{
  "id": 11793407,
  "name": "M. B. HAYNES CORPORATION, Plaintiff v. STRAND ELECTRO CONTROLS, INC., a Utah Corporation, Defendant",
  "name_abbreviation": "M. B. Haynes Corp. v. Strand Electro Controls, Inc.",
  "decision_date": "1997-08-05",
  "docket_number": "No. COA96-451",
  "first_page": "177",
  "last_page": "182",
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    "id": 14983,
    "name": "North Carolina Court of Appeals"
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    "name_long": "North Carolina",
    "name": "N.C."
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      "year": 1964,
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      "pin_cites": [
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      "category": "reporters:state_regional",
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      "year": 1994,
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      "pin_cites": [
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          "parenthetical": "applying Pennsylvania law"
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      "case_paths": [
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    {
      "cite": "562 N.W.2d 109",
      "category": "reporters:state_regional",
      "reporter": "N.W.2d",
      "case_ids": [
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      "weight": 3,
      "year": 1997,
      "pin_cites": [
        {
          "page": "112",
          "parenthetical": "listing the cases"
        },
        {
          "page": "112",
          "parenthetical": "holding, under state workers' compensation statute, employer has no more rights against negligent third party than employee"
        },
        {
          "page": "113",
          "parenthetical": "employer's cause of action \"cannot be extended beyond what was authorized by the Legislature\""
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  "last_updated": "2023-07-14T19:43:16.540119+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
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  "casebody": {
    "judges": [
      "Judges COZORT and McGEE concur.",
      "Judge COZORT concurred prior to 31 July 1997."
    ],
    "parties": [
      "M. B. HAYNES CORPORATION, Plaintiff v. STRAND ELECTRO CONTROLS, INC., a Utah Corporation, Defendant"
    ],
    "opinions": [
      {
        "text": "JOHN, Judge.\nPlaintiff M.B. Haynes Corporation appeals the trial court\u2019s entry of summary judgment in favor of defendant Strand Electro Controls, Inc. The trial court rejected plaintiff\u2019s assertion of a cause of action against defendant to recover increases in workers\u2019 compensation insurance premiums allegedly incurred as a result of plaintiff\u2019s payment of workers\u2019 compensation benefits to an employee injured by the negligence of defendant. We affirm the trial court.\nPertinent factual and procedural information includes the following: On 1 July 1991, Warren Dale Chandler (Chandler) was in the employ of plaintiff, an electrical contractor. On that date, Chandler\u2019s duties involved servicing a dimming equipment cabinet manufactured by defendant. Chandler suffered severe electric shock while working on the cabinet, which allegedly was not properly grounded.\nChandler filed a workers\u2019 compensation claim against plaintiff with the North Carolina Industrial Commission (the Commission). He ultimately received eighty weeks of temporary total disability benefits, totaling $22,933.62, and medical benefits amounting to $13,165.66. Chandler also instituted a negligence action against defendant, alleging it had breached its duty of care in the design and assembly of the dimming equipment cabinet.\nDefendant and Chandler thereafter entered into a settlement agreement awarding the latter $92,500, and the Commission ordered distribution of the funds pursuant to N.C.G.S. \u00a7 97-10.2 (1991). Plaintiff and its adjusting agent received $12,000 from the settlement in \u201cfull settlement of their subrogation interest\u201d in the third party award. In exchange for plaintiffs acceptance of this reduced portion of the third party award (plaintiffs full subrogation interest was calculated to total $38,209.06), Chandler agreed to release plaintiff from any further liability under the Workers\u2019 Compensation Act.