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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.
PHILLIP OXENDINE, Plaintiff-Appellee, v. TWL, INC., Defendant-
Appellee, and CANAL INSURANCE COMPANY, Defendant-Appellant
Filed: 19 June 2007
Workers' Compensation--cancellation of policy--notice
The Industrial Commission did not err in a workers' compensation case by holding that
cancellation of the pertinent workers' compensation policy was required under N.C.G.S. § 58-36-
105 even though defendant insurance company contends the insurance contract was void ab initio
based on alleged misrepresentations defendant employer made in its application, and thus the
insurance contract was in effect at the time of the compensable injury as a matter of law, because:
(1) N.C.G.S. § 58-3-10 is a more general statute, and N.C.G.S. § 58-36-105 specifically applies
to workers' compensation insurance; (2) N.C.G.S. § 58-36-105 contemplates the very sort of
material misrepresentation or nondisclosure of a material fact in obtaining the policy that
defendant insurance company alleges in this case; (3) defendant insurance company failed to
send its purported notice of cancellation via registered or certified mail as required by N.C.G.S. §
58-36-105; and (4) the bald assertion of underwriting reasons does not constitute a precise
reason for cancellation as required by the statute.
Appeal by defendant Canal Insurance Company from opinion and
award entered 27 June 2006 by Chairman Buck Lattimore of the Full
North Carolina Industrial Commission. Heard in the Court of
Appeals 9 May 2007.
Van Camp, Meacham & Newman, PLLC, by Thomas M. Van Camp, for
Hester, Grady, and Hester, P.L.L.C., by H. Clifton Hester, for
McAngus, Goudelock & Courie, PLLC, by Trula R. Mitchell, for
The present appeal stems from the workers' compensation
insurance contract between TWL, Inc. (TWL) and Canal Insurance
Company (Canal). Canal and TWL entered into an insurance contract
in March, 2002; the policy's effective dates were 20 March 2002through 20 March 2003. On 18 September 2002, Canal prepared a
Notice of Cancellation of Insurance. The notice stated that
TWL's policy would be cancelled, effective 7 December 2002, for
underwriting reasons. On 25 November 2002, Patty Watts, who
worked for Canal's managing agent, Golden Isle Underwriting, Inc.
(Golden), sent TWL a letter thanking TWL for its recent payment and
stating that TWL's policy would be cancelled 7 December 2002 due to
underwriting reasons. TWL had paid its premiums through 7
December 2002. All parties agree that the notice of cancellation
was sent via regular mail, and that the reason given for the
purported cancellation was underwriting reasons.
On 31 January 2003, Phillip Oxendine (plaintiff) was involved
in a car accident. At that time, plaintiff worked for TWL; the
accident arose out of his employment with the company. Plaintiff
suffered serious injuries and incurred medical expenses in excess
of $200,000.00. All parties agree that plaintiff's injury was
compensable. However, as a result of the dispute as to insurance
coverage, plaintiff's payments were significantly delayed.
Accordingly, plaintiff filed a motion to join Canal as a party on
20 April 2004, which Chief Deputy Commissioner Stephen T. Gheen
granted in an order filed 28 April 2004.
On 27 June 2006, Chairman Buck Lattimore, on behalf of the
Full Commission, filed an opinion and award affirming Deputy
Commissioner George R. Hall, III's 22 August 2005 opinion andaward.
(See footnote 1)
On appeal, Canal argues that TWL made material
misrepresentations in its application to Canal for insurance, and
that those material misrepresentations prevent recovery under the
insurance contract under N.C. Gen. Stat. § 58-3-10 and related case
law. See, e.g., Bell v. Nationwide Ins. Co., 146 N.C. App. 725,
726, 554 S.E.2d 399, 401 (2001) (noting, It is a basic principle
of insurance law that the insurer may avoid his obligation under
the insurance contract by a showing that the insured made
representations in his application that were material and false.)
(quotations and citations omitted). Accordingly, argues Canal, the
Full Commission erred in holding that cancellation of the policy
was required pursuant to N.C. Gen. Stat. § 58-36-105. Canal's
argument is without merit.
