Key Risk Ins. Co. v. Peck

• Decision Date: 07 March 2017
• Docket Number: No. COA16-872,COA16-872
• Citation: 252 N.C.App. 127,797 S.E.2d 354
• Court: North Carolina Court of Appeals
• Parties: KEY RISK INSURANCE COMPANY, Plaintiff, v. Chad PECK, Defendant/Third-Party Plaintiff, v. Mark Andrew McGuire, Third-Party Defendant.

252 N.C.App. 127

797 S.E.2d 354

KEY RISK INSURANCE COMPANY, Plaintiff,

v.Chad PECK, Defendant/Third-Party Plaintiff,

v.Mark Andrew McGuire, Third-Party Defendant.

No. COA16-872

Court of Appeals of North Carolina.

Filed: March 7, 2017

Macrae, Perry, Macrae & Whitley, LLP, Fayetteville, by Gregory T. Whitley, for plaintiff-appellant.

Ennis, Baynard, Morton, Medlin & Brown P.A., by Stephen C. Baynard, for defendant-appellee Peck.

TYSON, Judge.

Key Risk Insurance Company ("Key Risk") appeals from orders entered granting Chad Peck's ("Defendant") motion to dismiss and denying Key Risk's motion to substitute a party. We affirm.

I. Factual Background

Judith Holliday ("Holliday") was employed at CarolinaEast Medical Center, Inc. ("CarolinaEast"). Key Risk provided workers’ compensation insurance to CarolinaEast.

On 3 February 2013, Holliday and Third-Party Defendant, Mark Andrew McGuire ("McGuire"), responded to an emergency call. McGuire drove the ambulance, while Holliday was seated in the front passenger seat. Key Risk alleged the ambulance approached an intersection with its emergency lights and sirens activated while en route. Key Risk further alleged Defendant failed to yield, entered the intersection, and collided with the ambulance.

Holliday and Defendant received and alleged injuries resulting from the collision. Defendant signed a "Property Damage Release" releasing CarolinaEast, McGuire, and American Alternative Insurance Corporation from further liability for the collision in exchange for payment of $5,724.56. Defendant also signed a "Release in Full" wherein he released CarolinaEast, McGuire, Glatfelter Claims Management, Inc., and American Alternative Insurance Corporation from further liability for the collision in exchange for payment of $4,143.45 for his bodily injuries.

Holliday received extensive medical care for her injuries. Key Risk's complaint alleged it paid Holliday $63,965.58 as CarolinaEast's provider of workers’ compensation insurance. Key Risk's complaint further alleged it filed the proper forms with the North Carolina Industrial Commission, which admitted Holliday's right to compensation for medical treatment for the injuries she had sustained in the collision.

On 3 December 2015, Key Risk filed its complaint. Key Risk alleged Defendant was negligent in the operation of his vehicle, and it was entitled to recover the workers’ compensation benefits paid to Holliday from Defendant. Defendant filed an answer and a third-party complaint against McGuire. McGuire filed an answer and a motion for judgment on the pleadings.

Defendant moved to dismiss the action on 29 March 2016 pursuant to Rules 12(b)(1) and 12(b)(6) of the North Carolina Rules of Civil Procedure. On 13 April 2016, Key Risk moved to substitute Holliday as the named plaintiff pursuant to N.C. Gen. Stat. § 97-10.2.

After hearing oral arguments of counsel and reviewing the submissions of the parties, the trial court denied McGuire's motion for judgment on the pleadings, denied Key Risk's motion to substitute a party, and granted Defendant's motion to dismiss. Key Risk appeals.

II. Jurisdiction

Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b) (2015).

III. Issues

Key Risk argues the trial court erred by granting the motion to dismiss for lack of standing. In the alternative, Key Risk argues, even if it did not have standing to bring the claim, the trial court abused its discretion by denying its motion to substitute a party.

IV. Standard of Review

"A motion to dismiss a party's claim for lack of standing is tantamount to a motion to dismiss for failure to state a claim upon which relief can be granted according to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure." Slaughter v. Swicegood , 162 N.C.App. 457, 464, 591 S.E.2d 577, 582 (2004).

When considering a motion to dismiss under Rule 12(b)(6), "[t]he question for the court is whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory, whether properly labeled or not." Grant Constr. Co. v. McRae, 146 N.C.App. 370, 373, 553 S.E.2d 89, 91 (2001) (quoting Harris v. NCNB, 85 N.C.App. 669, 670, 355 S.E.2d 838, 840 (1987) ). The allegations in the complaint must be viewed in the light most favorable to the non-moving party. Donovan v. Fiumara , 114 N.C.App. 524, 526, 442 S.E.2d 572, 574 (1994).

