Carey v. Chessie Computer Services, Inc.

WILNER, J. Prior to 1963, if an employee incurred an occupational injury that, although not in itself disabling, when coupled with a previous impairment rendered the employee permanently disabled, the employer was exposed to liability under the Workers’ Compensation Law for the cumulative effect of the prior and subsequent impairments. That exposure served as a disincentive for employers to hire handicapped workers. In an effort to overcome that disincentive and encourage employers to hire persons with existing disabilities, the Legislature, in 1963, created a balanced mechanism to provide fair compensation to the subsequently injured employee and yet limit the liability of the employer. In what is now Maryland ⁷⁴⁴ Code, § 9-802(a) of the Labor and Employment Article (LE), the General Assembly directed, in relevant part, that if an employee, already having a permanent impairment, suffers a subsequent occupational injury that results in a permanent disability that is substantially greater, due to the combined effect of the previous impairment and the subsequent injury, than it would have been from the subsequent injury alone, the employer is liable only for the compensation payable for the subsequent injury.

To make up the difference, the Legislature created the Subsequent Injury Fund (SIF) and provided for additional compensation to be paid by that Fund if (1) the previous impairment was one that was likely to be a hindrance to the person’s employment, (2) the combined effect of the previous impairment and the subsequent injury results in a permanent disability exceeding 50% of the body as a whole, and (3) each is compensable for at least 125 weeks. See LE § 9-802(b). The intent of the Legislature, currently expressed in LE § 9-801, was that the total compensation to the employee be equal to the amount payable for the combined effects of the previous impairment and the subsequent injury. For some of the history of the statute, see Subsequent Injury Fund v. Pack, 250 Md. 306, 308 , 242 A.2d 506, 508 (1968) and McKenzie v. C.C. Kottcamp & Sons, 311 Md. 54, 57-58 , 532 A.2d 703, 704-05 (1987). 1 ⁷⁴⁵ Although the 1963 Act provided for participation by SIF in proceedings before the Workers’ Compensation Commission and required the Commission to make certain findings regarding the liability of SIF, it made no provision for allowing SIF to seek judicial review of an award against it.

See Pack, supra, 250 Md. at 311 , 242 A.2d at 509 (SIF is “nothing more than a glomerate of money, to be disbursed by the State Treasurer on written orders of the Commission” and is therefore not a “person” entitled to seek judicial review of a Commission order to pay). That disability was corrected by legislation in 1969. See 1969 Md. Laws, ch. 394; see also Subsequent Injury Fund v. Ehrman, 89 Md.App. 741, 747 , 599 A.2d 875, 878 (1992). In 1974, the General Assembly perceived a remaining gap— the situation present here, in which SIF had not been made a party to the proceeding before the Commission but either the employer or the claimant desired to have its liability under § 9-802 determined in a judicial review action — and addressed that matter through the enactment of what is now LE § 9-807, allowing a jparty to implead SIF in the judicial review action.

As a procedural mechanism for invoking § 9-802, LE § 9-807 provides that, in any case involving payment from SIF, the Commission or any party in interest shall give written notice to the State Treasurer or the attorney for SIF and implead SIF in writing. Section 9-807(b) permits SIF to be impleaded at any stage of the proceeding, either before the Commission or on judicial review in a Circuit Court or the Court of Special Appeals. In tacit recognition of the fact that the factual bases for liability on the part of SIF must be determined in the first instance by the Commission, however, § 9-807(b)(2) provides that, if SIF is impleaded in a judicial review action pending in either a Circuit Court or the Court of Special Appeals, “the court shall (i) suspend further proceedings; and (ii) remand the case to the Commission for further proceedings to give [SIF] an opportunity to defend against the claim.” ⁷⁴⁶ The issue presented to us in this somewhat convoluted case is whether the mandate in § 9 — 807(b)(2) that the court, upon an impleading of SIF, suspend further proceedings and remand the case to the Commission, effectively withdraws jurisdiction from the court to do otherwise, and thus makes any order or judgment entered by the court in derogation of that direction a nullity, or simply directs the court in how to exercise its jurisdiction in that circumstance. In that latter event, which we shall hold to be the case, any order or judgment entered in defiance of that mandate, though wrong and subject to reversal or vacation on appeal, is not in excess of the court’s jurisdiction and is therefore effective unless and until reversed or vacated on appeal.

