IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-763
Filed: 7 March 2017
Wilson County, No. 13 CVS 1154
ROBERT MURRAY, Plaintiff,
v.
JOSEPH CLIFTON MOODY, Defendant.
Appeal by defendant from order entered 31 March 2016 by Judge Reuben F.
Young in Wilson County Superior Court. Heard in the Court of Appeals 29 November
2016.
Cranfill Sumner & Hartzog LLP, by Scott H. Dunnagan, for unnamed workers’
compensation defendants-appellees.
Law Office of Robert E. Ruegger, by Robert E. Ruegger, for defendant-appellant.
ZACHARY, Judge.
Pursuant to the North Carolina Workers’ Compensation Act, an employer and
its workers’ compensation carrier are entitled to a lien on an injured employee’s
recovery in an action against a third-party tortfeasor. This lien extends to all benefits
paid to an employee for injuries caused by the third party.
In this case, plaintiff Robert Murray was injured in an automobile accident in
the course of his employment with unnamed defendant Evans MacTavish Agricraft,
Inc. (Evans). Defendant Joseph Moody caused the accident. Evans and its workers’
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Opinion of the Court
compensation carrier, unnamed defendant Cincinnati Insurance Company
(collectively with Evans, unnamed defendants) paid medical and indemnity benefits
to Murray, who later brought a personal injury action against Moody. The action was
tried to a jury, which heard evidence concerning Murray’s injuries and the amount of
workers’ compensation benefits that he received. The jury returned a verdict against
Moody and awarded Murray money damages.
The trial judge entered a final judgment in favor of Murray that, pursuant to
N.C. Gen. Stat. § 97-10.2(e), reduced the damage award by the amount of workers’
compensation benefits he received from unnamed defendants. Four days later, the
trial judge entered an amended judgment that did not reduce the damage award but
instead specifically granted judgment in favor of Evans for the exact amount of
workers’ compensation benefits that were paid to Murray, and that granted judgment
in favor of Murray for the balance of the damage award.
Roughly a year later, Moody filed a motion in Wilson County Superior Court
pursuant to N.C. Gen. Stat. § 97-10.2(j), which allows a superior court judge, in his
or her discretion, to determine the amount of an employer’s lien after an injured
employee has obtained a judgment against or settled a claim with a third party. The
superior court entered an order denying Moody’s motion, holding that the amount of
unnamed defendants’ lien had been determined by the prior court’s amended
judgment, and that the same was res judicata and could not be relitigated. As a
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result, the superior court concluded that it lacked jurisdiction to determine unnamed
defendants’ lien pursuant to subsection 97-10.2(j).
Moody now appeals the superior court’s order, and he argues that the court
had jurisdiction to set the amount of the lien. For the reasons that follow, we agree.
Accordingly, we reverse the superior court’s order denying Moody’s motion and
remand for further proceedings.
I. Background
On 3 August 2010, Murray was driving on Highway 86 near Hillsborough,
North Carolina, when his truck, a company vehicle owned by Evans, was struck in
the rear by a car being driven by Moody. The rear impact caused Murray’s truck to
strike another vehicle, and Murray sustained a compensable neck injury in the
accident. Murray’s neck injury required extensive medical treatment, including
physical and medication therapy.
Unnamed defendants accepted Murray’s workers’ compensation claim and
paid a total of $7,432.13 in benefits (comprised of $5,247.23 in medical benefits and
$2,184.90 in indemnity payments). On 2 August 2013, Murray filed a personal injury
action against Moody in Wilson County Superior Court. The complaint alleged that
Moody negligently caused the August 2010 car accident and sought damages for
Murray’s pain and suffering, medical expenses, and permanent injury. The case
proceeded to trial in March 2015, the Honorable Robert H. Hobgood presiding.
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At trial, the jury heard evidence of the medical and indemnity payments that
Evans made to Murray due to the compensable injury he sustained in the August
2010 automobile accident. This evidence established that Murray had received a total
of $7,432.13 in workers’ compensation benefits. The jury returned a verdict finding
Moody to be negligent and awarding Murray damages in the amount of $11,000.00.
