Hennepin County District Court File No. 27-CV-11-13846
Richard C. Lund, Noack Law Office, Mound, Minnesota (for respondents Jeff Quinn, et al.)
Terri L. Hommerding, John G. Ness & Associates, St. Paul, Minnesota (for respondents Excelsior & Grand II, LLC, et al.)
Larry J. Peterson, Krista L. Hiner, Peterson, Logren & Kilbury, P.A., St. Paul, Minnesota (for appellant)
Considered and decided by Chutich, Presiding Judge; Smith, Judge; and Klaphake, Judge.[*]
We affirm the district court's ratification of the validity of a settlement agreement between respondent Jeff Quinn and respondents Excelsior & Grand II, LLC, et al. (collectively Excelsior). Quinn's injuries were sustained during his employment with appellant Bor-Son Construction Company, Inc. Quinn's workers-compensation settlement with Bor-Son reserved Bor-Son's subrogation interests. Quinn failed to give Bor-Son timely and adequate notice of settlement negotiations. Because the district court erred in not providing a remedy for this lack of notice, we reverse and remand to the district court for it to determine the distribution, as opposed to credit, that Bor-Son will receive as a result of the Quinn-Excelsior settlement.
Quinn sustained a workplace injury when he was an employee of Bor-Son. Quinn and Bor-Son settled his workers-compensation claims in November 2005. The settlement provided that Bor-Son and its insurer "reserve and retain any and all subrogation or indemnity rights under Minn. Stat. § 176.061." Quinn then sued Excelsior, the owner of the property where the injury occurred, but did not serve Bor-Son or its insurer with a copy of the complaint, as required by Minnesota law.
On Monday April 30, 2012, Bor-Son's attorney, Larry Peterson, received a voicemail from Quinn,  informing Bor-Son that Quinn and Excelsior were to proceed with mediation later that morning. Peterson had scheduled other settlement conferences for that morning and was unable to attend the mediation. Peterson contacted Quinn and Excelsior, informing each that Bor-Son and its insurer would object to any attempted settlement between Quinn and Excelsior. During the first two hours of the mediation, Quinn attempted to contact Peterson but stopped after Bor-Son staff refused to contact Peterson on his cellular telephone. Later that day, Peterson was notified by telephone that the mediation resulted in the Quinn-Excelsior settlement, which provided that the payment "include[s] subrogation claims or liens" but also included a "Naig settlement" as a handwritten notation. See Naig v. Bloomington Sanitation, 258 N.W.2d 891, 894 (Minn. 1977) (holding that an employee may settle a claim with third-party tortfeasor so long as the employer-insurer receives reasonable notice of settlement negotiations and settlement does not affect the employer's subrogation rights). The following day, Peterson contacted Quinn and Excelsior, informing each that Bor-Son and its insurer objected to the Quinn-Excelsior settlement.
Quinn moved to ratify the Quinn-Excelsior settlement and to deny Bor-Son's objection to the settlement. Bor-Son responded to Quinn's motion and moved to intervene. The district court granted Bor-Son's motion to intervene, as well as Quinn's motion to approve the Quinn-Excelsior settlement. The district court later ratified the settlement, permitting Quinn and Excelsior to "distribute the settlement proceeds without providing a share for employer and insurer." This appeal followed.
Bor-Son argues that (1) Quinn's notice to Bor-Son was insufficient, (2) the Quinn-Excelsior settlement is not a Naig settlement, and (3) Bor-Son is entitled to a share of the ...