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opinions are subject to modification and technical correction prior to official
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version is to be considered authoritative.
NO.
COA06-1195-2
NORTH CAROLINA COURT OF APPEALS
Filed:
6 January 2009
JACINDA BURTON,
ADMINISTRATRIX OF
THE ESTATE OF MICHAEL C. BURTON,
Plaintiff,
v. Granville County
No.
04 CVS 562
PHOENIX FABRICATORS AND ERECTORS,
INC. and DAVIS, MARTIN, POWELL &
ASSOCIATES, INC.,
Defendants.
________________________________
DONNA DAVIS, ADMINISTRATRIX OF
THE ESTATE OF CHARLES M. DAVIS,
Plaintiff,
v. Granville County
No.
04 CVS 563
PHOENIX FABRICATORS AND ERECTORS,
INC. and DAVIS, MARTIN, POWELL &
ASSOCIATES, INC.,
Defendants.
Appeal
by defendant from orders entered 16 May 2006 by Judge W. Osmond Smith, III in
Granville County Superior Court. This
case was originally heard in the Court of Appeals 27 March 2007. Upon remand by order from the North Carolina
Supreme Court filed 10 April 2008.
Price, Smith,
Hargett, Petho & Anderson, by William Benjamin Smith, for plaintiffs-appellees.
Carruthers &
Roth, P.A., by Kenneth R. Keller, J. Patrick Haywood, and William J. McMahon,
IV, for defendant-appellant Phoenix Fabricators and Erectors, Inc.
GEER, Judge.
Defendant
Phoenix Fabricators and Erectors, Inc. (“Phoenix”) appeals from the denial of
its motions to dismiss the complaints of plaintiffs Jacinda Burton and Donna
Davis pursuant to Rule 12(b)(1) of the Rules of Civil Procedure. Burton and Davis brought wrongful death actions alleging that the
deaths of their husbands, who were employees of Phoenix’s
Indiana office, were the result of intentional
tortious conduct while the husbands were working for Phoenix
in North Carolina. The critical issue for this appeal is whether
Indiana or North Carolina
law applies. Under Indiana
law, because Burton and Davis
received workers’ compensation benefits, they would be barred from bringing a
civil action against their employer, Phoenix. Plaintiffs, however, contend that North
Carolina law applies and allows them to proceed under Woodson v. Rowland,
329 N.C. 330, 407 S.E.2d 222 (1991).
We
agree with Phoenix that Braxton v. Anco
Elec., Inc., 330 N.C. 124, 409 S.E.2d 914 (1991), mandates that we apply Indiana law because plaintiffs’ husbands were covered by Indiana’s Workers’
Compensation Act. Accordingly, we must
hold that the trial court erred in denying Phoenix’s motions to dismiss for lack of
subject matter jurisdiction, and we reverse.
Facts
Michael
Burton and Charles Davis, plaintiffs’ decedents, were killed on 30 October 2002
while helping construct a water tower on property owned by Granville County. Both men were employed by Phoenix,
an Indiana corporation, worked out of the Indiana office, and were covered by Indiana workers’ compensation.
Plaintiffs’
complaint alleges that decedents were assigned to work on the exterior of the
water tower at a height of over 80 feet above the ground without having any “fall
arrest protection.” The men were knocked
from the structure and fell to their deaths after a crane, which was lifting a
section of the water tower into place, failed, causing the section being lifted
to strike the previously erected portion of the tower.
On or
about 30 October 2002, Amerisure Insurance Company, the workers’ compensation insurance
carrier for Phoenix, filed “First Report of Employee Injury, Illness” forms for
both decedents with the Workers’ Compensation Board for the State of
Indiana. One month later, Jacinda Burton
signed an “Agreement to Compensation Between the Dependents of Deceased
Employee and Employer.” The record does
not contain a similar document signed by Donna Davis. Thereafter, Amerisure commenced the payment
of benefits to the Estates of Michael Burton and Charles Davis in accordance
with the Indiana Worker’s Compensation Act.
As of 19 January 2006, Amerisure had paid $312,270.47 in medical
expenses to the Estate of Charles Davis and $487.00 in medical expenses to the
Estate of Michael Burton. Additionally,
Amerisure has made weekly death benefit payments of $588.00 to both
plaintiffs. As of 25 January 2006,
Jacinda Burton had received $104,284.00 and Donna Davis had received
$104,784.00 in death benefit payments.