BACKGROUND In November, 1992, petitioner, Carole Carey, filed a workers’ compensation claim, alleging that on August 3, 1992, while in the employ of respondent, Chessie Computer Systems, Inc., she injured her back, neck, and knees when a chair she was about to sit on collapsed and tipped over, causing her to fall. The case was essentially put on hold for four years, while petitioner unsuccessfully pursued a Federal Employees Liability Act claim, apparently on the theory that her employer was CSX, a railroad subject to that Act. Not until the U.S. Court of Appeals for the Fourth Circuit affirmed a judgment that there was no Federal jurisdiction did petitioner pursue her State workers’ compensation claim, which was heard in November, 1996. Notwithstanding essentially uncontested evidence well-known to respondent that, in 1983, petitioner had sustained another work-related injury to her neck while working for CSX, that she had undergone surgery for that injury, and that she had made and settled a FELA claim based on the injury, respondent, though contesting whether she sustained an accidental injury in August, 1992, did not implead SIF.

On November 18, 1996, the Commission found that petitioner sustained a compensable accidental injury on August 3, 1992, and that, as a result of that injury, she was temporarily totally ⁷⁴⁷ disabled from August 4, 1992, to November 14, 1994. It made no finding with respect to the preexisting injury. On the findings it made, the Commission ordered respondent to pay petitioner $436 a week for that 27-month period, less wages actually paid, and to pay certain medical expenses in accordance with the Commission’s Medical Fee Guide. 2 Respondent sought judicial review of that order in the Circuit Court for Baltimore County in December, 1996. Ten months later, after discovery was completed, petitioner moved for summary judgment.

From the accompanying memorandum and petitioner’s argument at the hearing, it appears that the motion was based on the presumption of correctness of the Commission’s decision, supplemented by (1) respondent’s admission in discovery that petitioner had sustained an occupational accident on August 3, 1992, and (2) respondent’s failure, in response to discovery requests, to adduce any facts that would indicate that petitioner’s injuries and disability were not attributable to that accident. In response to that motion, respondent filed a motion to implead SIF, contending, for the first time, that SIF should be a party in the case. Noting LE § 9-807(b), respondent asked the court to “grant the Motion to Implead the Subsequent Injury Fund” and remand the case to the Commission. At a hearing on the motions, petitioner argued that, because the motion for summary judgment was filed first and because respondent failed to show any reason why it should not be granted, the court should grant that motion and then remand the case.

Petitioner urged that SIF would not be prejudiced by that approach — that it could make whatever defense it chose without regard to the judgment against the employer — • but that, as respondent already had the opportunity to present its case to the Commission, judicial economy would be served by confirming its liability. Respondent offered no substantive defense to the motion but contended that § 9 — 807(b) was jurisdictional in nature and that, upon the filing of the motion ⁷⁴⁸ to implead SIF, the court lost jurisdiction to do anything other than remand the case — that it was without jurisdiction to enter a summary judgment. The court, through Judge Turn-bull, disagreed with respondent and, treating the motion to implead SIF as just that — a motion that required a court response — decided that, because the motion for summary judgment was filed first, it would grant that motion and then grant the motion to implead. By ruling on the motions in that order, Judge Turnbull believed that there could be no jurisdictional impediment to his granting the summary judgment. 3 Respondent filed a timely motion under Maryland Rule 2-534 to alter or amend the judgment, asserting, for the first time in the judicial review proceeding, that there were genuine issues of material fact in dispute.

That motion was denied on December 11,1997. No appeal was taken from the judgment, and the case returned to the Commission pursuant to the order of remand. For whatever reason, no further proceedings were held before the Commission for two years. On January 18, 2000, following a hearing, the Commission entered an order declaring that respondent had failed to comply with the November 18, 1996 award and that the underpayment amounted to $38,866.

The order directed respondent to pay that amount plus a 20% penalty for nonpayment of the award (see LE § 9-728) and an attorney’s fee of $400. The transcript of the hearing has not been included in the record before us, al ⁷⁴⁹ though an incomplete copy appears in respondent’s brief. There is no indication of any participation by SIF. Indeed, the only issue apparently addressed by the Commission concerned respondent’s failure to comply with the 1996 award which, in turn, hinged on a dispute over the proper method of calculating the credit for wages paid to petitioner during the period of temporary total disability.

There is no indication that respondent made any effort to relitigate whether petitioner was entitled to benefits in the first instance or whether any part of the compensation should come from SIF. Respondent again sought judicial review in the Circuit Court for Baltimore County, of both the November, 1996, and the January, 2000, orders, thereby inaugurating a somewhat confusing set of proceedings, not all of which are fully documented in the record before us. 4 In March, 2000, petitioner moved to dismiss the petition for review of the November, 1996 order on the ground that that issue had been litigated in the earlier judicial review action, judgment had been entered against respondent, no appeal had been taken from the judgment, and the judgment was therefore conclusive. On May 31, respondent filed a motion for summary judgment, in which it took the position that its impleading of SIF in the earlier action served (1) to divest the Circuit Court of jurisdiction to enter the summary judgment against it, and (2) to render the Commission’s 1996 award itself a nullity. In its view, the impleading of SIF returned the case to its original ⁷⁵⁰ state, as if no order had ever been issued by the Commission and no judgment had been entered by the court.

