Court Opinion

ID: 4347374
Source: CourtListenerOpinion
Date Created: 2018-12-05 16:08:31.898135+00
Date Added: 2024-06-11T13:29:52.790372
License: Public Domain

FILED
                                                                              Dec 05 2018, 8:30 am

                                                                                  CLERK
                                                                              Indiana Supreme Court
                                                                                 Court of Appeals
                                                                                   and Tax Court

ATTORNEYS FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
Karl L. Mulvaney                                          Libby Y. Goodnight
Margaret M. Christensen                                   Krieg DeVault LLP
Nana Quay-Smith                                           Indianapolis, Indiana
Bingham Greenebaum Doll LLP                               Ann Marie Woolwine
Indianapolis, Indiana                                     Krieg DeVault LLP
Trenton W. Gill                                           Merrillville, Indiana
Katherine M. Haire
Reminger Co., LPA
Indianapolis, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

In the Matter of the                                      December 5, 2018
Guardianship of Christopher                               Court of Appeals Case No.
Lindroth, a Disabled Adult;                               45A04-1711-GU-2685
Hartford Underwriters Insurance                           Appeal from the Lake Circuit
Company,                                                  Court
Appellant-Respondent,                                     The Honorable Marissa
                                                          McDermott, Judge
        v.                                                Trial Court Cause No.
                                                          45C01-0708-GU-87
Marcia Dempe, as Guardian of
the Person and Co-Guardian of
the Estate of Christopher
Lindroth, and First Midwest
Bank, as Co-Guardian of the
Estate of Christopher Lindroth, a
Disabled Adult,

Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018                           Page 1 of 14
      Appellee-Claimants

      May, Judge.

[1]   Hartford Underwriters Insurance Company (hereinafter “Hartford”) appeals an

      order entered by the Lake Circuit Court in the Guardianship of Christopher

      Lindroth. On appeal, Hartford asserts the following restated issues:

              (1) whether the Lake Circuit Court had jurisdiction to order
              Hartford to pay attorney fees arising from the Worker’s
              Compensation action;

              (2) whether, if the Lake Circuit Court had jurisdiction, it should
              have deferred to the Arbitrator’s continuing jurisdiction over the
              fees to be paid in the Worker’s Compensation action;

              (3) whether the Lake Circuit Court’s order for Hartford to pay
              attorney fees is wrong under Illinois Worker’s Compensation
              Law; and

              (4) whether the Guardians should pay attorney fees to Hartford
              because Guardians engaged in improper forum shopping.

      We reverse the Lake Circuit Court’s order as to attorney fees and remand.

      Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 2 of 14
                             Facts and Procedural History
[2]   Lindroth was severely injured in a motorized cart accident while working for

      his employer, Coastal International, in Cook County, Illinois. He spent

      extended time in a coma and the lower half of his body is permanently

      paralyzed. Soon after the accident, a guardianship was opened in the Circuit

      Court of Lake County, Indiana, with Lindroth’s mother, Marcia Dempe,

      named as guardian of his person, and Dempe and First Midwest Bank named

      as guardians of his estate (hereinafter “Guardians” and “the Estate”).

[3]   Guardians filed a claim for worker’s compensation benefits in Cook County,

      Illinois. Hartford is the worker’s compensation insurer for Lindroth’s employer

      and thus is a party in Lindroth’s worker’s compensation action. There appears

      to have been no dispute that Lindroth was entitled to worker’s compensation

      benefits, and Hartford began paying for Lindroth’s medical expenses and lost

      wages.

[4]   Guardians also filed a civil tort action in Cook County, Illinois, against the

      manufacturer of the cart Lindroth had been driving and various other parties.

      That case proceeded to a jury, which found the damages were $34 million 1 but

      Lindroth was 35% at fault, such that Lindroth was awarded a judgment of $22

      1
       The parties are not arguing about the specific amounts of money that should change hands, only when (and
      on whose order) the monies should be paid. As such, for simplicity sake, all financials are rounded herein.

      Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018                    Page 3 of 14
      million. Of that, Lindroth’s lawyers for the tort case received $9 million for fees

      and costs.

