All
opinions are subject to modification and technical correction prior to official
publication in the
NO.
COA08-704
Filed: 3 March 2009
SCOTT CHAISSON,
Employee,
Plaintiff,
v.
I.C.
File No. 332868
RED SIMPSON,
Employer,
COMPANY,
Carrier,
Defendants.
Appeal
by defendants from Opinion and Award entered 7 February 2008 by the North
Carolina Industrial Commission. Heard in
the Court of Appeals 1 December 2008.
The Jernigan Law
Firm, by Leonard T. Jernigan, Jr., for plaintiff-appellee.
Hedrick, Gardner,
Kincheloe & Garofalo, L.L.P., by J. A. Gardner, III, and M. Duane
Jones, for defendants-appellants.
MARTIN,
Chief Judge.
Defendant-employer
Red Simpson and defendant-carrier Liberty Mutual Insurance Company
(collectively “defendants”) appeal from an Opinion and Award of the North
Carolina Industrial Commission (“Commission”) approving a compromise settlement
agreement and awarding attorney’s fees and costs in favor of plaintiff-employee
Scott Chaisson (“plaintiff”). We affirm.
The
parties do not dispute that, on 21 February 2003, plaintiff sustained an
injury to his right ankle and right knee arising out of and in the course of
his employment as a crew foreman and utility lineman with defendant-employer. Defendant-employer is a power line
contracting company, which “servic[es] power companies, utility companies
around the
At the
time of his injury, plaintiff was in
Defendant-carrier
accepted plaintiff’s claim as a compensable injury. On 15 May 2003, plaintiff underwent arthroscopic
surgery on his right knee to repair the right medial meniscal tear that was
detected by an MRI on 13 March 2003.
Plaintiff’s treating physician prescribed “a vigorous physical therapy
rehabilitation program” following his surgery and released plaintiff to return
to full duty work on 28 October 2003.
However,
on 18 August 2004, plaintiff returned to his treating physician complaining
that he continued to “hav[e] problems with his knee and . . .
described a burning-type discomfort, particularly with activity, and squatting.” After being ordered to start another course
of physical therapy, plaintiff returned to his treating physician on
15 February 2005, who noted that plaintiff “had persistent pain in the
knee cap (patellofemoral pain) and tendinitis (iliotibial friction band
syndrome) on the outside of his knee.”
Plaintiff was again sent to participate in a physical therapy
rehabilitation program and told to return for a reevaluation in three
months. Plaintiff began physical therapy
on 7 March 2005 and was to be seen twice a week for four to six weeks,
where it was reported that plaintiff “had pain in his knee at rest and with
activity, an abnormal gait, and decreased knee strength.”
According
to a later follow-up visit, the results of which are reflected in the Full
Commission’s unchallenged Finding of Fact 10, plaintiff’s treating
physician made the following determinations:
Per the testimony of [plaintiff’s
treating physician,] Dr. Caudle, Plaintiff is likely to have persistent
symptoms and over time he is likely to have wear-and-tear type arthritis, a
wearing away of the cartilage on the bone, on the inside half of the knee,
where the torn cartilage was removed.
The meniscus cartilage is between the bones, and the articular cartilage
is on the bone. The cartilage serves as
a cushioning between the bones. As Dr.
Caudle testified, Plaintiff is at risk of needing future medical treatment for
his knee because he does not have enough normal cushion remaining in his
knee. It is more likely than not that
Plaintiff will have gradual worsening symptoms in his right knee as he ages.
The Full Commission
also made the following unchallenged findings of fact:
5. In January 2004, Liberty Mutual
sent Plaintiff a Form 21, which Plaintiff refused to sign. Plaintiff wrote the Industrial Commission
saying he did not think the compensation was fair, particularly since he had
lost his job because he could no longer perform the physical duties of his job.
. . . .
11. Candice Buchanan was a Senior Claims Case
Manager II for Liberty Mutual in 2005, and was employed by Liberty
Mutual from April 1998 until May 13, 2005 in
12. As a Senior Claims Case Manager II
she handled catastrophic claims, complicated litigation and anything that had a
high dollar value. She tended to get
more complicated claims or older claims.
Because Ms. Buchanan had been able to settle a lot of cases quickly, the
company started giving her more and more cases that needed to be settled that
other people could not get settled, and she was able to do it. She handled and settled a high volume of
claims, and because of this ability she was nicknamed “The Liquidator.” If no other case manager could liquidate the
file, it would be given to her.
13. Several adjusters had handled Plaintiff’s
file before Ms. Buchanan got it. Future
medicals were an issue, no permanent disability benefits had been paid, and
Plaintiff had refused to sign a Form 21 submitted to him previously by
Liberty Mutual.
14. Ms. Buchanan first picked up the
Plaintiff’s file on April 6, 2005.
Ms. Buchanan talked with Plaintiff on one day, on or about
April 14, 2005, and they reached a settlement agreement. Ms. Buchanan could not testify as to the
exact settlement amount, but thought it was in the range of $25,000. Per Plaintiff’s testimony, the settlement
amount agreed to was $97,500.
