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03/24/92 4934 v. DISTRICT COLUMBIA DEPARTMENT

March 24, 1992

4934, INC., D/B/A THE GODFATHER, AND LUMBERMEN'S MUTUAL CASUALTY COMPANY, PETITIONERS
v.
DISTRICT OF COLUMBIA DEPARTMENT OF EMPLOYMENT SERVICES, RESPONDENT; KENNETH W. SKEEN, INTERVENOR



Petition for Review of a Decision of the District of Columbia Department of Employment Services.

Before Terry, Schwelb, and Farrell, Associate Judges.

The opinion of the court was delivered by: Terry

TERRY, Associate Judge: In this workers' compensation case, petitioners seek review of an order of the Director of the Department of Employment Services (DOES) reversing in part a hearing examiner's compensation order. The examiner had ruled that although the injured employee, Kenneth Skeen, had compromised and settled his claim against a third party without obtaining written approval from petitioners (Skeen's employer and its insurance carrier) as required by D.C. Code § 36-335 (g) (1988), his failure to comply with that statute was excusable "because of the unique circumstances under which his injury occurred." However, the examiner awarded to petitioners a credit against future compensation in the amount of $30,000, the sum previously received by Skeen. On appeal, the Director of DOES held that because Skeen had no justiciable claim against the third party (the government of Brazil), written approval of the settlement was not required. The Director also ruled that petitioners were not entitled to the $30,000 credit.

We agree with the Director that Skeen had no colorable claim against the government of Brazil and was therefore not required to obtain his employer's approval of the so-called settlement. We also hold, however, that in order to prevent unjust enrichment, petitioners are entitled to a credit for the $30,000 which Skeen actually received from Brazil. Accordingly, we affirm the Director's decision in part and reverse it in part.

I

The facts of this case are undisputed. Kenneth Skeen was employed as a "floorman" or bouncer at a nightclub known as The Godfather, owned by petitioner 4934, Inc. *fn1 On November 29, 1982, while on duty at The Godfather, Skeen was shot in the abdomen, left hand, and right leg by the twenty-three-year-old son of the Brazilian ambassador to the United States. Skeen filed a workers' compensation claim and, in December 1983, was awarded temporary total disability benefits from the date of the shooting through March 2, 1983.

On February 17, 1984, Skeen received a check for $30,000 from the Brazilian government. He had previously filed suit against the government of Brazil, the ambassador, and the ambassador's son in the United States District Court for the District of Columbia. When that court dismissed Skeen's complaint, *fn2 he noted an appeal, which was pending at the time he received the $30,000. On February 23, six days after this payment was made, Skeen voluntarily dismissed his appeal.

Skeen later filed a second workers' compensation claim seeking additional disability benefits for the period beginning March 21, 1986, and continuing indefinitely. While the earlier claim had been based on Skeen's actual physical injuries, this one asserted that he was suffering from post-traumatic stress syndrome. The employer did not contest the medical aspects of Skeen's claim, which was supported by his own testimony and by the reports of two psychiatrists. However, because Skeen had received the $30,000 payment from Brazil, petitioners maintained that they had no further obligation to pay him workers' compensation benefits. They contended that he had violated D.C. Code § 36-335 (g) by failing to obtain their prior written approval of his settlement with the Brazilian government.

After a hearing, *fn3 a DOES hearing examiner issued an order requiring petitioners to make disability payments to Skeen, retroactive to March 6, 1986. The examiner found as a fact that "on February 17, 1984, accepted monies, in an amount less than the compensation to which he would be entitled, to compromise his claim against third parties responsible for his work injury." She further found that "no written approval of this arrangement was obtained from employer by at the time of, or prior to, acceptance of the monies" and that D.C. Code § 36-335 (g) "relieves employer of liability for compensation in excess of the amount so recovered." The examiner went on to hold, however, that Skeen was excepted from the written approval requirement of section 36-335 (g) because he "had good cause for his failure to obtain the requisite written approval. was barred from disclosure of the terms under which his claim was partially resolved because of the unique circumstances under which his injury occurred," namely, the fact that "the third-party responsible for his injuries and subsequent disability was immune from civil or criminal suit under the laws of the United States." Skeen was therefore awarded disability benefits continuing indefinitely from March 6, 1986, but "with a set-off credit for $30,000.00 received by on February 17, 1984."

