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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
ESTATE OF BERNARD HARVEY, by and through LILLY LUCY MAE HARVEY,
Administratrix of the Estate of Bernard Harvey, Plaintiff, v.
KORE-KUT, INC. And JERRY W. MCLEAN, II, Defendant
Filed: 7 November 2006
1. Appeal and Error_appealability_motion to dismiss or strike defense_possibility of
An appeal from an order granting a motion to strike or dismiss the defense of the
employer's negligence in a negligence case involving a subcontractor was interlocutory but
affected a substantial right. Without an appeal, juries in different trials could reach different
resolutions of the same issue.
2. Workers' Compensation_settlement and waiver of subrogation by employer_action
against subcontractor_motion to dismiss defense of employer's negligence
In an action by the estate of a deceased employee against a subcontractor whose
negligence allegedly caused the employee's death, the trial court erred by allowing plaintiff's
motion to strike defendant's defense of intervening and insulating negligence by the employer,
which had paid workers' compensation benefits to the estate for the employee's death and
purportedly waived its subrogation rights, because a jury finding that the employer's negligence
contributed to the employee's death would entitle defendant subcontractor to a reduction in its
damages in the amount of the workers' compensation death benefits paid by the employer to the
employee's estate. N.C.G.S. § 97-10.2.
Appeal by defendants from order entered 29 August 2005 by
Judge Cy A. Grant in Halifax County Superior Court. Heard in the
Court of Appeals 14 August 2006.
Jones, Martin, Parris & Tessner, PLLC, by G. Christopher
Olson, for plaintiff appellee.
Teague, Campbell, Dennis & Gorham, LLP, by J. Matthew Little
and Matthew W. Skidmore, for employer-appellee.
Cranfill, Sumner & Hartzog, LLP, by William W. Pollock and
Jennifer A. Addleton, for defendant appellant.
Defendants, Kore-Kut, Inc. (Kore-Kut) and Jerry McLean,
appeal from the entry of an order granting plaintiff's motion tostrike or dismiss the defense of employer-appellee SCI
Corporation's (SCI), negligence pled in defendants' answer. We
reverse and remand.
This appeal arises from a suit filed against a third party,
Kore-Kut and its employee, subsequent to a settlement entered into
pursuant to the Workers' Compensation Act between the estate of
Bernard Harvey and the joint employers of the deceased, SCI and
Sanford Contractors, Incorporated. The basis of the suit against
Kore-Kut and Jerry McLean is that their negligence was the direct
and proximate cause of Bernard Harvey's death. Defendants, who were
employed as subcontractors of SCI at the time of the alleged
negligence, filed an answer in response to the complaint alleging
as a defense the intervening and insulating negligence of Bernard
Harvey's employer, SCI. SCI filed a motion to strike or dismiss the
defense of its negligence which was granted by the trial judge and
the parties appeal therefrom.
On 19 December 2003, Bernard Harvey was employed by SCI and
was involved in a construction project in Sanford, North Carolina,
removing the Burns Drive bridge. Defendant Kore-Kut was
subcontracted to perform certain concrete cutting tasks, and
pursuant to such subcontract sent a concrete cutting saw and
operator, Jerry McLean, to the construction site. On the day of 19
December 2003, Jerry McLean was operating the concrete cutting saw
and was making certain cuts to concrete slabs on the bridge in
order to enable the employees of SCI to place certain support beamsunderneath each concrete slab for removal. After the cuts were
made to the concrete slabs, Bernard Harvey walked underneath the
bridge to prepare to attach the support beams at which time the
concrete slab to be removed suddenly collapsed, striking Mr. Harvey
and causing his death.
Pursuant to the North Carolina Worker's Compensation Act, the
estate of Bernard Harvey and SCI entered into a final settlement
agreement and release approved by the Industrial Commission
providing the amount of compensation to be made to the estate for
the work-related death. The agreement provided that SCI would
compensate Lillie Mae Harvey, mother of decedent, in the lump sum
amount of $83,008.78 and Sandra H. Wright, decedent's alleged
common law wife, in the lump sum amount of $9,283.96 for the death
of Bernard Harvey, totaling $92,292.74. The agreement further
provided that SCI would waive their subrogation lien against any
The parties, Lillie Mae Harvey, Sandra Wright, and SCI
thereafter entered into another agreement which provided that in
consideration of the agreement to waive the subrogation lien,
Lillie Mae Harvey agrees to pay defendant insurer the amount of
$12,500.00 from any recovery resulting from a third-party claim
arising out of the accident on 19 December 2003, which caused the
death of Bernard Harvey. Within this agreement, the joint employers
and their insurer agreed to fully cooperate in the prosecution of
a third-party claim and stated that such promise of cooperation was
part of the basis of the bargain. On 8 February 2005, the estate of Bernard Harvey filed a
