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Walker v. K&W Cafeterias, Employer

Court of Appeals of North Carolina

February 19, 2019

GWENDOLYN DIANETTE WALKER, Widow of ROBERT LEE WALKER, Deceased Employee, Plaintiff,
v.
K&W CAFETERIAS, Employer, LIBERTY MUTUAL INSURANCE COMPANY, Carrier, Defendants.

          Heard in the Court of Appeals 17 January 2019.

          Appeal by plaintiff from Opinion and Award entered 27 February 2018 by the North Carolina Industrial Commission. I.C. No. Y18900

          The Sumwalt Law Firm, by Vernon Sumwalt, for plaintiff-appellant.

          Cranfill Sumner & Hartzog LLP, by Carl Newman and Roy G. Pettigrew, for defendant-appellees.

          TYSON, JUDGE.

         I. Background

         Robert Lee Walker ("Decedent") was killed in a motor vehicle accident while driving a truck owned by K&W Cafeterias, Inc. ("Employer") in South Carolina on 16 May 2012. Decedent was a resident of South Carolina. Employer is a North Carolina corporation and headquartered in Winston-Salem. Employer's vehicle Decedent was driving when the accident occurred was insured under an automobile liability policy underwritten by Liberty Mutual Insurance Company ("Insurer") (Employer and Insurer collectively referred to as "Defendants"). The automobile liability policy was purchased and entered into within North Carolina.

         On 21 August 2012, Decedent's widow, Gwendolyn Walker ("Plaintiff"), filed a claim for death benefits pursuant to the North Carolina Workers' Compensation Act. N.C. Gen. Stat. § 97-38 (2017). With the consent of the parties, the Industrial Commission entered an opinion and award, which included several joint stipulations, including, in relevant part:

1. . . . [Decedent] died as the result of a motor vehicle accident arising out of and in the course of his employment with Defendant-Employer.
2.At all relevant times, the parties hereto were subject to and bound by the provisions of the North Carolina Workers' Compensation Act.
. . .
6. The North Carolina Industrial Commission has jurisdiction over the parties and the subject matter involved in this case.
. . .
8. On the date of [Decedent's] death, [Decedent] had six children. However, all children were over the age of eighteen on the date of [Decedent's] death. . . .
11. Plaintiff Gwendolyn Dianette Walker is the widow and sole surviving dependent of [Decedent].

         Based upon the parties' stipulations, and with the consent of the parties, the Industrial Commission ordered Defendants to pay Plaintiff five hundred weekly payments of $650.89 each and an additional payment of $8, 318 for funeral expenses, for total anticipated benefits of $333, 763.

         Plaintiff was appointed the personal representative of Decedent's estate in South Carolina. On 26 August 2014, Plaintiff, as personal representative of the estate, filed a wrongful death and survival action against the at-fault driver and his father in the Horry County Court of Common Pleas in South Carolina. In March 2016, Plaintiff, the at-fault driver and his father settled the lawsuit and Plaintiff received a total of $962, 500 under the settlement ("the third-party settlement"). The total settlement amount of $962, 500 came from the following sources:

1. $50, 000 in liability benefits from the at-fault driver's insurer;
2. $12, 500 in personal underinsured motorist ("UIM") coverage covering Plaintiff and Decedent's own personal vehicle from Plaintiff's own automobile insurance carrier; and
3. $900, 000 in commercial UIM coverage covering the vehicle Decedent was driving when the accident occurred from Employer's automobile insurance carrier, Insurer.

         On 21 March 2016, Defendants filed a Form 33 request for hearing with the North Carolina Industrial Commission seeking a subrogation lien against $333, 763 of the $962, 500 Plaintiff had received from the third-party settlement. On 30 March 2016, Plaintiff filed a declaratory judgment action in the Horry County Court of Common Pleas in South Carolina seeking a declaration of "whether the Defendants are entitled to assert a claim against any and all settlement proceeds, including those settlement proceeds paid under the [underinsured motorist] coverage."

         Defendants removed Plaintiff's declaratory judgment action to the United States District Court for the District of South Carolina based upon the diversity of state citizenship of the parties on 2 May 2016. On 13 June 2016, Plaintiff filed a motion with the North Carolina Industrial Commission to stay the proceedings, pending the outcome of the declaratory judgment action in the United States District Court. The Industrial Commission denied Plaintiff's motion to stay the proceedings by an order filed 28 June 2016.

         On 28 July 2016, Plaintiff filed an appeal for a hearing before a deputy commissioner. Before the scheduled hearing, "the parties jointly requested that in lieu of testimony, they be allowed to try the case on stipulated facts and exhibits with the submission of briefs and proposed decisions[.]" Plaintiff argued South Carolina law controlled over North Carolina law to the extent South Carolina forbids subrogation of UIM proceeds for workers' compensation benefits under S.C. Code § 38-77-160.

         On 10 July 2017, the deputy commissioner filed an opinion and award ruling in favor of Defendants and requiring Plaintiff to apply the $962, 500 from the third- party settlement to satisfy Defendants' $333, 763 subrogation lien. Plaintiff appealed the deputy commissioner's opinion and award to the full Industrial Commission ("the Full Commission").

         On 26 January 2018, while Plaintiff's appeal to the Full Commission was pending, the United States District Court entered an order holding it "will abstain from exercising jurisdiction over [Plaintiff's] declaratory action, and will dismiss it without prejudice to the parties pursuing their claims before the Industrial Commission and the North Carolina appellate courts."

         On 27 February 2018, the Full Commission issued an opinion and award. The Full Commission found, in relevant part:

3. . . . Decedent was killed when his vehicle was struck by another vehicle operated by . . . "third parties," as defined in . . . N.C. Gen. Stat. § 97-10.2(a).
. . .
12. Under the terms of the Consent Opinion and Award, Plaintiff and Defendants stipulated to the Industrial Commission's jurisdiction over Plaintiff's workers' compensation claim. Furthermore, N.C. Gen. Stat. §§ 97-91 and 97-10.2 confer[] the Industrial Commission with personal jurisdiction over Plaintiff and subject matter jurisdiction over all aspects of the workers' compensation claim, including Defendant's lien.
. . .
14. Plaintiff conceded in her brief to the Deputy Commissioner that the distribution formula in N.C. Gen. Stat. § 97-10.2(f) would apply to the $50, 000.00 in liability insurance proceeds.
15. Plaintiff's $900, 000.00 in commercial UIM proceeds were paid pursuant to a North Carolina liability policy. While the policy contains a South Carolina endorsement (as well as endorsements or financial responsibility identification cards for Florida, West Virginia, and Virginia), the UIM policy was made in North Carolina, was paid pursuant to the provisions of a North Carolina policy, and is subject to the laws of this State.

         The Full Commission concluded Defendants were entitled to a subrogation lien on the entire third-party settlement proceeds "and not just [Plaintiff's] share of the Third-Party Recovery." The Full Commission's opinion and award directed the distribution of the third-party settlement amount of $962, 500 as follows:

a. The sum of $5, 921.91 shall be paid to Plaintiff's counsel for payment of actual costs pursuant to N.C. Gen. ...

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