The death benefit payments will continue for a total of 500 weeks until
each plaintiff has received $294,000.00.
On 10
June 2004, plaintiffs filed companion tort actions in Granville County Superior
Court against three defendants: Phoenix; Granville County; and Davis, Martin, Powell &
Associates, one of the project’s contractors.
Plaintiffs alleged that Phoenix “intentionally engaged in conduct with
regard to lack of tie off protection which was substantially certain to cause
injury or death and said conduct was intentional, gross, willful, wanton, and
recklessly negligent.” As for defendants
Granville County
and Davis, Martin, Powell & Associates, plaintiffs alleged negligence
consisting of a failure to certify the safety of Phoenix’s equipment and work practices and
breach of a non-delegable duty of providing a safe work site.
All of
the defendants filed motions for summary judgment. Subsequently, Phoenix also filed motions to dismiss
plaintiffs’ actions pursuant to Rule 12(b)(1), asserting that the trial court
lacked subject matter jurisdiction. The
trial court granted summary judgment for defendants Granville
County and Davis,
Martin, Powell & Associates, but denied Phoenix’s motions for summary judgment and
for dismissal.
Phoenix filed an appeal from the denial of its
Rule 12(b)(1) motion that this Court dismissed as improperly interlocutory. See Burton v. Phoenix Fabricators &
Erectors, Inc., 185 N.C. App. 303, 648 S.E.2d 235 (2007). Our Supreme Court allowed Phoenix’s
petition for discretionary review of this decision for the sole purpose of
reversing this Court’s dismissal based on the Court’s determination that the
denial of Phoenix’s
motions affected a substantial right.
The Supreme Court remanded for consideration of the merits of Phoenix’s appeal. Burton
v. Phoenix Fabricators & Erectors, Inc., 362 N.C. 352, 661 S.E.2d 242
(2008).
Discussion
When
considering a motion to dismiss for lack of subject matter jurisdiction, a
trial court is not limited to the pleadings, “‘but may review or accept any
evidence, such as affidavits, or it may hold an evidentiary hearing.’” Smith v. Privette, 128 N.C. App. 490,
493, 495 S.E.2d 395, 397 (quoting 2 James W. Moore et al., Moore’s Federal
Practice, §12.30(3) (3d ed. 1997)), appeal dismissed, 348 N.C. 284,
501 S.E.2d 913 (1998). On appeal from
the denial of a motion to dismiss for lack of subject matter jurisdiction, this
Court applies a de novo standard of review.
Id. (“An appellate court’s review of an order of the trial court
denying or allowing a Rule 12(b)(1) motion is de novo, except to the
extent the trial court resolves issues of fact and those findings are binding
on the appellate court if supported by competent evidence in the record.”).
Phoenix claims that plaintiffs, by electing to
accept benefits under Indiana’s
Workers’ Compensation Act, are barred from pursuing this action under the
exclusive remedy provision of that Act.
For that reason, Phoenix argues, North Carolina courts
lack subject matter jurisdiction over these actions. See McAllister v. Cone Mills Corp.,
88 N.C. App. 577, 579, 364 S.E.2d 186, 188 (1988) (“The issue of whether
plaintiff’s claim is barred by the Workers’ Compensation Act is a question of
subject matter jurisdiction.”).
Plaintiffs
argue, however, that the rule of lex loci applies to their tort
action. See Boudreau v.
Baughman, 322 N.C. 331, 335, 368 S.E.2d 849, 854 (1988) (“For actions
sounding in tort, the state where the injury occurred is considered the situs
of the claim. . . . This Court has
consistently adhered to the lex loci rule in tort actions.”). According to plaintiffs, North Carolina law governs because it is the
state where the injury occurred.
Our
Supreme Court addressed an analogous situation in Braxton, 330 N.C. at
125, 409 S.E.2d at 914, in which a North Carolina
resident, employed by a North Carolina
plumbing subcontractor, was injured while working on a construction site in Virginia due to the
alleged negligence of an electrical subcontractor. The plaintiff received benefits pursuant to North Carolina’s workers’ compensation statute and also
filed suit in North Carolina
against the electrical subcontractor, seeking punitive and compensatory
damages. Id. at 125-26, 409 S.E.2d at 914-15. Under Virginia
workers’ compensation law, the action was barred, but under North Carolina law, it was not. Id.
at 126, 409 S.E.2d at 915. The Supreme
Court observed that the appeal presented it with a “novel question of first
impression” regarding which State’s law to apply. Id.
