Appeal by defendant from judgments entered 7 April 2005 by
Judge William C. Gore in Brunswick County Superior Court. Heard in
the Court of Appeals 21 February 2006.
Baker & Slaughter P.A., by H. Mitchell Baker, III and M. Troy
Slaughter, for plaintiffs-appellees.
Johnson, Lambeth & Brown, by Maynard M. Brown and Anna J.
Averitt, for defendant-appellant.
Defendant, the Administratrix of the Estate of Leon Reece
(See footnote 1)
appeals from an order of the trial court denying her
motion for summary judgment and granting summary judgment to
plaintiffs Vivian and Michael Harrison Gregory, Jill Ann and
William Bryan Ward, and Shirley and Joseph Snapp with respect to
defendant's affirmative defenses of res judicata and collateral
estoppel. As the issues presented in these separate appeals
involve common questions of law, we have consolidated the appeals
for purposes of decision.
Defendant contends that a finding of the North Carolina
Industrial Commission, in an action brought under the State Tort
Claims Act, that Leon Reece Penland, Jr. ("SPC Penland") was not
grossly negligent precludes recovery in this case under N.C. Gen.Stat. § 166A-14 (2005). Because, however, the Industrial
Commission proceeding and this action do not involve an identity of
claims or parties, the doctrine of res judicata is inapplicable.
Further, the Commission had no jurisdiction to make any finding
regarding SPC Penland, and, therefore, the gross negligence finding
cannot be a basis for collateral estoppel. Accordingly, we hold
the trial court properly granted summary judgment on defendant's
The facts of this case are largely undisputed. On 14
September 1999, following Hurricane Floyd, North Carolina Governor
James B. Hunt, Jr. issued a Proclamation of a State of Disaster for
the North Carolina coastline under the North Carolina Emergency
Management Act, N.C. Gen. Stat. §§ 166A-1 through -53 (2005). As
part of the Emergency Operations Plan, the North Carolina National
Guard, including SPC Penland, was called to active duty in the area
of Oak Island, North Carolina. The National Guard and volunteers,
including plaintiffs Jill Ward, Michael Gregory, and Shirley Snapp,
performed beach patrols in which they attempted to keep people off
of the beaches.
Late in the evening on 22 September 1999, SPC Penland was
waiting at a local fire department for another National Guard
member. While there, SPC Penland met Ms. Ward, Mr. Gregory, and
Ms. Snapp, who told SPC Penland that they were bored and were
interested in riding in a Humvee. Although he had never previouslydriven a Humvee on a beach, SPC Penland offered to take the group
in a Humvee on a beach patrol.
SPC Penland drove east along the beach until the end of the
island, turned around, "gunned the engine," and "did a little fish-
tail" before straightening back out. Although Mr. Gregory advised
SPC Penland to follow his outbound tracks and stay on the hard-
packed sand if he wished to increase the speed, SPC Penland drove
toward the softer sand by the dunes and "accelerat[ed] to
significantly higher speeds than he had originally driven." As the
Humvee bounced over the dunes, "the vehicle became airborne," then
"landed and . . . vaulted again."
When it landed for the second time, the Humvee flipped over.
All three passengers were injured, and SPC Penland was thrown from
the vehicle and killed. No one had seen the speedometer, but Ms.
Ward and Ms. Snapp believed the vehicle had been going "extremely
fast," which Ms. Ward estimated to be about 50 or 55 miles per
hour. Mr. Gregory estimated that the Humvee had been going between
40 and 50 miles per hour.
Plaintiffs ultimately filed a complaint against defendant in
Brunswick County Superior Court alleging gross negligence by SPC
Penland. Based on the same facts, plaintiffs also brought an
action in the Industrial Commission against the North Carolina
National Guard under the State Tort Claims Act, N.C. Gen. Stat. §§
143-291 through -300.1A (2005). Prior to the adjudication of
plaintiffs' claims in superior court, Deputy Commissioner Morgan S.
Chapman denied plaintiffs' claims in the Industrial Commission. Plaintiffs appealed and, on 2 December 2003, the Full Commission
likewise entered an opinion and award in favor of the State.