On appeal the Director of DOES affirmed the examiner's award of disability benefits, but reversed the grant of a $30,000 credit to petitioners. *fn4 The Director wrote in her decision:

Article 37 of the Vienna Convention . . . provides that the members of the family of a diplomatic agent forming part of his household shall, if they are not nationals of the receiving state, enjoy the privileges and immunities specified in Articles 29-36. This includes immunity from civil action for damages. Accordingly, the Director concludes that since had no right, as a matter of law, to hold the assailant, the Ambassador, or the Federative Republic of Brazil liable for damages in this case, there was no third party action to compromise and there was no employer/carrier approval required. [Neither the] filing of an action, the voluntary payment of $30,000.00 by Brazil, nor the dismissal of [Skeen's] appeal creates liability for damages where all parties against whom recovery is sought enjoy immunity from liability due to sovereign or diplomatic immunity. It was, therefore, error as a matter of law, and the Director so concludes, for the Hearing Examiner to find that " compromised his claim against third persons for a sum certain without obtaining prior written approval from employer." Based on this Conclusion, the employer is not entitled to a set-off of the sum of monies received by at the U.S. Department of State on February 17, 1984. It is therefore unnecessary to determine employer's contention that the Hearing Examiner abused her discretion by excusing from the mandatory approval requirement of § 36-335 (g) of the Act. Since the Director has determined that did not compromise a claim for damages against a third-party tortfeasor, it follows that there was no employer approval required by § 36-335 (g) of the Act, and it is not necessary to determine whether was properly excused for his failure to comply with its provisions.

Petitioners now seek reversal of the Director's ruling.

II

Under long-settled principles of appellate review, we must defer to an administrative agency's findings of fact and affirm them if they are supported by substantial evidence in the record as a whole. See, e.g., Citizens Ass'n of Georgetown v. District of Columbia Zoning Commission, 402 A.2d 36, 41-42 (D.C. 1979); D.C. Code § 1-1510 (a)(3)(E) (1987). However, to the extent that an agency's decision involves an issue of law, it is entitled to less deference from a reviewing court because the court "has the greater expertise . . . ." Saah v. District of Columbia Board of Zoning Adjustment, 433 A.2d 1114, 1116 (D.C. 1981); see SEC v. Chenery Corp., 318 U.S. 80, 94 (1943) ("an order may not stand if the agency has misconceived the law"). In this case there are no factual issues, so that our review of the Director's ruling deals only with her legal analysis.

We agree with the Director's understanding of the doctrine of diplomatic immunity and its effect on Skeen's duty under D.C. Code § 36-335 (g). Section 36-335 provides in relevant part:

(a) If, on account of a disability or death for which compensation is payable under this chapter, the person entitled to such compensation determines that some person other than those enumerated in § 36-304 (b) is liable for damages, he need not elect whether to receive such compensation or to recover damages against such third person.

(g) If compromise with such third person is made by the person entitled to compensation or such representative of an amount less than the compensation to which such person or representative would be entitled under this chapter, the employer shall be liable for compensation as determined in subsection (f) of this section, only if the written approval of such compromise is obtained from the employer and his insurance carrier by the person entitled to compensation or such representative at the time of or prior to such compromise in a form and manner prescribed by the Mayor. [Emphasis added.]

The Director concluded that the examiner had erred in classifying the funds received by Skeen from the Brazilian government as a settlement or compromise governed by D.C. Code § 36-335 (g). She ruled that, as a matter of law, any recovery by Skeen from either his assailant or the government of Brazil was barred by diplomatic immunity. Because Skeen was not entitled to any recompense from a third party, the Director held, the transfer of $30,000 to him was a "voluntary payment" and therefore outside the purview of section 36-335 (g) Consequently, petitioners' prior approval of the payment was not required, and petitioners remained under an obligation to pay disability benefits to Skeen.