The
Court first acknowledged that the principal set out in Boudreau applied,
and Virginia
law governed “as to the tort law controlling the rights of the litigants in the
lawsuit allowed by this decision . . . .”
Id.
at 126-27, 409 S.E.2d at 915.
Nevertheless, the Court held that a different rule applied “in regard to
the ‘exclusive remedy bar’ imposed by statute . . . .” Id.
at 127, 409 S.E.2d at 915. The Court
held: “To determine whether the law says that plaintiff, in return for
collecting workers’ compensation benefits, has traded away his right to sue in
this situation, we look to the law which guarantees his receipt of those
benefits, which is the law of North
Carolina.” Id.
In
other words, the law of the state providing the workers’ compensation benefits
determines whether the workers’ compensation statute of that state provides an
exclusive remedy barring additional recovery through a tort action. The Court explained:
Public
policy considerations point to the same result.
All the parties are North
Carolina citizens; the plaintiff’s contract of
employment and the contracts giving rise to the workers’ compensation coverage
were signed here; and the plaintiff was receiving benefits under our workers’
compensation statute. Under these
circumstances, North Carolina’s
interests in implementing the protections afforded by our statute are
paramount.
Id., 409 S.E.2d at 916. As a result, even though the injury in Braxton
occurred in Virginia, the Supreme Court held
that “the workers’ compensation law of North
Carolina governs the question of whether this action
has been precluded by statute . . . .” Id. at 129, 409
S.E.2d at 916.
We are
bound by Braxton. In this case,
there is no dispute that plaintiffs’ husbands were covered by the Indiana
Workers’ Compensation Act and, indeed, plaintiffs have each received
significant amounts in workers’ compensation benefits as beneficiaries of the
particular bargain that Indiana
struck between employers and employees.
Since the law of Indiana guarantees the
deceased employees’ receipt of workers’ compensation benefits, Braxton
requires that we look to the law of Indiana to
determine whether plaintiffs’ claims are precluded by Indiana’s workers’ compensation statutes.
Indiana’s
Workers’ Compensation Act, similar to North
Carolina’s, contains an exclusive remedy provision
that bars employees’ actions for accidental injury or death. See Ind. Code §22-3-2-6 (2006). Indiana
courts have, however, interpreted this exclusive remedy provision as preserving
employees’ rights to bring actions for intentional torts against their
employers. See Baker v.
Westinghouse Elec. Corp., 637 N.E.2d 1271, 1273 (Ind. 1994) (“[W]e hold that the [workers’
compensation] act itself does not include employers’ intentional torts within
its coverage. The exclusivity provision
is expressly limited to personal injury or death . . . which occurs ‘by
accident.’ . . . [T]he intentional torts of an employer are necessarily beyond
the pale of the act.”).
Nevertheless,
the Indiana Court of Appeals held in Williams v. Delta Steel Corp., 695
N.E.2d 633, 635 (Ind. Ct. App.) (internal
citations omitted), transfer denied, 706 N.E.2d 174 (Ind. 1998), that “an employee, by accepting
and receiving compensation under the Act, concedes that the injury was
accidental in nature . . . . Thus, the
employee is precluded from repudiating that position by claiming that his injury
was not accidental but was instead caused by the employer’s intentional acts.” The court observed that the Workers’
Compensation Act allows an employee to recover both compensation benefits and
tort damages “only in situations in which the action at law is brought against
a third person. In all other cases, an
employee may recover at law, if such an action is maintainable, or under the
Act, but he may not recover under both.”
Id.
at 636 (internal citation omitted). The
court, therefore, affirmed the trial court’s order dismissing the action for
lack of subject matter jurisdiction. Id. at 637. See also Bailor v. Salvation Army,
854 F. Supp. 1341, 1355 (N.D. Ind. 1994) (“Once Bailor collected her worker’s
compensation payments she relinquished her option to collect tort damages
against any party liable for her worker’s compensation award.”), aff’d on
other grounds, 51 F.3d 678 (7th Cir. 1995).
