Playtex Apparel, Inc. v. Melvin.

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IN THE SUPERIOR COURT OF THE STATE OF DELAW ARE IN AND FOR KENT COUNTY PLA YTE X AP PAR EL, IN C., Appe llant, Defendant-Below, v. KATHY MELVIN, Appellee, Plaintiff-Below. : : : : : : : : : : : C.A. No. 04A-11-002 WLW Submitted: September 1,2005 Decided: December 29, 2005 ORDER Upon Appeal of Tw o Decisions of the Court of Common Pleas and a Cross-Appeal. Denied. J. R. Julian , Esquire, of J. R. Julian, P.A., Wilmington, Delaware; attorneys for the Appellant, Defendant-Below. Walt F. Schmittinger, Esquire of Schmittinger & Rodriguez, P.A., Dover, Delaware; attorneys for the Appellee, Plaintiff-Below. WITH AM, R.J. Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 Appe llant, Playtex Apparel, Inc. ( Playtex ), Defendant-below, appealed two decisions of the Court of Common Pleas ( Court below ). Appellee, Kath y Melv in ( Melvin ), Plaintiff-below, filed a cross-appeal. Playtex s appeal is premised on four theories, namely: (1) the second injury fund1 analysis used by the Court below was erroneous; (2) the Court below erred in holding that the Wage Collection Act applied and that Melvin had filed a valid Huffman 2 suit; (3) th e Cour t below erred in its analysis of the medical witness fee issue; and (4) the Court below demonstrated bias against Playtex by its conduct of the case. Melvin s cross-appeal is based on her argument that the C ourt below erred by not awarding attorney s fees for the time Melvin s counsel spent defending the declaratory judgment action filed by Playte x in the Cou rt of Ch ancery, w hich w as then tra nsferred to the Su perior C ourt. The underlying facts are as follows: Melvin suffered a work-related back injury in September of 1983. A s a result o f the injur y, Melv in receive d total disa bility paymen ts from Playtex in the amount of $228.5 3 per week. On January 26, 2001, Playtex, a self-insured company, filed a petition to terminate Melvin s total disab ility payments, but continued to pay Melvin s benefits as required by 19 Del. C. § 2347.3 On September 7, 2001, after conducting a hearing on the matter, the Industrial 1 This fund is currently titled the Workers Compensation Fund and will be referred to as the Fund throughout this opinion. 2 Huffman v. Oliphant, 432 A.2d 1207 (Del. 1981). 3 Section 2347 reads, in pertinent part, Compensation payable to an employee, under this chapter, shall not terminate until and unless the Board enters an award ending the payment of compensation after a hearing upon review of an agreement or award. 2 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 Accident Board ( Board ) grante d Playtex s petition as of the date of filing, but awarded partial disability benefits to Melvin, as well as attorney s fees and medical witness fees. Subsequently, Playtex determined it was entitled to a credit for the amount it paid in total disability benefits during the pendency of the petition. However, Playtex never sought acknowledgment of this cre dit from the Boa rd. Me lvin sent several d emand letters to P laytex and after full payment was not made, Melvin filed a Huffman claim in the Court below. Prior to Melvin s suit, Playtex filed a declaratory judgment action in the Court of Chancery, which was dismissed; however, the Court o f Chan cery allow ed Playte x to trans fer the m atter to the Superior C ourt. The Superior Court subsequently dismissed the action based on Play tex s failur e to prosecute. At the time of the Court below s decisions, Playtex was appealing the Superior Court s decision to the Supreme Court. The Court below issued two decisions - one concerning the failure of Playtex to pay Melvin s benefits, medical witness fees and attorney s fees on August 17, 2004, and one regarding whether Melvin was entitled to atto rney s fees for the time spent defending the actions in the Court of Chancery, Superior Court and Supreme Court on October 26, 2004. Playtex appealed the initial decision of the C ourt belo w and Melvin filed a cross-appeal based on the Court below s second decision. For the reaso ns set for th below , Playtex s appeal is denied and Melvin s crossappeal is denied. Standard of Review The function of this Court is to correct errors of law and to review the factual 3 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 findings of the court below to determine if they are sufficiently supported by the record and are the produ ct of an order ly and logical ded uctive process . 4 If an error of law exists, it is reviewed de novo.5 However, if substantial evidence exists for a finding of fact, this Court must accept that ruling, as it must not make its own factual conclusions , weigh evid ence, or mak e credibility determin ations. 