15. Even though his education level is only a
G.E.D., Plaintiff presents himself as intelligent and articulate. Plaintiff’s wife has a B.S. in nursing, and
was able to assist her husband in researching issues of further medical
treatment, including a possible knee replacement. During the settlement negotiations with
Liberty Mutual, Plaintiff made settlement demands as high as $145,000. At one time, a figure of $85,000 was also
discussed, although after researching the knee replacement issue, Plaintiff
would not accept that amount. The end
result was the settlement figure of $97,500.
16. After the settlement figure was reached
between Plaintiff and Candice Buchanan, Ms. Buchanan contacted Hedrick Eatman
Gardner and Kincheloe, defense counsel for Liberty Mutual in
. . . .
18. Jennifer Ruiz prepared a Compromise
Settlement Agreement, per the direction of her client, Liberty Mutual. The Compromise Settlement Agreement was
mailed to Plaintiff with a cover letter from Ms. Ruiz dated June 9,
2005. Ms[.] Ruiz requested that
Plaintiff review and sign the agreement and return it to her office. After receiving the settlement agreement,
which stated that the settlement amount was $97,500.00, to be paid in one lump
sum, Plaintiff signed the agreement and returned it to Ms. Ruiz’s office.
19. By the time the agreement had been signed
by Plaintiff and returned to Liberty Mutual, Candice Buchanan had left her
employment. Although the agreement had
been negotiated by Ms. Buchanan as an agent of Liberty Mutual Insurance
Company, Liberty Mutual refused to sign the agreement, and took the position
that the settlement amount was a mistake.
20. In her testimony, Candice Buchanan
acknowledged that a settlement agreement was reached. However, she denied that the amount was
$97,500 and insisted that it was in the range of $25,000. Ms. Buchanan produced no documentation to
support her position that the settlement figure actually negotiated was in the
range of $25,000 rather than the $97,500, which she communicated to Jennifer
Ruiz.
. . . .
23. After Plaintiff learned that the carrier
would not honor the Compromise Settlement Agreement, he sent the agreement to
the Executive Secretary’s office for enforcement. By Order filed August 30, 2005, the
Executive Secretary’s office denied the motion to enforce, and referred the
matter for a hearing before a Deputy Commissioner. Plaintiff hired attorney Leonard Jernigan to represent
him at the hearing before the Deputy Commissioner, and Mr. Jernigan filed a
Form 33 with cover letter dated September 14, 2005.
(Emphasis added.)
On
19 September 2005, defendants’ attorney signed a Form 33R on behalf
of defendants alleging that “[d]efendants never signed a settlement agreement
and therefore a settlement in any amount cannot be enforced.” On 4 April 2006, a deputy commissioner
heard plaintiff’s motion to “enforce an alleged settlement agreement.” On 22 May 2007, the deputy commissioner
filed an Opinion and Award, which concluded that the parties did negotiate and
enter into a settlement agreement to which defendants were bound “under general
principles of contract law,” and that defendant-carrier’s conduct “ha[d] been
in bad faith.” As a result, the deputy
commissioner approved the compromise settlement agreement in the amount of
$97,500, ordered defendant-carrier to pay attorney’s fees, and ordered
defendants to pay costs.
On
5 June 2007, defendants appealed to the Full Commission from the deputy
commissioner’s Opinion and Award. On
7 February 2008, the Full Commission entered its Opinion and Award, which
affirmed the deputy commissioner’s Opinion and Award with minor
modifications. Defendants gave notice of
appeal to this Court.
_________________________
Our
Supreme Court has “repeatedly held ‘that our Workers’ Compensation Act should
be liberally construed to effectuate its purpose to provide compensation for
injured employees or their dependents, and its benefits should not be denied by
a technical, narrow, and strict construction.’”
Adams v. AVX Corp., 349 N.C. 676, 680, 509 S.E.2d 411,
413 (1998) (quoting Hollman v. City of Raleigh, 273 N.C. 240, 252,
159 S.E.2d 874, 882 (1968)), reh’g denied, 350 N.C. 108,
532 S.E.2d 522 (1999).
“The
Industrial Commission and the appellate courts have distinct responsibilities
when reviewing workers’ compensation claims.”
Billings v. Gen. Parts, Inc., 187 N.C. App. 580, 584,
654 S.E.2d 254, 257 (2007) (citing Deese v. Champion Int’l Corp.,
352 N.C. 109, 114, 530 S.E.2d 549, 552 (2000)), disc. review and
supersedeas denied, 362 N.C. 233, 659 S.E.2d 435 (2008). The Industrial Commission is “‘the fact
finding body,’” Adams, 349 N.C. at 680, 509 S.E.2d at 413
(quoting Brewer v. Powers Trucking Co., 256 N.C. 175, 182,
123 S.E.2d 608, 613 (1962)), and is “‘the sole judge of the credibility of
the witnesses and the weight to be given their testimony.’”
