All opinions are subject
to modification and technical correction prior to official publication in the
North Carolina Reports and North Carolina Court of Appeals Reports. In the
event of discrepancies between the electronic version of an opinion and the
print version appearing in the North Carolina Reports and North Carolina Court
of Appeals Reports, the latest print version is to be considered authoritative.
Filed:
15 January 2008
MICHAEL SWIFT,
Employee,
Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 013054
RICHARDSON SPORTS LTD
PANTHERS,
Employer,
and
LEGION INSURANCE COMPANY,
c/o CAMERON M. HARRIS & COMPANY,
Carrier,
Defendants.
Appeal
by Defendant from an Order entered 6 February 2007 by the North Carolina
Industrial Commission. Heard in the
Court of Appeals 29 November 2007.
R.
James Lore, for Plaintiff-Appellee.
Hedrick,
Eatman, Gardner & Kincheloe, L.L.P., by Hatcher B. Kincheloe and Shannon P.
Metcalf, for Defendant-Appellants.
ARROWOOD,
Judge.
Richardson
Sports d/b/a Carolina Panthers (Defendant) appeals from an Order of the North
Carolina Industrial Commission granting a motion by Michael Swift (Plaintiff)
for attorney’s fees. We reverse and
remand for additional findings.
The
factual and procedural history of this case is summarized as follows: Plaintiff, who was previously employed by
Defendant as a professional football player, suffered a compensable injury in
December 1999. At the time of
Plaintiff’s injury, Defendant’s workers’ compensation insurance was provided by
Legion Insurance Company (Legion).
Plaintiff applied for workers’ compensation benefits and a hearing was
conducted before a Deputy Commissioner in November 2002. On 10 March 2003 the Commissioner entered an
Opinion that awarded disability and medical benefits to Plaintiff, and
attorney’s fees to Plaintiff’s counsel.
Defendant and Legion appealed to the Full Commission. On 10 October 2003 the Commission issued an
Opinion and Award adopting the Opinion of the Deputy Commissioner with
modifications, and left the Commissioner’s award of attorney’s fees undisturbed. On 30 October 2003 the Commission filed an
amendment to its Opinion, for reasons unrelated to the issue of attorney’s
fees.
Defendant
and Legion appealed both the original and amended Opinions of the
Commission. This Court issued an
opinion on 5 April 2005. Following a
rehearing, it issued a superceding opinion on 6 September 2005, affirming in
part and reversing in part. Swift v.
Richardson Sports, Ltd., 173 N.C. App. 134, 620 S.E.2d 533 (2005) (Swift
I), disc. review denied, 360 N.C. 545, 635 S.E.2d 61 (2006). In Swift I, this Court overruled
Defendant’s arguments challenging the Commission’s “finding that plaintiff
sustained a compensable injury by accident arising out of and in the course of
his employment[,]” Id. at 138, 620 S.E.2d at 536, its admission of
certain evidence, and the Commission’s award of 299 weeks of workers’
compensation benefits. The Court
reversed the Commission’s ruling on the issue of Defendants’ entitlement to
credit for amounts paid after Plaintiff’s injury, and “remanded to the
Commission for the entry of an appropriate award which allows for a dollar-for-dollar
credit.” Id. at 143, 620 S.E.2d
at 539.
Regarding
attorney’s fees, this Court noted that the Commission awarded attorney’s fees
pursuant to N.C. Gen. Stat. §97-88.1, which requires that before awarding
attorney’s fees, “the Commission must determine that a hearing ‘has been
brought, prosecuted, or defended without reasonable ground.’” Id.
(quoting N.C. Gen. Stat. §97-88.1). The
Court held that the “opinion and award sheds no light whatsoever upon this
question[,]” and remanded “this issue to the Full Commission for the entry of
additional findings of fact and conclusions of law on the issue of attorney
fees[.]” Id. The opinion directed that the Commission
should “state the statute it relied upon in making the award and should make
the necessary findings of fact and conclusions of law supporting the
award.” Id.
In
sum, this Court upheld the Commission’s award of 299 weeks of workers’
compensation benefits, and rejected Defendants’ arguments regarding
compensability, admission of certain evidence, and the number of weeks’
compensation. The Court reversed the
Commission’s calculation of the credit to which Defendants were entitled and
its award of attorney’s fees.