6 Discussion Both Playtex s and M elvin s co ntention s will be d iscussed individu ally below. Workers Co mpensation Fund A nalysis: Playtex argues that the Court below s decision incorrectly applied the Fund analysis because Playtex is self-insured; therefore, Playtex is responsible for paying its own disability benefits, even during the pendency of a petition to terminate benefits. However, Playtex s argument is flawed. In its decision, the Court below begins w ith a review of the legislativ e history b ehind th e Fund . The C ourt belo w corr ectly observes that the point of the Fund is to ensure that employees continue to receive their full benefits until the Board issues a final decision. The Court below also accu rately determin ed that simply be cause an employ er is self-in sured, su ch status d oes not n egate the requirem ent that an employ ee is still entitled to f ull disability benefits during the pendency of a petition. In fact, to allow a self-insu red emp loyer to u nilaterally issue itself a credit for benefits paid during the pendency of a petition would create a 4 Snyder v. Jehovah s Witnesses, Inc., 2005 Del. Super. LEXIS 364. 5 Id. 6 Id. 4 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 disparity between self-insured employers and those who are insured through the Fund, and would favor se lf-insured employers. Consequently, the Court below did not comm it an error of law in applyin g the Fund an alysis, so this portion of Playtex s appeal fails. Wage Collection Act and the Validity of the Huffman Suit: Playtex contends that the Court below s reliance on Hopkins,7 Dobrzynski 8 and McD ougall 9 are all misplaced. Instead, Playtex asserts tha t State v. Brown10 controls this case. However, Playtex s argument is erroneous for several reasons. First, Brown is inapposite to this case. In Brown, this Court held that the Board has a duty to grant a set-off when the employee h as not experienced any loss of w ages, such as when the employee receives an award from the Board, but had previously obtained employerprovided benefits for the same injury. 11 Here, Melvin did not receive an y benefits in addition to the benefits Playtex was already obligated to pay her. Moreover, if Playtex received a credit, Melvin would suffer wage loss. Therefore, no set-off is necessary and Brown is inapplic able. Further, Hopkins is applicable because it was only cited for the proposition that 7 Hopkins v. Evans, 575 A.2d 1172 (Del. 1990). 8 Dobrzynski v. City of Wilmington, IAB Hearing No. 928839 (August 5, 1998). 9 Nat. Union Fire Ins. v. McDougall, 773 A.2d 388 (Del. 2001). 10 2000 Del. Super. LEXIS 491. 11 Id. at *17. 5 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 [t]he legislative p olicy beh ind the C ontinge ncy Fu nd is to p rovide c ompen sation to an injured e mploye e until suc h time as th e emplo yee is fou nd not to be entitled to receive the com pensatio n, 12 which is accurate a nd pertin ent to this c ase. Dobrzynski is also relevant because as a Board opinion, it clearly demonstrates that Playtex was not entitled to a credit, contrary to its assertion. In Dobrzynski, the Board opined, [t]he Board agrees w ith Claim ant that the Act do es not pr ovide the Board with the authority to order claimants to reimburse employers for payments made during the pendency of a Petition for Termination of Benefits. Nor does the Act allow employers to offset fu ture ben efits in the a moun t overpa id to Claim ant. 13 Lastly, the Court below s use of McD ougall is on po int. While Playtex attempts to argue that the Court below was incorrect in its application of McD ougall because it used the good faith language instead of focusing on Playtex s reasonable grounds for dispute, the Court below did not erroneo usly app ly McD ougall. As the Court in McD ougall mentions, the alleged good faith belief of an employer or insu rer that the employee is no longer entitled to c ompen sation is irrelevan t under th is statute. 14 The Supreme Court also observed th at an employe r s obligation to p ay attaches wh en the Boar d s decision becomes final and the decision not to pay th e award was w rongfu l because it contravened a final ord er of the B oard. 15 Here, Playtex s decision to issue itself a 12 Hopkins, 575 A.2d at 1174. 13 Dobrzynski, IAB Hearing No. 928839, at 2. 14 McDougall, 773 A.2d at 393 (citing Huffman, 432 A.2d at 1209). 15 Id. 6 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 credit and not pay Melvin s benefits as per the Board s decision was wrongfu l. Therefore, the Court below was correct in stating: [t]hus, the emp loyer s alleg ed belief th at it is entitled to a credit is an insufficient basis to justify the u nilateral w ithholdin g of ben efits proper ly awarded by the Board. If the employ er desires a credit, it must petition the Board to have the credit recognized and enforced ag ainst the claima nt. Playtex has not obtained an order from the Board recognizing the alleged credit. The emplo yer theref ore may not simp ly withhold othe r benefits award ed by the Board in order to collect its a lleged cre dit. This argument by P laytex fails. Medical Witness Fee Issue Playtex argues th at the Co urt below erred in awardin g Melv in her m edical witness fees, as granted by the Board, as well as liquidated damag es since P laytex did not pay the fe es in a time ly manner after notice. However, the Court below s decision was correct. In support of its award, the Court below cited to 19 Del. C. § 2322(e), which states, [t]he fees of medical witnesses testifying at hearings before th e Industrial Accide nt Boar d in beh alf of an injured employee shall be taxed as a cost to the employer or his insurance carrier in the event the injured employee receives an award. Additio nally, the Court below cited to Brandywine School District v. Hoskins,16 which held that if a claimant is successful and obtains an award, then that claimant is entitled to medical w itness fees for any m edical w itness that claimant called. Hoskins also notes that the only e xception to this rule is if an un reasona ble 16 492 A.2d 1247, 1252 (Del. 1985). 