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authoritative.
NO. COA07-146
NORTH CAROLINA COURT OF APPEALS
Filed: 5 February 2008
IN THE MATTER OF THE ESTATE
OF CHRISTOPHER
BULLOCK, deceased,
KENNETH B. PARKER, and PURYEAR
TRANSPORT, INC.,
Petitioners,
v. North
Carolina Industrial Commission
Wake County No. 04 E 2908
C.C. MANGUM COMPANY and AMERICAN
ZURICH INSURANCE COMPANY,
Respondents.
Appeal by respondents from order entered 31 October 2006 by
Judge Narley L. Cashwell in Wake County Superior Court. Heard in the Court of Appeals 10 October
2007.
Davis
& Hamrick, L.L.P., by James G. Welsh, Jr., and H. Lee Davis, Jr., for
petitioner appellees.
Ogletree
Deakins Nash Smoak & Stewart, P.C., by Brian M. Freedman, and Sarah H.
Roane, for respondent appellants.
McCULLOUGH, Judge.
On 16 September 2004, Christopher Bullock (“Bullock”), an
employee of C.C. Mangum Company (“C.C. Mangum”), was working at a construction
site in Raleigh. Kenneth B. Parker (“Parker), an employee of Puryear Transport,
Inc. (“Puryear”), was delivering pavers to the site, driving a dump truck owned
by Puryear. Bullock signaled to Parker
to move his truck to the paving location and began to move barrels out of
Parker’s way, leaving Parker’s line of sight. While backing up to the paving
location, Parker inadvertently backed the dump truck over Bullock. Bullock died
as a result of injuries sustained in that accident. At the time of the accident, C.C. Mangum was insured by American
Zurich Insurance Company (“American Zurich Insurance”). Puryear was insured by
Converium Insurance Company (“Converium Insurance”).
Bullock was never married and had no biological children. At
the time of his death, Bullock resided with his long-time girlfriend, Katherine
Davis (“Davis”), and two minors, Michael Rashad Davis and Justin Tyler Davis,
who were Katherine Davis’s nephews (“minor nephews”). Davis had been living with Bullock since 1984, and her two minor
nephews had been living with and were fully supported by the couple since 1997.
Bullock did not, however, legally adopt either of the minor nephews. Bullock
died intestate, and his only heir at law pursuant to N.C. Gen. Stat. §29-15
(2005), was his mother, Melissa Hayward. Davis was named as personal
representative of Bullock’s estate.
After Bullock’s death, Bullock’s family retained attorney
Geoffrey H. Simmons (“Simmons”) to bring a wrongful death claim against Parker
and Puryear as well as a workers’ compensation claim against C.C. Mangum and
American Zurich Insurance.
In October of 2004, Simmons notified Puryear’s insurance
carrier, Converium Insurance, that he represented Bullock’s estate in “all
matters” arising from Bullock’s death.
Converium Insurance, through its Third-Party Administrator, National
Claims Management, and its adjustor, Allison Laird, began negotiating with
Simmons regarding the wrongful death claim. In January 2005, Simmons notified
Allison Laird that there was a pending workers’ compensation claim against
respondents; that he anticipated that it would be resolved by March 2005; and
that there would be a dependency hearing as part of this workers’ compensation
claim. Respondents were not notified of
the ongoing negotiations regarding the wrongful death claim.
On 21 April 2005, the North Carolina Industrial Commission
issued an Opinion and Award finding that the minor nephews were wholly and
fully dependent on Bullock for support and that they were the only persons
entitled to receive death benefits under N.C. Gen. Stat. §97-39 (2005).[Note
1] The Commission awarded death
benefits in the amount of $307.16 per week for 400 weeks to each minor nephew,
plus burial and medical expenses, an anticipated total amount of $259,587.44.
In May of 2005, without notifying respondents or obtaining
their written consent, Simmons settled the wrongful death claim against
petitioners for the sum of $95,000.00.
On 2 June 2005, counsel for Puryear and Parker delivered the settlement
agreement and settlement check to Simmons, which included instructions
directing that settlement proceeds were delivered “in trust” and were “not to
be negotiated or delivered” to any beneficiaries “until all liens, including .
