Thompson v. Norfolk Southern Ry. Co., COA99-1141.

• Decision Date: 19 September 2000
• Docket Number: No. COA99-1141.,COA99-1141.
• Court: North Carolina Court of Appeals
• Parties: Alfred Lee THOMPSON, Plaintiff, v. NORFOLK SOUTHERN RAILWAY COMPANY and City of Salisbury, Defendants.

535 S.E.2d 397

140 NC App. 115

Alfred Lee THOMPSON, Plaintiff, v. NORFOLK SOUTHERN RAILWAY COMPANY and City of Salisbury, Defendants.

No. COA99-1141.

Court of Appeals of North Carolina.

September 19, 2000.

Kennedy, Kennedy, Kennedy and Kennedy, LLP, by Harold L. Kennedy, III, Harvey L. Kennedy, and Willie M. Kennedy, Winston-Salem, for plaintiff-appellant/cross-appellee.

Jones, Hewson & Woolard, by Kenneth H. Boyer, Charlotte, for Norfolk Southern Railway Company, defendant-appellee.

Brinkley Walser, A Professional Limited Liability Company, by G. Thompson Miller, Lexington, for City of Salisbury, defendant-appellee/cross-appellant.

TIMMONS-GOODSON, Judge.

Plaintiff, Alfred Lee Thompson, appeals from orders of the trial court denying his motions to compel arbitration and to dismiss the counterclaim raised by defendant Norfolk Southern Railway Company ("Norfolk Southern") against plaintiff for property damage. Defendant City of Salisbury ("Salisbury") cross-appeals from an order denying its motion for removal asserting that venue was improper. Based upon our examination of the record, we affirm the court's order denying plaintiff's motion to compel arbitration and reverse the court's order denying Salisbury's motion for removal. We further dismiss plaintiff's appeal of the court's order denying its motion to dismiss.

The pertinent factual and procedural background is as follows: On 17 February 1999, plaintiff, a resident of Mecklenburg County, filed an action for damages against Norfolk Southern and Salisbury in Superior Court, Mecklenburg County. Plaintiff alleged that on 19 February 1996, a Norfolk Southern train collided with his vehicle as he attempted to cross a negligently maintained railway crossing in Salisbury. Salisbury is located in Rowan County, North Carolina. Plaintiff stated that as a result of the collision, he suffered bodily injury, loss of earnings and earning capacity, and pain and suffering.

Norfolk Southern moved for an extension of time to file an answer, which was granted by the trial court on 15 April 1999. Norfolk Southern subsequently answered on 17 May 1999 and included a counterclaim alleging that it had suffered property damage due to plaintiff's negligence.

In response, plaintiff filed a motion to dismiss Norfolk Southern's counterclaim, asserting that the claim was filed beyond the three-year statute of limitations. The trial court summarily denied plaintiff's motion on 20 July 1999.

On 1 April 1999, Salisbury filed a separate answer and motion for removal, pursuant to Rule 12(b)(3) of the North Carolina Rules of Civil Procedure, arguing that venue was improper in Mecklenburg County. Salisbury further requested that the court remove the case from Mecklenburg County to the county in which it alleged venue was proper, Rowan County.

Plaintiff responded and asserted that venue was proper in Mecklenburg County under sections 1-83(2) and 1-81 of the General Statutes. See N.C. Gen.Stat. §§ 1-81 & 1-83(2) (1999). Primarily, plaintiff argued that removing the case to Rowan County would pose an undue burden on him and his caregiver. Plaintiff explained that he was a paraplegic as a result of the collision and both he and his caregiver would be inconvenienced if the court transferred the case to Rowan County. Plaintiff also noted that his many doctors were in Charlotte, Mecklenburg County, and that it would be cost prohibitive to require them to travel to Rowan County to testify.

Following a hearing, the court denied Salisbury's motion to remove. In pertinent part, the court's order provided the following:

And it appearing to the Court, and the Court so finding, that the convenience of witnesses and the ends of justice would be promoted pursuant to N.C.G.S. 1-83(2) and that the proviso to N.C.G.S. 1-77(2) gives the Court the power to change the place of trial from the county where the cause of action arose, the Court is of the opinion that defendant City of Salisbury's motion to remove should, in the Court's discretion, be denied[.]

Salisbury provided plaintiff with a "Commercial General Liability Coverage" insurance policy, issued by the Interlocal Risk Financing Fund of North Carolina ("IRFFNC"). Salisbury's IRFFNC policy provided insurance coverage for those situations in which the city had waived its governmental immunity.

