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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.
WILLIE SPAULDING, Plaintiff, v. HONEYWELL INTERNATIONAL, INC.
FORMERLY KNOWN AS ALLIEDSIGNAL, INC., HOLTRACHEM MANUFACTURING
COMPANY LLC, HOLTRACHEM GP, INC., BRUCE DAVIS, and HERB ROSKIND,
Filed: 3 July 2007
1. Corporations_LLC member--no derivative liability
The trial court properly granted summary judgment for defendant Honeywell on claims
arising from exposure to toxic chemicals at a chemical plant. Defendant did not have derivative
liability for the acts of the LLC of which it was a member; N.C.G.S. § 57C-3-30(a) is clear that
mere participation in the business affairs of a limited liability company by a member is
insufficient standing alone to hold the member independently liable for harm caused by the LLC.
2. Workers' Compensation--exclusivity provisions--liability of LLC member-duty
owed by LLC
Defendant Honeywell was protected by the exclusivity provisions of the Workers'
Compensation Act in an action for exposure to toxic chemicals at a manufacturing plant owned
by an LLC of which it was a member. Honeywell neither promised nor assumed an independent
duty to plaintiff; the LLC, not Honeywell, owed a nondelegable duty to provide a safe workplace.
3. Employer and Employee--workplace safety_LLC member_no independent duty
Defendant Honeywell, who was not plaintiff's employer, did not owe plaintiff an
independent duty to provide for workplace safety through Honeywell's alleged liability under
Appeal by plaintiff from orders entered 23 September 2005 and
4 May 2006 by Judge John R. Jolly, Jr., in New Hanover County
Superior Court. Heard in the Court of Appeals 4 June 2007.
Hartzell & Whiteman, L.L.P., by J. Jerome Hartzell; Law Office
of Thomas N. Barefoot, P.A., by Thomas N. Barefoot; and
Twiggs, Beskind, Strickland & Rabenau, P.A., by Howard Twiggs
and Donald H. Beskind, for plaintiff-appellant.
Smith Moore LLP, by J. Donald Cowan, Jr., and Jeri L.
Whitfield; and King & Spalding LLP, by J. Kevin Buster,
Richard A. Schneider, and Michael R. Powers, for defendant-
appellee Honeywell International, Inc.
No brief filed for defendants-appellees HoltraChem
Manufacturing Company LLC, HoltraChem GP, Inc., Bruce Davis,
and Herb Roskind.
Willie Spaulding (plaintiff) appeals from order entered
granting Honeywell International, Inc. (Honeywell), formerly
known as AlliedSignal, Inc. (AlliedSignal), HoltraChem
Manufacturing Company LLC (HMC LLC), HoltraChem GP, Inc.
(HoltraChem), Bruce Davis (Davis), and Herb Roskind's
(Roskind) (collectively, defendants) motions for summary
judgment. Plaintiff also appeals from order entered, which
concluded the reports and related materials prepared by
Environmental & Safety Services, Inc. (ESS) are privileged. We
In 1962, Honeywell, formerly known as AlliedSignal, built the
Acme Plant (the plant) in Riegelwood, North Carolina to produce
chlor-alkali chemical products for the paper industry and other
customers. Honeywell owned and operated the plant from 1962 until
On 14 December 1979, Honeywell sold the plant to Linden
Chemicals and Plastics, Inc. (Linden). As part of the terms of
sale, Linden executed a promissory note to Honeywell. Linden
subsequently changed its corporate name to Hanlin GP, Inc.
In 1989, Hanlin failed to make timely payments under the terms
of the promissory note to Honeywell. Honeywell agreed to give
Hanlin credit on its indebtedness for any environmental remediation
and projects Hanlin funded that reduced Honeywell's futureliability under environmental laws. Hanlin eventually declared
bankruptcy, but continued to operate the plant as a debtor-in-
In 1992, HoltraChem, a distributor of chemicals including
chlor-alkali products, approached Honeywell about forming a
business entity to purchase the plant and proposed an agreement to
Honeywell. If Honeywell agreed to indemnify HoltraChem against
past environmental liabilities for which Honeywell was responsible,
the two companies would form a new company to operate and share
profits from the plant. Honeywell agreed to the transaction.