At
the same time an arbitration proceeding was occurring under the NFL Collection
Barganing Agreement. Pursuant to this
arbitration and the settlement thereof, on 14 August 2006 the Tennessee
Insurance Guaranty Association (TIGA) paid Plaintiff and his counsel
$207,194.34. On 23 August 2006
Plaintiff filed a motion for attorney’s fees and for approval of Plaintiff’s
attorney’s fees contract, pursuant to N.C. Gen. Stat. §§97-88 and 97-90
(2005). On 6 February 2007 the
Commission approved Plaintiff’s attorney’s fees contract and awarded
Plaintiff’s counsel attorney’s fees of $69,064.78, pursuant to N.C. Gen. Stat.
§97-88. Defendant has appealed from
this order.
Standard
of Review
On
appeal from the Industrial Commission:
Our review of the
Commission’s opinion and award is limited to determining whether competent
evidence of record supports the findings of fact and whether the findings of
fact, in turn, support the conclusions of law. If there is any competent
evidence supporting the Commission’s findings of fact, those findings will not
be disturbed on appeal despite evidence to the contrary. However, “[t]he
Commission’s conclusions of law are reviewed de novo.”
Rose
v. City of Rocky Mount, 180 N.C. App. 392, 395, 637 S.E.2d 251, 254 (2006)
(quoting Ward v. Long Beach Vol. Rescue Squad, 151 N.C. App. 717, 720,
568 S.E.2d 626, 628 (2002)), disc. review denied, 361 N.C. 356, 644
S.E.2d 232 (2007) (citations omitted).
__________________
Preliminarily, we address Plaintiff’s argument that an employer’s liability under N.C. Gen. Stat. §97-88 is an issue that Defendant waived by failing to raise it on its previous appeal to this Court. In the Commission’s October 2003 Opinion, from which Defendant originally appealed, the Commission awarded attorney’s fees pursuant to N.C. Gen. Stat. §97-88.1 (2005). Accordingly, the applicability of N.C. Gen. Stat. §97-88 to the facts of this case was not pertinent to the appeal, and Defendant did not waive review by failing to raise it on its first appeal.
The
Commission’s Opinion awards attorney’s fees under N.C. Gen. Stat. §97-88, which
provides in pertinent part that:
If the Industrial
Commission at a hearing on review or any court before which any proceedings are
brought on appeal under this Article, shall find that such hearing or
proceedings were brought by the insurer and the Commission or court by its
decision orders the insurer to make, or to continue payments of benefits,
including compensation for medical expenses, to the injured employee, the
Commission or court may further order that the cost to the injured employee of
such hearing or proceedings including therein reasonable attorney’s fee to be
determined by the Commission shall be paid by the insurer as a part of the bill
of costs.
“This
Court reviews the Commission’s ruling on a motion for attorney’s fees for an
abuse of discretion.” Cox v. City of
Winston-Salem, 171 N.C. App. 112, 119, 613 S.E.2d 746, 750 (2005) (citing Taylor
v. J.P. Stevens Co., 307 N.C. 392, 394, 298 S.E.2d 681, 683 (1983)). However, although the Commission acts in its
discretion in deciding whether to award attorney’s fees under N.C. Gen. Stat.
§97-88, its Opinion must contain sufficient findings of fact for this Court to
resolve appellate issues. Hodges v.
Equity Grp., 164 N.C. App. 339, 347, 596 S.E.2d 31, 47 (2004) (“As the
Commission did not render any findings regarding [an issue pertinent to
attorney’s fees], this cause must be remanded to the Commission for further findings
of fact and an entry of attorney’s fees award reflective of [the Commission’s
findings on the issue.]”
In the instant case, the Commission’s Opinion stated, in relevant part, the following:
The Full Commission
filed an Opinion and Award in the above captioned case . . . after the
defendant appealed the award of the Deputy Commissioner below. . . . [A]n amended Opinion and Award was entered
for the Full Commission on October 30, 2003.
The case was appealed by the defense to the North Carolina Court of
Appeals which issued its [first] decision on April 5, 2005[,] . . . [and a
superceding] decision on September 6, 2005. . . . The case was remanded back to the Court of Appeals which in turn
remanded the case to the Industrial Commission.
Plaintiff[] filed a
motion for attorney’s fees and costs pursuant to N.C. Gen. Stat. §97-88. Plaintiff’s attorney submitted itemization
of 187.5 total hours spent on appellate issues in this case. Considering the fact that the defense
appealed and lost on both the issue of compensability, degree of disability and
entitlement to medical compensation, further considering the risk of defense of
such an appeal and the substantial time spent in defending the risk along with
the skill and expertise of the plaintiff’s counsel good cause exists for taxing
the defense with plaintiff’s attorney’s fees otherwise due to be paid by the
plaintiff.