On the
other hand, “appellate courts must examine [only] ‘whether any competent
evidence supports the Commission’s findings of fact and whether [those]
findings . . . support the Commission’s conclusions of law.’” McRae v. Toastmaster, Inc.,
358 N.C. 488, 496, 597 S.E.2d 695, 700 (2004) (emphasis added) (second
alteration and omission in original) (quoting Deese, 352 N.C. at
116, 530 S.E.2d at 553). If the
findings of fact are supported by competent evidence, those findings are
conclusive on appeal “‘even though there be evidence that would support
findings to the contrary.’” See Adams,
349 N.C. at 681, 509 S.E.2d at 414 (quoting Jones v. Myrtle Desk
Co., 264 N.C. 401, 402, 141 S.E.2d 632, 633 (1965)). Moreover, findings of fact which are left
unchallenged by the parties on appeal are “presumed to be supported by
competent evidence” and are, thus “conclusively established on appeal.” See Johnson v. Herbie’s Place,
157 N.C. App. 168, 180, 579 S.E.2d 110, 118 (internal quotation marks
omitted), disc. review denied, 357 N.C. 460, 585 S.E.2d 760
(2003). Only “[t]he Commission’s
conclusions of law are reviewed de novo.” McRae, 358 N.C. at 496,
597 S.E.2d at 701.
I.
Defendants
first contend there is no competent evidence to support the Commission’s
Finding of Fact 21, which found that the parties negotiated a settlement
agreement in the amount of $97,500, and that the settlement amount reflected
the parties’ “meeting of the minds.” We
disagree.
“It is
a well-settled principle of contract law that a valid contract exists only
where there has been a meeting of the minds as to all essential terms of the
agreement.” Northington v. Michelotti,
121 N.C. App. 180, 184, 464 S.E.2d 711, 714 (1995) (citing O’Grady
v. Bank, 296 N.C. 212, 221, 250 S.E.2d 587, 594 (1978)); see
also Charles Holmes Mach. Co. v. Chalkley, 143 N.C. 181, 183,
55 S.E. 524, 525 (1906) (“The first and most essential element of an
agreement is the consent of the parties, an aggregatio mentium, or
meeting of two minds in one and the same intention, and until the moment
arrives when the minds of the parties are thus drawn together, the contract is
not complete, so as to be legally enforceable.”). “There must be neither doubt nor difference
between the parties[; t]hey must assent to the same thing in the same sense,
and their minds must meet as to all the terms.”
Croom v. Goldsboro Lumber Co., 182 N.C. 217, 220,
108 S.E. 735, 737 (1921). “This
mutual assent and the effectuation of the parties’ intent is normally
accomplished through the mechanism of offer and acceptance.” Snyder v. Freeman, 300 N.C. 204,
218, 266 S.E.2d 593, 602 (1980). “Whether
mutual assent is established and whether a contract was intended between
parties are questions for the trier of fact.”
The
Commission’s Finding of Fact 21 reads as follows:
Considering all of the evidence, the
testimony of Candice Buchanan that the settlement amount was less than $97,500
is not credible. The Plaintiff’s
testimony that the parties had negotiated a settlement of $97,500 is supported
by the greater weight of the evidence and is found to be credible. [Defendant-carrier] Liberty Mutual through
their agent, Candice Buchanan, who was authorized to act on the [defendant-]carrier’s
behalf, negotiated a settlement with Plaintiff in the amount of $97,500. This meeting of the minds was communicated to
their attorney and agent Jennifer Ruiz and was reflected in documents prepared
by Ms. Ruiz as the attorney and agent for the Defendants, in her letter of
May 25, 2005, her cover letter of June 9, 2005, and the settlement
agreement itself.
We first note that we
cannot conclude the Commission erred when it found Ms. Buchanan’s testimony
that she “kn[e]w for sure” she did not settle the claim with plaintiff for
$97,500 was not credible, since the Commission is “‘the sole judge of the
credibility of the witnesses and the weight to be given their testimony.’” See Adams, 349 N.C. at 680,
509 S.E.2d at 413 (quoting
Additionally,
according to Ms. Ruiz’s testimony, Ms. Buchanan communicated to her that the
settlement amount was $97,500. In
support of her testimony, Ms. Ruiz produced her own handwritten notes taken
during her telephone conversation with Ms. Buchanan in which Ms. Ruiz
documented that she had spoken with Candice (“Candy”) Buchanan who told her
that plaintiff’s case had been “settled for $97,500.” The parties also stipulated that a letter was
written and signed by Ms. Ruiz, dated 25 May 2005, and sent to plaintiff
in which she wrote:
As you know, I represent the [d]efendants
in the above-referenced workers’ compensation claim [for I.C. File No. 332868,
Carrier File No. WC555-683956, and HEGK File No. 19R-1090]. I understand that a settlement has been
reached in the amount of $97,500.00.
The settlement proceeds cannot be paid until a fully executed Settlement
Agreement has been approved by the North Carolina Industrial Commission. I cannot draft the Settlement Agreement until
I have a complete copy of your medical records.
I understand that you will be providing
me with a copy of your medical records. . . . If it would be
more convenient for you, I could certainly have our office courier pick up the
documents.