The Commission relied upon N.C. Gen. Stat. § 166A-14(a), which
(a) All functions hereunder and all other
activities relating to emergency management
are hereby declared to be governmental
functions. Neither the State nor any
political subdivision thereof, nor, except in
cases of willful misconduct, gross negligence
or bad faith, any emergency management worker
complying with or reasonably attempting to
comply with this Article or any order, rule or
regulation promulgated pursuant to the
provisions of this Article or pursuant to any
ordinance relating to any emergency management
measures enacted by any political subdivision
of the State, shall be liable for the death of
or injury to persons, or for damage to
property as a result of any such activity.
Applying this statute, the Commission found that SPC Penland "was
an emergency management worker acting within the course of his
employment" on the date of the accident and that he had "breached
his duty of care" toward plaintiffs. The Commission concluded,
however, that plaintiffs were not entitled to recover under the
State Tort Claims Act because the Emergency Management Act did not
permit recovery against the State
for an emergency management
worker's actions "committed during emergency management
operations." The Commission further found that SPC Penland's
"actions did not rise to the level required in order to constitute
gross negligence," as required for individual liability under the
Emergency Management Act. Plaintiffs ultimately chose not to
appeal the Full Commission's decision. Subsequently, defendant moved for summary judgment in superior
court, contending that the Commission's finding that SPC Penland
was not grossly negligent precluded plaintiffs' action based on res
judicata and collateral estoppel. The court disagreed and instead
entered summary judgment for plaintiffs on defendant's defenses of
res judicata and collateral estoppel. Defendant timely appealed to
 As an initial matter, we must address whether this Court
has jurisdiction to hear defendant's appeal since it involves an
interlocutory order. An order is interlocutory if "it is made
during the pendency of an action and does not dispose of the case
but requires further action by the trial court in order to finally
determine the entire controversy." Howerton v. Grace Hosp., Inc.
124 N.C. App. 199, 201, 476 S.E.2d 440, 442 (1996). There is
generally no right to appeal an interlocutory order. Id.
An interlocutory order is subject to immediate appeal only if
(1) the order is final as to some but not all of the claims or
parties, and the trial court certifies the case for appeal pursuant
to Rule 54(b) of the Rules of Civil Procedure, or (2) the trial
court's decision deprives the appellant of a substantial right that
will be lost absent immediate review. Id.
Because the trial court
did not include a Rule 54(b) certification in its order, we have
jurisdiction over defendant's appeal only if the trial court's
order deprived defendant of a substantial right. "'The right to avoid one trial on . . . disputed issues is not
normally a substantial right that would allow an interlocutory
appeal, [but] the right to avoid the possibility of two trials on
the same issues can be such a substantial right.'" Green v. Duke
, 305 N.C. 603, 606, 290 S.E.2d 593, 595 (1982) (quoting
Survey of Developments in N.C. Law, 1978
, 57 N.C. L. Rev. 827,
907-08 (1979)). In such situations, "[a] substantial right is
affected when '(1) the same factual issues would be present in both
trials and (2) the possibility of inconsistent verdicts on those
issues exists.'" In re Estate of Redding v. Welborn
, 170 N.C. App.
324, 328, 612 S.E.2d 664, 668 (2005) (quoting N.C. Dep't of Transp.
, 119 N.C. App. 730, 735-36, 460 S.E.2d 332, 335 (1995)).
Because the issues raised by defendant on appeal, if resolved
in her favor, meet these criteria, we hold that defendant has
sufficiently demonstrated the existence of a substantial right that
would be lost if we waited to review these issues until after a
final judgment. See Bockweg v. Anderson
, 333 N.C. 486, 491, 428
S.E.2d 157, 161 (1993) (noting "the denial of a motion for summary
judgment based on the defense of res judicata
may affect a
substantial right, making the order immediately appealable" because
defendant may "twice have to defend against the same claim by the
same plaintiff [and participate in] . . . a second trial in
frustration of the underlying principles of the doctrine of res
"). Accordingly, we have jurisdiction to address
defendant's argument that plaintiffs' claims are barred by the
doctrines of res judicata and collateral estoppel.
 Our Supreme Court recently explained that "[u]nder the
doctrine of res judicata or 'claim preclusion,' a final judgment on
the merits in one action precludes a second suit based on the same
cause of action between the same parties or their privies."
Whitacre P'ship v. Biosignia, Inc.