Consequently, on 16 March 2015, Judge Hobgood entered a final judgment consistent
with the jury’s verdict. Judge Hobgood then reduced Murray’s recovery by the
amount of workers’ compensation benefits paid to Murray. The final judgment reads
as follows:
And the Court having reduced said verdict by $7,423.13,
pursuant to the North Carolina Workers[’] Compensation
Act and in accordance with N.C.G.S. § 97-10.2;
IT IS THEREFORE ORDERED, ADJUDGED AND
DECREED that judgment be had against the Defendant in
the amount of $3,576.87, together with interest from the
date of filing hereof and costs taxed to the Defendant
herein, including reasonable attorney fees to Plaintiff’s
counsel pursuant to N.C.G.S. § 6-21.1.
The final judgment complied with N.C. Gen. Stat. § 97-10.2(e) (2015), which
provides that
the amount of compensation and other benefits paid or
payable on account of such injury or death shall be
admissible in evidence in any proceeding against the third
party. In the event that said amount of compensation and
other benefits is introduced in such a proceeding the court
shall instruct the jury that said amount will be deducted
by the court from any amount of damages awarded to the
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Opinion of the Court
plaintiff.
For reasons not apparent in the record, Judge Hobgood entered an amended
final judgment (amended judgment) on 20 March 2015, which expressly provided that
“judgment be had against the Defendant in the amount of $7,423.13 in favor of Evans
Mactavish Agricraft to be distributed in accordance with N.C.G.S. § 97-10.2(f).”
Another portion of the amended judgment granted “judgment . . . in favor of [Murray]
in the amount of $3,576.87[,]” the remainder of the jury’s damages award. As a result,
while the sum of $7,423.13 was simply deducted from Murray’s recovery in the initial
judgment, the sum of $7,423.13 was specifically awarded to Evans in the amended
judgment. Murray’s damage award was unchanged by the amended judgment.
On 14 May 2015, Moody appealed to this Court from the amended judgment
and other pre- and post-trial orders entered in the negligence action. Roughly three
months later, Murray and Moody entered into a settlement that was memorialized in
a document entitled “Release of All Claims-Civil Action Pending” (the release).
Pursuant to the release, Moody and his liability insurance carrier agreed to pay
Murray the lump sum of $15,654.25 in consideration for Murray’s agreement to
release any “claims resulting or to result” from the August 2010 automobile accident.
However, the release expressly preserved unnamed defendants’ rights “to enforce the
[amended] judgment obtained in favor of [Evans] in [the negligence] action for
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Opinion of the Court
[workers’ compensation] benefits paid . . . to . . . Robert Murray for his personal
injuries.”
On 2 September 2015, unnamed defendants served a Notice of Appearance and
Claim of Lien as well as a motion pursuant to N.C. Gen. Stat. § 97-10.2(j) seeking
determination of the amount of their lien on Murray’s recovery. Unnamed
defendants’ motion, however, was never scheduled for hearing. The record suggests
that unnamed defendants did not go forward with their motion once they learned that
the amended judgment setting the specific amount they could recover had been
entered in the negligence action. On 10 September 2015, Moody filed a motion to
withdraw his appeal from, inter alia, the amended judgment. This Court granted the
motion to withdraw the appeal four days later.
In February 2016, Moody filed his own Motion for Determination of Workers’
Compensation Lien in superior court pursuant to N.C. Gen. Stat. § 97-10.2(j). On 22
February 2016, the Honorable Reuben F. Young heard Moody’s motion in Wilson
County Superior Court. At the hearing, unnamed defendants argued that Judge
Hobgood’s amended judgment had decided the issue and amount of their lien. As
such, unnamed defendants argued, the determination of the lien was res judicata and
Judge Young had no statutory authority under N.C. Gen. Stat. § 97-10.2(j) to revisit
the issue. On 31 March 2016, Judge Young entered an order that denied Moody’s
motion on the following the grounds:
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[T]his Court lacks jurisdiction to determine the Workers’
Compensation [Defendants’] subrogation lien under
N.C.G.S. § 97-10.2(j) and the same is res judicata. This
Court further finds that the Amended Final Judgment
entered on March 20, 2015 in the above-captioned case
remains undisturbed, specifically including, but not
limited to, payment of $7,423.13 by Defendant Joseph
Clifton Moody to the Workers’ Compensation Defendants
to be distributed in accordance with N.C.G.S. § 97-10.2(f).