(Emphasis added.) The parties further stipulated that, along
with a signed letter from Ms. Ruiz dated 9 June 2005, plaintiff received
an unsigned copy of the Agreement for Final Compromise Settlement and Release
prepared by Ms. Ruiz, which included the following paragraph:
Notwithstanding the controversy between
the parties, [plaintiff] has agreed to accept, and [d]efendants have agreed to
pay, the sum of NINETY-SEVEN THOUSAND FIVE HUNDRED AND 00/100 DOLLARS
($97,500.00), in one lump sum, without commutation, plus payment of all medical
bills and expenses, as per Rule 502(2)(a), incurred for treatment of the
injury of February 21, 2003, up to and including the date of this
Agreement, and no further, after said medical bills have been submitted to and
approved by the North Carolina Industrial Commission.
Moreover, the letter
from Ms. Ruiz to plaintiff accompanying the compromise settlement agreement
stated: “Please find enclosed the Agreement
for Compromise Settlement and Release (‘clincher agreement’) which I have
drafted in accordance with the agreement you have reached with Red Simpson,
Inc. and Liberty Mutual Insurance Company to settle your workers’ compensation
claim.”
Based
on the evidence in the record and the unchallenged findings of fact by which we
are bound, we conclude that there was competent evidence to support the
Commission’s finding that a settlement agreement was reached in the amount of
$97,500. Therefore, we hold that the
Commission did not err by determining that there had been a meeting of the
minds between plaintiff and defendants, through defendant-carrier’s agent Ms.
Buchanan, as to the settlement amount of $97,500. Accordingly, we overrule this assignment of
error.
II.
Defendants
next contend the Commission erred by considering the parties’ compromise
settlement agreement because the agreement did not strictly comply with the
requirements of Workers’ Compensation Rule 502(3)(b). We disagree.
“To
make its purpose that the North Carolina Workmen’s Compensation Act shall be
administered exclusively by the North Carolina Industrial Commission effective,
the General Assembly has empowered the said Industrial Commission to make
rules, not inconsistent with this act, for carrying out the provisions of the
act . . . .” Winslow
v. Carolina Conf. Ass’n, 211 N.C. 571, 579, 191 S.E. 403, 408
(1937) (internal quotation marks omitted).
The North Carolina Industrial Commission also has the power “to construe
and apply such rules[, the construction and application of which]
. . . ordinarily are final and conclusive and not subject to review
by the courts of this State on an appeal from an award made by said Industrial
Commission.”
Furthermore,
the Commission has the discretion under Rule 801 of the Workers’
Compensation Rules of the North Carolina Industrial Commission to waive
violations of its own rules in the interest of justice, see Wade v. Carolina
Brush Mfg. Co., 187 N.C. App. 245, 251, 652 S.E.2d 713, 717
(2007), but only “where such action does not controvert the provisions of the
statute.” See Hyatt v. Waverly Mills,
56 N.C. App. 14, 25, 286 S.E.2d 837, 843 (1982).
Workers’
Compensation Rule 801 provides:
In the interest of justice, these rules
may be waived by the Industrial Commission.
The rights of any unrepresented plaintiff will be given special
consideration in this regard, to the end that a plaintiff without an
attorney shall not be prejudiced by mere failure to strictly comply with any
one of these rules.
Workers’ Comp. R. of
N.C. Indus. Comm’n 801 2009 Ann. R. (N.C.) 1009 (emphasis
added). This Court has stated that “[i]t
should be clearly understood that the Commission does have the discretion to
apply Rule 801 in cases where a pro se litigant fails to strictly
comply with the rules.” Wade,
187 N.C. App. at 251, 652 S.E.2d at 717; see also id. (“Had
the plaintiff filed a defective Form 44 or other document setting forth
the grounds for appeal, even if inexpertly drawn, the Commission could have
applied Rule 801 to waive strict compliance.”).
Consequently, when the Commission properly exercises its discretion to
waive strict compliance with those rules which do not conflict with the Workers’
Compensation Act, such decisions are “not reviewable by the courts, absent a
showing of manifest abuse of that discretion.”
See Hyatt, 56 N.C. App. at 25, 286 S.E.2d at
843–44; see also White v. White, 312 N.C. 770, 777,
324 S.E.2d 829, 833 (1985) (stating that a decision subject to an abuse of
discretion standard of review must be “accorded great deference” and may be
reversed “only upon a showing that its actions are manifestly unsupported by
reason . . . [and] only upon a showing that it was so arbitrary that
it could not have been the result of a reasoned decision.”).
“A ‘clincher’
or compromise agreement is a form of voluntary settlement” recognized by the
Commission and used to finally resolve contested or disputed workers’
compensation cases. See Ledford v.
It has
been long held that “[c]ompromise agreements are governed by the legal
principles applicable to contracts generally,” Penn Dixie Lines, Inc. v.
Grannick, 238 N.C. 552, 556, 78 S.E.2d 410, 414 (1953), which
include the central principle that, “[i]n the formation of a contract[,] an
offer and an acceptance are essential elements; they constitute the agreement
of the parties. The offer must be
communicated, must be complete, and must be accepted in its exact terms.” Dodds v. St. Louis Union Tr. Co.,
205 N.C. 153, 156, 170 S.E. 652, 653 (1933). Moreover, this acceptance, by “promise or
act, and communication thereof when necessary, while an offer of a promise is
in force, changes the character of the offer.