In the Commission’s
discretion, plaintiff’s counsel is allowed reasonable attorney’s fees for
defendants’ appeal of this matter and plaintiff’s motion for attorney’s fees is
hereby GRANTED. In light of the
circumstances of this case, as well as the nature and extent of services
provided, the Commission in its discretion finds that a reasonable attorney’s
fee to be taxed is $69,064.78. Therefore,
pursuant to N.C. Gen. Stat. §97-88, defendants shall pay plaintiff a reasonable
attorney’s fee of $69,064.78 as part of the costs of the appeal.
Plaintiff also has moved
for Commission approval of a fee contract entered into by the parties[, that] .
. . provides, from the date the record was filed at the Court of Appeals, for
an attorney’s fee of %33 1/3 of compensation awarded. This fee contract is reasonable under these circumstances and is
hereby APPROVED and an attorney’s fee of 33 1/3% of the benefits payable to
plaintiff is awarded to plaintiff’s counsel.
The
Commission’s Opinion adequately finds certain essential facts. It states its statutory basis (§97-88);
enumerates factors the Commission considered in exercising its discretion
(counsel’s skill, the time spent, the outcome of Defendant’s appeal); and
specifies that attorney’s fees are awarded for appellate costs
(Plaintiff’s contract provides for attorney’s fees “from the date the record on
appeal was filed.”). Nonetheless, we
conclude that the Commission’s findings and conclusions are insufficient to
allow us to resolve several other appellate issues presented by the facts of
this case.
For example, Defendant argues that §97-88 did not authorize the Commission to award attorney’s fees, on the grounds that the statute requires the Commission to find that the proceedings at issue were “brought by the insurer.” It appears from the record that attorney’s fees were awarded on remand from this Court of an appeal taken by Defendant and its insurer, Legion from the Commission’s Opinion and Award of October 2003. However, the Opinion fails to include the specific finding required under §97-88 that “that such hearing or proceedings were brought by the insurer[.]”
Another
issue raised on appeal is the identity of the entity ordered to pay attorney’s
fees. N.C. Gen. Stat. §97-88 authorizes
the Commission to tax attorney’s fees to the insurer. In the instant case, the Commission ordered “defendants” to pay
the attorney’s fee. The Commission’s
use of the plural form, defendants, suggests that the Commission
intended to order more than one defendant to pay fees. However, there are three possible
“defendants” to whom the Commission might have been referring: Defendant,
Legion, and TIGA.
Defendant
and Legion are listed as party defendants on the case caption. However, Legion was in liquidation at the
time the Commission’s Opinion was entered and proceedings against it were
therefore stayed. TIGA appears to have
paid for Legion’s liability in this case, but was not listed as a party on the
case caption. Defendant argues that
after proceedings against Legion were stayed “there was only one defendant” and
“no viable ‘insurer’ to pay an award of attorney’s fees pursuant to N.C. Gen.
Stat. §97-88[,]” which necessarily rendered the Commission’s order one
“compelling the payment of Plaintiff’s attorney’s fees by the employer.” However, the record indicates that, although
TIGA is no longer listed as a formal party on the case caption, TIGA paid for
Legion’s liability upon Legion’s insolvency and thus may have functioned as a
“viable insurer.”
Following
the Commission’s entry of an Opinion and Award in October 2003, Defendants
filed notice of appeal on 13 November 2003.
The notice of appeal was filed by Defendant, Legion, and TIGA, which was designated in the case
caption as “also appearing on behalf of Defendant-appellants.” On 10 February 2004 Defendant filed a motion
asking to add TIGA as an additional party.
In its motion, Defendant stated that Legion had gone into liquidation
proceedings, but that TIGA had “notified defense counsel of its agreement to
fund this claim[.]” The Commission
granted Defendant’s motion on 11 February 2004, adding TIGA as a party to the
appeal. However, on 19 February 2004 Defendant
filed a motion for reconsideration of their motion, asking to remove TIGA as a
named party. Defendant informed the
Commission that TIGA had “agreed to accept the financial responsibility of this
claim” but asserted that TIGA “cannot be named as a specific party to this
lawsuit. In Tennessee, the case caption
always remains as is, with the insolvent carrier listed as the carrier.” Thus, Defendant’s request to the Commission
represented that, although TIGA would continue to provide coverage on the risk,
certain technical requirements of Tennessee statutory law required TIGA to be
removed from the case caption. However,
the Commission’s summary grant of Defendant’s request fails to include any
findings or conclusions about TIGA’s relationship to Legion, or why the
Commission granted Defendant’s request to remove TIGA as a named party.