Moody appeals from Judge Young’s order.
II. Discussion
A. Standard of Review
Ordinarily, the trial court’s ruling on a motion pursuant to N.C. Gen. Stat. §
97-10.2(j) is reviewed for an abuse of discretion. Cook v. Lowe’s Home Centers, Inc.,
209 N.C. App. 364, 367, 704 S.E.2d 567, 570 (2011). However, the principal question
presented here is whether Judge Young had jurisdiction to rule on the merits of
Moody’s motion. “[W]hether a trial court has subject matter jurisdiction is a question
of law, which is reviewable on appeal de novo.” Ales v. T.A. Loving Co., 163 N.C. App.
350, 352, 593 S.E.2d 453, 455 (2004) (citation omitted).
B. Analysis
Moody’s sole argument on appeal is that Judge Young erred in denying Moody’s
motion to determine the amount of unnamed defendants’ lien on the ground that the
amended judgment was res judicata as to the lien issue. We agree.
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“Under the doctrine of res judicata or ‘claim preclusion,’ a final judgment on
the merits in one action precludes a second suit based on the same cause of action
between the same parties or their privies[,]” and the doctrine precludes the
relitigation of “all matters that were or should have been adjudicated in the prior
action.” Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004)
(citations omitted). For unnamed defendants to establish that Moody’s claim (or
motion) is barred by res judicata, they “must show (1) a final judgment on the merits
in an earlier suit, (2) an identity of the cause of action in both the earlier and the later
suit, and (3) an identity of parties or their privies in the two suits.” Erler v. Aon Risks
Servs., Inc., 141 N.C. App. 312, 316, 540 S.E.2d 65, 68 (2000), disc. review denied, 548
S.E.2d 738 (2001).
It is well established that our Workers’ Compensation Act was never intended
to provide an employee with a windfall recovery from both the employer and a third
party who is legally responsible for causing the employee’s compensable injuries.
Radzisz v. Harley Davidson of Metrolina, Inc., 346 N.C. 84, 89, 484 S.E.2d 566, 569
(1997). Where “[t]here is one injury, [there is] still only one recovery.” Andrews v.
Peters, 55 N.C. App. 124, 131, 284 S.E.2d 748, 752 (1981), disc. rev. denied, 305 N.C.
395, 290 S.E.2d 364 (1982). To that end, N.C. Gen. Stat. § 97-10.2 defines the rights
and remedies of employees and employers against third-party tortfeasors. Radzisz,
346 N.C. at 89, 484 S.E.2d at 569. “Section 97-10.2 and its statutory predecessors
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were designed to secure prompt, reasonable compensation for an employee and
simultaneously to permit an employer who has settled with the employee to recover
such amount from a third-party tort-feasor.” Id. (citation omitted).
In the first twelve months following an injury, an injured employee has the
“exclusive right” to enforce the liability of a third party. N.C. Gen. Stat. § 97-10.2(b)
(2015). Pursuant to subsection 97-10.2(h) (2015), “[i]n any proceeding against or
settlement with the third party, every party to the claim for compensation shall have
a lien to the extent of his interest . . . upon any payment made by the third party by
reason of such injury or death[.]” “An employer’s statutory right to a lien on a
recovery from the third-party tort-feasor is mandatory in nature[.]” Radzisz, 346 N.C.
at 89, 484 S.E.2d at 569.