, 358 N.C. 1, 15, 591 S.E.2d 870,
880 (2004). For defendants to establish that a plaintiff's claim
is barred by res judicata, they "must show (1) a final judgment on
the merits in an earlier suit, (2) an identity of the cause of
action in both the earlier and the later suit, and (3) an identity
of parties or their privies in the two suits." Erler v. Aon Risks
Servs., Inc. of the Carolinas
, 141 N.C. App. 312, 316, 540 S.E.2d
65, 68 (2000), disc. review denied
, 548 S.E.2d 738 (2001). There
is no dispute that the Commission's opinion and award constituted
a final judgment entitled to res judicata effect. See Bryant v.
, 130 N.C. App. 135, 138, 502 S.E.2d 58, 61 ("The
doctrine of res judicata
precludes relitigation of final orders of
the Full Commissions . . . ."), disc. review denied
, 349 N.C. 228,
515 S.E.2d 700 (1998). We hold, however, that defendant has failed
to meet the second and third requirements for res judicata.
In the Industrial Commission, plaintiffs brought a claim
against the State under the State Tort Claims Act, while the action
currently on appeal is a common-law claim against an individual.
Our Supreme Court has previously held that a claim against the
State in the Industrial Commission "did not constitute another
pending between the same parties
for the same cause" as anaction filed in superior court against a state employee. Wirth v.
, 258 N.C. 505, 507, 128 S.E.2d 810, 812 (1963). As a
establishes that plaintiffs' cause of action in the
Industrial Commission is not the same as the cause of action in
This view is confirmed by Meyer v. Walls
, 347 N.C. 97, 108,
489 S.E.2d 880, 886 (1997):
Furthermore, the fact that the Tort
Claims Act provides for subject matter
jurisdiction in the Industrial Commission over
a negligence claim against the State does not
preclude a claim against defendants in
Superior Court. A plaintiff may maintain both
a suit against a state agency in the
Industrial Commission under the Tort Claims
Act and a suit against the negligent agent or
employee in the General Court of Justice for
If, under Meyer, a plaintiff may properly bring both a claim in the
Industrial Commission and a claim in superior court, then the
causes of action cannot be identical.
(See footnote 2)
The Commission's decision
thus does not meet the second requirement of res judicata.
With respect to the third element of res judicata, since the
parties were not identical, defendant must establish that SPC
Penland was in privity with the North Carolina National Guard. "'[P]rivity' for purposes of res judicata . . . denotes a mutual or
successive relationship to the same rights of property." State ex
rel. Tucker v. Frinzi, 344 N.C. 411, 417, 474 S.E.2d 127, 130
(1996) (internal quotation marks omitted). "'Privity is not
established, however, from the mere fact that persons may happen to
be interested in the same question or in proving or disproving the
same state of facts, or because the question litigated was one
which might affect such other person's liability as a judicial
precedent in a subsequent action.'" Id. (quoting 47 Am. Jur. 2d
Judgments § 663 (1995)).
Typically, "[i]n order for a person to be privy to an action,
he must have acquired an interest in the subject matter of the
action either by succession, inheritance, or purchase from a party
subsequent to the action." Smith v. Smith, 334 N.C. 81, 85, 431
S.E.2d 196, 198 (1993). That basis for privity does not exist in
this case. Instead, the only relationship relied upon by defendant
is the fact that SPC Penland was the employee of the National Guard
alleged to be negligent. It is, however, well established that
"[t]he relationship of principal and agent or master and servant
does not create [the] privity" required for res judicata. Kayler
v. Gallimore, 269 N.C. 405, 408, 152 S.E.2d 518, 521 (1967).
Indeed, in Kaminsky v. Sebile, 140 N.C. App. 71, 81, 535 S.E.2d
109, 115-16 (2000), this Court held that no privity existed for res
judicata purposes between a member of the military and the United
Moreover, our Supreme Court has held:One is 'privy,' when the term is applied to a
judgment or decree, whose interest has been
legally represented at the trial. A party
will not be concluded by a former judgment
unless he could have used it as a protection,
or as a foundation of a claim, had the
judgment been the other way.
Masters v. Dunstan, 256 N.C. 520, 526, 124 S.E.2d 574, 578 (1962).
See also Kayler, 269 N.C. at 407, 152 S.E.2d at 520 ("[A] party to
the subsequent action, who was not a party to the former action
and, therefore, is not estopped by the judgment therein, cannot
assert that judgment as an estoppel against his opponent, even
though the opponent was a party to the action in which the judgment
was rendered."). Here, if the judgment had been in plaintiffs'
favor in the Industrial Commission, defendant would not have been
bound by that judgment. Accordingly, defendant is not in privity
with the State such that plaintiffs' claims against defendant are
barred by res judicata.