It supplies the elements of agreement and consideration, changing the
offer into a binding promise, and the offer cannot afterwards be revoked
without the acceptor’s consent.” Wilkins
v. Vass Cotton Mills, 176 N.C. 72, 81, 97 S.E. 151, 155 (1918)
(internal quotation marks omitted).
Furthermore,
it has long been recognized that “[a] valid contract . . . may
consist of one or many pieces of paper, provided the several pieces are so
connected physically or by internal reference that there can be no uncertainty
as to the meaning and effect when taken together.” Simpson v. Beaufort Cty. Lumber Co.,
193 N.C. 454, 455, 137 S.E. 311, 312 (1927) (internal quotation marks
omitted); see also Rankin v. Mitchem, 141 N.C. 277, 280,
53 S.E. 854, 855 (1906) (“Letters and telegrams which constitute an offer
and acceptance of a proposition, complete in its terms, may constitute a
binding contract, although there is an understanding that the agreement must be
expressed in a formal writing, and one of the parties afterwards refuses to
sign such agreement without material modification.”) (internal quotation marks
omitted).
In Lemly
v. Colvard Oil Co., 157 N.C. App. 99, 577 S.E.2d 712 (2003), this
Court determined that a handwritten memorandum, signed by the parties following
a Commission-ordered mediated settlement conference was “a valid compromise
settlement agreement subject to approval by the Industrial Commission pursuant
to Rule 502(1),” after one party drafted a clincher agreement according to
the terms agreed upon in the settlement conference but the non-drafting party
refused to sign the agreement. See
Lemly, 157 N.C. App. at 101, 104, 577 S.E.2d at 714, 716. The handwritten memorandum at issue in Lemly
stated that (1) a definite settlement amount was to be payable by
defendants to claimant, (2) claimant would “execute [a] clincher setting
out above terms and other standard language,” and (3) ”[u]pon approval by
[the Industrial Commission], settlement will be paid.” See id. at 100–01, 577 S.E.2d at
713 (third alteration in original). Although,
at the time of the settlement negotiations in the present case, the parties
were not participating in a mediated settlement conference, we nevertheless
find Lemly instructive.
In Lemly,
the Commission found that the parties had reached an agreement following their
mediation settlement conference and signed a settlement memo “pending the
execution by plaintiff of a clincher agreement.” See id. at 102, 577 S.E.2d at 714
(internal quotation marks omitted). This
was also reflected in the mediator’s report from the parties’ settlement
conference, which stated that the parties reached “agreement on all issues” and
that the issues settled would be “disposed of” by the clincher.
In the
present case, as in Lemly, the Commission found that, on or about
14 April 2005, plaintiff and defendant-carrier’s agent, Ms. Buchanan, “reached
a settlement agreement.” Again, this
finding was not challenged by defendants and is, therefore, binding on this
Court. Additionally, defendants do not
dispute that a letter dated 25 May 2005 was signed by their agent, Ms.
Ruiz, and sent to plaintiff which stated, “I understand that a settlement has
been reached in the amount of $97,500.00.”
Thus, as in Lemly, defendants in the present case signed a letter
memorializing their offer to settle plaintiff’s workers’ compensation claim for
the definite amount of $97,500, pending the execution of a clincher agreement
to be drafted by Ms. Ruiz upon receipt of plaintiff’s medical records.
The
parties in this case further stipulated that a settlement agreement was
prepared by Ms. Ruiz and sent to plaintiff, which stated: “Notwithstanding the controversy between the
parties, [plaintiff] has agreed to accept, and [d]efendants have agreed to pay,
the sum of NINETY-SEVEN THOUSAND FIVE HUNDRED AND 00/100 DOLLARS ($97,500.00),
in one lump sum . . . .”
In the signed letter, dated 9 June 2005, accompanying the
settlement agreement, Ms. Ruiz wrote:
Please find enclosed the Agreement for
Compromise Settlement and Release (“clincher agreement”) which I have
drafted in accordance with the agreement you have reached with Red Simpson,
Inc. and Liberty Mutual Insurance Company to settle your workers’ compensation
claim.
I would ask that you review this clincher
agreement, sign where indicated, have your signature witnessed, and return it
to me in the enclosed, self-addressed, stamped envelope. Upon receipt, I will sign the same on behalf
of my clients and submit it to the North Carolina Industrial Commission for
approval. The North Carolina Industrial
Commission will review our agreement at that time to make sure that it is fair
to all parties involved. After reviewing
the agreement, the Commission will enter an Order, approving our settlement, and
payment will be made to you in accordance with the agreement.
. . . .
Following the brief medical summary
[included in the first several paragraphs of the clincher agreement], there are
several paragraphs which state the positions of both you and, in the
alternative, my clients with regard to your claim and any workers’ compensation
benefits allegedly owed to you by my clients.
Please understand that these “contentions” paragraphs are not facts and
should not be considered as such by you in reviewing the agreement. Following these paragraphs, there are several
paragraphs which more fully set out in legal terms the settlement and release
agreement. These provide, among other
things, the amount of settlement and indicate that this is a final settlement
of your workers’ compensation claim.
. . . .
By copy of this letter to my clients, I
am also asking that they review the enclosed clincher agreement and
documentation/reports to be sure that they accurately and completely reflect
the terms of the settlement agreement reached between the parties. . . .