When an injured employee is entitled to compensation from a third-party
judgment or settlement, N.C. Gen. Stat. § 97-10.2(j) (2015) grants the superior court
limited jurisdiction to determine the amount of an employer’s or workers’
compensation carrier’s subrogation lien:
(j) Notwithstanding any other subsection in this section, in
the event that a judgment is obtained by the employee in
an action against a third party, or in the event that a
settlement has been agreed upon by the employee and the
third party, either party may apply to the resident superior
court judge of the county in which the cause of action arose
or where the injured employee resides, or to a presiding
judge of either district, to determine the subrogation
amount. After notice to the employer and the insurance
carrier, after an opportunity to be heard by all interested
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parties, and with or without the consent of the employer,
the judge shall determine, in his discretion, the amount, if
any, of the employer’s lien, whether based on accrued or
prospective workers’ compensation benefits, and the
amount of cost of the third-party litigation to be shared
between the employee and employer. The judge shall
consider the anticipated amount of prospective
compensation the employer or workers’ compensation
carrier is likely to pay to the employee in the future, the
net recovery to plaintiff, the likelihood of the plaintiff
prevailing at trial or on appeal, the need for finality in the
litigation, and any other factors the court deems just and
reasonable, in determining the appropriate amount of the
employer’s lien. If the matter is pending in the federal
district court such determination may be made by a federal
district court judge of that division.
Pursuant to the statute’s plain language, there are two instances in which the
superior court is given jurisdiction: (1) when the employee has obtained a judgment
against the third party, and (2) when the employee has settled with the third party.
“There is no mathematical formula or set list of factors for the trial court to
consider in making its determination . . . ; the statute plainly affords the trial court
discretion to determine the appropriate amount of [a] lien.” Wood v. Weldon, 160 N.C.
App. 697, 700, 586 S.E.2d 801, 803 (2003) (internal citation omitted), disc. rev. denied,
358 N.C. 550, 600 S.E.2d 469 (2004). The discretionary authority granted to the
superior court under subsection 97-10.2(j) is rather broad, but it “is not unlimited[.]”
In Re Biddix, 138 N.C. App. 500, 504, 530 S.E.2d 70, 72 (2000). Rather, “ ‘the trial
court is to make a reasoned choice, a judicial value judgment, which is factually
supported . . . [by] findings of fact and conclusions of law sufficient to provide for
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meaningful appellate review.’ ” Id. (quoting Allen v. Rupard, 100 N.C. App. 490, 495,
397 S.E.2d 330, 333 (1990)). It is also “clear from the use of the words ‘shall’ and ‘and’
in subsection (j), that the trial court must, at a minimum, consider the factors that
are expressly listed in the statute.” Estate of Bullock v. C.C. Mangum Co., 188 N.C.
App. 518, 526, 655 S.E.2d 869, 874 (2008).
The gravamen of Moody’s argument is that the doctrine of res judicata is
inapplicable here, as subsection 97-10.2(j) allows him “to challenge the amount the
workers’ compensation carrier is entitled to recover after a jury trial and entry of
judgment” in the negligence action. “If this were not the case,” Moody argues, “the
ability of a party to challenge the amount of a workers’ compensation lien” pursuant
to subsection 97-10.2(j) would be limited “only to those situations where a pre-trial
settlement was reached.”
In response, unnamed defendants argue that because the “amount” of their
lien was previously determined . . . by way of Judge Hobgood’s Amended Final
Judgment,” res judicata bars the relitigiation of this matter. Unnamed defendants
further argue that even if the doctrine of res judicata does not apply, “both law and
equity” require remand for entry of an order consistent with the amended judgment.
Unnamed defendants assert that Judge Hobgood’s amended judgment secures the
amount they are owed and that amount should not be disturbed. This contention is
based on the rule that “ordinarily one judge may not modify, overrule, or change the
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judgment of another Superior Court judge previously made in the same action.”
Calloway v. Ford Motor Co., 281 N.C. 496, 501, 189 S.E.2d 484, 488 (1972).
After carefully reviewing the decisions of this Court and our Supreme Court in
Hieb v. Lowery, 121 N.C. App. 33, 464 S.E.2d 308 (1995), aff’d, 344 N.C. 403, 474
S.E.2d 323 (1996), we conclude that Moody’s argument must prevail.
