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Radzisz v. Harley Davidson of Metrolina Inc.5/9/1997
WHICHARD, Justice.
Plaintiff-employee, David Eugene Radzisz, a motorcycle mechanic employed by defendant-employer, was involved in a collision with an automobile on 1 June 1990 while operating a customer's motorcycle. As a result of injuries sustained in the accident, plaintiff filed both a workers' compensation claim with defendants and a civil action against the owners of the automobile ("third party"). Upon learning of the civil suit, defendant-carrier Universal Underwriters notified plaintiff and the third party of a potential subrogation lien in the workers' compensation action and requested that no settlement funds be disbursed in the civil action until the potential lien was satisfied. Defendants subsequently denied compensation, claiming that the collision occurred outside the course and scope of plaintiff's employment. On 24 September 1990, plaintiff and the third party agreed to settle the civil action for $25,000 and to the entry of a consent judgment in that amount.
In order to accommodate the potential workers' compensation lien on the proceeds of the civil action, plaintiff and defendants entered into a "Settlement Stipulation and Agreement" on 8 November 1990, which provides in pertinent part:
In order to accommodate the potential worker's compensation lien on the proceeds of the civil action, [the parties] hereby execute this Stipulation and Agreement whereby [plaintiff] stipulates that if his worker's compensation claim is upheld by the Industrial Commission or if [defendants] file a written admission of liability for benefits with the Commission, [defendants] will have a lien, as provided in G.S. § 97-10.2, against these proceeds, and stipulates that they will be entitled to a credit against the worker[']s compensation benefits to the extent that they have a subrogation interest in the proceeds of the settlement of the civil action. The amount of this subrogation interest is to be determined as if the civil action were settled after the total amount of the worker's compensation lien is determined by the Industrial Commission or a court, and is to be determined in accordance with . . . G.S. § 97-10.2. The parties specifically reserve the right to contest the issue of the amount of the lien.
A consent order requiring payment of $25,000 by the third party to plaintiff was entered 16 November 1990, and the funds were thereafter disbursed to plaintiff, subject to the terms of the settlement agreement.
Following a June 1991 hearing before Deputy Commissioner Charles Markham, plaintiff was awarded workers' compensation benefits. The Deputy Commissioner also concluded that "pursuant to the agreement between all the parties to the consent judgment," defendants were entitled to a credit or lien against the proceeds of the third-party settlement.
Plaintiff appealed to the full Commission, which, in a 13 December 1994 opinion and award, determined that plaintiff was entitled to workers' compensation benefits but denied defendants' subrogation interest. The Commission concluded that "as defendants did not admit liability for this injury and instead denied and contested liability, and as no final award has been entered by the Industrial Commission, defendants shall have no subrogation interest or lien as to the $25,000 third party settlement." The Commission also noted that the settlement agreement entered into by the parties did not create a subrogation interest but rather "purports and preserves any such interest as defendants may have eventually been found to exist" pursuant to the requirements of N.C.G.S. § 97-10.2.
The Court of Appeals, in a unanimous decision, reversed the Commission and held that defendants did p
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