Cannon v Meinberg, (04-483) 03/15/2005

Appeal by plaintiffs from orders entered 10 December 2003 and 23 January 2004 by Judge Lindsay R. Davis, Jr. in Forsyth County Superior Court. Heard in the Court of Appeals 1 December 2004.

Bob Davidson, Jr., for plaintiff-appellant.

Teague, Rotenstreich and Stanaland, L.L.P., by Stephen G. Teague, for defendant-appellees.

    LEVINSON, Judge.

    Plaintiffs Michael L. Cannon (Cannon) and M.L. Cannon Enterprises, Inc., (Cannon Enterprises) appeal from dismissal of their claims against defendants. We affirm.
    Cannon is president of Cannon Enterprises, a North Carolina corporation. Defendants Phoenix Company and Berkley Insurance Company are North Carolina insurance companies. Defendant Christopher Meinberg is an insurance agent, who was employed by thePhoenix Company at the time of the events giving rise to this lawsuit. On 22 January 2002 plaintiffs filed suit against defendants, seeking damages for negligence and breach of contract. Their complaint alleged, in relevant part, the following:
    . . . . . .

    6.    Prior to January of 1999, . . . [Cannon,] met with . . . [Meinberg] and told . . . [him that] he wanted workers compensation insurance coverage for the partners and officers of [Cannon Enterprises]. . . . [He] was assured by [Meinberg] that [Cannon Enterprises] would have full workers compensation coverage . . . for the partners and officers of [Cannon Enterprises].

    7.    At the time of the conversation with the Plaintiffs, Christopher Meinberg, was a licensed insurance agent and was acting as an agent of . . . Phoenix Company and . . . Berkley Insurance Company[.] . . .

    8.    On May 4, 1999, . . . [Cannon] was out on a jobsite performing job duties for . . . [Cannon Enterprises], when he suffered a severe injury due to a fall.

    9.     . . . Cannon presented the claim to . . . Meinberg, who then informed . . . [Cannon] that he had not added workers compensation coverage for the partners and officers of the corporation, and that . . [Cannon] did not have workers compensation insurance coverage[.] . . .

    10.    Based on the May 4, 1999 injury, . . . Cannon missed numerous days from work, had medical expense and permanent injury.

    11.    When the Plaintiffs . . . presented . . . Cannon's May 4, 1999 workers compensation claim for payment, it was denied by . . . Berkley Insurance Company[.] . . .

    . . . . . .

    14.    The Defendants, represented to the Plaintiffs . . . that they would provide . . . workerscompensation coverage . . . for the partners and/or officers of the corporation. The Defendants have breached [this] Contract . . . with the Plaintiffs[.] . . .

    Upon these allegations, plaintiffs asserted that Meinberg was negligent in failing to procure workers' compensation coverage for the partners and officers of appellant; that Meinberg's negligence could be imputed to the corporate defendants; and that defendants had breached a contract with plaintiffs “to provide them full workers['] compensation coverage.” Plaintiffs claimed that “Cannon is entitled to recover for his medical expense, loss of income and for his permanent disability” and that Cannon Enterprises “is entitled to recover the expense that is necessary to adequately compensate . . . Cannon for his May 4, 1999 workers['] compensation injury.”
    Defendants answered, denying the material allegations of the complaint and raising various defenses. Defendants also moved for dismissal of plaintiffs' complaint under N.C.G.S.§ 1A-1, Rule 12(b)(6), for failure to state a valid claim for relief. Thereafter, defendants moved for summary judgment, and for dismissal of plaintiffs' complaint under N.C.G.S. § 1A-1, Rule 12(b)(1), for lack of subject matter jurisdiction. Following a hearing on 17 November 2003, the trial court on 10 December 2003 dismissed plaintiffs' claims with prejudice, in an order stating in relevant part that:
        . . . [T]he relief claimed in the complaint is recovery of amounts that would have been awarded for a workers['] compensation claim . . . but the complaint does not allege that any such award has been made. The [IndustrialCommission] has exclusive jurisdiction to award benefits under the Workers['] Compensation Act. This Court lacks jurisdiction to determine what amounts, if any, the plaintiff would be awarded by the [Industrial Commission], and the motion to dismiss for lack of subject matter jurisdiction should be granted. In addition or in the alternative, . . . the complaint fails to state a claim on which relief may be granted[.] . . .

On 23 January 2004 the trial court entered an amended order changing dismissal of plaintiffs' claims with prejudice to dismissal without prejudice. The amended order made no other changes to the dismissal order. From these orders plaintiffs appeal.

    Plaintiffs appeal the trial court's dismissal of their claims for lack of jurisdiction and failure to state a claim for relief. “This Court reviews de novo whether a trial court's grant of a motion to dismiss for lack of subject matter jurisdiction was proper.” Emory v. Jackson Chapel First Missionary Baptist Church, __ N.C. App. __, __, 598 S.E.2d 667, 669 (2004) (citation omitted). “For a motion based on Rule 12(b)(6), the standard is whether, construing the complaint liberally, 'the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory.'” Country Club of Johnston County, Inc. v. United States Fidelity & Guar. Co., 150 N.C. App. 231, 238, 563 S.E.2d 269, 274 (2002) (quoting Block v. County of Person, 141 N.C. App. 273, 277, 540 S.E.2d 415, 419 (2000)).     We conclude that the trial court's order should be upheld for several reasons. First, plaintiffs' claim assumes that, if a workers' compensation insurance policy with coverage for Cannon had been in place at the time of Cannon's injury, such policy necessarily would have covered Cannon's “workers' compensation injury.” Plaintiffs have essentially presumed that the alleged negligence of defendants deprived plaintiffs of certain coverage under a workers' compensation insurance policy that covered partners and officers. Plaintiffs fail to consider the possibility that the Industrial Commission might not have found Cannon's injury to be compensable under the Workers' Compensation Act. For example, if the Industrial Commission were to find that Cannon's injury did not arise out of and in the course of his employment, then he would not be eligible for workers' compensation benefits. In that event, he would not be covered by any workers' compensation insurance policy, regardless of its coverage.
    Because plaintiffs herein seek damages for failure to procure workers' compensation insurance, their complaint should allege an award of workers' compensation benefits by the Industrial Commission, under whose terms Cannon would have been entitled to insurance coverage. See, e.g., Wiles v. Mullinax, 275 N.C. 473, 477, 168 S.E.2d 366, 368 (1969) (plaintiff's complaint in her suit for negligent failure to procure workers' compensation insurance “alleges that the damages . . . consisted of $ 8,400 paid by [plaintiff] pursuant to the award of the Industrial Commission”). Because plaintiffs' complaint lacks any facts establishing Cannon'sentitlement to workers' compensation benefits, plaintiffs likewise failed to state facts showing that the absence of coverage under their workers' compensation insurance policy caused any injury or damages. Accordingly, plaintiffs' complaint fails to state a cause of action. See, e.g., Piedmont Inst. of Pain Mgmt. v. Staton Found., 157 N.C. App. 577, 596, 581 S.E.2d 68, 80 (2003) (where plaintiffs “failed to allege damages under any tort theory . . . their claims against [defendants] were properly dismissed”); Noell v. Winston, 51 N.C. App. 455, 457, 276 S.E.2d 766, 768 (1981) (upholding dismissal where plaintiff “failed to allege any facts which would entitle him to recovery of damages”). We conclude that the trial court's order dismissing plaintiffs' claims for failure to state a claim for relief should be sustained.
    Affirmed.
    Judges HUNTER and CALABRIA concur.

Report per Rule 30(e).

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