complaint against third-party subcontractors, Kore-Kut, and its
employee Jerry McLean, stating claims under the theories of
negligence, respondeat superior, and negligent training and
supervision. In answering the complaint, Kore-Kut and Jerry McLean
asserted the defense of the intervening and insulating negligence
of the employer, SCI. On 25 May 2005, SCI filed a motion to strike
or dismiss the asserted defense of SCI's negligence pursuant to the
terms of the settlement agreement in which SCI thereby waived all
rights to a subrogation lien in such action. The trial court
granted SCI's motion to strike or dismiss the asserted defense on
29 August 2005.
Defendants now appeal.
Defendants contend on appeal that the trial court erred in
granting SCI's motion to dismiss or strike defendants' pleaded
defense of SCI's negligence. We agree.
 We first address whether plaintiff's appeal is
interlocutory. As a general rule, an appeal will not lie until a
disposition or judgment on the issues is rendered which is final in
nature. Romig v. Jefferson-Pilot Life Ins. Co., 132 N.C. App. 682,
684-85, 513 S.E.2d 598, 600, disc. review denied, cert. denied,
motion to dismiss allowed in part, 350 N.C. 836, 539 S.E.2d 294
(1999), aff'd, 351 N.C. 349, 524 S.E.2d 804 (2000). However, a
party may appeal an interlocutory order that affects somesubstantial right claimed by the appellant and will work an injury
to him if not corrected before an appeal from the final judgment.
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); see also N.C. Gen.
Stat. § 1-277 (2005); N.C. Gen. Stat. § 7A-27(d)(1) (2005). Thus,
the instant appeal from the interlocutory order granting the motion
to dismiss or strike the defense of intervening negligence is
proper if it affects the substantial rights of the parties.
Where the dismissal of an appeal as interlocutory could result
in two different trials on the same issues, creating the
possibility of inconsistent verdicts, a substantial right is
prejudiced and therefore such dismissal is immediately appealable.
See Hartman v. Walkertown Shopping Center, 113 N.C. App. 632, 439
S.E.2d 787, disc. review denied, 336 N.C. 780, 447 S.E.2d 422
(1994). In the instant case, defendants pled the insulating and
intervening negligence of the third party, SCI, as a defense to the
action. N.C. Gen. Stat. § 97-10.2(e) provides in pertinent part:
If the third party defending such proceeding,
by answer duly served on the employer,
sufficiently alleges that actionable
negligence of the employer joined and
concurred with the negligence of the third
party in producing the injury or death, then
an issue shall be submitted to the jury in
such case as to whether actionable negligence
of employer joined and concurred with the
negligence of the third party in producing the
injury or death. . . . If the verdict shall
be that actionable negligence of the employer
did join and concur with that of the third
party in producing the injury or death, then
the court shall reduce the damages awarded by
the jury against the third party by the amount
which the employer would otherwise be entitledto receive therefrom by way of subrogation
hereunder and the entire amount recovered,
after such reduction, shall belong to the
employee or his personal representative free
of any claim by the employer and the third
party shall have no further right by way of
contribution or otherwise against the
employer, except any right which may exist by
reason of an express contract of indemnity
between the employer and the third party,
which was entered into prior to the injury of
N.C. Gen. Stat. § 97-10.2(e) (2005). Were this Court to dismiss the
appeal before us as interlocutory, there is certainly a possibility
of inconsistent jury verdicts as to the issue of negligence on the
part of the employer, SCI. Denial of appeal from the motion to
strike or dismiss the defense of the employer's negligence could
result in two juries in separate trials reaching different
resolutions of this same issue if subsequent trial on the merits
and appeal were successful. Therefore, a substantial right is
affected and the appeal from such order shall be granted.
Motion to dismiss/strike negligence defense
 We next address the issue of whether the trial court
properly granted SCI's motion to strike or dismiss defendant's
defense of intervening and insulating negligence.
The question before this Court today is whether an employer
can waive its right to subrogation in a settlement with the
deceased employee's estate before the Industrial Commission,
thereby eliminating the third party's statutory right to a
determination of the employer's negligence and the entitlement to
a deduction of damages resulting therefrom. N.C. Gen. Stat. 97-10.2 provides for the rights of an employee
or the estate of a deceased employee to bring suit against a third
party when the injury or death of the employee is caused under
circumstances creating a liability in some person other than the
employer[.] N.C. Gen. Stat. § 97-10.2(a).