A. Formation of HMC LLC
In 1993, the North Carolina General Assembly enacted the North
Carolina Limited Liability Act, N.C. Gen. Stat. 57C-1-01, et seq.
On 23 November 1993, Honeywell and HoltraChem formed HMC LLC as a
manager-managed limited liability company. HoltraChem, Honeywell,
and Hanlin were the named members of HMC LLC. Davis served as HMC
LLC's manager. In 1994, Hanlin sold the plant to HMC LLC in a
transaction approved by the bankruptcy court.
On 7 April 1994, the members entered into an operating
agreement which granted the members certain rights to participate
in the management of HMC LLC with respect to budgetary and other
matters. As manager, Davis was vested with full and complete
authority to manage HMC LLC's day-to-day affairs, including the
plant. HMC LLC operated the plant as the sole employer from 1994
until the plant closed in 2000. Plaintiff worked at the plant from 1987 to 2000. Plaintiff
and sixty-four other former employees of the plant alleged they
were injured in the workplace due to exposures to mercury, chlorine
gas, and other hazardous materials.
B. Present Claims
On 17 January 2002, plaintiff instituted this action and
asserted claims for: (1) civil conspiracy; (2) employer liability;
(3) aiding and abetting; (4) duty to control; (5) negligent
undertaking; (6) ultra-hazardous activity; and (7) fellow employee
liability. In September 2004, all defendants moved for summary
judgment. On 23 September 2005, defendants' motions for summary
judgment were granted against all plaintiffs on all claims.
Each of the sixty-five plaintiffs timely noticed appeal to
this Court. This Court determined that briefing and argument
should take place only for plaintiff's appeal. The remaining
sixty-four appeals were stayed pending the outcome of this appeal.
Plaintiff asserted forty-nine assignments of error in the
record on appeal, but only argues in his brief the trial court
erred by: (1) granting Honeywell's motion for summary judgment and
(2) declaring the ESS reports and related materials to be
privileged. Plaintiff abandoned his remaining assignments of
error. Assignments of error not set out in the appellant's brief,
or in support of which no reason or argument is stated or authority
cited, will be taken as abandoned. N.C.R. App. P. 28(b)(6)
(2007); see Animal Legal Def. Fund v. Woodley, 181 N.C. App. 594,597, 640 S.E.2d 777, 779 (2007) ([W]e will not review defendants'
unargued assignments of error.).
III. Summary Judgment
A. Standard of Review
Summary judgment is proper if the pleadings,
depositions, answers to interrogatories, and
admissions on file, together with the
affidavits, if any, show 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. The party moving for summary
judgment ultimately has the burden of
establishing the lack of any triable issue of
A defendant may show entitlement to summary
judgment by (1) proving that an essential
element of the plaintiff's case is
non-existent, or (2) showing through discovery
that the plaintiff cannot produce evidence to
support an essential element of his or her
claim, or (3) showing that the plaintiff
cannot surmount an affirmative defense.
Summary judgment is not appropriate where
matters of credibility and determining the
weight of the evidence exist.
Once the party seeking summary judgment makes
the required showing, the burden shifts to the
nonmoving party to produce a forecast of
evidence demonstrating specific facts, as
opposed to allegations, showing that he can at
least establish a prima facie case at trial.
To hold otherwise . . . would be to allow
plaintiffs to rest on their pleadings,
effectively neutralizing the useful and
efficient procedural tool of summary judgment.
Draughon v. Harnett Cty. Bd. of Educ., 158 N.C. App. 208, 212, 580
S.E.2d 732, 735 (2003) (internal citations and quotations omitted),
aff'd per curiam, 358 N.C. 131, 591 S.E.2d 521 (2004). We review
an order allowing summary judgment de novo. Summey v. Barker, 357
N.C. 492, 496, 586 S.E.2d 247, 249 (2003). If the granting ofsummary judgment can be sustained on any grounds, it should be
affirmed on appeal. Shore v. Brown, 324 N.C. 427, 428, 378 S.E.2d
778, 779 (1989).
