Title: Deese v. Champion Int'l Corp

State: north-carolina

Issuer: North Carolina Supreme Court

Document:

IN THE SUPREME COURT OF NORTH CAROLINA
No. 500PA98-2
FILED 16 JUNE 2000
BRACY DEESE,
Employee
v.
CHAMPION INTERNATIONAL CORPORATION,
Employer (Self-Insured),
and
SEDGWICK JAMES OF THE CAROLINAS,
Administrator
On discretionary review pursuant to N.C.G.S. § 7A-31 of
a unanimous decision of the Court of Appeals, 133 N.C. App. 278,
515 S.E.2d 239 (1999), replacing its holding in a prior decision
of this case reported at 131 N.C. App. 299, 506 S.E.2d 734
(1998), and remanding an opinion and award entered by the North
Carolina Industrial Commission 4 September 1997.  Heard in the
Supreme Court 16 February 2000.
John A. Mraz, P.A., by John A. Mraz, for plaintiff-
appellant.
Robinson & Lawing, L.L.P., by Jane C. Jackson,
Jolinda J. Babcock, and Kristin M. Major, for
defendant-appellees.
ORR, Justice.
This case arises out of proceedings before the
Industrial Commission initiated after defendants, on 13 December
1994, filed a Form 24 application to terminate plaintiff’s
workers’ compensation benefits “on the grounds that the plaintiff
is presently either a partner, owner and/or employee of a used
car dealership . . . and that plaintiff therefore has earning
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capacity and does not continue to be totally disabled.” 
Defendants supported their contention with documents and
videotapes of plaintiff inspecting vehicles, talking with
customers, and working in the office.  However, plaintiff failed
to respond to defendants’ application to terminate benefits. 
Thus, on 13 February 1995, the Commission entered an
administrative decision and order approving defendants’
application effective 15 February 1994.  On 16 March 1995,
plaintiff filed a request that the order be assigned for hearing.
A deputy commissioner conducted a hearing on
21 February 1996.  On 14 January 1997, the deputy commissioner
entered an opinion and award, finding, inter alia, the following:
22.  The videotapes are significant in
that they shed light on the plaintiff’s
veracity.  The plaintiff’s attempts to
operate these businesses without the
knowledge of the defendants, coupled with the
contradiction of his testimony by the
videos[,] are circumstances the undersigned
finds significant in assessing plaintiff’s
propensity for truth.  In view of the
documentary evidence and videotape evidence,
the undersigned finds plaintiff’s testimony
that he was not involved in vehicle sales to
be unbelievable.
The deputy commissioner’s findings generated
conclusions of law to the effect that defendants demonstrated
that “plaintiff has regained his wage earning capacity” and that
as of 15 February 1994, defendants were entitled to stop payment
of temporary total disability benefits.
Plaintiff appealed to the full Commission, which
reconsidered the evidence but did not hear live testimony.  In
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its opinion and award entered 4 September 1997, the full
Commission made the following pertinent findings of fact:
16.  Mr. William Gregory, a private
investigator hired by defendant, obtained
videotape of plaintiff on the premises of his
brother’s car lot in the fall of 1994.  Prior
investigations by Mr. Gregory produced no
evidence that plaintiff was engaging in any
activity that went beyond his recommended
physical limitations.  Further, there is no
evidence in the record that plaintiff was
earning wages at his former wage level with
defendant from this car business or from any
other employment.
17.  The Deputy Commissioner in this
matter found plaintiff’s testimony regarding
his association with his brother’s car
business and his later investment in said
business was not credible.  The Deputy
Commissioner found that plaintiff had
attempted to keep his involvement with the
car business hidden from defendant and that
plaintiff had never mentioned his involvement
to any of his treating physicians until after
he learned that his activities had been
videotaped.
18.  Despite the Deputy Commissioner’s
first hand observations of the witness at
hearing, the Full Commission finds that
plaintiff’s testimony regarding his
association with his brother’s car business
and his later investment in said business to
be credible for the following reasons: 
plaintiff informed Dr. Lawless that he had
been spending some time with his brother at
