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.
NO. COA01-1529
NORTH CAROLINA COURT OF APPEALS
Filed: 1 April 2003
MICHAEL
LEMLY,
Employee,
Plaintiff,
v. North
Carolina Industrial Commission
I.C.
File No. 717229
COLVARD
OIL COMPANY,
Employer,
and
FEDERATED
MUTUAL INSURANCE COMPANY,
Carrier,
Defendants.
Appeal by defendants from opinion and award entered 5 September 2001 by the North Carolina Industrial Commission. Heard in the Court of Appeals 10 February 2003.
Crosswhite,
Edwards & Crosswhite, by Joseph N. Crosswhite, for plaintiff-appellee.
Ball
Barden & Bell, P.A., by Thomas R. Bell, for defendant-appellants.
EAGLES,
Chief Judge.
Colvard
Oil Company and Federated Mutual Insurance Company (“defendants”) appeal from
an opinion and award of the full Commission concluding that a memorandum of
settlement arising out of a mediated settlement conference was not enforceable
as a compromise settlement agreement and awarding Michael Lemly (“plaintiff”)
total disability benefits. After careful consideration of the briefs and
record, we reverse and remand.
The
plaintiff worked for defendant Colvard Oil Company (“Colvard Oil”) as a truck
driver. On 6 May 1997, the plaintiff was hauling gravel when tree limbs became
entangled in the bed of his truck. The plaintiff “wrestle[d]” with a tarp
covering the bed of his truck. As the plaintiff lifted a tree limb from the bed
of the truck, he “felt a real sharp pain” in his back and “a real bad burning
sensation.” The following day, the plaintiff went to the emergency room and
then to his family physician.
Defendants
filed a Form 60 dated 5 June 1997 admitting plaintiff’s right to compensation
and began paying plaintiff temporary total disability benefits. Plaintiff
participated in physical therapy and received treatment from several doctors
until he was cleared to return to light duty work in January 1998. Plaintiff
returned to work for Colvard Oil on 26 January 1998 at a filling station
subject to work restrictions. After work on 26 January, the plaintiff “could
barely walk” and he proceeded to the emergency room. Dr. Mark Scott, a
physician in the emergency room, advised the plaintiff to remain out of work.
Dr. Charles Branch, Jr., a neurosurgeon, performed surgery on the plaintiff’s
back in May 1998. Plaintiff has not returned to work since 26 January 1998.
The
Industrial Commission ordered the parties to participate in a mediated settlement
conference which occurred on 12 August 1998. At the conclusion of the
conference, the parties all signed a “Memorandum of Settlement” which stated:
The
Parties agree that:
1. Defendants
shall pay claimant $40,000.00 in settlement of this claim; and
2. Claimant
shall pay out of the settlement proceeds all unpaid medical bills and satisfy
all medical liens; and
3. Claimant
shall execute clincher setting out above terms and other standard language.
Upon approval by [the Industrial Commission], settlement will be paid.
4. Defendants
shall pay all mediation fees.
The
day after the mediation, the defendants sent the plaintiff a clincher
agreement. The plaintiff did not execute the clincher agreement and filed a
Form 33 dated 15 September 1998 seeking a hearing because of “the Defendants
refus[al] to provide necessary medical treatment.” Defendants filed a Form 24
on 12 October 1998 seeking to terminate or suspend payment of benefits and
moved to “Require Compliance with Mediated Settlement.”
In
an opinion and award, the Deputy Commissioner denied defendants’ motion to
enforce the settlement agreement. The Deputy Commissioner awarded plaintiff
temporary total disability compensation from 28 January 1998 through 26 May
1999 and permanent partial disability compensation for a period of seventy-five
weeks. The plaintiff and defendants appealed.
The
full Commission concluded that the signed settlement agreement was “not
enforceable as a Compromise Settlement Agreement.” The full Commission awarded
the plaintiff temporary total disability benefits from 28 January 1998 through
26 May 1999 and ongoing total disability benefits “until further order of the
Commission.” Defendants appeal.
On
appeal, defendants contend that the full Commission erred in refusing to allow
defendants to stop paying disability benefits to the plaintiff because
plaintiff wrongfully refused light duty work and that the full Commission erred
in failing to enforce the settlement agreement. After careful consideration, we
agree.
Defendants
first contend that the full Commission erred by failing to enforce the
settlement agreement. Defendants argue that the parties participated in a
Commission ordered mediation which resulted in an agreement to settle, signed
by both parties. The plaintiff agreed to execute a clincher agreement which
would set out the terms of the settlement. Defendants argue that the plaintiff
has not alleged that the clincher agreement contained terms different than what
was agreed to at the mediation. We agree.
“[O]ur
role in reviewing decisions of the Commission is strictly limited to the
two-fold inquiry of (1) whether there is competent evidence to support the
Commission’s findings of fact; and (2) whether these findings of fact justify
the Commission’s conclusions of law.” Foster v. Carolina Marble & Tile
Co., 132 N.C. App. 505, 507, 513 S.E.2d 75, 77, disc. review denied,
350 N.C. 830, 537 S.E.2d 822 (1999). “The Commission’s findings will not be
disturbed on appeal if they are supported by competent evidence even if there
is contrary evidence in the record. However, the Commission’s conclusions of
law are reviewable de novo by this Court.” Hawley v. Wayne Dale
Constr., 146 N.C. App. 423, 427, 552 S.E.2d 269, 272, disc. review
denied, 355 N.C. 211, 558 S.E.2d 868 (2001) (citations omitted).