(Second and third
emphasis added.) The parties further
stipulated that, unlike the plaintiff in Lemly, the plaintiff in this
case accepted all of the terms of the agreement by affixing his signature and
that of his witness to the agreement, and returned the signed agreement to Ms.
Ruiz as she requested.
Neither
of the parties in the present case allege that the clincher agreement, prepared
by defendants’ agent and signed by plaintiff without any modifications, failed
to comply with any of the requirements of 502(2), which are required for the
agreement to be eligible for approval by the Commission. Instead, defendants assert only that this
Court should conclude the Commission erred by considering the settlement
agreement since, due to defendants’ decision to withhold their signatures from
the unmodified clincher agreement, which they drafted, the agreement failed to
strictly comply with the signature requirement of Rule 502(3)(b).
However,
we conclude that the 25 May and 9 June 2005 letters written and signed
by defendants’ agent Ms. Ruiz—which specifically stated that a settlement
had been reached in the amount of $97,500 and that a clincher agreement stating
the same followed—and the clincher agreement signed by plaintiff—which
was prepared by defendants’ agent reflecting the same terms—taken together
comprise a written memorialization of the fully executed settlement agreement
between plaintiff and defendants.
Accordingly, since settlement agreements are subject to general
contracting principles, we find that, in this case, the aforementioned
documents taken together satisfied the signing requirement of
Rule 502(3)(b), even though only defendants’ agent signed the agreement on
behalf of all defendants. See, e.g.,
Pee Dee Oil Co. v. Quality Oil Co., Inc., 80 N.C. App. 219, 223,
341 S.E.2d 113, 115 (“That defendant company did not sign the asset
purchase contract, which was prepared at its direction, is not decisive, for
a written contract can consist of several writings.”) (emphasis added)
(citing Hines v. Tripp, 263 N.C. 470, 139 S.E.2d 545 (1965)), disc.
review denied, 317 N.C. 706, 347 S.E.2d 438 (1986). Therefore, we hold that the Commission did
not err or abuse its discretion when it waived strict compliance with
Rule 502(3)(b) and considered the settlement agreement that it received
from plaintiff, who was unrepresented by counsel at the time. Consequently, we overrule this assignment of
error.
III.
Defendants
next contend the settlement agreement was not approved by the Commission “in
accordance with the statutory requirements” of N.C.G.S. §97-17(a). In the present case, after plaintiff learned
that defendants would “not honor” the compromise settlement agreement that
defendants drafted and that he accepted without modifications, this then-pro
se plaintiff “sent the agreement to the Executive Secretary’s office [at
the Commission] for enforcement.”
Defendants argue that, because plaintiff’s decision to submit a copy of
the settlement agreement directly to the Commission failed to comply with the
express language of N.C.G.S. §97-17(a), which provides that “[a] copy of a
settlement agreement shall be filed by the employer,” see N.C.
Gen. Stat. §97-17(a) (2007) (emphasis added), the “system envisioned” by the
North Carolina General Assembly to “safeguard” the “processing and handling of
compromise settlement agreements” was, itself, compromised. For the reasons discussed below, we overrule
this assignment of error.
It has
long been held that, “[i]f the language of the statute is plain and free from
ambiguity, and expresses a single, definite, and sensible meaning, that meaning
is conclusively presumed to be the meaning which the Legislature intended to
convey. In other words, the statute must
be interpreted literally.” Sch. Comm’rs
of
N.C.G.S.
§97-17(a) provides:
This article does not prevent settlements
made by and between the employee and employer so long as the amount of
compensation and the time and manner of payment are in accordance with the
provisions of this Article. A copy of
a settlement agreement shall be filed by the employer with and approved by the
Commission. No party to any
agreement for compensation approved by the Commission shall deny the truth of
the matters contained in the settlement agreement, unless the party is able to
show to the satisfaction of the Commission that there has been error due to
fraud, misrepresentation, undue influence or mutual mistake, in which event the
Commission may set aside the agreement.
Except as provided in this subsection, the decision of the Commission to
approve a settlement agreement is final and is not subject to review or
collateral attack.
N.C. Gen. Stat. §97-17(a)
(emphasis added). N.C.G.S. §97-17(b)
further provides that “[t]he Commission shall not approve a settlement
agreement under this section, unless all of the following conditions
are satisfied,” which include the requirements that: (1) ”[t]he settlement agreement is
deemed by the Commission to be fair and just, and that the interests of all of
the parties and of any person, including a health benefit plan that paid
medical expenses of the employee have been considered”; (2) ”[t]he
settlement agreement contains a list of all of the known medical expenses of
the employee related to the injury to the date of the settlement agreement,
including medical expenses that the employer or carrier disputes
. . .,” unless “the employer agrees to pay all medical expenses of
the employee related to the injury to the date of the settlement agreement”;
and (3) ”[t]he settlement agreement contains a finding that the positions
of all of the parties to the agreement are reasonable as to the payment of
medical expenses.” N.C. Gen. Stat. §97-17(b)
(emphasis added).
