Opinion
No. COA05-1491.
Filed August 15, 2006.
1. Appeal and Error — appealability — partial summary judgment — possibility of inconsistent verdicts — claims with different elements
A right of immediate appeal based on the possibility of inconsistent verdicts did not arise from denying summary judgment to defendant Profile and granting summary judgment to defendants Terra-Mulch and Hoffman. Verdicts involving Terra-Mulch or Hoffman would be on Woodson and Pleasant claims, while a verdict involving Profile would be based on negligence. These claims have different elements and require different proof.
2. Appeal and Error — appealability — partial summary judgment — interlocking limited liability companies
There was no immediate appeal from an order denying summary judgment to a limited liability company (Profile) which was the sole member manager of another limited liability company (Terra-Mulch) for which summary judgment was granted. There is no case law to support the conclusion that a substantial right existed because evidence raised in defense of Profile might later be used against Terra-Mulch if the summary judgment for Terra-Mulch is successfully appealed.
3. Appeal and Error — appealability — partial summary judgment — three parties with same counsel
There was no substantial interest supporting an immediate appeal from summary judgments for two of these three defendants where they had shared the same counsel. This case involved only the common situation of defendants with conflicting interests, not the disclosure of confidential information or motions to disqualify counsel before trial, as did the cases cited as precedent.
Judge TYSON dissenting.
Appeal by defendant Profile from order entered 23 June 2005 by Judge Nathaniel J. Poovey in the Superior Court in Caldwell County. Heard in the Court of Appeals 18 May 2006.
Moss, Mason Hill, by Joseph W. Moss and Matthew L. Mason, for defendant Profile Products, L.L.C. Jones, Martin, Parris Tessener Law Offices, P.L.L.C., by John Alan Jones and G. Christopher Olson, for plaintiffs. Shumaker, Loop Kendrick, L.L.P., by William H. Sturges and Patricia Wilson Magee, and Kennedy, Covington, Lobdell Hickman, L.L.P., by William G. Scoggin, for North Carolina Citizens For Business And Industry, amicus curiae.
Plaintiffs Lennie and Bonnie Hamby brought this action against defendants Roy Hoffman, Terra-Mulch, L.L.C. ("Terra-Mulch"), and Profile Products, L.L.C. ("Profile"), and Electric Service Group, Inc. ("ESG"), for personal injuries sustained in a workplace accident. All defendants moved for summary judgment on grounds that plaintiffs could not satisfy the legal standard required to overcome the protections of Chapter 97 of the North Carolina General Statutes which limit plaintiffs' remedy to worker's compensation benefits. Following a hearing, the court granted summary judgment to Hoffman and Terra-Mulch, but denied same to Profile and ESG. Profile appeals. On 22 November 2005, Profile filed a petition for writ of certiorari. On 5 December, plaintiffs moved to dismiss this appeal as interlocutory. On 6 December 2005, plaintiffs filed a second motion to dismiss on the same grounds. For the reasons discussed below, we dismiss this appeal.
Lennie Hamby ("Hamby") worked as a dump truck operator for Terra-Mulch at its plant in Conover. Dump trucks delivered wood chips to the plant and dumped them whereupon they were poured into a pit containing two large augers. A 42" guardrail separated the pit from a raised dock where Hamby stood to operate the truck. Hamby stepped around the guardrail and in trying to descend from the dock and fell into the pit. A co-worker testified that he tried to stop the augers, but the first emergency stop button was inoperable. Before the co-worker could reach another stop mechanism, the augers injured Hamby, causing the loss of part his left leg.
Defendant Profile appeals from a partial denial of summary judgment. "Ordinarily, a partial summary judgment, because it does not completely dispose of the case, is interlocutory, and cannot be immediately appealed." Wolfe v. Villines, 169 N.C. App. 483, 485, 610 S.E.2d 754, 757 (2005). "In two instances a party is permitted to appeal interlocutory orders[.] First, a party is permitted to appeal from an interlocutory order when the trial court enters a final judgment as to one or more but fewer than all of the . . . parties and the trial court certifies in the judgment that there is no just reason to delay the appeal of those claims." Wood v. McDonald's Corp., 166 N.C. App. 48, 54, 603 S.E.2d 539, 543 (2004) (internal quotation marks and citations omitted); see N.C. Gen. Stat. § 1A-1, Rule 54(b). Here, the trial court declined to certify this appeal. Second, an appeal from an interlocutory order is permitted if the order affects a substantial right. Sherrill v. Amerada Hess Corp., 130 N.C. App. 711, 719, 504 S.E.2d 802, 807 (1998).