Defendant cites Brotherton v. Paramore, 5 N.C. App. 657, 169
S.E.2d 36 (1969), and Mason v. N.C. State Highway Comm'n, 7 N.C.
App. 644, 173 S.E.2d 515 (1970), as support for application of res
judicata. We find neither decision controlling. Brotherton, in
which the plaintiff had recovered damages against the State in the
Industrial Commission and sought to recover additional damages from
the state employee, applied the rule set out in Bowen v. Iowa Nat'l
Mut. Ins. Co., 270 N.C. 486, 496, 155 S.E.2d 238, 246 (1967):
"Although separate judgments may be rendered against the agent and
his principal arising out of the same cause of action, there can be
but one satisfaction of the judgments arising on the same cause ofaction . . . ." See Brotherton, 5 N.C. App. at 658, 169 S.E.2d at
37 ("We think the rationale of the opinion in Bowen . . . is
clearly applicable here."). The issue of one satisfaction of
judgments is not present in this case. In Mason, both the prior
action and the subsequent action (found barred by res judicata)
were filed in the Industrial Commission against the State under the
State Tort Claims Act, with the only distinction being the identity
of the employees alleged to have been negligent. 7 N.C. App. at
646, 173 S.E.2d at 516. In this case, plaintiffs have not
attempted to file a second action in the Industrial Commission
alleging negligence by a state employee other than SPC Penland, and
we fail to see how Mason supports defendant's position.
Res judicata does not, therefore, bar plaintiffs' claims. We
now turn to defendant's arguments regarding collateral estoppel.
 The Industrial Commission, in addition to concluding that
the State could not be held liable under N.C. Gen. Stat. § 166A-
14(a), found that "[a]lthough [SPC Penland] breached his duty of
care to his three passengers by driving too fast, his actions did
not rise to the level required in order to constitute gross
negligence." A state employee may not be held liable under N.C.
Gen. Stat. § 166A-14(a) unless grossly negligent, engaging in
willful misconduct, or acting in bad faith. Defendant contends
that collateral estoppel precludes plaintiffs from relitigating
whether SPC Penland's actions constituted gross negligence. In Whitacre Partnership
, the Supreme Court explained that
"[w]hereas res judicata estops a party or its privy from bringing
a subsequent action based on the 'same claim' as that litigated in
an earlier action, collateral estoppel precludes the subsequent
adjudication of a previously determined issue, even if the
subsequent action is based on an entirely different claim." 358
N.C. at 15, 591 S.E.2d at 880. For defendant "to assert a plea of
collateral estoppel under North Carolina law as traditionally
applied, [defendant] would need to show that  the earlier suit
resulted in a final judgment on the merits,  that the issue in
question was identical to an issue actually litigated and necessary
to the judgment, and  that both [defendant] and [plaintiffs]
were either parties to the earlier suit or were in privity with
parties." Thomas M. McInnis & Assocs., Inc. v. Hall
, 318 N.C. 421,
429, 349 S.E.2d 552, 557 (1986). The Court in Hall
, however, went
on to abandon the third requirement, commonly called "mutuality,"
when collateral estoppel is being used "against a party who has
previously had a full and fair opportunity to litigate a matter and
now seeks to reopen the identical issues with a new adversary."
at 434, 349 S.E.2d at 560; see also Whitacre P'ship
, 358 N.C.
at 15, 591 S.E.2d at 880 ("North Carolina recognizes both [the
doctrines of res judicata and collateral estoppel] as traditionally
formulated, although we have followed the modern trend in
abandoning the strict 'mutuality of estoppel' requirement for
defensive uses of collateral estoppel." (quoting Hall
, 318 N.C. at
434, 349 S.E.2d at 560)). We have already concluded that the decision of the Full
Commission constituted a final judgment on the merits. Moreover,
because defendant is attempting to defensively invoke collateral
estoppel to preclude plaintiffs from relitigating the issue of SPC
Penland's gross negligence, the mutuality requirement does not
apply. Finally, as the parties do not dispute, and we see no
reason to doubt, that the issue of SPC Penland's gross negligence
before the Industrial Commission is "identical to" the issue of SPC
Penland's gross negligence at common law, all that remains for us
to determine is whether this issue was "actually litigated and
necessary to the [Commission's] judgment." Hall
, 318 N.C. at 429,
349 S.E.2d at 557.
On this question, this Court has held: "[W]here the court
adjudicating the prior proceeding lacked jurisdiction over an
issue, the [actually litigated and necessary] element of collateral
estoppel has not been met." Meehan v. Cable
, 127 N.C. App. 336,
340, 489 S.E.2d 440, 443 (1997) (issues raised before the clerk of
court were not "actually litigated" or "necessary to the judgment"
because the clerk lacked jurisdiction to hear them). In Alt v.