In
support of its assertion that TIGA could not be listed as a party to the
appeal, Defendant cited only Tennessee Code Ann. §56-12-107(c)(1) and (2)
(2000), which provides in pertinent part:
(1) Any action
relating to or arising out of this part against the association shall be
brought in a court in this state. Such
court shall have exclusive jurisdiction over any action relating to or arising
out of this part against the association[.]
(2) Exclusive venue in
any action brought against the association is in the circuit or chancery court
in Davidson County; provided, that the association may waive such venue as to a
specific action.
(emphasis
added). Defendant asserted that this
statute “prohibits [TIGA] from being named as a party to a suit unless the
venue of the suit is in Davidson County, Tennessee.” But, Defendant did not articulate why its appeal from an award of
workers’ compensation benefits in North Carolina constituted an action
“relating to or arising out of [the Tennessee Insurance Guaranty Statute]” or
was an action brought “against the association[.]” Nor does the Opinion contain findings in this regard. Moreover, we note that under Tenn. Code Ann.
§56-12-107(b)(4) (2000), TIGA has the “right to intervene as a party before any
court that has jurisdiction over an insolvent insurer as defined by this
part[.]”
Additionally,
cases from other jurisdictions have identified TIGA as a party in cases not
brought in Tennessee. Rhulen Agency,
Inc. v. Alabama Ins. Guar. Ass’n, 896 F.2d 674 (2d Cir. 1990); General
Elec. Co. v. Cal. Ins. Guar. Ass’n, 997 S.W.2d 923 (Tex. Ct. App. 1999); Colaiannia
v. Aspen Indem. Corp., 885 P.2d 337,
(Colo. Ct. App. 1994); Maytag Corp. v. Tennessee Ins. Guaranty Ass’n,
79 Ohio App. 3d 817, 608 N.E.2d 772 (1992).
Accordingly, without findings and conclusions, Defendant’s bare citation
of the referenced statute does not clarify the basis for the Commission’s
granting Defendant’s request to remove TIGA from the case caption. This issue is significant, because much of
Defendant’s argument rests on the proposition that TIGA had to be
removed as a named party.
Defendant’s
arguments also assume that, upon its removal as a named party on the case
caption, TIGA could no longer be considered a viable “insurer” in the
case. However, Defendant cites no
authority for this proposition, and the record shows that TIGA continued to provide
risk coverage for Defendant, notwithstanding its removal from the case
caption. On 14 August 2006 TIGA issued
a check payable to Plaintiff in the amount of $207,194.34. The statement accompanying the check lists
Defendant as “insured” and Plaintiff as “claimant.”
As
a Guaranty Association, TIGA may have been liable for payment of attorney’s
fees, and the Commission may have meant Legion and TIGA as the “defendants”
referenced in its Opinion. Generally:
[Guaranty Associations]
are unincorporated associations created in various states throughout the
country pursuant to their state statutes based upon the Post-Assessment
Property and Liability Insurance Guaranty Association Model Act (the Model
Act). The purpose of the Model Act is
to protect policyholders and claimants . . . against the insolvency of a local
insurer[.] . . . The Guaranty Associations are comprised of all insurance
companies who are authorized to write casualty and property insurance policies
in the particular state.
Rhulen
Agency,
896 F.2d at 676. Regarding TIGA, the
Tennessee Court of Appeals has stated:
TIGA is a creature of
statute established for the express purpose of avoiding “financial loss to
claimants or policyholders because of the insolvency of an insurer.” . . . The
statutes also provide that TIGA “be deemed the insurer to the extent of its
obligation on the covered claims and to such extent shall have all rights,
duties, and obligations of the insolvent insurer as if the insurer had not
become insolvent.”
Tenn.
Ins. Guar. Ass’n v. Ctr. Ins. Co., 2005 Tenn. App. lexis 340 (Tenn. Ct. App. 2005) (quoting Tenn. Code Ann. §§56-12-102,
and 107(a)(2) (2000)). Thus, the
“guaranty association is designed to place claimants in the same positions they
would have been in if the liability insurer had not become insolvent. Once an insurer is declared insolvent, the
association steps into the shoes of the insurance company with all of the
rights, duties and obligations of the insolvent insurer to the extent those
obligations are defined by statute.
TIGA is deemed to be the insurer to the extent of its statutory
obligation on the claim.” Maytag
Corp, 79 Ohio App. 3d at 821, 608 N.E.2d at 775 (citing Luko v. Lloyd’s
of London, 393 Pa.Super. 165, 573 A.2d 1139 (1990); and Washington Ins.
