2017-00207833-CU-PO

VSS International, Inc. vs. Polar Corporation

Nature of Proceeding: Hearing on Demurrer

Filed By: Edlow, Joshua T.

Defendants Polar Corporation dba Polar Service Centers, Polar Corporation, and Polar

Tank Trailer LLC (“Polar”) Demurrer to the Complaint of VSS International, Inc. dba VSS Emultech is sustained with leave to amend for failure to state facts sufficient to constitute a cause of action.

Plaintiff’s Request for Judicial Notice is granted.

Plaintiff’s objections to the Reply exhibits are sustained. The evidence attached is not the subject of judicial notice and is not relevant to the issues raised by the demurrer.

Plaintiff alleges causes of action for strict liability and negligence, seeking reimbursement of workers compensation benefits paid to its former employee, Raymond Myers. Plaintiff contends that Polar is liable for the injuries to Meyers, who fell from a tank trailer in 2012 while performing a tank washout procedure in the course and scope of his employment with VSS.

Polar contends that on the face of the Complaint, the claims are barred by the statute of limitations set forth in CCP 335.1. Polar contends that, since the injury occurred on June 20, 2012, this Complaint is barred by the statute of limitations. This Complaint was not filed until February 10, 2017, long after the applicable 2 year statute of limitations in CCP 335.1 had passed.

The right of an employer to bring a cause of action against a third party for payments made to an employee for injuries caused by a third party is governed by California Labor Code section 3852. An employer may bring such a cause of action against a third party. However, those claims, whether in tort or contract, are governed by the statute of limitations applicable to personal injury claims. The time for bringing a suit against a third party tortfeasor when an injury to an employee is caused by a third party is the same, whether commenced by the employer or the employee. See County of San Diego v. Sanfax Corp. (1977) 19 Cal.3d 862 and Jordan v. Superior Court. (1981) 116 Cal.App,3d 202.

In 2014, Myers filed an underlying case against Polar seeking damages for his

personal injuries. Plaintiff employer VSS filed a workers compensation lien on July 27,
2016 in the underlying case in order to recover workers compensation benefits. (RJN
Ex. 5) In January of 2017, Myers and Polar settled the personal injury case for
$3,500,000 and did not include plaintiff VSS in the settlement. VSS’ motion to file a
complaint in intervention in the underlying action was denied. VSS then filed this
separate action against Polar to obtain reimbursement of workers compensation
benefits paid to Myers before the underlying personal injury case was dismissed.

In denying VSS’ motion to intervene in the underlying personal injury action, the court ruled in part as follows:

Polar further argues that VSSE’s lien rights are fully protected by VSSE’s lien claim, because the settlement agreement between Plaintiffs and Polar states that Plaintiffs hold Polar harmless from and against all claims, which includes a lien claim by VSSE. (Descalso Decl. Ex. A ¶7.)

Moreover, while VSSE argues that it will be prejudiced if it is not permitted to intervene, it is not clear why this is the case. VSSE contends that it will be unable to intervene and recoup its payments if Plaintiff dismisses the action prior to trial, citing Van Nuis v. Los Angeles Soap Co. (1973) 36 Cal. App.

3d 222, 229. However, under Van Nuis, an employer may still file a separate suit to recover worker’s compensation payments. Van Nuis v. Los Angeles Soap Co. (1973) 36 Cal. App. 3d 222, 229-31. As a result, the Court perceives no prejudice to VSSE if it is not permitted to intervene in this action, as it still

may seek to recover its claimed damages.

(Minute Order Department 47, February 8, 2017, See RJN 9)

In Van Luis v Los Angeles Soap Co. (1973) 36 Cal.App.3d 222, 231-232- the court stated:

“To summarize: under Sections 3859 and 3860, as amended, an employee may settle his claim against the third party tortfeasor without the consent of the employer; such a settlement is not subject to any lien based upon the employer’s claim for reimbursement of compensation payments under such pleadings as here present; rather the employer must assert such claim by way of an action against the third party…”
The court also wrote at page 229 that, in the above situation:
“.. .the employer retains the right to recover such payment in case the employee settles, but he must do so by bringing an action against the third party pursuant to Labor Code section 3852…”

Labor Code 3859 provides “(a) No release or settlement of any claim under this chapter as to either the employee or the employer is valid without the written consent of both. Proof of service filed with the court is sufficient in any action or proceeding where such approval is required by law; (b) Notwithstanding anything to the contrary contained in this chapter, an employee may settle and release any claim he may have against a third party without the consent of the employer. Such settlement or release shall be subject to the employer’s right to proceed to recover compensation he has paid in accordance with Section 3852.”

Polar now argues, contrary to its arguments made in the underlying case, that VSS’s right to reimbursement was not protected, but rather barred by the statute of limitations because it was not asserted as a complaint in intervention in the underlying personal injury action. However, VSS filed a timely lien asserting its rights in the underlying action and later filed its separate complaint for reimbursement in accordance with the ruling denying the motion to intervene before the underlying action was dismissed. These facts support either a tolling or equitable estoppel argument on behalf of VSS.

Since this is the first challenged to the pleadings, VSS is given leave to amend to allege facts that might support tolling of its claim for reimbursement under Labor Code section 3852, judicial estoppel, or equitable estoppel.

The Amended complaint to be filed and served on or before March 12, 2018. Response to be filed and served within 30 days of service of the amended complaint, 35 days if served by mail.