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North Carolina Insurance Guaranty Association v. Weathersfield Management, LLC

Court of Appeals of North Carolina

November 5, 2019


          Appeal by defendant from order entered 4 January 2019 by Judge G. Bryan Collins, Jr. in Wake County No. 17 CVS 11899 Superior Court. Heard in the Court of Appeals 15 October 2019.

          Nelson Mullins Riley & Scarborough LLP, by Christopher J. Blake and Joseph W. Eason, for plaintiff-appellee.

          Hunter, Smith & Davis, LLP, by Rachel Ralston Mancl, for defendant-appellant.

          TYSON, Judge.

         Weathersfield Management, LLC, f/k/a Accuforce Staffing Services, LLC, f/k/a Accuforce Smart Solutions, LLC ("Defendant") appeals an order granting summary judgment for the North Carolina Insurance Guaranty Association ("Plaintiff"). We affirm.

         I. Background

         Defendant is a regional worker staffing company with less than $50, 000, 000.00 in market value. Defendant experienced severe financial problems to the extent it was forced to file for bankruptcy protection under Chapter 13 of the U.S. Bankruptcy Code.

         North Carolina employers, who employ above a threshold number of employees, are statutorily required to maintain workers' compensation insurance coverage. Defendant's bankruptcy filing made it difficult to obtain coverage to meet this statutory requirement. Dallas National quoted coverage for Defendant, which required a deductible of $800, 000.00 per occurrence, but included a duty to defend the insured. Defendant was unable to find another insurance carrier and accepted the policy from Dallas National to meet North Carolina's workers' compensation insurance coverage requirement beginning 18 August 2009.

         This policy also required Defendant to maintain a collateral deposit of $600, 000.00. Defendant claims this collateral deposit has not been returned. At some point during Defendant's period of coverage, Dallas National ceased conducting business as Dallas National and began using Freestone as its name.

         In June 2012, Defendant's employee, Tina Huffman ("Ms. Huffman"), asserted a workplace injury and filed a workers' compensation claim. Freestone acknowledged in a Form 60 filing to the North Carolina Industrial Commission ("Commission"): (1) coverage under Defendant's policy; (2) that Ms. Huffman was an employee of Defendant; and, (3) Ms. Huffman was injured during the course and scope of her employment. The Commission determined Ms. Huffman was entitled to weekly disability benefits totaling $165.40 and Ms. Huffman's attorney was awarded $55.14 per week.

         In 2014, Plaintiff's involvement with Defendant's policy was activated due to the insolvency of Freestone. Plaintiff retained counsel to defend Defendant during the pendency of Ms. Huffman's claim. Plaintiff pursued settling Ms. Huffman's claim and a determination from the Commission of whether she can return to work. Ms. Huffman's counsel maintains that she "is completely disabled and unable to return to work." As of 10 August 2018, Plaintiff has paid $134, 002.93 in indemnity and expense payments on Ms. Huffman's claim.

         On 28 September 2017 Plaintiff commenced this action for reimbursement under N.C. Gen. Stat. § 58-48-1 for payment of Ms. Huffman's claims asserted under coverage for Defendant's policy with Freestone. Following written discovery, Plaintiff moved for summary judgment. The trial court heard and granted Plaintiff's motion for summary judgment. Defendant appeals.

         II. Jurisdiction

         This Court possesses jurisdiction pursuant to N.C. Gen. Stat. § 7A-27(b) (2017).

         III. Issues

         Defendant argues the trial court erred by granting summary judgment for Plaintiff under N.C. Gen. Stat. § 58-48-35 (2017) and asserts: (1) Defendant does not have a self-insured retention; (2) Defendant is not a high-net-worth employer or affiliate; (3) estoppel bars the claim; and, (4) genuine issues of material fact remain undecided.

         IV. Standard of Review

         "Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows that 'there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.'" In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)).

         V. Analysis

         A. Self-Insured Retention

         Defendant argues Plaintiff has no claim under N.C. Gen. Stat. § 58-48-35 because Defendant's policy does not contain ...

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