Our standard of review for cases originating in the Industrial
Commission is well established:
Our review of the Commission's opinion and
award is limited to determining whether
competent evidence of record supports the
findings of fact and whether the findings of
fact, in turn, support the conclusions of law.
If there is any competent evidence supporting
the Commission's findings of fact, those
findings will not be disturbed on appeal
despite evidence to the contrary. However,
the Commission's conclusions of law are
reviewed de novo.
Rose v. City of Rocky Mount, 180 N.C. App. 392, 395, 637 S.E.2d251, 254 (2006) (internal quotations, alterations, and citations
omitted). A question of statutory interpretation is ultimately a
question of law for the courts. Brown v. Flowe, 349 N.C. 520,
523, 507 S.E.2d 894, 896 (1998) (citation omitted). We therefore
review this issue, which is controlled by statute, de novo.
The crux of Canal's argument is that the insurance contract at
issue was void ab initio due to alleged misrepresentations TWL made
in its application for insurance. Because the contract was never
valid to begin with, argues Canal, the requirements for
cancellation found in N.C. Gen. Stat. § 58-36-105 do not apply.
Instead, Canal would have this Court apply N.C. Gen. Stat. § 58-3-
10 and hold that no contract was ever formed. We hold that N.C.
Gen. Stat. § 58-36-105 does apply; a workers' compensation
insurance contract will therefore never be void ab initio, but must
be cancelled in the manner prescribed by N.C. Gen. Stat. § 58-36-
N.C. Gen. Stat. § 58-3-10 reads: All statements or
descriptions in any application for a policy of insurance, or in
the policy itself, shall be deemed representations and not
warranties, and a representation, unless material or fraudulent,
will not prevent a recovery on the policy. N.C. Gen. Stat. §
N.C. Gen. Stat. § 58-36-105 is titled Certain workers'
compensation insurance policy cancellations prohibited. N.C. Gen.
Stat. § 58-36-105 (2005). It reads, in pertinent part:
(a) No policy of workers' compensation
insurance . . . shall be cancelled by theinsurer before the expiration of the term or
anniversary date stated in the policy and
without the prior written consent of the
insured, except for any one of the following
(2) An act or omission by the insured or the
insured's representative that constitutes
material misrepresentation or nondisclosure of
a material fact in obtaining the policy,
continuing the policy, or presenting a claim
under the policy.
N.C. Gen. Stat. § 58-36-105 (2005).
It is a general rule of statutory construction that
[w]here one of two statutes might apply to the
same situation, the statute which deals more
directly and specifically with the situation
controls over the statute of more general
applicability. When two statutes apparently
overlap, it is well established that the
statute special and particular shall control
over the statute general in nature . . .
unless it clearly appears that the legislature
intended the general statute to control.
Fowler v. Valencourt
, 334 N.C. 345, 349, 435 S.E.2d 530, 532-33
(1993) (quoting Trustees of Rowan Tech. v. Hammond Assoc.
, 313 N.C.
230, 238, 328 S.E.2d 274, 279 (1985)) (internal quotations and
In this case, § 58-3-10 is the more general statute, applying
to any application for a policy of insurance. N.C. Gen. Stat. §
58-3-10 (2005). In contrast, § 58-36-105 applies specifically to
workers' compensation insurance. As § 58-36-105 contemplates the
very sort of material misrepresentation or nondisclosure of a
material fact in obtaining the policy that Canal alleges in this
case, it clearly governs our review of the matter. N.C. Gen. Stat.
§ 58-36-105(a)(2) (2005). Having established that N.C. Gen. Stat. § 58-36-105 applies,
we must consider whether Canal's attempted cancellation of the
policy was effective. N.C. Gen. Stat. § 58-36-105 provides in
(b) Any cancellation permitted by subsection
(a) of this section is not effective unless
written notice of cancellation has been given
by registered or certified mail
receipt requested, to the insured not less
than 15 days before the proposed effective
date of cancellation. . . . The notice shall
state the precise reason for cancellation
Whenever notice of intention to cancel is
required to be given by registered or
certified mail, no cancellation by the insurer
shall be effective unless and until such
method is employed and completed
N.C. Gen. Stat. § 58-36-105(b) (2005) (emphasis added).
