Ales v. TA Loving Co.

• Decision Date: 16 March 2004
• Docket Number: No. COA03-589.,COA03-589.
• Citation: 593 S.E.2d 453,163 NC App. 350
• Court: North Carolina Court of Appeals
• Parties: Joseph ALES, Jr., Plaintiff, v. T.A. LOVING COMPANY, and Shields, Inc., Defendants, T.A. Loving Company, and Shields, Inc., Defendants and Third-Party Plaintiffs, v. Orders Distributing Company, Inc., and Tarkett, Inc., Third-Party Defendants.

593 S.E.2d 453

163 NC App. 350

Joseph ALES, Jr., Plaintiff, v. T.A. LOVING COMPANY, and Shields, Inc., Defendants, T.A. Loving Company, and Shields, Inc., Defendants and Third-Party Plaintiffs, v. Orders Distributing Company, Inc., and Tarkett, Inc., Third-Party Defendants.

No. COA03-589.

Court of Appeals of North Carolina.

March 16, 2004.

The McGougan Law Firm, by Paul J. Ekster and Kevin J. Bullard, Tabor City, for plaintiff-appellee.

Hedrick & Morton, L.L.P., by B. Danforth Morton, Wilmington, for defendant-appellants Columbus County Hospital, Reliance Insurance Company and Cambridge Integrated Services Group.

MARTIN, Chief Judge.

The unnamed defendants appeal from an order of the superior court extinguishing their workers' compensation lien against the proceeds of plaintiff's third-party recovery against defendants T.A. Loving Company (Loving), Shields, Inc. (Shields), and third-party defendant Tarkett, Inc. (Tarkett). The unnamed defendants include plaintiff's former employer, Columbus County Hospital (Hospital); the employer's workers' compensation insurance carrier, Reliance Insurance Company; and the insurance carrier's bankruptcy receiver, Cambridge Integrated Services Group. Loving, a general contractor remodeling part of the Hospital, and Shields, a subcontractor repairing flooring in the Hospital, are named defendants but are not parties to this appeal. Likewise, third-party defendants Orders Distributing Company, Inc. (Orders), a tile and floor products distributor, and Tarkett, manufacturer of the flooring tile used at Hospital, are not involved as parties in this appeal.

On 20 August 1999, plaintiff injured his back and knee in a fall during the course of his employment as a nurse anesthetist at Hospital. Plaintiff sued Hospital, Loving and Shields to recover for his personal injuries. Defendant Shields filed a third-party complaint against third-party defendants Orders and Tarkett.

Plaintiff also pursued a workers' compensation claim against Hospital, which was settled through a clincher agreement approved by the North Carolina Industrial Commission in July 2001. In addition to medical expenses paid on plaintiff's behalf, the clincher required a one-time payment of $120,000, which discharged the Hospital's liability to plaintiff. The Hospital's motion to dismiss plaintiff's lawsuit against it was allowed by order of the trial court on 17 July 2002, nunc pro tunc 3 June 2002. Defendants Loving and Shields, along with plaintiff and third-party defendants Orders and Tarkett, attempted to mediate plaintiff's claim on 16 October 2002, but reached an impasse.

On 9 January 2003, plaintiff's attorney wrote a letter to the attorneys for defendants Loving and Shields and third-party defendant Tarkett, stating in part:

Pursuant to our agreement, it is my understanding that we have settled the above matter with all Defendants for the total sum of $145,000.00 contingent upon a waiver of the workers' compensation lien.

Plaintiff filed a motion on 24 January 2003 to extinguish the workers' compensation subrogation lien in the amount of $206,669.93 claimed by defendant insurance carrier. The motion was heard on 3 March 2003 in Columbus County Superior Court. At the hearing, plaintiff offered a copy of the 9 January 2003 letter as his sole exhibit in support of his motion. The court found:

19. That in order to resolve this disputed claim, and in order to bring about a final resolution to all matters in dispute, a settlement has been agreed upon by the Plaintiff and the above-captioned third parties in the above-entitled action.

On 19 March 2003, the trial court ordered that the workers' compensation lien of $206,669.93 should be waived in its entirety.

The record on appeal contains six assignments of error, which are presented in two arguments by defendant Hospital in its brief. Defendant Hospital argues that the trial court did not have jurisdiction to reduce the worker's compensation lien or, alternatively, that the trial court did not hold a hearing sufficient to protect Hospital's rights to due process of law. We agree with defendant's first argument and vacate the trial court's order.

The question presented here is whether N.C. Gen.Stat. § 97-10.2(j) provides the superior court with jurisdiction to adjust the amount of a worker's compensation lien when the terms of the settlement agreement are contingent upon such adjustment. The statute provides, in pertinent part:

(j)

...