We
agree that there seems to be no ambiguity in the sentence of
subsection (a) of N.C.G.S. §97-17, which provides that “[a] copy of a
settlement agreement shall be filed by the employer with and approved by the
Commission.” N.C. Gen. Stat. §97-17(a). However, subsection (b) of the same
statutory provision casts some doubt on how to construe this language, since
subsection (b) plainly states that the Commission has the authority to
approve a settlement agreement under this section only when “all of
the following conditions are satisfied”—none of which is the condition that
the settlement agreement must be submitted for filing to the Commission by the
employer, rather than by the claimant. See
N.C. Gen. Stat. §97-17(b) (emphasis added).
Furthermore,
defendants cite no authority to support their assertion that the “public policy”
the General Assembly has “set forth in G.S. 97-17 is that [d]efendants are
the last to look at compromise settlement agreements . . . [to]
ensure they were not altered before sending them to the Industrial Commission
for consideration and that they comply with the current expectations of the employer/carrier.” Defendants also do not explain why this “policy”
would be compromised by allowing this plaintiff, in these circumstances, to
file this settlement agreement with the Commission. Instead, defendants only argue that, by the
General Assembly requiring “the employer” rather than the claimant to file the
settlement agreement with the Commission, it “assures [sic] that [defendants]
have the last opportunity to ensure that same [sic] is compliant with their
authority and their assessment of the claim” “[s]ince the carrier is making the
payment.”
Defendants’
argument is unpersuasive. Defendants
presented no evidence to show that they were deprived of the opportunity to
thoroughly review the content of their own contract, prepared by their
agent, to verify that the terms were consistent with their assessment of
the value of plaintiff’s claim prior to sending it to plaintiff for his
acceptance, and presented no evidence that plaintiff altered the settlement
agreement in any way prior to filing it with the Commission.
The
facts of the present case are as follows:
(1) an agreement had been reached between plaintiff and defendants,
through its authorized agent, to settle plaintiff’s worker’s compensation claim
in its entirety for a definite settlement amount; (2) defendants drafted a
settlement agreement according to the terms of this negotiated agreement
between plaintiff and defendants’ agent; (3) there was competent evidence
that plaintiff and defendants agreed on the terms that were reduced to writing
in this settlement agreement; (4) plaintiff timely accepted the terms of
the written settlement agreement without any modifications thereto;
(5) there was no evidence of any change in circumstances that would tend
to negate the negotiated settlement figure of the agreement between the time
plaintiff signed the agreement and the time it was returned to defendants for
their signatures; (6) there were no unknown facts which came to light that
would impact the defendants’ ability to enter into the agreement; and
(7) defendants failed to show any justification for their failure to
follow through with the settlement agreement negotiated.
As
referenced above, our appellate courts “have held in decision after decision
that our Workmen’s Compensation Act should be liberally construed to
effectuate its purpose to provide compensation for injured employees or
their dependents, and its benefits should not be denied by a technical,
narrow, and strict construction.” Hollman,
273 N.C. at 252, 159 S.E.2d at 882 (emphasis added). Accordingly, since the General Assembly has
not expressly provided that a settlement agreement filed by the claimant,
rather than by the employer, deprives the Commission of its authority to
approve a settlement agreement otherwise properly before it, in light of the
facts of the case before us, we hold that the compromise settlement agreement
approved by the Commission is not unenforceable solely because it was filed by
plaintiff, rather than by defendants.
Therefore, we overrule this assignment of error.
IV.
Defendants
next contend the Commission erred when it deemed that the settlement agreement
was “fair and just and in the best interest of all parties.” We disagree.
“The
law permits compromise settlements between employers and employees who are
bound by and subject to the Workmen’s Compensation Act, provided they are
submitted to and approved by the Industrial Commission.” Caudill v. Chatham Mfg. Co.,
258 N.C. 99, 106, 128 S.E.2d 128, 133 (1962). Both Workers’ Compensation Rule 502(1)
and N.C.G.S. §97-17(b)(1) provide that the Commission may only approve those
compromise settlement agreements that it deems to be “fair and just” and in the
best interests of all of the parties. See
Workers’ Comp. R. of N.C. Indus. Comm’n 502(1) 2009 Ann. R. (N.C.) 996;
N.C. Gen. Stat. §97-17(b)(1). “The
conclusion the agreement is fair and just . . . must come after a
full review of the medical records filed with the agreement submitted to the
Commission[, and] . . . only if [the agreement] allows the injured employee
to receive the most favorable disability benefits to which he is entitled.” Lewis v. Craven Reg’l Med. Ctr.,
134 N.C. App. 438, 441, 518 S.E.2d 1, 3 (1999), aff’d per curiam,
352 N.C. 668, 535 S.E.2d 33 (2000).
“The law thus undertakes to protect the rights of the employee in
contracting with respect to his injuries.”
Caudill, 258 N.C. at 106, 128 S.E.2d at 133 (emphasis
added).
Here,
although the parties stipulated that the cost of a total knee replacement is
approximately $25,000 to $30,000, defendants argue that, at the time of the “alleged
date of settlement” on 14 April 2005, there was “no indication” in
plaintiff’s medical history that he would require a total knee replacement, and
so there was “no competent evidence, such as a medical note, to support the
$97,500 settlement figure at the time the settlement was reached on or around
April 14, 2005.” However,
defendants did not challenge the Commission’s findings that “[f]uture medicals were
an issue, no permanent disability benefits had been paid, and [p]laintiff
had refused to sign a Form 21 submitted to him previously by [defendant-carrier].” (Emphasis added.)
