Home Indemnity Co. v. Pate
Home Indemnity, a worker's compensation carrier, made payments to employee Charles Riddle, who subsequently sued Allied Chemical Corporation in federal court. Home Indemnity's attempt to intervene in the federal suit to assert its subrogation lien was denied as untimely. Riddle and Allied Chemical settled without addressing Home Indemnity's claim. Consequently, Home Indemnity filed a state court suit against Riddle, Allied Chemical, attorney Gordon Pate, and his law firm, alleging conversion for disbursing funds without acknowledging the lien. Pate's motion for summary judgment, citing res judicata/collateral estoppel and good faith reliance on the federal judgment, was granted by the trial court. The appellate court reversed and remanded, ruling that Home Indemnity was not barred by res judicata or collateral estoppel since it was not a party to the federal judgment on the merits of its claim, and that good faith is not a defense to conversion.