. . worker’s compensation, have been fully paid and satisfied or compromised
and released.” On 3 June 2005, Davis,
as personal representative of the estate, and Hayward, as sole beneficiary
under the Intestate Succession Act, signed the Settlement Agreement and
Release. Simmons disbursed the
settlement funds to Hayward pursuant to N.C. Gen. Stat. §28A-18-2 (2005), which
directs that proceeds from wrongful death actions be distributed according to
the Intestate Succession Act to a decedent’s heirs at law.
Respondents learned of the settlement agreement between
Bullock’s estate and Parker and Puryear in February 2006. On 17 February 2006, C.C. Mangum’s counsel
wrote to Laird, seeking reimbursement for the death benefits to be paid to the
minor nephews. On 5 June 2006,
petitioners filed a motion to approve the settlement and to set aside any
existing workers’ compensation lien that respondents might have. On 27 August 2006, respondents moved for the
court to: (1) deny petitioners’ motion; (2) enter a declaratory order finding
that respondents do possess a workers’ compensation lien on the settlement
proceeds received by Hayward; and (3) set aside the settlement agreement.
A hearing was held on 28 August 2006, and by order entered
31 October 2006, the trial court denied respondents’ motion to set aside the
settlement agreement; respectively, the trial court granted petitioners’ motion
to approve the settlement agreement and concluded that respondents did not have
a valid workers’ compensation lien on the settlement proceeds, or in the
alternative, the court concluded that if respondents did have a valid workers’
compensation lien, such lien should be struck.
On appeal, respondents contend that: (1) the trial court
erred in concluding that respondents do not have a lien pursuant to N.C. Gen.
Stat. §97-10.2 against the wrongful death benefits recovered by decedent’s
estate; (2) the trial court abused its discretion by finding, in the
alternative, that if such lien did exist, such lien should be struck pursuant
to N.C. Gen. Stat. §97-10.2(j); and (3) the trial court erred in failing to set
aside the settlement agreement.
I. Existence of Lien
Respondents first contend that the trial court erred in
concluding that respondents do not have a lien against the wrongful death
benefits recovered by decedent’s estate. We agree.
“Questions of statutory
interpretation are questions of law, which are reviewed de novo by an
appellate court.” In re Proposed
Assessments v. Jefferson-Pilot Life Ins. Co., 161 N.C. App. 558, 559, 589
S.E.2d 179, 180 (2003). “The cardinal principle of statutory interpretation is
to ensure that legislative intent is accomplished.” McLeod v. Nationwide
Mutual Ins. Co., 115 N.C. App. 283, 288, 444 S.E.2d 487, 490, disc.
review denied, 337 N.C. 694, 448 S.E.2d 528 (1994). “To determine legislative
intent, we first look to the language of the statute.” Estate of Wells v.
Toms, 129 N.C. App. 413, 415-16, 500 S.E.2d 105, 107 (1998).
N.C. Gen. Stat. §§97-10.2(f)(1) and 28A-18-2 both govern the
distribution of damages recovered in a wrongful death action. “‘Statutes in
pari materia are to be construed together, and it is a general rule that
the courts must harmonize such statutes, if possible, and give effect to each,
that is, all applicable laws on the same subject matter should be construed
together so as to produce a harmonious body of legislation, if possible.’”
Justice v. Scheidt, Commissioner of Motor Vehicles, 252 N.C. 361,
363, 113 S.E.2d 709, 711 (1960) (quoting Blowing Rock v. Gregorie, 243
N.C. 364, 371, 90 S.E.2d 898, 904 (1956)). Here, the right for decedent’s
estate to bring an action against Parker and Puryear, third-party tortfeasors,
is conferred by N.C. Gen. Stat. §28A-18-2. However, the relative rights between
decedent’s estate and respondents are governed by N.C. Gen. Stat. §97-10.2.
N.C.