Here,
the full Commission found that:
The
parties participated in a mediated settlement conference pursuant to an Order
of the Commission dated 25 March 1998. On 12 August 1998, the mediation was
held and an agreement was reached between the parties. The parties signed a
handwritten memorandum of the settlement, pending the execution by
plaintiff of a clincher agreement. While returning home from the conference,
plaintiff determined that he did not wish to follow through with the agreement,
and did not prepare a clincher agreement.
(Emphasis added.) The full Commission
then concluded that “[t]he handwritten Memorandum of Settlement signed by the
parties on 12 August 1998 is not enforceable as a Compromise Settlement
Agreement under Industrial Commission Rule 502.”
Pursuant
to G.S. §97-80(c), “[t]he Commission may order parties to participate in
mediation.” The duties of the parties if an agreement is reached in the
mediation are:
(d) Finalizing
agreement. If an agreement is reached in the mediation conference, the parties
shall reduce the agreement to writing, specifying all the terms of their
agreement bearing on the resolution of the dispute before the Industrial
Commission, and sign it along with their counsel. By stipulation of the parties
and at their expense, the agreement may be electronically or stenographically
recorded. All agreements for payment of compensation shall be submitted in
proper form for Industrial Commission approval, and shall be filed with the
Commission within 20 days of the conclusion of the mediation conference.
Mediated Settlement and Neutral
Evaluation Conferences R. of N.C. Indus. Comm’n 4(d), 2003 Ann. R. (N.C.) 866.
“All compromise settlement agreements must be submitted to the Industrial
Commission for approval. Only those agreements deemed fair and just and in the
best interest of all parties will be approved.” Workers’ Comp. R. of N.C.
Indus. Comm’n 502(1), 2003 Ann. R. (N.C.)834. “A ‘clincher’ or compromise
agreement is a form of voluntary settlement used in contested or disputed
cases.” Ledford v. Asheville Housing Authority, 125 N.C. App. 597, 599,
482 S.E.2d 544, 546, disc. review denied, 346 N.C. 280, 487 S.E.2d 550
(1997). The settlement agreement “must contain specified language or its equivalent”
to be approved by the Industrial Commission. Id.; see also
Workers’ Comp. R. of N.C. Indus. Comm’n 502(2), 2003 Ann. R. (N.C.) 834.
Compromise
settlement agreements, including mediated settlement agreements, “are governed
by general principles of contract law.” Chappell v. Roth, 353 N.C. 690,
692, 548 S.E.2d 499, 500, reh’g denied, 354 N.C. 75, 553 S.E.2d 36
(2001). “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). “To be enforceable, the terms of a contract
must be sufficiently definite and certain.” Miller v. Rose, 138 N.C.
App. 582, 587-88, 532 S.E.2d 228, 232 (2000).
Here,
at the mediation the parties signed a written “Memorandum of Settlement.”
Plaintiff, plaintiff’s attorney, defendants’ attorney, and a representative of
defendant Federated Mutual Insurance Company all signed this memorandum. The
memorandum began with the language “[t]he parties agree that: (1) Defendants
shall pay claimant $40,000.00 in settlement of this claim.” It further stated
that the “[c]laimant shall pay out of the settlement proceeds all unpaid
medical bills and satisfy all medical liens” and that “[d]efendants shall pay
all mediation fees.” The memorandum also stated that “[c]laimant shall execute
clincher setting out above terms and other standard language. Upon approval by
[the Industrial Commission], settlement will be paid.”
The
language of this signed memorandum indicates that the parties agreed to settle
this matter for $40,000.00 and provides for the payment of plaintiff’s unpaid
medical bills and medical liens. It references a clincher agreement that
“[plaintiff] shall execute.” The defendants, in accordance with the signed
“Memorandum of Settlement,” prepared a clincher agreement and sent it to the
plaintiff the day after the mediation. This clincher agreement contained the
standard terms required by Rule 502(2) of the Workers’ Compensation Rules of
the North Carolina Industrial Commission.
In
addition, the “Report of Mediator” states that the “parties reached: X
agreement on all issues.” It further states that the “[i]ssues settled to be
disposed of by: X clincher.” Defendants’ “Motion to Require Compliance
with Mediated Settlement” provides that:
4. On
12 August 1998 mediation occurred which resulted in a mediated settlement
agreement. . . .
5. On
12 August 1998, as a result of mediation, the parties settled all issues
between them. A written memorandum of this agreement prepared at mediation is
attached . . . to this Motion.
6. As
a result of this settlement agreement, the undersigned attorney for Employer
and Carrier prepared a Clincher Agreement and mailed it to Employee’s attorney.
In early September telephone conversations occurred between attorneys for the
parties indicating that Employee would not go through with the settlement. On
15 September 1998 Employee’s attorney wrote attorney for Employer and Carrier a
letter . . . indicating that his client would not go through with settling this
claim and that he was, in fact, filing an additional Form 33.
“Plaintiff’s Response” to this motion
stated that “[p]laintiff does not dispute the facts as set forth in the
Defendant’s Motion.”
While
the better practice would be for the parties to execute a clincher agreement
which contains all the required terms and language at the conclusion of the
mediated settlement conference if an agreement is reached, the signed
“Memorandum of Settlement” here fully complies with Rule 502(2) of the Workers’
Compensation Rules and is a valid compromise settlement agreement subject to
approval by the Industrial Commission pursuant to Rule 502(1).
Because
we have concluded that the written “Memorandum of Settlement” is a valid
compromise settlement agreement, we need not address defendants’ remaining
assignments of error.
Accordingly,
the opinion and award of the full Commission is reversed and the matter
remanded to the full Commission in order for the full Commission to consider
its approval of the mediated settlement agreement pursuant to Rule 502(1) of
the Workers’ Compensation Rules, i.e., is the agreement “deemed fair and just
and in the best interest of all parties.”
Reversed
and remanded.
Judges
MARTIN and GEER concur.