In Hieb, the plaintiff, who was gravely injured in an automobile accident and
who received workers’ compensation benefits from St. Paul Fire and Marine
Insurance Company (St. Paul), filed an action against the third-party defendant
together with unnamed defendant Hartford Accident and Indemnity Company
(Hartford), the plaintiff’s underinsured motorist (UIM) insurance carrier. Hieb, 121
N.C. App. at 34, 464 S.E.2d at 309. The personal injury action was tried to a jury,
which returned a verdict against the defendants and awarded the plaintiff
$1,279,000.00 in damages. Id. at 34, 464 S.E.2d at 309. Judge Robert Gaines entered
judgment upon the jury verdict, and the judgment contained findings that referenced
a declaratory judgment action that the plaintiff had filed before trial:
7. The Plaintiffs have instituted a second action against
St. Paul Fire and Marine and Hartford Insurance Company
. . . to determine the respective rights of the parties to the
benefits of the Hartford underinsured motorist coverage
and to determine the amount of such coverage.
8. That on or about August 28, 1992, an order was entered
in that action by the Honorable Robert P. Johnston which
holds that . . . Hartford is allowed to reduce its limits by
the amount of worker[s’] compensation paid or to be paid
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to Plaintiff and further holding that the proceeds of the
Hartford underinsured policy are subject to the lien of St.
Paul Insurance Company pursuant to North Carolina
General Statute[s] [s]ection 97-10.2. That action is now on
appeal to the North Carolina Court of Appeals. This Court
is bound by the Order of Judge Johnston unless and until
said Order is modified by the Court of Appeals or any other
Court of competent jurisdiction. This Court has not
addressed the issues raised in that action.
Id. at 35, 464 S.E.2d at 309-10 (first alteration added).
Based on these findings, Judge Gaines determined that St. Paul was entitled
to a lien on all workers’ compensation benefits it had paid, and would pay, to the
plaintiff. Id. at 35, 464 S.E.2d at 310. As noted in Judge Gaines’ judgment, Judge
Johnston’s order allowed Hartford to reduce its limits by the amount of workers’
compensation paid or to be paid to the plaintiff, and held that the Hartford UIM
policy’s proceeds were subject to the lien of St. Paul for all amounts paid or to be paid
to the plaintiff. Id. This Court reversed the former portion of that order but affirmed
the latter portion of the order allowing St. Paul’s lien against the Hartford UIM
benefits. Hieb v. St. Paul Fire & Marine Ins. Co., 112 N.C. App. 502, 435 S.E.2d 826
(1993) (Hieb I ). Shortly after the decision in Hieb I, Hartford tendered its UIM policy
limit of $475,000.00 in accordance with the orders of Judges Johnston and Gaines.
Hieb, 121 N.C. App. at 36, 464 S.E.2d at 310 (hereinafter referred to as Hieb II).
However, the plaintiff and St. Paul could not agree on the distribution of those
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proceeds, as St. Paul asserted that none of the Hartford money could be disbursed to
the plaintiff until St. Paul’s lien was set and paid in full. Id.
Consequently, the plaintiff moved Judge Claude Sitton to determine the
amount of St. Paul’s lien pursuant to subsection 97-10.2(j). Id. According to the
version of subsection 97-10.2(j) in effect at that time, a superior court judge’s
authority to determine the amount of a workers’ compensation lien was triggered only
by (1) a judgment that was insufficient to compensate the workers’ compensation
carrier’s subrogation claim1 or (2) a settlement. Id. at 37, 464 S.E.2d at 311 (citing
N.C. Gen. Stat. § 97-10.2(j) (1991) (“[I]n the event that a judgment is obtained which
is insufficient to compensate the subrogation claim of the Workers’ Compensation
Insurance Carrier, or in the event that a settlement has been agreed upon by the
employee and the third party, either party may apply. . . .”) (emphasis added).
Exercising his discretion under subsection 97-10.2(j), Judge Sitton ordered that St.
