Deese v. Champion Intern. Corp., No. 500PA98-2.

Decision Date16 June 2000
Docket NumberNo. 500PA98-2.
Citation352 N.C. 109,530 S.E.2d 549
CourtNorth Carolina Supreme Court
PartiesBracy DEESE, Employee, v. CHAMPION INTERNATIONAL CORPORATION, Employer (Self-Insured), and Sedgwick James of the Carolinas, Administrator.

John A. Mraz, P.A., by John A. Mraz, Asheville, for plaintiff-appellant.

Robinson & Lawing, L.L.P., by Jane C. Jackson, Jolinda J. Babcock, and Kristin M. Major, Winston-Salem, for defendant-appellees.

ORR, Justice.

On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision of the Court of Appeals, 133 N.C.App. 278, 515 S.E.2d 239 (1999), replacing its holding in a prior decision of this case reported at 131 N.C.App. 299, 506 S.E.2d 734 (1998), and remanding an opinion and award entered by the North Carolina Industrial Commission 4 September 1997. Heard in the Supreme Court 16 February 2000.

This case arises out of proceedings before the Industrial Commission initiated after defendants, on 13 December 1994, filed a Form 24 application to terminate plaintiff's workers' compensation benefits "on the grounds that the plaintiff is presently either a partner, owner and/or employee of a used car dealership ... and that plaintiff therefore has earning capacity and does not continue to be totally disabled." Defendants supported their contention with documents and videotapes of plaintiff inspecting vehicles, talking with customers, and working in the office. However, plaintiff failed to respond to defendants' application to terminate benefits. Thus, on 13 February 1995, the Commission entered an administrative decision and order approving defendants' application effective 15 February 1994. On 16 March 1995, plaintiff filed a request that the order be assigned for hearing.

A deputy commissioner conducted a hearing on 21 February 1996. On 14 January 1997, the deputy commissioner entered an opinion and award, finding, inter alia, the following:

22. The videotapes are significant in that they shed light on the plaintiff's veracity. The plaintiff's attempts to operate these businesses without the knowledge of the defendants, coupled with the contradiction of his testimony by the videos[,] are circumstances the undersigned finds significant in assessing plaintiff's propensity for truth. In view of the documentary evidence and videotape evidence, the undersigned finds plaintiff's testimony that he was not involved in vehicle sales to be unbelievable.

The deputy commissioner's findings generated conclusions of law to the effect that defendants demonstrated that "plaintiff has regained his wage earning capacity" and that as of 15 February 1994, defendants were entitled to stop payment of temporary total disability benefits.

Plaintiff appealed to the full Commission, which reconsidered the evidence but did not hear live testimony. In its opinion and award entered 4 September 1997, the full Commission made the following pertinent findings of fact:

16. Mr. William Gregory, a private investigator hired by defendant, obtained videotape of plaintiff on the premises of his brother's car lot in the fall of 1994. Prior investigations by Mr. Gregory produced no evidence that plaintiff was engaging in any activity that went beyond his recommended physical limitations. Further, there is no evidence in the record that plaintiff was earning wages at his former wage level with defendant from this car business or from any other employment.
17. The Deputy Commissioner in this matter found plaintiff's testimony regarding his association with his brother's car business and his later investment in said business was not credible. The Deputy Commissioner found that plaintiff had attempted to keep his involvement with the car business hidden from defendant and that plaintiff had never mentioned his involvement to any of his treating physicians until after he learned that his activities had been videotaped.
18. Despite the Deputy Commissioner's first hand observations of the witness at hearing, the Full Commission finds that plaintiff's testimony regarding his association with his brother's car business and his later investment in said business to be credible for the following reasons: plaintiff informed Dr. Lawless that he had been spending some time with his brother at his brother's car dealership; plaintiff's statements to Dr. Lawless are corroborated by statements to Dr. Lawless by plaintiff's wife; Ms. Donna Kropelnicki, the rehabilitation nurse assigned by defendant to plaintiff's case, had knowledge of the fact that plaintiff was attempting to get out of the house and that he had been frequently visiting his brother's business[;] and[ ] it was only after Ms. Kropelnicki reported these activities to defendant that the later videotapes were taken.
21. As the result of his 4 August 1989 injury by accident, plaintiff has been unable to earn wages in his former employment with defendant or in any other employment from 15 February 1994 through the present and continuing.