John Umstead Hosp.
, 125 N.C. App. 193, 479 S.E.2d 800, disc. review
, 345 N.C. 639, 483 S.E.2d 702 (1997), this Court applied
this principle to circumstances analogous to those here. The
plaintiff in Alt
had filed a complaint in superior court alleging
malicious prosecution, false imprisonment, and the deprivation of
his constitutional and statutory rights against the defendants, a
state psychiatric hospital and various individuals. Id.
at 194,479 S.E.2d at 801. The plaintiff's claims were dismissed following
a motion for summary judgment by the defendant, and the trial
court's ruling was upheld on appeal. Id.
The plaintiff subsequently filed a complaint in the Industrial
Commission under the State Tort Claims Act, alleging he had been
injured by the State's negligence. Id.
The defendant contended
that the dismissal of plaintiff's claims in superior court
precluded plaintiff's claims in the Industrial Commission. Id.
198, 479 S.E.2d at 803. In holding that the "actually litigated"
requirement of collateral estoppel was not satisfied, this Court
Pursuant to the State Tort Claims Act,
exclusive original jurisdiction of claims
against the State or its institutions and
agencies, in which injury is alleged to have
occurred as a result of the negligence of an
employee of the State, is vested in the North
Carolina Industrial Commission. Thus,
plaintiff's negligence claim against defendant
hospital could not have been adjudicated in
the prior proceeding because the Superior
Court had no jurisdiction over a tort claim
against the State
, 479 S.E.2d at 804 (emphasis added) (internal citation
omitted). As a result, this Court upheld the Commission's
rejection of the collateral estoppel defense.
Likewise, in this case, the Industrial Commission lacked
jurisdiction to address SPC Penland's gross negligence. "[T]he
Tort Claims Act does not confer jurisdiction in the Industrial
Commission over a claim against an employee of a state agency."
, 347 N.C. at 105, 489 S.E.2d at 884. Thus, the Commission
would have jurisdiction to address the issue of gross negligenceonly if that issue fell within its jurisdiction with respect to
claims against the State.
The Emergency Management Act, however, provides that
"[n]either the State nor any political subdivision thereof, nor,
except in cases of willful misconduct, gross negligence or bad
faith, any emergency management worker complying with or reasonably
attempting to comply with this Article . . . shall be liable for
the death of or injury to persons . . . ." N.C. Gen. Stat. § 166A-
14(a). We agree with the Full Commission that, under N.C. Gen.
Stat. § 166A-14(a), the State has maintained its sovereign immunity
with respect to emergency management operations. The Commission,
therefore, had no jurisdiction to hear plaintiffs' claims filed in
the Industrial Commission and could not properly make any findings
on the parties' factual allegations. See Vereen v. N.C. Dep't of
, 168 N.C. App. 588, 591, 608 S.E.2d 412. 414 (2005) ("Having
dismissed plaintiff's tort claim, the Commission had no
jurisdiction to ex mero motu
enter an order with respect to any
workers' compensation claim which plaintiff may have . . . .").
Accordingly, under Alt
, because of this lack of jurisdiction,
plaintiffs' claim of gross negligence under the Emergency
Management Act was not "actually litigated" before the Commission
or "necessary" to its judgment, and, therefore, plaintiffs are not
collaterally estopped by the Commission's finding on that issue.
See also Templeton v. Apex Homes, Inc.
, 164 N.C. App. 373, 378, 595
S.E.2d 769, 772 (2004) (concluding that, because plaintiffs won on
one of their breach of contract claims and were awarded the onlyremedy plaintiffs sought, trial court's ancillary determinations
that plaintiffs lost on two other breach of contract claims were
not "necessary" to the judgment). We hold, therefore, that the
trial court properly concluded that plaintiffs' claims were not
barred by collateral estoppel.
Judges McGEE and CALABRIA concur.