Gen. Stat. §28A-18-2 authorizes the personal representative of an estate to
bring a wrongful death action on behalf of a decedent and governs the
distribution of the damages recovered from such action. Section 28A-18-2(a) (2005) provides in pertinent
part:
(a) ... The amount recovered [in a wrongful death
action against a third-party tortfeasor] ... is not liable to be applied as
assets, in the payment of debts or legacies, ... but shall be
disposed of as provided in the Intestate Succession Act.
Section 97-10.2 of the Workers’ Compensation Act defines the
rights and remedies of employees and employers against third-party tortfeasors.
Radzisz v. Harley Davidson of Metrolina, 346 N.C. 84, 87, 484 S.E.2d 566,
568 (1997). Section 97-10.2 was designed to secure prompt, reasonable
compensation for an employee and to simultaneously permit an employer who has
settled with the employee to recover such amount from a third-party tortfeasor.
Brown v. R.R., 204 N.C. 668, 671, 169 S.E. 419, 420 (1933). Our Supreme
Court has held that the purpose of the North Carolina Workers’ Compensation Act
is not only to provide a swift and certain remedy to an injured worker, but is
also to ensure a limited and determinate liability for employers. Barnhardt v. Cab Co., 266 N.C. 419,
427, 146 S.E.2d 479, 484 (1966). The legislative intent behind the Workers’
Compensation Act is not to provide an employee with a windfall of a recovery
from both the employer and the third-party tortfeasor. Radzisz, 346 N.C.
at 89, 484 S.E.2d at 569. Likewise, “[the Workers’ Compensation Act] does not
create two causes of action. . . . The
right to bring [an] action for damages for wrongful death is conferred by
General Statutes [now §28A-18-2]. The [Workers’ Compensation Act] merely
governs the respective rights of the employee’s estate, the employer and the
insurance carrier to maintain an action for damages against third
parties.” Groce v. Rapidair, Inc.,
305 F. Supp. 1238, 1241 (1969).
N.C. Gen. Stat. §97-10.2 provides in pertinent part:
(a) The right to compensation and other benefits under this
Article for disability, disfigurement, or death shall not be affected by
the fact that the injury or death was caused under circumstances creating a
liability in some person other than the
employer to pay damages therefor, such person hereinafter being referred to as
the “third party.” The respective rights and interests of the
employee-beneficiary under this Article, the employer, and the
employer’s insurance carrier, if any, in respect of the common-law cause
of action against such third party and the damages recovered shall be
as set forth in this section.
* * * *
(f)(1) ...if an award final in nature in favor of the
employee has been entered by the Industrial Commission, then any
amount obtained by any person by settlement with, judgment against,
or otherwise from the third party by reason of such injury or death shall
be disbursed by order of the Industrial Commission for the following
purposes and in the following order of priority:
* * * *
c. Third to the reimbursement of the employer for all
benefits by way of compensation or medical compensation expense paid or to be
paid by the employer under award of the Industrial Commission.
* * * *
(h) In any ... settlement with the third party, every
party to the claim for compensation shall have a lien to the extent of his
interest under (f) hereof upon any payment made by the third
party by reason of such injury... and such lien may be enforced against any
person receiving such funds.
Id.
(emphasis
added).
Here, the trial court reasoned that because the lien created
by §97-10.2(h) is a subrogation lien, applying general principles of
subrogation, respondents are only entitled to step into the shoes of the minor
nephews, the beneficiaries of the workers’ compensation award, and may only
enforce such lien against proceeds to which the minor nephews are entitled.
Because the minor nephews are not heirs at law under the Intestate Succession
Act and are not entitled to wrongful death proceeds pursuant to N.C. Gen. Stat.
§28A-18-2, the trial court concluded that respondents, likewise, do not have an
enforceable lien against such proceeds.
We disagree, as it is improper to abrogate an employer’s right of
reimbursement by creating limits to recovery that the General Assembly has not
expressed, implied, or intended. Radzisz, 346 N.C. at 89-91, 484 S.E.2d
at 568-69.
Before
we begin the analysis of §97-10.2, we note that we have already held that the
language of §28A-18-2(a), which prohibits recoveries from a wrongful death
action from being applied to debts of the decedent, is not a bar to an
employer’s recovery of compensation paid; this is because we have held that the
right of reimbursement created by §97-10.2(f)(1) is not a debt of the decedent,
but rather, is a statutory right. Byers v. Highway Commission, 3 N.C.
