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OWEN AND GALLOWAY v. THE TRAVELERS INSURANCE COMPANY

DECEMBER 17, 1986

OWEN AND GALLOWAY
v.
THE TRAVELERS INSURANCE COMPANY, A CONNECTICUT CORPORATION



BEFORE ROY NOBLE LEE, P.J., SULLIVAN & ANDERSON, JJ.

SULLIVAN, JUSTICE, FOR THE COURT:

Carl Walker was an electrician in the employ of O'Neal Electric. Travelers Insurance Company provided workmen's compensation benefits to Carl Walker because the Travelers had a workmen compensation contract with O'Neal Electric. On March 25, 1979, Walker, while in the course of his employment, was working from the platform of a "High-Ranger" produced by Mobile Aerial Towers, Inc. The platform assembly of this "High-Ranger" collapsed causing Walker to fall and suffer injury.

Walker employed the law firm of Owen and Galloway. This firm instituted a third party action against Mobile Aerial Towers, Inc., in the United States District Court for the Southern District of Mississippi, alleging liability for Walker's accident under the theories of strict liability, negligence, and breach of implied warranty.

 Travelers intervened to recover the workers' compensation benefits it had provided to Walker, although Travelers did not assist Walker in any manner nor did they pay any of the expert witness fees in the action on the products liability claim.

 The trial in the district court resulted in a jury verdict in the sum of $45,000.00. Travelers had paid $24,590.79 to Walker in workers' compensation. Under Section 71-3-71, Mississippi Code Annotated (1972), cost of collection, including attorneys fees, are to be recovered first, then the workers' compensation carrier recovers lien and any remaining funds to be paid to the claimant. In the instant case Owen and Galloway, through their employment with Walker, charged him fifty percent (50%) of the amount of the recovery and eventually Travelers recovered the sum of $18,882.95. Then Owen and Galloway paid unto Walker $11,420.55 or one-half (1/2) of the attorneys fees they had charged him so that in essence Walker would attain some recovery from his third party action and Owen and Galloway received 25% of the judgment rather than 50%.

 At the conclusion of the action in the Federal District Court Owen and Galloway filed a claim against Travelers in the Chancery Court of the First Judicial District of Harrison County, Mississippi, seeking an equitable recovery for legal services performed on behalf of Travelers. The action in the state court is not based on the language of Section 71-3-71, Mississippi Code Annotated (1972), but on theories of equity and it seeks to apportion the fees and costs which accrued in the third party action.

 Among other things, the Travelers filed a motion to dismiss the chancery court action for lack of jurisdiction pursuant to Rule 12 and they also filed a motion to dismiss the complaint under Rule 12(b)(6), for failure to state a claim upon which relief could be granted.

 Chancellor William L. Stewart overruled the motion to dismiss for lack of jurisdiction and sustained the motion to dismiss under Rule 12(b)(6) for failure to state a claim.

 Owen and Galloway appeal and assign as error that the lower court erred in dismissing the amended complaint under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. The Travelers cross-appealed and assigned as error the failure of the chancellor to grant their motion to dismiss for lack of jurisdiction pursuant to Rule 12, Mississippi Rules or Civil Procedure.

 I.

 THE MOTION TO DISMISS FOR LACK OF JURISDICTION UNDER RULE 12, MISSISSIPPI RULES OF CIVIL PROCEDURE

 Section 71-3-71, Mississippi Code Annotated (1972), provides in part:

 The acceptance of compensation benefits from or the making of a claim for compensation against an employer or insurer for the injury or death of an employee shall not affect the right of the employee or his dependents to sue any other party at law for such injury or death, but the employer or his insurer shall be entitled to reasonable notice and opportunity to join in any such action or may intervene therein. If such employer or insurer join in such action, they shall be entitled to repayment of the amount paid by them as compensation and medical expenses from the net proceeds of such action (after deducting the reasonable costs of collection) as hereinafter provided.

 The commencement of an action by an employee or his dependents (or legal representative) against a third party for damages by reason of the injury, or the adjustment of any such claim, shall not affect the right of the injured employee or his dependents (or legal representative) to recover compensation, but any amount recovered by the injured employee or his dependents (or legal representative) from a third party shall be applied as follows: reasonable costs of collection as approved and allowed by the court in which such action is pending, or by the commission of this state in case of settlement without suit, shall be deducted; the remainder, or so much thereof as is ...


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