\nShortly thereafter, plaintiff brought the. instant suit against defendant, alleging negligence and breach of the warranty of merchantability in its manufacture and sale of the dimming equipment cabinet. Plaintiff claimed defendant\u2019s tortious conduct had caused injury to plaintiff\u2019s employee Chandler who had been paid a sizable sum in workers\u2019 compensation benefits. As a result, plaintiff continued, its workers\u2019 compensation insurance premiums had \u201csubstantially increased and will continue to be higher than they otherwise would be if Plaintiff\u2019s employee had not been injured.\u201d An affidavit, of plaintiff\u2019s Safety Director later filed with the court asserted an increase in premiums of over $50,000 during the period of 1993 to 1996 as a direct result of Chandler\u2019s 1991 injury.\nDefendant\u2019s answer included the affirmative defense that plaintiff\u2019s action was barred because it had participated in the settlement agreement with defendant regarding Chandler\u2019s suit. Defendant\u2019s motion for summary judgment was granted by the trial court in an order entered 31 January 1996. Plaintiff filed notice of appeal to this Court 19 February 1996.\nThe dispositive issue before this Court is whether an employer\u2014 whose workers\u2019 compensation insurance premiums have risen as the result of an employee\u2019s injury by a third party \u2014 may maintain a cause of action against the third party to recover its increased insurance costs. Numerous jurisdictions which have considered this question have answered it in the negative, see Schipke v. Grad, 562 N.W.2d 109, 112 (S.D. 1997) (listing the cases), some deciding the action was precluded by their respective state workers\u2019 compensation statutes, see, e.g., Erie Castings Co. v. Grinding Supply, Inc., 736 F.2d 99 (3rd Cir. 1984) (applying Pennsylvania law), and others ruling the employer\u2019s economic harm was too remote a result of the tortfeasor\u2019s conduct to allow recovery, see, e.g., RK Constructors, Inc. v. Fusco Corp., 650 A.2d 153 (Conn. 1994). See generally 7 Arthur Larson & Lex K. Larson, Larson\u2019s Workers\u2019 Compensation Law \u00a7 77.30 (1996) (noting problematical situation of employers with no cause of action against third party for increase in premiums and no subrogation rights in employee\u2019s third party award). We conclude plaintiff\u2019s actions herein as well as our statutory provisions delineating \u201crights and remedies against third parties\u201d in the workers\u2019 compensation context sustain the ruling of the trial court.\nThe pertinent section, G.S. \u00a7 97-10.2(a), states:\nThe respective rights and interests of the employee-beneficiary under this Article, the employer, and the employer\u2019s insurance carrier, if any, in respect of the common-law cause of action against such third party and the damages recovered shall be as set forth in this section.\nThe statute goes on to provide that the employee (or the employee\u2019s representative) \u201cshall have the exclusive right to proceed to enforce the liability of the third party\u201d for the first 12 months following his or her injury or death; further, during this period, the employee \u201cshall have the right to settle with the third party and to give a valid and complete release of all claims to the third party by reason of such injury or death.\u201d G.S. \u00a7 97-10.2(b) (emphasis added). Upon expiration of the initial 12 month period, either the employee or the employer may proceed against the tortfeasor. G.S. \u00a7 97-10.2(c). Again, the party bringing such action may settle with, and release all claims against, the tortfeasor. Id.\nIn the case sub judice, Chandler, the employee, initiated a tort action against defendant, the third party, to recover for injuries sustained on the job. Chandler thereafter entered into a settlement agreement with defendant, which settlement was approved by plaintiff, Chandler\u2019s employer. The settlement agreement by its terms released defendant \u201cfrom all claims and demands, rights and causes of action of any kind\u201d that Chandler might have arising out of his injury, and Chandler agreed \u201cto indemnify and save harmless\u201d defendant \u201cfrom and against all claims and demands whatsoever\u201d growing out of the incident. Thus, plaintiff was thereby precluded from bringing another cause of action against defendant for damages arising out of Chandler\u2019s injury. See G.S. \u00a7 97-10.2(c); cf. Keith v. Glenn, 262 N.C. 284, 286, 136 S.E.2d 665, 667 (1964) (settlement binding on parties to agreement and those who knowingly accept its benefits).