[5]   Pursuant to an Illinois statute, 820 ILCS 305/5, a worker’s compensation

      insurer is entitled to reimbursement from any civil judgment proceeds collected

      by an employee from third parties responsible for the workplace accident, so

      Hartford sought reimbursement from the civil judgment proceeds of the $5.7

      million that Hartford had already paid out for Lindroth’s medical expenses and

      lost wages. Pursuant to that same statute, insurers that are reimbursed from

      such civil judgment proceeds must return 25% of such reimbursement to cover

      the insurer’s portion of attorney fees from the civil action that produced the

      proceeds. The parties agreed Hartford’s statutory lien (reimbursement amount

      minus 25% attorney fees) was $3.5 million.

[6]   The guardianship judge in Lake Circuit Court initially ordered Guardians to

      put $3.5 million of the civil judgment proceeds into a segregated account

      earmarked for paying Hartford’s statutory lien. After time, the Lake Circuit

      Court ordered Guardians to release $3 million to Hartford. On November 10,

      2016, Hartford filed a motion requesting the Lake Circuit Court release the

      remainder of the lien money to which Hartford was statutorily entitled. 2

      2
       By this time, Hartford had recalculated the lien amount because Medicaid had unexpectedly covered some
      medical expenses, and the amount due to Hartford under the lien was only $400,000.

      Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018                 Page 4 of 14
[7]   That same day, Guardians filed a motion asserting Hartford owed the Estate

      $2.3 million for attorney fees on future medical expenses that also would be

      paid from the civil judgment proceeds, rather than by Hartford. Guardians

      suggested the Lake Circuit Court subtract Hartford’s statutory lien money being

      held in the segregated account from that $2.3 million due for attorney fees on

      future medical expenses and order Hartford to pay the Estate $1.9 million. The

      Lake Circuit Court signed Guardians’ proposed order. (Compare Addendum to

      Appellant’s Br. at 3-7 with id. at 8-12.) Hartford filed a motion to correct error,

      which the Lake Circuit Court denied without any findings or conclusions.

[8]   On November 16, 2017, Hartford filed an emergency motion to reconsider 3

      because the Illinois Worker’s Compensation Commission was to issue a

      decision about when Hartford would pay attorney fees for future medical

      expenses that would be covered by the civil judgment proceeds. On November

      30, 2017, the Worker’s Compensation Arbitrator issued an order that found the

      Lake Circuit Court “has no jurisdiction over the issue of adjudicating the

      Illinois workers’ compensation lien.” (Id. at 18.) In addition, the Arbitrator

      found the Lake Circuit Court’s orders do “not control the decision of the

      [Worker’s Compensation] Arbitrator.” (Id.) The Arbitrator entered a number

      3
        Because a motion to reconsider does not stay the deadline for a notice of appeal, Hartford timely filed its
      notice of appeal. After the record was filed, vesting jurisdiction in our Court, we stayed the appeal and
      remanded for the Lake Circuit Court to address Hartford’s motion to reconsider.

      Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018                         Page 5 of 14
      of findings to explain why the Lake Circuit Court had wrongly applied Illinois

      law, and then the Arbitrator entered the following conclusions and orders:

              The arbitrator notes that the Indiana probate court’s order of
              March 16, 2017 found that a net recoverable lien was due to
              [Hartford] in the amount of $396,325.76. The Indiana probate
              court’s order did not reimburse [Hartford] for the Section 5(b)
              lien due and owing to Hartford. The Indiana probate court
              ordered the amount held in escrow to be distributed directly to
              [Guardians]. The arbitrator finds that in the event Hartford is
              still due and owing any amount for their lien under Section 5(b)
              of the Act that any payments for statutory attorney’s fees to
              [Lindroth’s] attorneys are suspended until such time that the
              workers’ compensation carrier is repaid for their Section 5(b) lien
              on past workers’ compensation benefits already paid. . . .

              The arbitrator finds that [Hartford] is ordered to pay the 25%
              attorneys fee for future medical and permanent total disability
              benefits to [Lindroth’s] counsel as the benefit to [Hartford] from
              the third-party recovery is received by [Hartford]. Any such
              payments for statutory attorney’s fees to [Lindroth’s] counsel is
              suspended until such time that [Hartford’s] section 5(b) lien is
              completely recovered.