"Our jurisprudence regarding the substantial right analysis is not defined by fixed rules applicable to all cases of a certain type, but rather is based on an individual determination of the facts and procedural context presented by each case." Boyce Isley, PLLC v. Cooper, 169 N.C. App. 572, 574-75, 611 S.E.2d 175, 176-77 (2005).
Whether a party may appeal an interlocutory order pursuant to the substantial right exception is determined by a two-step test. The right itself must be substantial and the deprivation of that substantial right must potentially work injury to plaintiff if not corrected before appeal from final judgment. The substantial right test is more easily stated than applied. And such a determination usually depends on the facts and circumstances of each case and the procedural context of the orders appealed from.
Wood, 166 N.C. App. at 55, 603 S.E.2d at 544 (internal quotation marks and citations omitted). Here, defendants assert three substantial rights will be affected if this appeal is not permitted: the risk of inconsistent verdicts, the creation of a significant conflict between Profile and Terra-Mulch, and the creation of a conflict for Profile's counsel, who also represent Terra-Mulch.
Profile first argues that the denial of summary judgment to Profile and grant of summary judgment to Terra-Mulch and Hoffman creates an immediate and fundamental inconsistency and the possibility of inconsistent verdicts. We disagree.
"[T]he possibility of undergoing a second trial affects a substantial right only when the same issues are present in both trials, creating the possibility that a party will be prejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issue." Green v. Duke Power Co., 305 N.C. 603, 608, 290 S.E.2d 593, 596 (1982). "This Court has interpreted the language of Green and its progeny as creating a two-part test requiring a party to show that (1) the same factual issues would be present in both trials and (2) the possibility of inconsistent verdicts on those issues exists." North Carolina Dep't of Transp. v. Page, 119 N.C. App. 730, 735-36, 460 S.E.2d 332, 335 (1995).
Because Terra-Mulch was Mr. Hamby's employer and Hoffman was his co-employee, plaintiffs would have to meet the standards set by Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991) and Pleasant v. Johnson, 312 N.C. 710, 713, 325 S.E.2d 244, 247 (1985) in order to prevail. Section 97-9 of the Workers' Compensation Act provides that it is the exclusive remedy to any employee for personal injury or death by accident suffered on the job. N.C. Gen. Stat. § 97-9 (2006). However, "when an employer intentionally engages in misconduct knowing it is substantially certain to cause serious injury or death to employees and an employee is injured or killed by that misconduct, that employee, or the personal representative of the estate in case of death, may pursue a civil action against the employer." Woodson, 329 N.C. at 340-41, 407 S.E.2d at 228. In addition, the Act bars "a worker who is injured in the course of his employment from suing a co-employee whose negligence caused the injury." Pleasant, 312 N.C. at 713, 325 S.E.2d at 247. "Provisions of the Act relative to an injured worker bringing an action against a third party for negligence causing injury have been held to apply only to third parties who were "strangers to the employment." Id.
Where a defendant is nothing "more than a related, but separate entity" from the employer, the exclusivity provisions of the Workers' Compensation Act are not an absolute bar to recovery. Cameron v. Merisel, Inc., 163 N.C. App. 224, 233, 593 S.E.2d 416 2004). In such cases, third-party claims are permissible.
Profile is a limited liability company and also the sole member-manager of Terra-Mulch. N.C. Gen. Stat. § 57C-3-30(a) provides that
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 conduct.
N.C. Gen. Stat. § 57C-3-30(a) (emphasis supplied) (2006). Thus, while Profile cannot be held liable simply because it is the member-manager of Terra-Mulch, it could be personally liable for its own tortious conduct. The dissent cites N.C. Gen. Stat. § 57C-3-23, captioned "Agency powers of managers" as providing support for the contention that a member-manager is covered by the exclusivity provisions of the Workers' Compensation Act. This statute reads:
Every manager is an agent of the limited liability company for the purpose of its business, and the act of every manager, including execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business of the limited liability company of which he is a manager, binds the limited liability company, unless the manager so acting has in fact no authority to act for the limited liability company in the particular matter and the person with whom the manager is dealing has knowledge of the fact that the manager has no authority. An act of a manager that is not apparently for carrying on the usual course of the business of the limited liability company does not bind the limited liability company unless authorized in fact or ratified by the limited liability company.
