Walker v. K&W Cafeterias
| Citation | 846 S.E.2d 679,375 N.C. 254 |
| Decision Date | 14 August 2020 |
| Docket Number | No. 99PA19,99PA19 |
| Court | United States State Supreme Court of North Carolina |
| Parties | Gwendolyn Dianette WALKER, Widow of Robert Lee Walker, Deceased Employee v. K&W CAFETERIAS, Employer, Liberty Mutual Insurance Company, Carrier |
The Sumwalt Law Firm, Charlotte, by Vernon Sumwalt, for plaintiff-appellant.
Cranfill Sumner & Hartzog, LLP, Raleigh, by Roy G. Pettigrew, for defendant-appellees.
Pursuant to plaintiff's petition for discretionary review, we review the decision of the Court of Appeals, which affirmed the 27 February 2018 Opinion and Award of the North Carolina Industrial Commission (the Commission). The Commission found that the uninsured/underinsured motorist (UIM) proceeds that plaintiff received on behalf of her husband's estate through the settlement of a South Carolina wrongful death lawsuit were subject to defendants’ subrogation lien under N.C.G.S. § 97-10.2. We conclude that, by an endorsement to the UIM policy covering the vehicle that decedent was driving when he was killed, South Carolina insurance law applies, and it bars subrogation of UIM proceeds. S.C. Code § 38-77-160 (2015). Therefore, the UIM proceeds that plaintiff recovered from the wrongful death lawsuit may not be used to satisfy defendants’ workers’ compensation lien under N.C.G.S. § 97-10.2. Accordingly, we reverse and remand for further proceedings not inconsistent with this opinion.1
On 16 May 2012, Robert Lee Walker (decedent), plaintiff's husband and an employee of defendant K&W Cafeterias (K&W), was involved in a motor vehicle accident with a third-party in Dillon, South Carolina. Decedent died as a result of his injuries. The vehicle that decedent was driving was owned by K&W, a North Carolina corporation headquartered in Winston-Salem, North Carolina.
Prior to the occurrence of the accident in which Mr. Walker died, the vehicle insurance policy applicable here was modified by an endorsement, pertinent parts of which are quoted below:
Decedent's widow, Gwendolyn Dianette Walker, filed a workers’ compensation claim with the North Carolina Industrial Commission (the Commission) for medical expenses and death benefits resulting from decedent's death under N.C.G.S. § 97-38 –40. On 7 January 2013, the Commission entered a Consent Opinion and Award ordering defendants to pay $333,763 in workers’ compensation benefits to plaintiff.2
In 2014, plaintiff, as representative of decedent's estate, filed a new and separate civil action in South Carolina—a wrongful death case seeking damages from the driver of the motor vehicle (the third-party) who was at fault in the accident that resulted in Mr. Walker's death. In 2016, plaintiff and the third-party reached a settlement agreement, according to which plaintiff recovered a total of $962,500 on behalf of decedent's estate. The recovery included: (1) $50,000 in liability benefits from the third-party's insurer; (2) $12,500 in personal UIM proceeds from plaintiff's and decedent's own personal UIM policy; and (3) $900,000 in UIM proceeds from a commercial UIM policy that K&W purchased with its automobile insurance carrier.
On 21 March 2016, Liberty Mutual Insurance Co.—the workers’ compensation insurance carrier for K&W and co-defendant in this case—filed a request for a hearing with the North Carolina Industrial Commission in which it sought repayment of the workers’ compensation death benefits it had paid to plaintiff beginning in 2013, claiming a lien under N.C.G.S. § 97-10.2 on the UIM proceeds that she recovered from the South Carolina wrongful death settlement in 2016.
On 30 March 2016, plaintiff filed a declaratory judgment action against defendants in South Carolina, asserting that S.C. Code § 38-77-160 precluded subrogation and assignment to defendants of the UIM proceeds that plaintiff had been awarded in the settlement. On 2 May 2016, defendants removed the action to the United States District Court for the District of South Carolina on the basis of diversity jurisdiction. The United States District Court ultimately abstained from hearing the declaratory judgment action.