7 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 number of med ical witne sses are ca lled and th eir testimon y is unreasonably cumulative or redu ndant b ecause o f the testim ony of o ther med ical witne sses. 17 In the case sub judice, there was never a factual finding that the number of Melvin s medical w itnesses w as unrea sonable , nor w as there a f inding th at their testimony was un reasona bly cum ulative. P laytex s co ntention that Me lvin should not be awarded medical witness fees because she did not receive an award from the Board regarding her psychiatric problems fails because as mentioned above, an injured employee is entitled to medical witness fees whenever he or she receives an award. Further, Playtex s reliance on Knott-E llis v. State 18 is misplac ed. Knott-E llis is distingu ishable because it was a direct appeal of a Board decision, wherein the Board denied medical witness fees. Here, the Board granted medical witness fees and Playtex did not appeal the Board s decision. Therefore, 19 Del. C. § 2322(e) and Hoskins control, so the Court below did not commit an e rror of law . Consequ ently, Playtex s argument that the Court below should not have awarded medical witness fees and liquidated damages fails. Bias Against Playtex Playtex contends that the Court below demonstrated bias because the August 17, 2004 decision w as issued just five d ays after P laytex sub mitted its re sponse to Melvin s Motio n for S umma ry Judg ment. However, as indicated above, the Court below s decision was well-reasoned and clearly supported by case law and the 17 Id. 18 2000 Del. Super. LEXIS 409. 8 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 applicable statutes. Therefore, this Court finds no bias and rejects Playtex s request to reverse the decision of the Court below on this ground. Attorney s Fees Melvin s sole cross-appeal concern s the Co urt below s decision to only award attorney s fees for the work Melvin s counsel did in presenting the claim to the Court below. As the Court below noted, attorney s fees can only be awarded when provided for by statute o r in a con tract. 19 Here, the pertinent statute is 19 Del. C. § 1113(c), which reads, [a]n y judgm ent entere d for a p laintiff in an action br ought u nder this section shall include an award for the costs of the action, the necessary costs of prosecution and reasonab le attorney 's fees, all to b e paid by the defen dant. M elvin also cited to two additional Workers Compensation Act statutes that permit an award of attorney s fees in support of his argument that there are multiple justifications for a comprehensive attorney s fee award. The first, 19 Del. C. § 2320 (10) state s, in relevant p art: A reasonable attorney s fee in an amount not to exceed 30 percent of the award or 10 times the avera ge wee kly wage in Delaware as announced by the Secretary of Labor at the time of the award, whichever is smaller, shall be allowed by the Board to any employee awarded compensation under P art II of th is title and tax ed as cos ts against a party. The second statute cited by Melvin was 19 Del. C. § 2350(f), which allows the Super ior Cou rt to award attorney s fees to a claim ant s attorney w hen the claiman t s award is affirmed on an appeal from the Board s decision. Both of these statutes 19 Casson v. Nationwide Ins. Co., 455 A.2d 361, 370 (Del. Super. 1982). 9 Playtex App arel, Inc. v. Kathy M elvin C.A. No. 04A-11-002 WLW December 29, 2005 support the Court below s determination that attorney s fees are provided for in statutes. The first statute allows the Board to award attorney s fees to a successful claimant. The second statute permits the Superior Court to award attorney s fees when a claimant successfully defends his/her award on appeal. Likewise, Section 1113(c) provides authority to the Court below to award attorney s fees for a successful Huffman claim, as was the case here. However, Section 1113(c) does not require the Court below to award a ttorney s fees for the successful defense of a declaratory judgment action in e ither the C ourt of C hancery , the Sup erior Court or the Supreme Court. The Court below concluded that it lacked the authority to impose attorney s fees for the declaratory judgment action in the Court of Chancery, Superior Court and the Supreme Court. This Court agrees. Consequently, Melvin s argument on cross-appeal is unsuc cessful. Based on the foregoing, Playtex s appeal is denied and Melvin s cross-appeal is denied. IT IS SO ORDERED. /s/ William L. With am, Jr. R.J. WLW/dmh oc: Prothonotary xc: Order Distribution 10

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