App. 139, 147, 164 S.E.2d 535, 541 (1968), aff’d, 275 N.C. 229, 166
S.E.2d 649 (1969)(interpreting former N.C. Gen. Stat. §28-173, which has been
recodified as §28A-18-2). Likewise, our Supreme Court has stated,
(I)t is mandatory
under the provisions of the Workmen’s Compensation Act that any recovery
against a third party by reason of an injury to or death of an employee
subject to the Act, the proceeds received from such settlement with or judgment
against the third party, shall be disbursed according to the
provisions of the Workmen’s Compensation Act.
Cox
v. Transportation Co., 259 N.C. 38, 43, 129 S.E.2d 589, 592-93 (1963)
(emphasis added).
According to the plain language of §97-10.2(f) and (h), when
read in pari materia, respondents have a statutory lien against any
payment made by a third-party tortfeasor arising out of an injury or
death of an employee subject to the Act.
This lien may be enforced against “any person receiving such funds.”
N.C. Gen. Stat. §97-10.2(h) (emphasis added). It is a lien for “all amounts
paid or to be paid” to the employee, and it is mandatory in nature. Radzisz,
346 N.C. at 90, 484 S.E.2d at 569.
Although the General Assembly expressly subrogated the
rights of an employer’s insurance carrier to that of an employer, see
N.C. Gen. Stat. §97-10.2(g), we find no language in section 97-10.2
subrograting the rights of an employer to that of the beneficiaries of the
workers’ compensation award. If the General Assembly intended to subrogate the
employer’s rights to that of the beneficiaries of the award, they would have
done so expressly as they did in subsection (g). Instead, the extent of an
employer’s subrogation interest under subsection (f) is measured by compensation
paid or to be paid by the employer.
Here, respondents have a statutory workers’ compensation
lien upon any payment made by third-party tortfeasors, Parker and Puryear,
arising out of Bullock’s death. This lien may be enforced against any person
receiving third-party settlement proceeds, which includes Bullock’s mother,
Melissa Hayward, who will be paid from the $95,000.00 settlement. Respondents’ lien is for all amounts paid or
to be paid to or on behalf of the minor nephews, which is $259,587.44. It was
improper for the trial court to conclude that respondents’ rights were
subrogated to those of the minor nephews where the General Assembly has not
expressed, implied, or intended any such limit. This conclusion, which allows
for two recoveries, one by the employee through his dependents and another by
the employee through his estate, contravenes both the plain language of
§97-10.2(f) as well as the compensatory rather than punitive intent of the Act.
II. Lien Reduction pursuant to N.C. Gen.
Stat. §97-10.2(j)
Respondents next contend that the trial court abused its
discretion by finding, in the alternative, that if respondents did have a lien
against the settlement proceeds under §97-10.2(h), such lien should be struck
pursuant to §97-10.2(j). Because we find
that the trial court made insufficient findings to provide for meaningful
appellate review, we remand.
Pursuant to N.C. Gen. Stat. §97-10.2(j), once a settlement
between an employee and a third-party tortfeasor “has been finalized so that
only performance of the agreement is necessary to bind the parties,” either
party may petition a superior court to determine the subrogation amount.[Note
2] Ales v. T. A. Loving Co.,
163 N.C. App. 350, 353, 593 S.E.2d 453, 455 (2004). A trial judge has
discretion under this provision to adjust the amount of a workers’ compensation
lien, even if the result is a double recovery for the plaintiff. Holden v.
Boone, 153 N.C. App. 254, 257, 569 S.E.2d 711, 713 (2002). However, “the
discretion granted [to the Superior Court judge] under G.S. §97-10.2(j) is not
unlimited; ‘the trial court is to make a reasoned choice, a judicial value
judgment, which is factually supported . . . by findings of fact and
conclusions of law sufficient to provide for meaningful appellate review.’”
In re Biddix, 138 N.C. App. 500, 504, 530 S.E.2d 70, 72 (2000), disc.
review denied, 352 N.C. 674, 545 S.E.2d 418 (2000) (quoting Allen v.