N.C. Gen. Stat. § 57C-3-23 (2006). This statute appears to cover agency relationships pertaining to regular operation of the business, rather than liability for torts such as those alleged here. The North Carolina Limited Liability Company Act defines liabilities, debts and obligations as:
(10a) Liabilities, debts, and obligations. — Have one and the same meaning and are used interchangeably throughout this Chapter. Reference to "liabilities," "debts," or "obligations" whether individually or in any combination, is deemed to reference "all liabilities, debts, and obligations, whether arising in contract, tort, or otherwise."
N.C. Gen. Stat. § 57C-1-03 (2006). We believe that N.C. Gen. Stat. § 57C-3-30(a) is the controlling statute on this issue, permitting Profile potentially to be held liable for its own acts and conduct.
Here, plaintiffs' third amended complaint alleged gross negligence, as well as Woodson claims, against Profile and Terra-Mulch in its first claim. While the complaint does not clearly separate the different claims against the two defendants, plaintiffs clarified their assertions to the trial court. In their 3 June 2005 memorandum opposing summary judgment, and in their argument on the summary judgment motion, plaintiffs acknowledged Terra-Mulch as the employer against whom they could pursue a Woodson claim, and repeatedly asserted that they were pursuing "a third-party claim against Defendant Profile, with that claim being grounded upon ordinary negligence principles." At the motion hearing, plaintiffs' counsel stated, "We recognize that to reach the jury as against Terra-Mulch, we're restricted to Woodson. But with respect to the separate entity, Profile, a third-party case, counting it ordinary negligence."
Thus, plaintiff contends that any verdict for or against Terra-Mulch (the employer) or Hoffman (the co-worker) would be on Woodson and Pleasant claims, while a verdict on the claim against Profile would be based on the claims for negligence as alleged in the complaint. These claims have different elements, requiring different proof, and there would be nothing necessarily inconsistent about differing verdicts on these different types of claims.
Profile also asserts that the trial court's order creates a significant conflict between Profile and Terra-Mulch which will work substantial injury if not immediately addressed. We do not agree.
Profile contends that as sole member manager of Terra-Mulch, the order puts Profile in a difficult position. The order allows plaintiffs to proceed against Profile as a third-party, and Profile, in turn, would be permitted to raise the issue of Terra-Mulch's negligence in defending against that claim. Thus, Profile could present evidence of Terra-Mulch's negligence in order to seek workers' compensation credit. N.C. Gen. Stat. § 97-10.2(e). Profile contends that if plaintiffs later successfully appealed the order granting summary judgment to Terra-Mulch, the evidence could be used in a subsequent trial against Terra-Mulch. Profile acknowledges that there is no previous case law to support its contention that this affects a substantial right. We are not persuaded that these circumstances constitute a substantial right.
Profile next argues that the order created an adversarial relationship among Hoffman, Terra-Mulch and Profile which impaired its right to representation by counsel of its choice. We disagree.
All three of these parties have shared the same counsel and now face the prospect of retaining new and separate counsel to proceed. Profile cites several cases in support of this argument: Travco Hotels v. Piedmont Natural Gas Co., 332 N.C. 288, 420 S.E.2d 426 (1992), Goldston v. American Motors Corp., 326 N.C. 723, 392 S.E.2d 735 (1990) and Cunningham v. Sams, 161 N.C. App. 295, 588 S.E.2d 484 (2002). These cases are inapposite. In Travco Hotels, the Court considered whether an order denying the defendant's motion to disqualify plaintiff's counsel was immediately appealable. Id. at 291, 420 S.E.2d at 427-28. Plaintiff's counsel had previously represented defendant in another matter and defendant feared counsel would use confidential information against it. Id. at 291, 420 S.E.2d at 428. The Court agreed that the use of confidential information by previous counsel against defendant would deprive it of a substantial right not to have its attorney-client confidences breached to its detriment. Id. at 292-93, 420 S.E.2d at 428. Profile does not argue that it might be harmed by having attorney-client confidences disclosed. In addition, the Court determined that the appeal failed the second prong of the two-part substantial right test because the defendant's rights could be protected after final judgment at trial by appeal at that point. Goldston and Cunningham concerned interlocutory appeals of trial court orders disqualifying counsel before trial. See Goldston and Cunningham supra. Here, we have no order granting or denying a motion to disqualify counsel, but instead only the common situation in which two defendants may have conflicting interests. Profile has failed to show a substantial interest which would be lost if this appeal is dismissed.
Dismissed.
Judges McCULLOUGH concurs.
Judge TYSON dissents in a seperate opinion.