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12/16/94 ALABAMA FOREST PRODUCTS INDUSTRY WORKMEN'S

December 16, 1994

ALABAMA FOREST PRODUCTS INDUSTRY WORKMEN'S COMPENSATION SELF-INSURER'S FUND
v.
BERRY FAYE LUCAS; WILLIAM R. LEWIS; AND PATE, LEWIS & LLOYD



Appeal from Montgomery Circuit Court. (CV-90-1025).

Yates, Judge. Robertson, P. J., and Thigpen, J., concur.

The opinion of the court was delivered by: Yates

YATES, Judge

On May 21, 1990, the Alabama Forest Products Industry Workmen's Compensation Self-Insurer's Fund ("Alabama Forest") sued Betty Faye Lucas, seeking reimbursement of $24,442.88 in workmen's compensation benefits that it had paid to her as a dependent of her deceased spouse, Eugene Lucas. Ms. Lucas had filed a third-party action after Eugene's work-related death in September 1982. The case was settled for $40,000 in June 1988. Alabama Forest claimed that it had a subrogation interest in Ms. Lucas's action, but that it had never received reimbursement for the compensation benefits paid to her. Two months after Alabama Forest sued, Ms. Lucas filed a bankruptcy petition, listing Alabama Forest as a creditor.

On September 6, 1990, Alabama Forest filed an amended complaint, adding William R. Lewis, the attorney who had represented Ms. Lucas in her third-party action, and his law firm, Pate, Lewis & Lloyd, as additional defendants. Lewis moved to dismiss, stating by affidavit that he had searched his records and could find "no communication of any kind whereby he became a fiduciary agent, representative or attorney for [Alabama Forest]." He further stated that he believed that Alabama Forest had amended its complaint to include him and his law firm as defendants "subsequent to a ruling by the Federal Bankruptcy Court that effectively dismissed [its] claim against the original defendant, Betty Lucas." Lewis's motion was denied.

In February 1992, Lewis moved for a summary judgment; his motion was denied in August 1992. In November 1992, Alabama Forest moved for a summary judgment; its motion was denied in May 1993. On July 9, 1993, Lewis moved to dismiss the case, or, alternatively, for a summary judgment. Although the evidence revealed that there had, in fact, been communication between Lewis and Alabama Forest, Lewis argued the following:

"No agreement was ever reached by me or any member of the law firm of Pate, Lewis & Lloyd with ... anyone representing [Alabama Forest] to protect or in any way represent the subrogation interest of [Alabama Forest]. It is my opinion that the actions taken by me on behalf of my law firm met the obligations required of me for the purposes of the adequate representation of my client."

On August 5, 1993, the trial court entered a summary judgment, with the following order:

"1. Defendant Betty Faye Lucas has been discharged pursuant to an order of the United States Bankruptcy Court dated October 23, 1990, and is therefore no longer subject to the jurisdiction of this Court.

"2. The Court finds that the claim by [Alabama Forest] is based upon an agreement to a right of subrogation.

"3. The Court finds there is insufficient evidence to support said claim.

"IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED [that] the Defendant's Motion for Summary Judgment is hereby GRANTED ...."

Alabama Forest appeals. The issue presented is whether a cause of action for statutory subrogation for reimbursement of worker's compensation benefits exists on the part of the insurer against the attorney who represented the plaintiff against a thirdparty tort-feasor when the attorney knew, or should have known, of the insurer's statutory interest in the proceeds of such an action or a settlement thereof.

The record contains numerous items of correspondence. There is a letter dated April 25, 1986, to Lewis from the office of Doyle Fuller, ...


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