Furthermore,
defendants did not dispute, and the medical records support, the Commission’s
finding that plaintiff suffered from a 10% permanent partial disability rating
to his right knee, and that, although plaintiff’s treating physician first
determined that he had reached maximum medical improvement in
October 2003, his physician withdrew this opinion after he reassessed
plaintiff’s condition in October 2004.
Additionally, at a 15 February 2005 follow-up visit with plaintiff,
plaintiff’s treating physician noted that plaintiff had “[p]ersistent knee pain”
dating back to the arthroscopic surgery on plaintiff’s right knee almost two
years earlier, and noted that he planned to see plaintiff in three months to “reevaluate”
his condition, but would see him “[a]nytime sooner if [plaintiff wa]s having
problems.” The medical records also
support the Commission’s finding that, during plaintiff’s third prescribed
course of physical therapy beginning in March 2005, plaintiff reported
continued knee pain “at rest and with activity,” and had an “abnormal gait,” as
well as “decreased knee strength.”
Since
defendants chose to give plaintiff’s file to Ms. Buchanan one month before
plaintiff was due to return to his physician for a reevaluation of his
condition in May 2005, and Ms. Buchanan was relied upon to settle a lot of
cases quickly and could settle “cases that needed to be settled” that
other people could not settle, it seems “clear that the parties were
contracting [to settle plaintiff’s claim] with reference to future
uncertainties and were taking their chances as to future developments, relapses
and complications, or lack thereof.” See
Caudill, 258 N.C. at 106, 128 S.E.2d at 133; see also id.
(“A compromise is essentially an adjustment and settlement of differences. If there are no differences or uncertainties
there is no reason for compromise.”).
Therefore, we hold that, based on the evidence available to the parties
at the time of the settlement negotiation, the Commission correctly concluded
that the parties’ decision to settle plaintiff’s claim for $97,500 was fair and
just and in the best interest of the parties, and overrule this assignment of
error.
V.
Finally,
defendants contend the Commission abused its discretion when it assessed
attorney’s fees in the amount of 25% of the settlement amount of $97,500
against defendant-carrier pursuant to N.C.G.S. §97-88.1. “[T]he policy behind
If the Industrial Commission shall
determine that any hearing has been brought, prosecuted, or defended without
reasonable ground, it may assess the whole cost of the proceedings including
reasonable fees for defendant’s attorney or plaintiff’s attorney upon the party
who has brought or defended them.
N.C. Gen. Stat. §97-88.1
(2007). “The purpose of th[is] section
is to prevent stubborn, unfounded litigiousness, which is inharmonious with the
primary purpose of the Workers Compensation Act to provide compensation to
injured employees.” Beam v. Floyd’s
Creek Baptist Church, 99 N.C. App. 767, 768, 394 S.E.2d 191, 192
(1990) (internal quotation marks omitted).
The
determination of “[w]hether the defendant had a reasonable ground to bring a
hearing is reviewable by this Court de novo.” Troutman v. White & Simpson, Inc.,
121 N.C. App. 48, 50, 464 S.E.2d 481, 484 (1995), disc. review
denied, 343 N.C. 516, 472 S.E.2d 26 (1996). “The reviewing court must look to the
evidence introduced at the hearing in order to determine whether a hearing has
been defended without reasonable ground.”
Ruggery v. N.C. Dep’t of Corr., 135 N.C. App. 270, 274,
520 S.E.2d 77, 80 (1999). “The test
is not whether the defense prevails, but whether it is based in reason rather
than in stubborn, unfounded litigiousness.”
Sparks v. Mountain Breeze Rest. & Fish House, Inc.,
55 N.C. App. 663, 665, 286 S.E.2d 575, 576 (1982). If it is determined that a party lacked
reasonable grounds to bring or defend a hearing before the Commission, then the
decision of whether to make an award pursuant to N.C.G.S. §97-88.1, “and the
amount of the award, is in the discretion of the Commission, and its award or
denial of an award will not be disturbed absent an abuse of discretion.” Troutman, 121 N.C. App. at 54–55,
464 S.E.2d at 486.
Defendants
argue that they had “a reasonable basis to defend th[eir] claim” that the
settlement agreement submitted to the Commission by plaintiff was
unenforceable, primarily because they denied that the settlement amount agreed
to by both parties was $97,500. However,
in light of the evidence before the Commission discussed in the sections above,
we conclude that the position defendants took in the face of their settlement
agreement with plaintiff was in bad faith, as found by the Commission, and
conclude that defendants have articulated no reasonable ground in support of
their failure to honor the terms of this settlement agreement with
plaintiff. Accordingly, we hold that the
Commission did not abuse its discretion when it assessed a percentage of the
settlement amount of $97,500 as attorney’s fees against defendant-carrier in
its 7 February 2008 Opinion and Award.
Affirmed.
Judges
WYNN and STEPHENS concur.