Paul was entitled to recover “$241,677.77 as full satisfaction of any workers[’]
compensation lien it may have on . . . benefits paid or to be paid” to the plaintiff, and
that the plaintiff receive the remainder of the Hartford UIM proceeds. Id. at 36-37,
464 S.E.2d at 310-11.
1 Subsection 97-10.2(j) was amended in June 1999. N.C. S.L. 1999-194, s.2. The amendment
eliminated the requirement that a third-party judgment be insufficient to compensate the workers’
compensation carrier before the superior court could exercise its discretion and determine the
subrogation amount. As noted above, a third-party judgment for any amount of damages will now
trigger the superior court’s authority to determine the amount of a workers’ compensation lien. See
N.C. Gen. Stat. § 97-10.2(j) (2015).
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St. Paul appealed and a divided panel of this Court reversed. After stating
that one superior court judge generally may not overrule or modify the judgment of
another superior court judge (“the superior court judge rule”), the Hieb II Court
recognized that subsection 97-10.2(j) provided an exception to this rule. Id. at 37,
464 S.E.2d at 311 (“There are, however, some statutory exceptions to [the superior
court judge] rule. See, e.g., North Carolina General Statutes §§ 97-10.2 (1991) and
1A-1, Rule 60 (1990).”). However, the Hieb II Court ultimately held that subsection
97-10.2(j) had not been “call[ed] . . . into play” and that Judge Sitton lacked the
authority to modify the other superior court judges’ orders because the “ ‘judgment’
(in excess of $1.25 million) exceeded any amount necessary to reimburse” St. Paul at
that time.2 Id. at 38, 464 S.E.2d at 311. The plaintiff appealed this Court’s decision
in Hieb II to the North Carolina Supreme Court. Hieb, 344 N.C. at 407, 474 S.E.2d
at 325.
On appeal to the North Carolina Supreme Court, the plaintiff argued, inter
alia, that the superior court judge rule was not implicated because “the issue
previously decided by Judges Gaines and Johnston was whether a workers’
compensation carrier could assert a lien, pursuant to N.C.G.S. § 97-10.2, against the
proceeds of UIM insurance purchased by someone other than the insured party’s
employer, while the issue before Judge Sitton was the amount of such workers’
2 When Hieb II was decided, “St. Paul had paid [the plaintiff] approximately $266,400.00 in
workers’ compensation benefits.” 121 N.C. App. at 38, 464 S.E.2d at 311.
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compensation lien that should be allowed.” Hieb, 344 N.C. at 408, 474 S.E.2d at 326.
After noting that “Judge Gaines’ conclusions of law explicitly state in accordance with
Judge Johnston’s order that ‘St. Paul Fire and Marine Insurance Company is entitled
to a lien against the proceeds of the Hartford underinsured motorist policy for all
amounts paid, or to be paid, to [the p]laintiff . . . as worker[s’] compensation
benefits[,]’ ” our Supreme Court rejected the plaintiff’s argument and held that the
superior court judge rule applied:
[I]t is clear that the amount of the lien is to be the total of
all amounts paid or to be paid to plaintiff as workers’
compensation benefits. Additionally, the Court of Appeals
issued a unanimous opinion [(in Hieb I)] affirming that
portion of Judge Johnston’s order relating to the workers’
compensation lien of St. Paul. . . . Thus, the issue of
amount was dealt with and decided three times prior to
plaintiffs presenting the matter to Judge Sitton. Judge
Sitton’s order, setting a lesser amount of the lien to be
repaid, does not address a different issue than that
previously decided by Judges Johnston and Gaines.
Id. Even so, the Supreme Court went on to consider the plaintiff’s argument that
subsection 97-10.2(j) gave Judge Sitton the authority to determine the amount of St.
Paul’s lien. Id. The Court, however, rejected this contention based upon the rationale
stated in Hieb II:
Th[e] judgment [obtained by the plaintiff] is greater than
the amount of St. Paul’s lien at the time of Judge Sitton’s
order and therefore is not “insufficient to compensate the
subrogation claim.” On this record, we hold that the Court
of Appeals did not err in concluding that Judge Sitton did
not have authority under the provisions of N.C.G.S. § 97-
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10.2(j) to modify the previous judgments.
Hieb, 344 N.C. at 410, 474 S.E.2d at 327.