Guar. Assn. v. Mullins, 62 Wash. App. 878, 816 P.2d 61 (1991)).
N.C.
Gen. Stat. §58-48-5 (2005), states in pertinent part:
The purpose of [the N.C.
Insurance Guaranty Association] is to provide a mechanism for the payment of
covered claims under certain insurance policies . . . and to avoid financial
loss to claimants or policyholders because of the insolvency of an insurer[.]
Accordingly,
under either Tennessee or North Carolina law, it is possible that the
Commission intended to impose the attorney’s fees on the insurer and used the
plural form “defendants” to encompass both the original insurer, Legion, as
well as TIGA, the entity that assumed responsibility for Legion’s
obligations. However, the Commission
failed to make findings or conclusions regarding (1) the basis for the
Commission’s allowing the removal of TIGA from the case caption; or (2) TIGA’s
liability for attorney’s fees.
The
parties also present arguments on whether an employer can ever be liable for
payment of attorney’s fees under N.C. Gen. Stat. §97-88. Plaintiff argues that North Carolina case
law holds that if an employer fails to maintain workers’ compensation insurance
at all times, it becomes liable for obligations that would normally fall to the
insurer. For example, in Roberts v.
Coal Co., 210 N.C. 17, 21, 185 S.E. 438, 440 (1936), the North Carolina
Supreme Court considered whether “the employer under the Workmen’s Compensation
Act should be relieved of liability for the compensation to his injured
employee by reason of the insolvency of his insurance carrier” and concluded
that:
The liability of the
employer under the award is primary.
He, by contract, may secure liability insurance for his protection, but
his obligation to the injured employee is unimpaired. . . . “Into the construction
of every act must be read the purpose of the Legislature, and the underlying
purpose in this instance . . . was to give relief to workmen. This relief [is] . . . charged against the
employer.” . . . The statute requires
the employer to insure and keep insured his liability[.] . . . [M]anifestly the
insolvency of the insurer should not relieve the insured, nothing else
appearing.
Id. at 21, 185 S.E. at 441
(quoting C. & O. R. R. v. Palmer, 149 Va. 560, 572, 140 S.E. 831,
835-36 (1927)). On the other hand,
Defendant relies on the statutory language specifying that attorney’s fees be
paid by the “insurer.” However, because
the Commission does not state clearly whether it is imposing attorney’s fees on
TIGA or Defendant we do not reach the issue of whether Defendant could be
liable for attorney’s fees.
We
note that Defendant also argues that the Commission erred by entering its
Opinion and Award in violation of a stay order. Again, the relevance of this argument depends on whether the
Commission was imposing attorney’s fees against Legion, TIGA, Defendant, or
more than one of these. We note,
however, that in Tucker v. Workable Company, 129 N.C. App. 695, 501
S.E.2d 360 (1998), the Commission awarded Plaintiff workers’ compensation
benefits, attorney’s fees, and a penalty against Defendant’s insolvent
insurer. Defendant appealed and argued
that the Commission’s award was entered in violation of a previously issued
stay order that stayed “all litigation and other proceedings against
[Defendant’s insolvent insurer.]” This
Court held:
This argument is without
merit because the Full Commission did not decide issues relating to defendant
employer’s insolvent insurance carrier IAEA.
The only issues determined by the Full Commission were those between plaintiff
employee and defendant employer.
Additionally, the Full Commission could proceed against the employer
Able Body because . . . even though the insurance carrier is insolvent, the
employer remains primarily liable to an employee for a workers’ compensation
award . . . [and] “his obligation to the injured employee is unimpaired.” . . .
Thus, the Full Commission did not violate the stay order[.]
Id. at 699-700, 501 S.E.2d
at 364 (quoting Roberts, 210 N.C. at 21, 185 S.E. at 440).
We
conclude that the Commission’s Order for payment of attorney’s fees must be
reversed and remanded for additional findings and conclusions addressing (1)
whether the insurer was a party to the appeal from the Deputy Commissioner; (2)
the basis for the Commission’s granting Defendant’s request to remove TIGA from
the case caption; (3) TIGA’s liability for attorney’s fees following the
insolvency of Legion; (4) the identity of the entities the Commission ordered
to pay attorney’s fees; and (5) TIGA’s relationship to Defendant and to the
insolvent insurer.
Defendant
has also argued that the Commission erred by failing to conduct an evidentiary
hearing. On remand, the Commission
should conduct a hearing, if necessary, in order to resolve any genuine issues
of fact arising from the issues presented.
Reversed
and Remanded.
Judges
TYSON and JACKSON concur.