It is uncontested that Canal failed to send its purported
notice of cancellation via registered or certified mail. Despite
this, Canal argues that [t]he legislative intent of N.C. Gen.
Stat. § 58-36-105 was fulfilled by TWL's actual receipt of the
notice more than fifteen days prior to cancellation.
As plaintiff points out in his brief, If the North Carolina
Legislature intended to forego the requirement of service by
registered or certified mail, it would not have provided language
in the statute which specifically states that a cancellation is not
effective until service by certified or registered mail is
'employed and completed.' [A] statute must be considered as a
whole and construed, if possible, so that none of its provisions
shall be rendered useless or redundant. It is presumed that the
legislature intended each portion to be given full effect and didnot intend any provision to be mere surplusage. R.J. Reynolds
Tobacco Co. v. N.C. Dep't of Env't & Natural Res.
, 148 N.C. App.
610, 616, 560 S.E.2d 163, 168 (2002) (quoting Builders, Inc. v.
City of Winston-Salem
, 302 N.C. 550, 556, 276 S.E.2d 443, 447
(1981)) (internal quotations and citations omitted) (alteration in
original). Canal's argument regarding substantial compliance
therefore must fail.
Moreover, even if this Court were to agree on that issue, we
could not hold that the bald assertion of underwriting reasons
constitutes a precise reason for cancellation.
(See footnote 2)
No court has
interpreted the meaning of precise reason. As our Supreme Court
recently stated, however, When the language of a statute is clear
and without ambiguity, it is the duty of this Court to give effect
to the plain meaning of the statute, and judicial construction of
legislative intent is not required. Patronelli v. Patronelli
N.C. 628, 631, 636 S.E.2d 559, 561 (2006) (quoting Diaz v. Div. of
, 360 N.C. 384, 387, 628 S.E.2d 1, 3 (2006)). The term
precise is defined as [c]learly expressed or delineated;
definite, or [e]xact, as in performance or amount; accurate or
correct . . . . The Am. Heritage Coll. Dictionary 1076 (3rd ed.
1997). We think it clear that a vague assertion of underwritingreasons fails to meet that standard. Furthermore, we observe that
our legislature demands, [i]n the event of an adverse underwriting
decision, that an insurance company provide the applicant,
policyholder, or individual proposed for coverage with the specific
reason or reasons
for the adverse underwriting decision . . .
N.C. Gen. Stat. § 58-39-55 (2005) (emphasis added). As noted, we
presume that the legislature intended each portion [of a
statute] to be given full effect and did not intend any provision
to be mere surplusage. R.J. Reynolds Tobacco Co.
, 148 N.C. App.
at 616, 560 S.E.2d at 168. If the legislature believed that the
phrase underwriting reasons was precise, it is unlikely that it
would have included a requirement that insurance companies provide
specific reason or reasons for adverse underwriting decisions.
Accordingly, Canal's purported notice of cancellation stumbles over
another statutory hurdle.
Canal concedes that it failed to follow the procedure outlined
by N.C. Gen. Stat. § 58-36-105. Accordingly, the insurance
contract was in effect at the time of the compensable injury as a
matter of law. Canal's remaining arguments on appeal are therefore
irrelevant, and the Full Commission's opinion and award are
Judges HUNTER and GEER concur.
The earlier opinion and award does not appear to be a
part of the record on appeal.
We note that Canal's only treatment of this issue in its
brief is a statement that [t]he reason for cancellation was
noted. We will not consider unsupported contentions in the
absence of legal argument or authority. See, e.g., Animal Legal
Def. Fund v. Woodley
, 181 N.C. App. 594, 597, 640 S.E.2d 777, 779
(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.) (quotations and
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