Plaintiff abandoned his appeal from the order granting summary
judgment for all defendants except Honeywell. Plaintiff argues the
trial court erred by entering summary judgment in favor of
Honeywell and asserts under the 1994 Operating Agreement: (1)
Honeywell, as a member of HMC LLC, can be held derivatively liable
for acts of the limited liability company; (2) based upon
Honeywell's independent duty, our Supreme Court's holding in
Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991), does not
shield Honeywell from its duty; and (3) Honeywell assumed an
independent duty of workplace safety in the HMC LLC operating
1. Derivative Liability of Member
 Plaintiff argues Honeywell has derivative liability for
HMC LLC's acts because of its status as a member of that limited
liability company. We disagree.
N.C. Gen. Stat. 57C-3-30(a) (2005) provides as follows:
(a) A person who is a member, manager,
director, executive or any combination thereof
of a limited liability company is not liable
for the obligations of a limited liability
company solely by reason of being a member,
manager, director, or executive and does not
become so by participating, in whatever
capacity, in the management or control of the
business. A member, manager, director, or
executive may, however, become personally
liable by reason of that person's own acts or
This statutory provision expressly limits the liability of a
member for the obligations of a [LLC] and provides that
participating, in whatever capacity in the management or control
of the business, does not impose liability on a member for the
acts of the limited liability company and prohibits the court from
imposing derivative liability on Honeywell for the acts of HMC LLC.
Plaintiff concedes in his brief:
This interpretation of section 57C-3-30(a) is
borne out by the language of the section,
which refers to a member's liability for the
obligations of a limited liability company.
The language referring to obligations of an
LLC negates the derivative liability that the
member would, if treated like a partner,
inherit through the LLC.
(Emphasis supplied). In Page v. Roscoe, LLC, this Court affirmed
the trial court's ruling that the plaintiff could not state a claim
against a member of a limited liability company because the
plaintiff had not allege[d] any acts on the part of [the member]
individually, which are not related to his status as a member of a
North Carolina limited liability company[.] 128 N.C. App. 678,
686-88, 497 S.E.2d 422, 428 (1998).
Whether Honeywell participated or failed to participate in the
management of HMC LLC does not allow plaintiff to hold Honeywell
derivatively or individually liable for the acts of HMC LLC. N.C.
Gen. Stat. § 57C-3-30(a) is clear, that in the absence of an
independent duty, mere participation in the business affairs of a
limited liability company by a member is insufficient, standingalone and without a showing of some additional affirmative conduct,
to hold the member independently liable for harm caused by the LLC.
Plaintiff abandoned all his claims against his employer HMC
LLC on appeal. No direct liability of HMC LLC exists to impose
derivatively upon Honeywell. See Spivey v. Lowery, 116 N.C. App.
124, 126, 446 S.E.2d 835, 837 (Because the plaintiff released the
tort-feasor, the plaintiff may not assert a claim against the
defendant because of the derivative nature of that defendant's
liability.), disc. rev. denied, 338 N.C. 312, 452 S.E.2d 312
(1994). This assignment of error is overruled.
2. Woodson Claims
 Honeywell argues if it is deemed to be plaintiff's
employer then it is entitled to protection under North Carolina's
Workers' Compensation Act. Plaintiff asserts the exclusivity
provisions of the Workers' Compensation Act do not apply to
Plaintiff neither contends that Honeywell and HMC LLC are one
and the same entity, nor that one company is the alter ego of the
other. Rather, plaintiff argues that Honeywell is liable because
of its own and direct responsibility to maintain workplace safety.
The question of whether Honeywell is protected by the exclusivity
provisions of and remedies available in the Workers' Compensation
Act or civilly liable to plaintiff is governed by whether plaintiff
can demonstrate Honeywell promised or assumed an independent duty
to him. See Hamby v. Profile Products, L.L.C., 179 N.C. App. 151,632 S.E.2d 804, disc. rev. allowed, 360 N.C. 646, 638 S.E.2d 466
3. Independent Duty Under the Operating Agreement
Plaintiff argues Honeywell voluntarily undertook an
independent duty to ensure worker safety at the plant in the 1994
Operating Agreement and the trial court erred by entering summary
judgment for all defendants. Plaintiff asserts, Honeywell had the
duty of ensuring . . . plant worker safety under the 1994
Operating Agreement, and Honeywell . . . failed to perform any
such duty. We disagree.