A trial court's order denying a motion to substitute a party is reviewed for an abuse of discretion. Revolutionary Concepts, Inc. v. Clements Walker PLLC , 227 N.C.App. 102, 112, 744 S.E.2d 130, 137 (2013) (holding the trial court did not abuse its discretion in denying a motion to substitute where plaintiffs failed to offer any compelling reason why they failed to make the motion in a reasonable time after a merger). "Under the abuse-of-discretion standard, we ... determine whether a decision is manifestly unsupported by reason, or so arbitrary that it could not have been the result of a reasoned decision." Mark Grp. Int'l., Inc. v. Still , 151 N.C.App. 565, 566, 566 S.E.2d 160, 161 (2002).

V. Insurers’ Rights under N.C. Gen. Stat. § 97-10.2

Key Risk reads and asserts the provisions of N.C. Gen. Stat. § 97-10.2 (2015) provide standing to bring this action. We disagree.

When our courts engage in statutory interpretation, the primary task "is to ensure that the legislative intent is accomplished. The best indicia of legislative purpose are the language of the statute, the spirit of the act, and what the act seeks to accomplish." Radzisz v. Harley Davidson of Metrolina, Inc. , 346 N.C. 84, 88-89, 484 S.E.2d 566, 569 (1997) (internal citations and quotation marks omitted).

Statutory interpretation begins by examining the plain and ordinary meanings of words in the statute. Dion v. Batten , ––– N.C.App. ––––, ––––, 790 S.E.2d 844, 848 (2016). "When the language of a statute is clear and unambiguous, there is no room for judicial construction, and the courts must give it its plain and definite meaning." Lemons v. Old Hickory Council, 322 N.C. 271, 276, 367 S.E.2d 655, 658 (1988) ; see also State v. Wiggins, 272 N.C. 147, 153, 158 S.E.2d 37, 42 (1967) ("It is elementary that in the construction of a statute words are to be given their plain and ordinary meaning unless the context, or the history of the statute, requires otherwise.").

N.C. Gen. Stat. § 97-10.2 exclusively provides for the rights and remedies of employees, employers, and insurance carriers against third parties under the Workers’ Compensation Act. Radzisz , 346 N.C. at 86, 484 S.E.2d at 568. N.C. Gen. Stat. § 97-10.2(a) states:

The respective rights and interests of the employee-beneficiary under this Article, the employer, and the employer's insurance carrier, if any, in respect of the common-law cause of action against such third party and the damages recovered shall be as set forth in this section .

N.C. Gen. Stat. § 97-10.2(a) (emphasis supplied).

Under this statute, the employee possesses the exclusive right to proceed against a third-party tortfeasor during the first twelve months after the date of injury. N.C. Gen. Stat. § 97-10.2(b). If the employee does not bring such an action within those first twelve months, and the employer has filed the appropriate admission of liability with the Industrial Commission, "then either the employee or the employer shall have the right to proceed to enforce the liability of the third party by appropriate proceedings." N.C. Gen. Stat. § 97-10.2(c) (emphasis supplied). If neither the employee nor the employer have instituted an action against the third-party tortfeasor prior to sixty days before the expiration of the applicable statute of limitations, the right to bring the action reverts exclusively to the employee. Id .

When a proceeding is instituted against a third party, "the person having the right" to bring the proceeding must bring it "in the name of the employee or his personal representative[.]" N.C. Gen. Stat. § 97-10.2(d). An exception to this requirement exists where the employee or his personal representative "refuse[s] to cooperate with the employer by being the party plaintiff[.]" Id . In these cases, the statute states the action "shall be brought in the name of the employer and the employee or his personal representative shall be made a party plaintiff or party defendant by order of court." Id . (emphasis supplied). In any properly instituted proceeding, neither the employer nor the insurance carrier are considered necessary or proper parties. Id .

After outlining which parties are permitted to institute proceedings within the applicable time periods against a third party, N.C. Gen. Stat. § 97-10.2(g) specifically provides for the rights of the insurance carrier:

The insurance carrier affording coverage to the employer under this Chapter shall be subrogated to all rights and liabilities of the employer hereunder but this shall not be construed as conferring any other or further rights upon such insurance carrier than those herein conferred upon the employer, anything in the policy of insurance to the contrary notwithstanding.

Here, Key Risk argues the statute grants insurance carriers subrogation to all the rights and liabilities of the employer, and as such insurance carriers have standing under the statute to enforce the liability of the third party. The plain language of N.C. Gen. Stat. § 97-10.2(b) - (d) does not support this reading. See Lemons , 322 N.C. at 276, 367 S.E.2d at 658.

The language of these sections explicitly states "the employer shall have the right to proceed to enforce the liability of the third party." N.C. Gen. Stat. § 97-10.2(c) (emphasis supplied). The insurance carrier is only mentioned once in the sections outlining the procedure for bringing an action against a third party. The statute provides that when a proceeding is brought against a third party "by the person having the right" to bring such a proceeding, "the insurance...