Our review of the decisions in Hieb reveals that the superior court judge rule
does not apply in the present case. As noted above, the Hieb II Court recognized that
subsection 97-10.2(j) provides a specific statutory exception to this rule. 121 N.C.
App. at 37, 464 S.E.2d at 311. Likewise, the clear implication of the Supreme Court’s
analysis in Hieb is that subsection 97-10.2(j) would have provided an exception to the
superior court judge rule had the plaintiff’s judgment been insufficient to compensate
St. Paul’s subrogation claim, thereby triggering Judge Sitton’s authority to
determine, in his discretion, the amount of the workers’ compensation lien. See Hieb,
344 N.C. at 409-10, 474 S.E.2d at 326-27 (addressing whether Judge Sitton’s
authority under subsection 97-10.2(j) had been triggered); see also Johnson v. S.
Indus. Constructors, Inc., 347 N.C. 530, 534, 538, 495 S.E.2d 356, 358-59, 361 (1998)
(citing the Supreme Court’s decision in Hieb and holding that “since the judgment for
plaintiff against the third-party tort-feasor in this case, in the amount of $219,052.20,
is greater than the amount of the lien at the time of the trial court’s order and is thus
not ‘insufficient to compensate the subrogation claim,’ the trial court did not have
jurisdiction to determine the amount of the lien pursuant to N.C.G.S. § 97-10.2(j)”).
Against this backdrop, we also conclude that subsection 97-10.2(j) provides a
statutory exception to the doctrine of res judicata. Under subsection 97-10.2(j)’s plain
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language, the lien amount is to be determined at a later, separate proceeding, one
that occurs after an employee has “obtained” a judgment against (or settled with) the
third party, and after one of the parties has elected to “apply” for such a
determination. See N.C. Gen. Stat. § 97-10.2(j). Use of the words “obtained” (past
tense and past participle of the verb “obtain”) and “apply” (present tense) in the
statute indicates that the legislature intended subsection 97-10.2(j) to operate as
follows: Once an employee has obtained a judgment against a third party, either
party may apply to the appropriate superior court judge to determine the subrogation
amount. At that point, a determination may be made, in the judge’s discretion, after
the employer and insurance carrier have been given notice and after all interested
parties have been given the opportunity to be heard on the matter. See id. Case law
from this Court supports this interpretation. See, e.g., Dion v. Batten, __ N.C. App.
__, __, 790 S.E.2d 844, 850 (2016) (“In the present case, a judgment was obtained by
Plaintiff against Defendant, and [Defendant’s UIM carrier] applied . . . for a
determination of the subrogation amount. Under the plain language of [subsection
97-10.2(j)], the authority of the trial court was triggered, allowing it to exercise
discretion in determining the subrogation amount.”); Wood, 160 N.C. App. at 700, 586
S.E.2d at 804 (considering whether the superior court abused its discretion in
reducing the defendants’ workers’ compensation lien after the plaintiff obtained a
default judgment against a third-party tortfeasor and applied for determination of
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the lien amount). Because the statute specifically contemplates that a judgment will
be issued in an action between the employee and a third party before “either party”
may “apply” to determine the subrogation amount, see N.C. Gen. Stat. § 97-10.2(j), it
would be nonsensical to hold that the prior judgment bars further litigation of the
lien issue. See Helms v. Powell, 32 N.C. App. 266, 269, 231 S.E.2d 912, 914 (1977)
(“Under the normal rules of statutory construction, the language of a statute will be
interpreted to avoid absurd or illogical consequences.”) (citation omitted).
It is also significant that subsection “97-10.2(j) grants limited jurisdiction to
the superior court to determine the amount of the employer’s lien[.]” Leggett v. AAA
Cooper Transp., Inc., 198 N.C. App. 96, 99, 678 S.E.2d 757, 760 (2009) (emphasis
added). The statute “provides a ‘procedural remedy’ and not a substantive claim.”
Anglin v. Dunbar Armored, Inc., 226 N.C. App. 203, 207, 742 S.E.2d 205, 208 (2013).
As such, the second element of res judicata, “an identity of the cause of action in both
the earlier and the later suit,” cannot be proven in the present case. Erler, 141 N.C.