Under the IRFFNC policy, the IRFFNC agreed to "pay those sums that [Salisbury] becomes legally obligated to pay as compensatory damages because of `bodily injury' ... to which [the] coverage appli[ed]." The policy further provided that the IRFFNC had "the right and duty to defend any `suit' seeking those damages."

The "DEFINITIONS" section of the IRFFNC policy stated the following:

"Suit" means a civil proceeding in which damages because of "bodily injury," "property damage," "personal injury" or "advertising injury" to which this coverage applies are alleged. "Suit" includes:

a. An arbitration proceeding in which such damages are claimed and to which you must submit or do submit with our consent; or

b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which you submit with our consent.

Plaintiff filed a motion to compel arbitration based upon Salisbury's IRFFNC policy. Plaintiff claimed that the above IRFFNC definitions section required Salisbury to arbitrate any suit for bodily injury and that as a third party beneficiary to the insurance policy, he had a right to have his claim against Salisbury submitted to arbitration. The trial court found that the IRFFNC policy did not contain an agreement to arbitrate as required by the Uniform Arbitration Act. Therefore, the court concluded, Salisbury could not be compelled to arbitrate plaintiff's claim against the city.

Plaintiff appeals from the orders denying his motions to compel arbitration and to dismiss Norfolk Southern's counterclaim. Further, Salisbury cross-appeals from the order denying its motion for removal.

Plaintiff's Appeal

By his first assignment of error, plaintiff contends that the court erred in denying his motion to compel arbitration. Plaintiff argues that he was a third party beneficiary to Salisbury's agreement with the IRFFNC to arbitrate all claims filed against Salisbury for bodily injury and that as a beneficiary to that agreement, he is entitled to have his claim against the city resolved through arbitration. We disagree.

Initially, we must examine whether an appeal lies from the court's order denying plaintiff's motion to compel arbitration. Because the trial court has yet to reach a final judgment below, plaintiff's appeal from the court's order denying his motion is interlocutory. Veazey v. Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381, reh'g denied, 232 N.C. 744, 59 S.E.2d 429 (1950) (citation omitted). Generally, interlocutory orders are not appealable. However, an "order denying arbitration, although interlocutory, is immediately appealable because it involves a substantial right which might be lost if appeal is delayed." Burke v. Wilkins, 131 N.C.App. 687, 688, 507 S.E.2d 913, 914 (1998) (citation omitted); N.C. Gen.Stat. §§ 1-277, 7A-27(d)(1) (1999). Because the appeal involves an order denying the substantial right of arbitration, we will examine the merits of plaintiff's contentions.

The Uniform Arbitration Act, as adopted by this state, provides in pertinent part:

Two or more parties may agree in writing to submit to arbitration any controversy existing between them at the time of the agreement, or they may include in a written contract a provision for the settlement by arbitration of any controversy thereafter arising between them relating to such contract or the failure or refusal to perform the whole or any part thereof.

N.C. Gen.Stat. § 1-567.2 (1999).

On application of a party showing an agreement described in [N.C.]G.S. 1-567.2; and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.

N.C. Gen.Stat. § 1-567.3 (1999).

While public policy favors arbitration, parties may not be compelled to arbitrate their claims unless there exists a valid agreement to arbitrate as specified by section 1-567.2 of the General Statutes. Routh v. Snap-On Tools Corp., 108 N.C.App. 268, 423 S.E.2d 791 (1992). The party seeking to compel arbitration must prove the existence of a mutual agreement to arbitrate. Id. at 271-72, 423 S.E.2d at 794.

The IRFFNC policy section upon which plaintiff relies did not establish an agreement to arbitrate claims, but states only that the definition of "suit" under the policy included "[a]n arbitration proceeding in which such damages are claimed and to which [Salisbury] must submit or do[es] submit with [the IRFFNC's] consent." Clearly, Salisbury and the IRFFNC did not agree to submit to arbitration "any controversy existing between them at the time of the agreement", nor did they agree to arbitrate "any controversy thereafter arising between them relating to [their] contract or the failure or refusal to perform the whole or any part thereof." N.C.G.S. § 1-567.2.

We conclude that the trial court was correct in finding that Salisbury's policy with the IRFFNC did not include an agreement to arbitrate. Because no arbitration agreement existed between the IRFFNC and Salisbury, plaintiff's argument that he was a third-party beneficiary to the IRFFNC policy must fail. Accordingly, plaintiff's first assignment of error is overruled.

By his next assignment of error, plaintiff asserts that the trial court erred in denying his motion to dismiss Norfolk Southern's counterclaim because it was filed beyond the three-year statute of limitations. Because the record reflects that the order denying plain...