      (Id. at 20-21) (errors in original).

[9]   The Lake Circuit Court then heard Hartford’s pending motion to reconsider. In

      the order thereon, the Lake Circuit Court stated in pertinent part:

              This court, namely, the Lake Circuit Court, is a court of general
              jurisdiction. As such, it is vested with authority to hear and
              determine the general class of cases involving guardianships, as
              well as any matters merely collateral to those proceedings. The
              court rejects Hartford’s argument that [the court] lacked subject

      Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 6 of 14
               matter jurisdiction here. Indeed, the court’s March 16, 2017
               Judgment relates directly to the interests of the estate that is in
               the care of this court.

       (Id. at 22.) The Lake Circuit Court also reiterated its conclusions regarding

       lump-sum payments of future attorney fees and then affirmed its prior order

       that Hartford pay the $1.9 million lump-sum award of attorney fees for

       anticipated future medical expenses.

                                  Discussion and Decision
[10]   As Hartford notes on appeal, it cannot comply with the orders of both the

       Worker’s Compensation Arbitrator and the Lake Circuit Court, because those

       two orders are in direct conflict – the Arbitrator ordered Hartford not to make

       any additional payments until the Guardians refund the remaining statutory

       lien monies (≈ $400,000), while the Lake Circuit Court ordered Hartford to

       immediately pay an additional $1.9 million to the Guardians for reimbursement

       of attorney fees on future estimated medical expenses.

[11]   Hartford appeals from the Lake Circuit Court’s denial of Hartford’s motion to

       reconsider the Lake Circuit Court’s judgment of March 16, 2017, in light of the

       Illinois Worker’s Compensation Commission Arbitrator’s decision of

       November 30, 2017. “A trial court’s control and discretion to change its own

       rulings is firmly established in common law, and we will review a trial court’s

       reconsideration of its prior rulings for abuse of discretion.” In re Estate of

       Hammar, 847 N.E.2d 960, 962 (Ind. 2006).

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 7 of 14
[12]   At issue in that motion to reconsider was whether the Lake Circuit Court had

       jurisdiction to order Hartford to pay the Estate attorney fees that may accrue in

       the worker’s compensation action. Where, as here, the facts pertinent to the

       trial court’s jurisdiction are undisputed, we review the issue de novo. Edwards v.

       Edwards, 80 N.E.3d 939, 943 (Ind. Ct. App. 2017). “Subject matter jurisdiction

       is defined as the power to hear and determine cases of the general class to

       which any particular proceeding belongs.” Id.

[13]   The guardianship action from which Hartford appeals arose from the Lake

       Circuit Court. Lake Circuit Court does not have a separate probate court and

       instead hears probate matters within the civil division of that Court. See Ind.

       Code § 33-33-45-21(a) (“The court is divided into civil (including probate),

       criminal, county, and juvenile divisions.”). The Lake Circuit Court is a court of

       “original and concurrent jurisdiction in all civil cases.” Ind. Code § 33-28-1-

       2(a)(1).

[14]   However, “Indiana courts only have jurisdiction to the extent that jurisdiction

       has been granted to them by the constitution or by statute[,]” In re Custody of

       M.B., 51 N.E.3d 23, 234 (Ind. 2016), and our legislature made very clear that

       the “worker’s compensation board shall administer the worker’s compensation

       law.” Ind. Code § 22-3-1-2. Moreover, the worker’s compensation system is the

       exclusive remedy for employees who are injured or killed by an accident arising

       out of and in the course of employment. See Ind. Code § 22-3-2-6 (“The rights

       and remedies granted to an employee [under this law] on account of personal

       injury or death by accident shall exclude all other rights and remedies of such

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 8 of 14
       employee, the employee’s personal representatives, dependents or next of kin . .

       . on account of such injury or death.”); see also Wolf Corp. v. Thompson, 609

       N.E.2d 1170, 1173 (Ind. Ct. App. 1993) (employer entitled to summary

       judgment on Estate’s wrongful death action filed in trial court because sole

       remedy for accident was to be found in worker’s compensation laws). “The

       board maintains continuing jurisdiction over all attorney’s fees in cases before

       the board and may order a different attorney’s fee or allowance in a particular

       case.” Ind. Code § 22-3-1-4(e). Furthermore, appeals from worker’s

       compensation proceedings rest within the jurisdiction of the Court of Appeals.