Based on the findings of fact, "the Full Commission conclude[d] as a matter of law that the Administrative Decision and Order of [the] Special Deputy Commissioner ... filed 13 February 1995 which allowed the termination of plaintiff's benefits ... was erroneously approved." Additionally, the full Commission concluded that "as a result of his 4 August 1989 injury by accident, plaintiff is entitled to have defendant reinstate payments of temporary total disability compensation." Thus, the Commission, with one commissioner dissenting, reversed the deputy commissioner and awarded plaintiff temporary total disability benefits. Defendants then appealed to the Court of Appeals.

In the Court of Appeals' first review of the case sub judice, it reversed the opinion and award of the Commission and remanded the case to the full Commission. Deese v. Champion Int'l Corp., 131 N.C.App. 299, 304, 506 S.E.2d 734, 737 (1998). In support of its decision, the court followed its prior holding in Sanders v. Broyhill Furn. Indus., 124 N.C.App. 637, 478 S.E.2d 223 (1996), disc. rev. denied, 346 N.C. 180, 486 S.E.2d 208 (1997). In Sanders, the Court of Appeals held that Commission findings reversing credibility determinations made by a deputy commissioner are reviewable by the Court of Appeals and must be supported by findings "showing why the deputy commissioner's credibility determinations should be rejected." Id. at 641, 478 S.E.2d at 226. Applying Sanders, the Court of Appeals in this case then reviewed the full Commission's findings of fact and determined that the evidence supporting finding of fact number eighteen, which set out the Commission's credibility determinations supporting its opinion that plaintiff was credible, was not relevant to the deputy commissioner's credibility determinations that plaintiff was not credible. Deese, 131 N.C.App. at 303, 506 S.E.2d at 737. The court further noted that the full Commission failed to consider several credibility issues raised by plaintiff's testimony that the deputy commissioner used to support her determination that plaintiff was not credible. Id.

On 3 March 1999, this Court granted plaintiff's petition for discretionary review for the limited purpose of remanding the case to the Court of Appeals for reconsideration in light of Adams v. AVX Corp., 349 N.C. 676, 509 S.E.2d 411 (1998). In Adams, this Court overruled Sanders to the extent that it required the full Commission to demonstrate "`that sufficient consideration was paid to the fact that credibility may be best judged by a first-hand observer of the witness when that observation was the only one.'" Id. at 681, 509 S.E.2d at 413-14 (quoting Sanders, 124 N.C.App. at 641, 478 S.E.2d at 226). Adams reinforced the proposition that the Commission is the sole judge of the credibility of witnesses and that the ultimate fact-finding function lies with the Commission whether it conducts a hearing or reviews a cold record. Id. at 680-81, 509 S.E.2d at 413.

The Court of Appeals filed its second opinion in this case on 18 May 1999. In a unanimous decision, the Court of Appeals stated:

Here, after receiving evidence and viewing surveillance videotapes, the deputy commissioner determined plaintiff was involved in the auto sales business beginning with his obtaining a dealer license in February 1994. The deputy commissioner then found plaintiff's testimony that he was not involved in the auto sales business not to be credible.
In finding the plaintiff's testimony to be credible, the Commission based its determination on statements made by the plaintiff to his psychologist, Dr. Lawless, and to his rehabilitation nurse, Ms. Kropelnicki. However, plaintiff's statement that he was "spending some time" at his brother's car dealership was, according to testimony at the hearing, made to Dr. Lawless in 1992, as was the corroborating statement made by plaintiff's wife to Dr. Lawless. In addition, the statement made by plaintiff to Ms. Kropelnicki that he was visiting his brother's car lot was made in early January 1994. We fail to see how these statements were relevant to the Commission's credibility determination as plaintiff did not become involved in the auto sales business until February 1994.
Thus, since this was the only finding to support the Commission's determination that defendant was credible, we conclude there was insufficient evidence to support such a finding.

Deese v. Champion Int'l Corp., 133 N.C.App. 278, 283, 515 S.E.2d 239, 243 (1999). The court further held that it agreed with defendants' argument that the full Commission applied the wrong legal standard in determining disability and that "plaintiff's post-injury earning capacity rather than his actual wages earned is the relevant factor in assessing the disability." Id. at 284, 515 S.E.2d at 244. For the reasons stated below, we reverse the Court of Appeals on both issues before this Court for review.

The first issue we must review is whether the full Commission's findings of...

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