App. at 316, 540 S.E.2d at 68. Murray’s negligence action against Moody involved a
civil claim for money damages, a full trial in which factual issues were resolved by a
jury, and a judgment entered upon the jury’s verdict. In contrast, Moody’s motion to
determine the amount of the workers’ compensation lien is purely statutory and
narrow in scope. Once the superior court’s limited jurisdiction under subsection 97-
10.2(j) is properly invoked, the court simply performs a judicial act in which it “must
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Opinion of the Court
. . . consider the factors that are expressly listed in the statute[,]” Estate of Bullock,
188 N.C. App. at 526, 655 S.E.2d at 874, and make “a judicial value judgment, which
is factually supported . . . [by] findings of fact and conclusions of law[.]” In Re Biddix,
138 N.C. App. at 504, 530 S.E.2d at 72.
This Court has held that “orders entered in a [statutory] proceeding . . . in
which an executor must show cause why he should not be removed, do not constitute
res judicata as to a later civil action for damages between the parties or collaterally
estop the bringing of such an action.” Shelton v. Fairley, 72 N.C. App. 1, 5, 323 S.E.2d
410, 414 (1984). In support of its holding, the Shelton Court observed that “ ‘[t]he res
judicata doctrine precluding relitigation of the same cause of action has been held
inapplicable where the performance of an act was sought in one action and a money
judgment in the other.’ ” Id. at 8, 323 S.E.2d at 414 (citation omitted). There is no
reason why this general principle should not apply in reverse here, as there is a
substantial distinction between Murray’s civil negligence action for damages and
Moody’s later motion to determine the amount of the workers’ compensation lien. The
amended judgment, therefore, cannot be res judicata as to the final amount of the
workers’ compensation lien. Rather, that determination must be made by the
superior court upon consideration of the mandatory statutory factors contained in
subsection 97-10.2(j).
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MURRAY V. MOODY
Opinion of the Court
To sum up, Murray (the employee) obtained a judgment against Moody (the
third-party defendant) in the negligence action. Moody later applied—as he was
entitled—for a determination of the amount of the workers’ compensation lien.
Unnamed defendants were then given notice and an opportunity to be heard on the
matter. Under subsection 97-10.2(j)’s plain language, the superior court’s authority
was triggered by Moody’s motion. Judge Young should have exercised his discretion
and determined the subrogation amount, as Judge Hobgood’s amended order in the
negligence action was not res judicata to Moody’s present action. Accordingly, Judge
Young erred in concluding that he did not have jurisdiction to consider Moody’s
motion for the determination of unnamed defendants’ lien pursuant to subsection 97-
10.2(j).
For the reasons stated above, we reverse Judge Young’s order denying Moody’s
motion and remand to the trial court for proper determination of the amount of the
workers’ compensation lien on Murray’s recovery from Moody in the negligence
action. On remand, the superior court should receive evidence “as to matters which
must be considered” under subsection 97-10.2(j) and enter an order with findings that
reflect full consideration of the mandatory factors. Hill v. Hill, 229 N.C. App. 511,
530, 748 S.E.2d 352, 365 (2013) (addressing remand in equitable distribution when
trial court failed to make statutorily-required findings of fact); see Alston v. Fed. Exp.
Corp., 200 N.C. App. 420, 425, 684 S.E.2d 705, 708 (2009) (reversing and remanding
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MURRAY V. MOODY
Opinion of the Court
for additional findings when “no findings of fact in the trial court’s order [addressed
certain] mandatory statutory factors” contained in subsection 97-10.2(j)).
Finally, we note that this case is unique in the context of subsection 97-10.2(j)
because unnamed defendants have not simply asserted a lien on Murray’s recovery;
instead, the subrogation amount they seek to recover is memorialized in a judgment
granted in favor of Murray and Evans. If the trial court decides to reduce the lien
amount, it may be necessary for Moody to file an appropriate motion to set aside the
amended judgment.
III. Conclusion
We reverse the trial court’s order and remand for further proceedings
consistent with this opinion.
REVERSED AND REMANDED.
Judges CALABRIA and INMAN concur.
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