawsuit.
The State encourages insurance companies to assume both workmen’s compensation and liability risks. If there is an “increasing prevalence of direct conflicts on interest” causing a carrier “to turn up on both sides of the courtroom”, as I suspect (without evidence here) there is, then there may be a policy problem in this highly regulated industry worthy of a uniform statutory policy remedy. But there is now clearly no State policy prohibiting insurance *511companies from insuring both risks.3 Nothing in this record would justify us in expressing an opinion on the wisdom of a prohibitory policy. We know nothing about the insurance industry from a business or social point of view. The proposition that an insurance company must “waive” its subrogation rights under the workmen’s compensation statute in order to honor its obligation as a liability carrier is patently unfair and contrary to any existing statutory policy.4 The point should be that any remedy required as a result of “increasing prevalence of direct conflicts” is one of policy better considered in the legislative arena on proper social, business and insurance data with a consciousness of the need for coverage. It must be borne in mind that these conflicts arise by the chance of coverage by a specific insurer after the accident and frequently, as here, are not discovered until the claimant’s suit against a third party.5 In short, there may be a problem worthy of attention. But the existence of a problem should not be an invitation to this Court on a case by case basis to bar an insurer litigant of its workmen’s compénsation subrogation right in disregard of the statute. The statute is the governing law.
If I am correct that there is no general injustice where, as here, notwithstanding the conflict, the case viewed overall was in fact thoroughly and fairly litigated on the merits, the question then becomes whether or not Commercial Union did any specific inequity which justifies some form of estop-pel prohibiting its assertion of its statutory subrogation right.6
Obviously one specific incident stands out. It seems to me that it was improper for Commercial Union to use Mr. Baio’s' statement received in its capacity as workmen’s compensation carrier given the admitted conflict and the statute noted above.7 But any prejudice in that regard is negated by the fact that the defendants here not only did not object during the trial on their tort claim but actually applied grease to the evidentiary admission process. As to any prejudice in fact, it also seems clear that the particular evidence was at best inconsequential and of little or no moment in the trial of the tort case. Indeed, *512no real argument has been made to the contrary. Under equitable estoppel doctrines, it is prejudice to the other party, not penalty to the actor which is the key. Wilson v. American Insurance Company, Del. Supr., 209 A.2d 902 (1965); City Loan System v. Nordquist, Del.Super., 165 A. 341 (1933). Estoppels should be resorted to solely as a means of preventing injustice, and should not be permitted to defeat the law. Ainscow v. Alexander, Del.Super., 39 A.2d 54 (1944). Thus, since no rights were asserted on this issue until post-trial boot strapping and since it was insignificant on the merits, it seems to me that the incident, although unfortunate, does not justify es-toppel effect against the exercise of a statutory right. Perhaps this conclusion, essentially factual, is what separates me from the majority.
I would affirm the judgment of the Superior Court insofar as .it impliedly determined that Commercial Union was entitled to its statutory right of subrogation. Since the majority has found it unnecessary to consider Commercial Union’s obligation to share in Mr. Baio’s attorney fees, I too am relieved of the burden of dealing with that thorny issue.8

. I am not sure of the significance of the footnote in the majority opinion disclaiming any concern here with the ethical conduct of Commercial Union’s attorney. While I recognize questions of ethical conduct of Commercial Union’s attorney and the legal conflict faced by Commercial Union itself are separate issues, and while technically no question of ethics is before us, I find it difficult to treat this letter and any Baio waiver resulting therefrom as dealing solely with representation. It expressly speaks of the “inherent conflict of interest” of a carrier, “the fact that my client’s lien is preserved” and “[t]he lien interest of my client” resting on the plaintiff’s case. Obviously, Commercial Union’s attorney thought he was dealing with his client’s conflict as well as his own. And surely Commercial Union will look to its attorney for guidance as to its own conflict. While it is almost always possible to do better in retrospect, Mr. Redfeam’s conduct was open and above board and expressly extended to Commercial Union.

. It should be noted that Rankin’s insurance coverage has significance to a claimant as well as to Rankin, and the Baios, in particular, had a stake during the litigation in that coverage. They just lost a fair fight on their claim against Rankin.

. A similar conflict problem can arise in other contexts such as a routine negligence case when there is a counterclaim.

. The situation in this case is not aggravated because the numbers are relatively small. But workmen’s compensation recoveries can be enormous and even the “equitable” law of this case will be hard to reasonably distinguish in the cases that follow. Moreover, under the general policy view I have expressed, the deci-sión clearly allows the “double recovery” noted by the majority. I fear the majority is creating a new field for future litigation that is unnecessary given the statute, unwarranted by statutory policy, and undesirable for legal certainty in a regulated industry assigned the social and economic responsibility of dealing with particular risks. The final footnote in the majority opinion may provide a meaningful limitation on the broader language in the body of the opinion and give insurers some guidance when conflict situations arise.

. The case of Arendas v. Rich & Company, D.Ct.W.D.Pa., 220 F.Supp. 957 (1963) does not specifically deal with the conflicting coverage problem and therefore is not helpful here. This case does not involve duplicity on the part of Commercial Union. It had a legal contractual duty to defend Rankin and gained no unconscionable advantage by its required performance of that legal burden.

. I use the broad language of estoppel because, as I understand it, waiver, whether express or implied, is the “intentional relinquishment of a known right.” See, for example, Standard Acc. Ins. Co. v. Ponsell’s Drug Stores, Inc., Del. Supr., 202 A.2d 271, 274 (1964) and Klein v. American Luggage Works, Inc., Del.Supr., 158 A.2d 814, 818 (1960). In my judgment, it is clear that Commercial Union did not intentionally relinquish its right to subrogation. To the contrary, Commercial Union expressly reserved its subrogation claim in the letter of July 31, 1974 at the very commencement of the lawsuit.

. While we have no evidence of insurance company practice, and perhaps a judgment is premature, it does clearly seem to me that the defendants here are correct when they say: “Recognizing the conflict that was created, Commercial should have established separate files and retained separate attorneys for both their interests as the workmen’s compensation carrier and as the liability carrier. Information received in its capacity as the workmen’s compensation carrier should not have been used by it in its capacity as the liability carrier. 19 Del.C. § 2312.”

. It is interesting' to note that the Superior Court, in a thoughtful opinion, discussed only the attorney fee question although “waiver” was briefed. See Commercial Union insurance Co. v. Baio, Del.Super., 389 A.2d 271 (1978) and defendants’ briefs in the Superior Court.