Rupard, 100 N.C. App. 490, 495, 397 S.E.2d 330, 333 (1990)). N.C. Gen.
Stat. §97-10.2(j) provides, in pertinent part:
[T]he judge shall
determine, in his discretion, the amount, if any, of the employer’s lien,
whether based on accrued or prospective workers’ compensation benefits, and
the amount of cost of the third-party litigation to be shared between the
employee and employer. The judge shall consider [1] the anticipated
amount of prospective compensation the employer or workers’ compensation
carrier is likely to pay to the employee in the future, [2] the net recovery to
plaintiff, [3] the likelihood of the plaintiff prevailing at trial or on
appeal, [4] the need for finality in the litigation, and [5] any other
factors the court deems just and reasonable[.]
N.C.
Gen. Stat. §97-10.2(j) (emphasis added).
Although we have held that there is no mathematical formula
or set list of factors for the trial court to consider in making its
determination, Biddix, 138 N.C. App. at 502, 530 S.E.2d at 72, it is
clear from the use of the words “shall” and “and” in subsection (j), that the
trial court must, at a minimum, consider the factors that are expressly listed
in the statute. Otherwise, such words are rendered meaningless.
Here, the court made no findings nor is there any indication in the record to show that it considered the following mandated statutory factors: (1) the cost of litigation to be shared between Bullock’s estate and respondents, if any; (2) the net recovery to Melissa Hayward, which would require a determination of the amount necessary to adequately compensate her, given that the court found that she was not dependent on Bullock for support nor did she have much contact with him while he was alive, and the amount of attorney’s fees and other expenses to be paid from the settlement proceeds; (3) the likelihood of Bullock’s estate prevailing at trial or on appeal; and (4) the need for finality in the litigation. The trial court made only the following findings to support its decision to strike respondents’ lien: (1) that Melissa Hayward is Bullock’s sole surviving heir at law; (2) that Melissa Hayward had little contact with Bullock; (3) that liability for Bullock’s death was contested; (4) that the settlement was in the amount of $95,000.00; and (5) that the prospective workers’ compensation benefits totaled $259,567.44, which exceeds the total settlement proceeds. Based upon these findings, we are unable to determine whether the court properly exercised its discretion or if it acted under a misapprehension of law in striking respondents’ statutory right to reimbursement from settlement proceeds recovered from Parker and Puryear. Accordingly, we remand for additional findings.
III. Validity of Settlement
Finally, respondents contend that because petitioners
settled their third-party claim without the written consent of C.C. Mangum, the
trial court erred by refusing to set aside the settlement agreement pursuant to
§97-10.2(h). Even without the written consent of the employer, however,
pursuant to §97-10.2(h)(2), the settlement agreement need not be set aside if
either party complies with §97-10.2(j). Because we remand for additional
findings to determine whether the workers’ compensation lien was properly
reduced to zero under §97-10.2(j), we need not address this argument at this
time.
Accordingly, this order is reversed in part and remanded for additional findings of fact.
Reversed in part, remanded for additional findings.
Judges CALABRIA and STEPHENS concur.
NOTES
1. The Industrial Commission determined
that Davis was not wholly dependent on Bullock for support, as she had been
receiving Social Security disability payments and other governmental
assistance.
2. Respondents argue that according to
our decision in Ales, in order for a trial court to have jurisdiction to
determine the subrogation amount under subsection (j), the parties must
petition the court after the settlement is reached, but before the
settlement proceeds have been distributed.
We find that respondents have misconstrued our holding in Ales.
Although it is true that we have interpreted subsection (j) to require that a
party must first reach a final settlement agreement before the trial court has
jurisdiction to determine the subrogation amount, we have not interpreted
subsection (j) to require that the parties must petition the court before
the settlement proceeds have been distributed. We find no such requirement in
the language of subsection (j); however, we note that in determining the
appropriate amount of the workers’ compensation lien, the trial court does have
discretion under (j) to consider any factors that it deems “just and
reasonable,” which could include the timeliness of the petition and whether
settlement proceeds have been distributed.