Petitioners contend that the $30,000 payment to Skeen constituted a settlement of his claim against the Brazilian government, and that Skeen's immediate dismissal of his appeal is proof that the claim was settled. Petitioners are correct in asserting that, as a general rule, forbearance from asserting a claim constitutes good consideration for compromise and settlement. Rommel v. West American Insurance Co., 158 A.2d 683, 685 (D.C. 1960); Saunders System Washington Co. v. Kuffner, 75 A.2d 136, 137 (D.C. 1950). There is, however, a limitation on that rule: the claim foregone must be "advanced in good faith and . . . not obviously absurd in fact or plainly unfounded in law. . . ." Magruder v. National Metropolitan Bank, 40 A.2d 828, 830 (D.C. 1945) (emphasis added); accord, Rommel, supra, 158 A.2d at 685; Saunders, supra, 75 A.2d at 137. We hold that Skeen's claim against the government of Brazil, the ambassador, and his son was plainly unfounded in law, so that Skeen's purported "settlement" of that claim was a legal nullity.

D.C. Code § 36-335 (g) applies only when a workers' compensation claimant settles a claim against a third party who is "liable for damages," id. § 36-335 (a), resulting from the same injury for which the claimant is seeking compensation. As a matter of law, neither the Brazilian government nor the actual assailant, the ambassador's son, was ever liable for such damages because diplomatic immunity shielded them absolutely from liability. *fn5 International law is part of the law of the land, Fatemi v. United States, 192 A.2d 525, 527 & n.3 (D.C. 1963), and diplomatic immunity has long been recognized and honored as a fundamental doctrine in international law. Indeed, the principles of diplomatic immunity are much older than the United States itself. See Davis v. Packard, 32 U.S. (7 Pet.) 276, 284 (1833).

But we need not base our holding solely on the sometimes amorphous precepts of unwritten international law, for in this case we have both a statute and a treaty on which to rely. 22 U.S.C. § 254d (1988) provides in part:

Any action or proceeding brought against an individual who is entitled to immunity with respect to such action or proceeding under the Vienna Convention on Diplomatic Relations . . . shall be dismissed. [Emphasis added.]

Article 31 of the Vienna Convention on Diplomatic Relations, April 18, 1961, 23 U.S.T. 3227, T.I.A.S. No. 7502, 500 U.N.T.S. 95, provides in part:

A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall also enjoy immunity from its civil and administrative jurisdiction. . . . [Emphasis added.]

See Caravel Office Building Co. v. Peruvian Air Attache, 347 A.2d 280, 282 (D.C. 1975) (diplomat cannot be sued for breach of lease); Hellenic Lines, Ltd. v. Moore, 120 U.S. App. D.C. 288, 290-291, 345 F.2d 978, 980-981 (1965) (ambassador is not subject to service of process). Article 37 of the Vienna Convention, moreover, provides that the privileges and immunities specified in Articles 29 through 36 extend to members of the family of a diplomatic agent, provided they are not nationals of the receiving state. Accord, Carrera v. Carrera, 84 U.S. App. D.C. 333, 335, 174 F.2d 496, 498 (1949). Thus the Director was correct in ruling that Skeen "had no right, as a matter of law," to hold the ambassador, the ambassador's son, or the government of Brazil liable for damages, and that there was therefore "no third party action to compromise and . . . no employer/carrier approval required."

Any possible doubt that the claim against Brazil and the ambassador's son had no legal foundation is dispelled by the testimony of the attorney who represented Skeen in the federal court proceedings. *fn6 In testifying before the hearing examiner in this case, that attorney admitted that he knew before filing suit that criminal charges against the ambassador's son "had been dropped because of diplomatic immunity." He said that he filed the suit as part of a "three-prong strategy," which also included "media attention" *fn7 and "political attention," to put "pressure" on Brazil. Finally, the attorney testified, the Brazilian government "offered a certain sum to end all of this. That is basically what it was." When asked whether he had "a right to pursue a claim against Brazil or the other defendants," the attorney replied that he "considered it as a moral claim," but conceded that it had "no legal basis." Given this and similar testimony, *fn8 we have no difficulty in concluding not only that Skeen's claim was "plainly unfounded in law," Magruder, supra, 40 A.2d at 830, but that Skeen's attorney knew it was plainly unfounded in law before he filed the suit in federal court.

III

We disagree, however, with the Director's decision to reverse the examiner's ruling that petitioners were entitled to a credit for the $30,000 payment. Although the government of Brazil had no legal obligation to pay Skeen anything at all, the facts make clear that the payment, albeit gratuitous, was directly related to the shooting and was undoubtedly intended to compensate Skeen to some extent for his injuries. That being the case, ...


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