In North Carolina, the employer owes a non-delegable duty to
provide a safe workplace to its employees. See N.C. Gen. Stat. §
95-129 (1) and (2) (2005) (Each employer shall furnish to each of
his employees conditions of employment and a place of employment
free from recognized hazards that are causing or are likely to
cause death or serious injury or serious physical harm to his
employees . . . [and] shall comply with occupational safety and
health standards or regulations[.]); see also Brooks v. BCF
Piping, 109 N.C. App. 26, 33, 426 S.E.2d 282, 286 (1993) (The duty
imposed under the North Carolina Occupational Safety and Health Act
is nondelegable.). Here, it is undisputed that plaintiff's
employer was HMC LLC. Under the statute and case law, HMC LLC, not
Honeywell, owed a nondelegable duty to provide plaintiff with a
safe workplace. Id.
In the analagous context of a parent-subsidiary relationship,
the United States District Court for the Middle District of NorthCarolina has stated, quoting Muniz v. National Can Corp., 737 F.2d
145, 148 (1st Cir. 1984):
An employer has a nondelegable duty to provide
for the safety of its employees in the work
environment. The parent-shareholder is not
responsible for the working conditions of its
subsidiary's employees merely on the basis of
[the] parent-subsidiary relationship. A
parent corporation may be liable for unsafe
conditions at a subsidiary only if it assumes
a duty to act by affirmatively undertaking to
provide a safe working environment at the
subsidiary. Such an undertaking may be
express, as by contract between the parent and
the subsidiary, or it may be implicit in the
conduct of the parent . . . .
Because an employer has a nondelegable duty to
provide safe working conditions for its
employees, we do not lightly assume that a
parent corporation has agreed to accept this
responsibility. Neither mere concern with nor
minimal contact about safety matters creates a
duty to ensure a safe working environment for
the employees of a subsidiary corporation. To
establish such a duty, the subsidiary's
employee must show some proof of a positive
undertaking by the parent corporation.
Richmond v. Indalex Inc., 308 F. Supp. 2d 648, 662-63 (M.D.N.C.
2004) (emphasis supplied).
Here, plaintiff asserts Honeywell assumed control over
environmental and worker safety at the plant in HMC LLC's 1994
Operating Agreement. Plaintiff, quoting the operating agreement,
argues Honeywell: (1) took control over HMC LLC's budget with
respect to environmental matters pertaining to the [Honeywell]
Former Sites; (2) agreed to indemnify and hold harmless HMC LLC,
its manager, and HoltraChem from and against any and all
Environmental Costs; and (3) agreed it shall, and shall be solely
and exclusively entitled to, direct and control, subject toconsultation with the Manager, any and all activities and
expenditures undertaken in response to an Environmental Event.
Nowhere in the 1994 Operating Agreement does Honeywell
affirmatively undertak[e] to provide a safe working environment
for HMC LLC's employees. Id. The agreement states:
[T]he business and affairs of HMC [LLC] shall
be managed by the Manager . . . the Manager
shall have full and complete authority, power
and discretion to manage the business,
affairs, and properties of HMC [LLC], to make
all decisions regarding those matters and to
perform any and all other acts or activities
customary or incident in the management of HMC
The 1994 Operating Agreement was entered into by and among
the members of HMC LLC, i.e. Honeywell, HoltraChem, and Hanlin, for
the management, operation and financing of HMC LLC.
Plaintiff contends HMC LLC's operating agreement created an
independent duty on the part of Honeywell to HMC LLC's employees.
This Court recently addressed a similar argument by a plaintiff in
Babb v. Bynum & Murphrey, PLLC,:
Next, plaintiffs' contend that the firm's
operating agreement created a duty on the part
of defendant. North Carolina recognizes the
right of a third-party beneficiary to sue for
breach of a contract executed for his benefit.