Chapter 97, Section 10.2 further allows a defendant in an
action by an employee against a third party to plead as a defense
the contributing negligence of the employer, to admit evidence of
the amount of compensation and benefits paid by the employer, and
requires an instruction to the jury that the amount paid by the
employer will be deducted from any amount of damages awarded to the
plaintiff. The statute further requires that if the jury finds
actionable negligence on the part of the employer, then the court
shall reduce the damages awarded by the jury against the third
party by the amount which the employer would otherwise be entitled
to receive therefrom by way of subrogation
[.] N.C. Gen. Stat. §
97-10.2(e) (emphasis added).
Previous cases interpreting the intent of N.C. Gen. Stat.
§ 97-10.2(e) looked to prior case history before the enaction and
gleaned that the statute was a mere codification of the Supreme
Court's ruling in Brown v. R.R.
, 204 N.C. 668, 169 S.E. 419 (1933).
The Court stated that where an employer seeks to recover from a
third-party tortfeasor the amount of workers' compensation benefits
paid by the employer to its employee, the third party may raise the
employer's contributory negligence in causing the employee's injury
as a defense to the employer's action. Leonard v. Johns-ManvilleSales Corp.
, 309 N.C. 91, 305 S.E.2d 528 (1983). The case further
states that this enumeration stems from the articulated policy of
our courts disfavoring any allowance of recovery by the employer
where the employer's acts joined with the acts of the third party
to cause the employee's injury. Id.; see also Geiger v. Guilford
Coll. Cmty. Volunteer Firemen's Ass'n
, 668 F. Supp. 492, 496
Further, previous case law interpreting the statute has stated
that [i]t is clear from the provisions of N.C.G.S. § 97-10.2 . . .
that it was and is the intent of the legislature that the non-
negligent employers are to be reimbursed for those amounts they pay
to employees who are injured by the negligence of third parties,
and that employees are not intended to receive double recoveries.
Johnson v. Southern Industrial Constructors
, 347 N.C. 530, 538, 495
S.E.2d 356, 360-61 (1998); see also Radzisz v. Harley Davidson of
, 346 N.C. 84, 89, 484 S.E.2d 566, 569 (1997) (stating
that the [Workers' Compensation] Act in general and N.C.G.S. § 97-
10.2 specifically were never intended to provide the employee with
a windfall of a recovery from both the employer and the third-party
In the instant case, SCI paid plaintiff a total of $92,292.74
in settlement for Bernard Harvey's workers' compensation claim
flowing from the injury causing his death. Had SCI not waived its
right to subrogation, $92,292.74 is the amount in which SCI would
acquire a lien on any recovery by plaintiff from defendant Kore-
Kut. SCI has attempted to evade a determination of negligence andpossible forfeiture of certain monies by waiving this statutory
right to subrogation.
To allow such a practice within the well-delineated guidelines
of the interaction between the courts of general justice and the
Worker's Compensation Act would be a disservice. Kore-Kut as the
third party, has a right to a jury determination as to whether the
negligence of SCI joined with the negligence of Kore-Kut and its
employees in causing the death of Mr. Harvey. In turn, if the jury
finds that SCI's wrongdoing did contribute to the injury, then
Kore-Kut is entitled to a reduction of its damages in the amount of
$92,292.74, that which the employer would have otherwise been
entitled to receive by way of subrogation so long as the jury did
not find SCI negligent, but for SCI's waiver of its rights.
Thus, if the jury finds actionable negligence on the part of
SCI as well as third-party Kore-Kut, Kore-Kut would be entitled to
a potential reduction in its damages up to the amount of
$92,292.74. To find otherwise would impermissibly allow plaintiff
and SCI to contractually shift SCI's obligation to Kore-Kut as
established under the Workers' Compensation Act. This Court will
not allow any device, whether it be contract or agreement, written
or implied, to relieve an employer of an obligation statutorily set
forth in the Workers' Compensation Act. See
N.C. Gen. Stat. § 97-6
Accordingly, the trial court improperly granted the motion to
dismiss or strike the defense of the intervening and insulating
negligence of SCI, and therefore the case must be remanded for atrial on the merits and a jury determination as to the allocation
of negligence among the parties. Further, if a jury determines
that SCI's negligence contributed to the death of Mr. Harvey, then
Kore-Kut and its employee are entitled to a reduction of damages in
the amount which SCI paid plaintiff as settlement for the injuries
to Mr. Harvey resulting in death, $92,292.74.
Reversed and remanded.
Chief Judge MARTIN and Judge HUNTER concur.
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