       See Ind. Appellate Rules 5(C)(1) & 9(A). As such, under Indiana law, trial

       courts do not have authority to review or decide issues within worker’s

       compensation proceedings.

[15]   The worker’s compensation proceeding at issue herein, however, is from

       Illinois. Illinois’s version of the Worker’s Compensation Act explains “[a]ny

       disputed questions of law or fact shall be determined as herein provided.” 820

       ILCS 305/19. When parties inform the Commission that “the parties have

       failed to reach an agreement,” the Commission is to designate an Arbitrator.

       820 ILCS 305/19(a). “The Arbitrator shall make such inquiries and

       investigations as he or they shall deem necessary . . . .” 820 ILCS 305/19(b).

       Thereafter, the Arbitrator files its decision with the Commission, which

       distributes the decision to the parties. Id. If neither party files a “Petition for

       Review” of the Arbitrator’s decision, “then the decision shall become the

       decision of the Commission and in the absence of fraud shall be conclusive.”

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 9 of 14
       Id. If a Petition for Review is filed, then the Commission holds a hearing as

       provided by statute and issues its decision. See 820 ILCS 305/19(e) (explaining

       proceedings before Commission); see also 820 ILCS 305/19(c)(6) (“The fees and

       payment thereof of all attorneys and physicians for services authorized by the

       Commission under this Act shall, upon request of either the employer or the

       employee or the beneficiary affected, be subject to the review and decision of

       the Commission.”). Commission decisions are binding unless procured by

       fraud or timely appealed. 820 ILCS 305/19(f).

[16]   Unlike in Indiana, appeals of decisions from the Illinois Commission proceed

       to circuit courts. 820 ILCS 305/19(f)(1). However, the statute is very specific

       that, in particular, appeals may be heard by

               the Circuit Court of the county where any of the parties
               defendant may be found, or if none of the parties defendant can be
               found in this State then the Circuit Court of the county where the
               accident occurred, shall by summons to the Commission have
               power to review all questions of law and fact presented by such
               record.

       820 ILCS 305/19(f)(1) (emphasis added). As that italicized language makes

       clear, the appeal is to be heard wherever in Illinois a defendant is located or

       where the accident occurred. Thus, because the Lake Circuit Court is not in

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 10 of 14
       Illinois, it simply cannot be a proper forum to hear any questions of law or fact

       presented by the worker’s compensation record. 4

[17]   Even if Lake Circuit Court arguably could have had subject matter jurisdiction,

       our Indiana Supreme Court recently reiterated that “having jurisdiction does

       not automatically mean that it would be appropriate for the circuit court to

       exercise that jurisdiction.” In re Custody of M.B., 51 N.E.3d at 235 (emphasis in

       original).

                Courts of concurrent jurisdiction cannot exercise jurisdiction
                over the same subject at the same time, and where one of the
                courts acquires jurisdiction of the subject matter and the parties,
                it is vested with such jurisdiction to the exclusion of the other
                court until the final disposition of the case. In addition, this rule
                is not mitigated where the subject matter before the separate
                courts is the same, but the actions are in different forms.

                In the present case, a CHINS proceeding and a custody action
                are distinct in form, but we acknowledge that both involve the
                same subject matter, which is the care and custody of M.B. Due
                to this, it would have been appropriate for the circuit court to
                have allowed the parties to file their independent custody action,
                but stay the action until the conclusion of the CHINS
                proceeding, or, had the parties filed a 12(B)(8) motion, the court
                could possibly have dismissed on those grounds. A court of
                concurrent jurisdiction should abstain from exercising that

       4
         Thus, we need not determine the application of Illinois law regarding concurrent jurisdiction, which permits
       Illinois trial courts to determine questions of law that arise in Worker’s Compensation proceedings prior to
       the Commission making its final determination. See, e.g., Employers Mut. Cos. v. Skilling, 644 N.E.2d 1163,
       1166 (Ill. 1994) (“although we conclude that the Commission had concurrent jurisdiction to hear the disputed
       insurance coverage issue presented in this case, when the question of law was presented to the circuit court in
       the declaratory judgment suit, the jurisdiction of the circuit court became paramount”).