Meanwhile, on 13 June 2016, plaintiff filed a motion in the North Carolina Industrial Commission to stay all proceedings on defendants’ subrogation claim there, pending the result of the federal litigation. Plaintiff's motion was denied on 28 June 2016. Plaintiff then filed a motion to reconsider, which the Commission denied on 18 July 2016. Plaintiff appealed and filed another motion for stay. Plaintiff's appeal was heard by a Deputy Commissioner.
In its 10 July 2017 Opinion and Award, the Deputy Commissioner denied plaintiff's motion to stay the proceedings and ordered the distribution of plaintiff's entire recovery from the South Carolina wrongful death settlement with the at-fault driver (the third-party recovery). The Deputy Commissioner concluded that defendants were entitled to subrogation under N.C.G.S. § 97-10.2(f)(1)(c), (h), and ordered that defendants be reimbursed out of the third-party recovery for the $333,763 in workers’ compensation benefits that they had paid to Mrs. Walker under the 7 January 2013 Consent Opinion and Award.
Plaintiff appealed the 10 July 2017 Opinion and Award to the Full Commission, which affirmed the Deputy Commissioner's decision. Plaintiff then appealed to the Court of Appeals.
The Court of Appeals affirmed, holding in pertinent part that "[t]he Full Commission correctly concluded Defendants could assert a subrogation lien for workers' compensation benefits paid to Plaintiff on the UIM policy proceeds obtained by Plaintiff in the South Carolina wrongful death action." Walker v. K&W Cafeterias , 264 N.C. App. 119, 133, 824 S.E.2d 894, 904 (N.C. Ct. App. 2019). As explained below, we conclude that defendants may not satisfy their workers’ compensation lien by collecting from plaintiff's recovery of UIM proceeds in her South Carolina wrongful death settlement. Accordingly, we reverse the decision of the Court of Appeals.
First, we emphasize that this case is not plaintiff's workers’ compensation claim. That claim was fully resolved in 2013 when death benefits were paid to plaintiff under the Workers’ Compensation Act due to Mr. Walker's work-related death. Instead, here we review what should happen to over $900,000 that was paid to plaintiff in the South Carolina wrongful death settlement with the at-fault driver. That settlement was reached in 2016, and to date, the money remains in the trust account of plaintiff's attorneys.
Because the 2012 workers’ compensation case was brought in North Carolina, Liberty Mutual sought to have the Commission order plaintiff to reimburse the workers’ compensation benefits she had been paid with the as-yet-undistributed recovery she received in her South Carolina wrongful death settlement. Although the Commission and the Court of Appeals concluded that Liberty Mutual could be reimbursed with plaintiff's wrongful death UIM proceeds, we disagree.
For the reasons below, we conclude that the South Carolina UIM policy—a contract to which defendants are party and according to which the wrongful death settlement proceeds were paid—controls the outcome here. That policy requires the application of South Carolina law to the payment of UIM proceeds. Under South Carolina UIM law, an insurer is barred, without exception, from seeking to be reimbursed with UIM proceeds for benefits it has previously paid. S.C. Code § 38-77-160 (). Accordingly, we reverse the decision of the Court of Appeals and remand to the Commission for proceedings not inconsistent with this opinion.
This case presents a single issue of law, i.e., a conclusion of law by the Commission, which we review de novo. N.C.G.S. § 97-86 ( ).
We must determine whether to apply North Carolina or South Carolina law to the attempted subrogation of plaintiff's wrongful death settlement UIM proceeds. The Court of Appeals analyzed this question as an abstract choice of law issue and concluded that North Carolina law applies. See Walker , 264 N.C. App. at 131, 824 S.E.2d at 902–03 (discussing Anglin v. Dunbar Armored, Inc. , 226 N.C. App. 203, 742 S.E.2d 205 (2013) ). We do not agree with the conclusion that this case presents a choice of law issue; instead we conclude that this issue is properly analyzed under contract law interpreting a choice-of-law clause. As we are basing our decision on contractual terms rather than legal principles related to choice of law, we need not—and do not—go beyond the contract as modified by its endorsement; by the explicit...
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...243, 247 (2005) (citation omitted). The Commission's conclusions of law, however, are reviewed de novo. Walker v. K&W Cafeterias , 375 N.C. 254, 258, 846 S.E.2d 679, 682 (2020).II. Analysis¶ 10 Defendants maintain that the Full Commission erred by determining that N.C. Gen. Stat. § 97-25.1 ......
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