Respondent sought a judgment that the original award of November, 1996, was of no effect and that no award could be entered until SIF and respondent were afforded an opportunity to defend on the merits at a further hearing before the Commission. Respondent also urged that the Commission, in its January, 2000 order, abused its discretion in assessing a penalty against respondent. The motion for summary judgment was apparently misfiled for a time. On June 1, the court, acting again through Judge Turnbull, granted the partial motion to dismiss, without a hearing and apparently without knowledge of the motion for summary judgment.

On June 5, SIF filed a notice with the clerk that it did not intend to participate in the action “since the issues to be heard do not involve [SIF].” Respondent filed a motion for reconsideration, to which petitioner filed a response, neither of which is in the record. All of this came before Judge Hennegan who, on June 21, 2000, entered an order granting respondent’s motion for summary judgment. In his order, which was flatly inconsistent with the order of Judge Turnbull entered three weeks earlier, Judge Hennegan declared that the Commission’s award of November, 1996 “became of no effect upon the impleader of [SIF].” He reversed the Commission’s order of January, 2000, and remanded the case “for further proceedings including, but not limited to compensability and benefits issues with full participation by all parties, including [SIF].” Petitioner appealed to the Court of Special Appeals, which vacated the summary judgment and remanded for further proceedings in the Circuit Court. Carey v. Chessie Computer, 141 Md.App. 228 , 784 A.2d 1151 (2001).

The intermediate appellate court concluded, in relevant part, that (1) Judge Turnbull’s order granting the motion to dismiss the petition for judicial review of the Commission’s November, 1996 order was interlocutory in nature, in that it did not dispose of all issues in the action, and therefore did not divest the court, through Judge Hennegan, of jurisdiction to act inconsistently ⁷⁵¹ and grant the motion for summary judgment, (2) the summary judgment entered by Judge Turnbull in 1997 was not entitled to res judicata status because, upon the impleading of SIF, the court lost jurisdiction to do anything other than remand the case and the summary judgment was therefore void ab initio, but (3) although the summary judgment was void, the impleading of SIF did not disturb the existing Commission order, which remained in effect, subject to modification by the Commission. In light of that last conclusion, which rendered erroneous Judge Hennegan’s determination that the 1996 Commission order was “of no effect,” the court remanded the case to the Circuit Court for further proceedings, to resolve whatever issues respondent chooses to raise with respect to both the 1996 and 2000 orders of the Commission. We granted ceiiio-rari to consider two of the rulings made by the Court of Special Appeals — whether Judge Hennegan had jurisdiction to act inconsistently with the ruling by Judge Turnbull and whether the summary judgment granted by Judge Turnbull in 1997 was entitled to preclusive effect. DISCUSSION We may dispose quickly of the first issue.

The second petition for judicial review raised a number of discrete issues. Respondent sought to litigate not only the validity of the 1996 order but also, in connection with the 2000 order, the calculation of credits against the 1996 award and the 20% penalty. The motion to dismiss granted by Judge Turnbull dealt only with the attack on the 1996 order and therefore did not adjudicate all of the claims in the action. The Court of Special Appeals was quite correct in pointing out that, under Maryland Rule 2-602(a), an order that does not dispose of all of the claims in the action, in their entirety, does not terminate the action as to any of the claims and “is subject to revision at any time before the entry of a judgment that adjudicates all of the claims by and against all of the parties.” There was no jurisdictional impediment, therefore, to Judge Hennegan’s revisiting, through the motion for summary judgment, the ⁷⁵² issue ruled upon by Judge Turnbull.

See Gertz v. Anne Arundel County, 339 Md. 261 , 661 A.2d 1157 (1995). The second, and principal, issue is more problematic, because of an apparent gap in the rules governing the procedure for impleading SIF at the Circuit Court level and the manner chosen by respondent to achieve that impleading. The parties and both lower courts have assumed throughout that respondent effectively impleaded SIF by merely filing a motion to do so. The entire debate over whether Judge Turnbull had the authority or jurisdiction to grant the summary judgment hinges on that assumption, for, unless SIF was effectively impleaded prior to the time the summary' judgment was entered on the docket, LE § 9-807(b), whether jurisdictional or not, was inapplicable and could serve as no impediment to the entry of the summary judgment.

Section 9-807(b) uses a technical term and a technical concept in providing for participation by SIF. It allows a party to “implead the Fund, as a party,” and speaks to what must happen when SIF is so “impleaded” while the case is pending in a Circuit Court or the Court of Special Appeals. When the case is pending before the Commission, the procedure for impleading SIF is governed by a Commission regulation (CO-MAR 14.09.01.13), which requires the impleading party to serve on SIF the original claim and any amendments,