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018                      Page 11 of 14
                  jurisdiction when the subject matter is properly before another
                  court. We seek to clarify that abstention is not the same as
                  relinquishing or being divested of jurisdiction but is only the
                  postponement of its exercise.

       Id. (internal citations and quotations omitted). Similarly, here, even if the Lake

       Circuit Court had jurisdiction over matters collateral to the Guardianship, it

       should have abstained from interfering with the Illinois Worker’s

       Compensation Arbitrator’s authority to determine when and how attorney fees

       would be paid inside that Worker’s Compensation action.

[18]   As the Lake Circuit Court noted, it has jurisdiction over the Guardianship and

       the funds being managed therein for Lindroth. We presume this is why

       Hartford brought its request for payment of the statutory lien to the Lake

       Circuit Court. Nevertheless, the Lake Circuit Court’s jurisdiction to release

       funds to pay Hartford’s statutory lien against Lindroth’s civil judgment

       proceeds does not also grant the Lake Circuit Court jurisdiction to recalculate

       the attorney fees due in the Illinois Worker’s Compensation proceedings.5 See,

       e.g., American Mgmt., Inc. v. Riverside Nat. Bank, 725 N.E.2d 930, 933 (Ind.

       Ct. App. 2000) (defendant cannot challenge merits of foreign judgment during

       domestication unless foreign judgment is void because foreign court lacked

       subject matter jurisdiction or personal jurisdiction).

       5
           We therefore need not determine whether the Lake Circuit Court’s order misapplied Illinois law.

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018                     Page 12 of 14
[19]   As a final matter, Hartford asks that we order the Estate to pay appellate

       attorney fees because “[t]he Estate’s blatant act of forum shopping should not

       be countenanced by this Court.” (Br. of Appellant at 46.) We may order a

       party to pay appellate attorney fees “if an appeal, petition, or motion, or

       response, is frivolous or in bad faith.” Ind. Appellate Rule 66(E). Hartford

       asserts that the Estate is the party that asked the Lake Circuit Court to calculate

       the attorney fees that were due to Hartford. However, Hartford filed a “petition

       to adjudicate/set Hartford’s reimbursable past workers’ compensation lien[,]”

       (Appellant’s App. Vol. 2 at 43), and therein Hartford

               respectfully requests this Honorable Court enter an Order setting
               Hartford’s recoverable past workers’ compensation lien at
               $3,462,111.49 and, further, a directive that said amount is to be
               withdrawn from the segregated account that was set up
               specifically to reimburse The Hartford as [sic] and for its workers
               compensation lien, and for any other relief this Court deems just.

       (Id. at 48.)

[20]   As Hartford was the party that invited the Lake Circuit Court to calculate the

       amount of Hartford’s statutory lien and the Estate simply requested a different

       calculation of the monies due, we decline to impose attorney fees on the Estate

       for “forum shopping[.]” (Br. of Appellant at 46.) While we hold the Lake

       Circuit Court did not have jurisdiction to calculate the attorney fees due in the

       Illinois Worker’s Compensation proceeding involving these same two parties,

       we decline to shift fees from the party that first asked the Lake Circuit Court to

       exceed its authority.

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 13 of 14
                                               Conclusion
[21]   Because the Lake Circuit Court did not have jurisdiction to decide when and

       how attorney fees would be paid in an ongoing worker’s compensation

       proceeding from Illinois, we reverse the order denying Hartford’s motion to

       reconsider, vacate the order for Hartford to pay $1.9 million in attorney fees,

       and remand for the Lake Circuit Court to disburse Estate funds in accordance

       with any unappealed final order from the Worker’s Compensation Arbitrator or

       Worker’s Compensation Commission.

[22]   Reversed and remanded.

       Baker, J., and Robb, J., concur.

       Court of Appeals of Indiana | Opinion 45A04-1711-GU-2685 | December 5, 2018   Page 14 of 14