\nIn addition, the full provisions of G.S. \u00a7 97-10.2 reveals a statutory scheme whereby employers are limited to recovery of benefits they have paid to an employee.\nFirst, G.S. \u00a7 97-10.2(d) indicates suit against the tortfeasor must\nbe brought in the name of the employee or his personal representative and the employer or the insurance carrier shall not be a necessary or proper party thereto.\nWithout question, an employer not properly a party to the third party action may not present therein evidence of increased insurance costs. Rather, the evidence will be limited to damages suffered by the employee. See Schipke, 562 N.W.2d at 112 (holding, under state workers\u2019 compensation statute, employer has no more rights against negligent third party than employee).\nFurther, while an employee generally must obtain approval of the employer before settling with a tortfeasor and releasing all claims, G.S. \u00a7 97-10.2(h), the employer\u2019s authorization is not required \u201c[i]f the employer [has been] made whole for all benefits paid or to be paid by him\u201d under the Workers\u2019 Compensation Act, G.S. \u00a7 97-10.2(h)(l). The statutory language indicates legislative concern that employers have a means to recover benefits paid to an employee, but no more.\nIn sum, G.S. \u00a7 97-10.2 delineates the \u201crights and remedies against third parties,\u201d in the worker\u2019s compensation context, and the section mandates that they \u201cshall be as set forth,\u201d G.S. \u00a7 97-10.2(a) (emphasis added). The statute thus reflects the General Assembly\u2019s intent to limit an employer to recovery of workers\u2019 compensation benefits it has paid its employee. See Schipke, 562 N.W.2d at 113 (employer\u2019s cause of action \u201ccannot be extended beyond what was authorized by the Legislature\u201d).\nBased on the foregoing, we hold the trial court properly granted defendant\u2019s motion for summary judgment in that plaintiff was precluded as a matter of law from maintaining a cause of action against defendant to recover increases in workers\u2019 compensation insurance premiums. See N.C.R. Civ. R 56(c) (summary judgment properly granted where party \u201cis entitled to a judgment as a matter of law\u201d).\nAffirmed.\nJudges COZORT and McGEE concur.\nJudge COZORT concurred prior to 31 July 1997.",
        "type": "majority",
        "author": "JOHN, Judge."
      }
    ],
    "attorneys": [
      "Long, Parker & Warren, P.A., by W. Scott Jones and Kimberly A. Lyda, for plaintiff-appellant.",
      "Roberts & Stevens, PA., by Wyatt S. Stevens and Isaac N. Northup, Jr., for defendant-appellee."
    ],
    "corrections": "",
    "head_matter": "M. B. HAYNES CORPORATION, Plaintiff v. STRAND ELECTRO CONTROLS, INC., a Utah Corporation, Defendant\nNo. COA96-451\n(Filed 5 August 1997)\n1. Workers\u2019 Compensation \u00a7 72 (NCI4th)\u2014 action against negligent third party \u2014 damages\u2014increased workers\u2019 compensation insurance premiums \u2014 settlement\nThe trial court properly granted summary judgment in favor of defendant in a tort action seeking as damages the increases in workers\u2019 compensation premiums incurred as result of payments to an employee injured as a result of defendant\u2019s negligence where plaintiff had approved a settlement between the injured employee and defendant which released defendant from all claims and demands arising out of the employee\u2019s injuries.\n2. Workers\u2019 Compensation \u00a7 74 (NCI4th)\u2014 action by employer against negligent third party \u2014 increased premiums as damages \u2014 limited to recovery of benefits paid\nThe trial court correctly granted defendant\u2019s motion for summary judgment where plaintiff, the employer of an injured worker, sought to recover increases in workers\u2019 compensation premiums from defendant, a negligent third-party. The provisions of N.C.G.S. \u00a7 97-10.2 reflects the General Assembly\u2019s intent to limit an employer to recovery of workers\u2019 compensation benefits it has paid its employee.\nAppeal by plaintiff from order entered 31 January 1996 by Judge Ronald E. Bogle in Buncombe County Superior Court. Heard in the Court of Appeals 9 January 1997.\nLong, Parker & Warren, P.A., by W. Scott Jones and Kimberly A. Lyda, for plaintiff-appellant.\nRoberts & Stevens, PA., by Wyatt S. Stevens and Isaac N. Northup, Jr., for defendant-appellee."
  },
  "file_name": "0177-01",
  "first_page_order": 213,
  "last_page_order": 218
}