In order to assert rights as a third-party
beneficiary under the operating agreement,
plaintiffs must show they were an intended
beneficiary of the contract. We have stated
that plaintiffs must show:
(1) that a contract exists between two persons
or entities; (2) that the contract is valid
and enforceable; and (3) that the contract was
executed for the direct, and not incidental,
benefit of the [third party]. A person is a
direct beneficiary of the contract if the
contracting parties intended to confer alegally enforceable benefit on that person. It
is not enough that the contract, in fact,
benefits the [third party], if, when the
contract was made, the contracting parties did
not intend it to benefit the [third party]
directly. In determining the intent of the
contracting parties, the court should consider
the circumstances surrounding the transaction
as well as the actual language of the
contract. When a third person seeks
enforcement of a contract made between other
parties, the contract must be construed
strictly against the party seeking
Here, the operating agreement states [a]
member shall be liable for all acts or neglect
for any professional negligence for which he
or she is directly responsible. The operating
agreement also requires the company to comply
with the Rules of Professional Conduct. We
believe the intent of the parties regarding
these provisions was not to directly benefit
plaintiffs, rather it was to directly benefit
the law firm and its members. As some
evidence of our belief, neither plaintiffs nor
anyone else is designated as a beneficiary of
the operating agreement. Moreover, there is
no argument in plaintiffs' brief to suggest
that the agreement was entered into to
directly benefit plaintiffs. Therefore,
plaintiffs, at most, are mere incidental
beneficiaries under these provisions.
Accordingly, we disagree with plaintiffs.
182 N.C. App. 750, ___, 643 S.E.2d 55, 57-58 (2007) (emphasis
supplied) (internal citations and quotations omitted).
Here, as in Babb, plaintiff has failed to argue the 1994
Operating Agreement was entered into to directly benefit him or
other HMC LLC employees. Neither plaintiff nor anyone else, other
than the signatories, were designated to be beneficiaries of the
operating agreement. Id. The 1994 Operating Agreement was entered
into by and among the members of HMC LLC wherein they allocated
environmental events, risks, and liabilities among themselves. Plaintiff was neither a direct nor intended beneficiary of this
agreement. Also, Honeywell's agreement to be responsible for
budgetary expenditures in response to an environmental event is
insufficient, as a matter of law, to impose an independent duty
upon Honeywell to plaintiff. Richmond, 308 F. Supp. 2d at 662-64;
see N.C. Gen. Stat. § 57C-3-30(a).
Nowhere in the 1994 Operating Agreement does Honeywell
affirmatively undertak[e] to provide a safe working environment
for HMC LLC's employees. Richmond, 308 F. Supp. 2d at 662-63.
Plaintiff has failed to show he was an intended or direct
beneficiary of the 1994 Operating Agreement. Babb, 182 N.C. App.
at ___, 643 S.E.2d at 57-58. This assignment of error is
4. Independent Duty under Environmental Statutes
 Plaintiff also argues Honeywell owed him an independent
duty to provide for workplace safety due to Honeywell's alleged
violations of or liability to remediate conditions at the plant
under environmental statutes. We disagree.
A federal court has addressed this argument
and held that: While these statutes certainly
provide for private causes of action, those
causes of action are limited to recovery of
response costs under CERCLA and to enforce
compliance under RCRA. See 42 U.S.C. §§
9613(h), 9607(a); 42 U.S.C. § 6792(a).
Therefore, there is no private cause of action
under either CERCLA or RCRA to recover damages
for personal injuries suffered as a result of
violations of those statutes.
Polcha v. AT & T Nassau Metals Corp., 837 F. Supp. 94, 96 (M.D.
Penn. 1993) (emphasis supplied). Plaintiff's alleged breach ofenvironmental statutes did not create an independent duty of
workplace safety to plaintiff. Plaintiff was never employed by
Honeywell. Plaintiff's employer, HMC LLC, not Honeywell owed him
a nondelegable duty to provide its employees with a safe workplace.
This assignment of error is overruled.
IV. Privileged Materials
Plaintiff argues the trial court erred by declaring the ESS
reports and related materials to be privileged. The trial court
stated it considered the ESS reports and related materials in
granting defendants' motions for summary judgment. Plaintiff
admits the summary judgment ruling [was] not affected by the issue
of whether the ESS reports are privileged. In light of our
holding to affirm the trial court's order granting Honeywell's
motion for summary judgment, it is unnecessary for us to reach this
assignment of error.
Plaintiff has abandoned all claims he asserted against all
defendants on appeal except Honeywell. The trial court properly
granted Honeywell's motion for summary judgment on plaintiff's
claims. In light of our holding to affirm the trial court's order
granting Honeywell's motion for summary judgment, it is unnecessary
for us to reach plaintiff's assignment of error regarding the trial
court's ruling on the ESS reports and related materials. The trial
court's judgment is affirmed.
Chief Judge MARTIN and Judge MCCULLOUGH concur.
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