In
this case, application of Indiana law compels
the conclusion that plaintiffs’ action is barred by the Indiana workers’ compensation exclusive
remedy provision. It is undisputed that
plaintiffs accepted workers’ compensation benefits pursuant to Indiana’s workers’
compensation statute. Although the trial
court’s orders denying Phoenix’s motions to
dismiss found that plaintiffs have “not signed any final settlement agreement
indicating consideration for or release of any other claims” against Phoenix, this fact is inconsequential under Indiana law. Under Williams, an employee elects his
or her remedy “by accepting and receiving compensation under the Act . . . “ 695 N.E.2d at 635. Since plaintiffs accepted benefits under Indiana’s Workers’ Compensation Act, they are precluded,
under Indiana
law, from bringing an intentional tort claim.
The Workers’ Compensation Act now “affords the exclusive remedy” for
plaintiffs against Phoenix. Id.
at 637.
Plaintiffs,
however, contend Braxton is a “results oriented” opinion that seeks to
maximize North Carolina
employees’ rights rather than to establish a conflict of laws rule regarding
exclusive remedy provisions. Insofar as Braxton
is susceptible of a reading that establishes such a rule, plaintiffs suggest
that Braxton is an anomalous departure from the well-established
doctrine of lex loci. Regardless,
only the Supreme Court may revisit Braxton. We are bound by Braxton and nothing in
that opinion suggests that its rule applies only when it would expand the
remedies available to the plaintiff.
Moreover,
Braxton and our application of Braxton to the facts of this case
are consistent with the weight of authority.
As Professor Larson has stated, “[i]t is generally held that, if a
damage suit is brought in the forum state by the employee against the employer
or statutory employer, the forum state will enforce the bar created by the
exclusive-remedy statute of a state that is liable for workers’ compensation as
the state of employment relation, contract, or injury.” 9 Arthur Larson & Lex K. Larson, Larson’s
Workers’ Compensation Law §144.01 (2008).
Failure to enforce the exclusive remedy defense of a foreign state,
Professor Larson observes, can result in “irremediable harm to the employer . .
. . Because of this [], then, a foreign
exclusive-remedy defense to common-law suit against the employer will usually
be honored . . . .” Id.
The Restatement
(Second) of Conflict of Laws §184 (1971) reaches the same conclusion: “Recovery
for tort or wrongful death will not be permitted in any state if the defendant
is declared immune from such liability by the workmen’s compensation statute of
a state under which the defendant is required to provide insurance against the
particular risk and under which (a) the plaintiff has obtained an award for the
injury . . . .” Comment (b) states the
rationale for this rule, echoing the public policy concerns identified in Braxton:
It is thought unfair that a person who is
required to provide insurance against a risk under the workmen’s compensation
statute of one state which gives him immunity from liability for tort or
wrongful death should not enjoy that immunity in a suit brought in other
states. Also to deny a person the
immunity granted him by a workmen’s compensation statute of a given state would
frustrate the efforts of that state to restrict the cost of industrial
accidents and to afford a fair basis for predicting what these costs will
be. All states are sympathetic with the
policies underlying workmen’s compensation, and all states grant certain
persons immunity from liability for tort or wrongful death, although the
provisions of the various statutes do differ in matters of detail. For all of these reasons, a state will not
hold a person liable for tort or wrongful death under the circumstances stated
in the present rule.
Under
the rule of this Section, a defendant will be accorded immunity from tort or
wrongful death liability if he is given such immunity by the workmen’s
compensation statute of any state under which he is required to provide
insurance against the particular risk and under which the plaintiff has already
obtained an award for the injury. A
person who accepts an award under the workmen’s compensation statute of a given
state may justly be held bound by the provisions of that statute insofar as
immunity from tort and wrongful death liability is concerned.
Id. cmt. b.
In
this case, denying Phoenix the benefit of Indiana’s exclusive remedy provision would, in the words
of the Restatement, “frustrate the efforts” of Indiana to restrict the costs of industrial
accidents. It would add a layer of
unpredictability to a workers’ compensation framework designed to “afford a
fair basis for predicting what these costs will be.” Id. Such a result would not be consistent with
the reasoning in Braxton.
Because
Braxton requires us, when determining exclusive remedy issues, to look
to the law that guarantees an employee his receipt of workers’ compensation
benefits and because Indiana law bars plaintiffs’ actions, we hold that the
trial court erred in denying Phoenix’s 12(b)(1) motions to dismiss for lack of
subject matter jurisdiction.
Accordingly, we reverse.
Reversed.
Chief
Judge MARTIN and Judge WYNN concur.