his brother’s car dealership; plaintiff’s
statements to Dr. Lawless are corroborated by
statements to Dr. Lawless by plaintiff’s
wife; Ms. Donna Kropelnicki, the
rehabilitation nurse assigned by defendant to
plaintiff’s case, had knowledge of the fact
that plaintiff was attempting to get out of
the house and that he had been frequently
visiting his brother’s business[;] and[] it
was only after Ms. Kropelnicki reported these
activities to defendant that the later
videotapes were taken.
. . . .
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21.  As the result of his 4 August 1989
injury by accident, plaintiff has been unable
to earn wages in his former employment with
defendant or in any other employment from
15 February 1994 through the present and
continuing.
Based on the findings of fact, “the Full Commission
conclude[d] as a matter of law that the Administrative Decision
and Order of [the] Special Deputy Commissioner . . . filed
13 February 1995 which allowed the termination of plaintiff’s
benefits . . . was erroneously approved.”  Additionally, the full
Commission concluded that “as a result of his 4 August 1989
injury by accident, plaintiff is entitled to have defendant
reinstate payments of temporary total disability compensation.” 
Thus, the Commission, with one commissioner dissenting, reversed
the deputy commissioner and awarded plaintiff temporary total
disability benefits.  Defendants then appealed to the Court of
Appeals.
In the Court of Appeals’ first review of the case sub
judice, it reversed the opinion and award of the Commission and
remanded the case to the full Commission.  Deese v. Champion
Int’l Corp., 131 N.C. App. 299, 304, 506 S.E.2d 734, 737 (1998). 
In support of its decision, the court followed its prior holding
in Sanders v. Broyhill Furn. Indus., 124 N.C. App. 637, 478
S.E.2d 223 (1996), disc. rev. denied, 346 N.C. 180, 486 S.E.2d
208 (1997).  In Sanders, the Court of Appeals held that
Commission findings reversing credibility determinations made by
a deputy commissioner are reviewable by the Court of Appeals and
must be supported by findings “showing why the deputy
commissioner’s credibility determinations should be rejected.” 
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Id. at 641, 478 S.E.2d at 226.  Applying Sanders, the Court of
Appeals in this case then reviewed the full Commission’s findings
of fact and determined that the evidence supporting finding of
fact number eighteen, which set out the Commission’s credibility
determinations supporting its opinion that plaintiff was
credible, was not relevant to the deputy commissioner’s
credibility determinations that plaintiff was not credible. 
Deese, 131 N.C. App. at 303, 506 S.E.2d at 737.  The court
further noted that the full Commission failed to consider several
credibility issues raised by plaintiff’s testimony that the
deputy commissioner used to support her determination that
plaintiff was not credible.  Id.
On 3 March 1999, this Court granted plaintiff’s
petition for discretionary review for the limited purpose of
remanding the case to the Court of Appeals for reconsideration in
light of Adams v. AVX Corp., 349 N.C. 676, 509 S.E.2d 411 (1998). 
In Adams, this Court overruled Sanders to the extent that it
required the full Commission to demonstrate “‘that sufficient
consideration was paid to the fact that credibility may be best
judged by a first-hand observer of the witness when that
observation was the only one.’”  Id. at 681, 509 S.E.2d at 413-14
(quoting Sanders, 124 N.C. App. at 641, 478 S.E.2d at 226). 
Adams reinforced the proposition that the Commission is the sole
judge of the credibility of witnesses and that the ultimate fact-
finding function lies with the Commission whether it conducts a
hearing or reviews a cold record.  Id. at 680-81, 509 S.E.2d at
413.
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The Court of Appeals filed its second opinion in this
case on 18 May 1999.  In a unanimous decision, the Court of
Appeals stated:
Here, after receiving evidence and
viewing surveillance videotapes, the deputy
commissioner determined plaintiff was
involved in the auto sales business beginning
with his obtaining a dealer license in
February 1994.  The deputy commissioner then
found plaintiff’s testimony that he was not
involved in the auto sales business not to be
credible.
In finding the plaintiff’s testimony to
be credible, the Commission based its
determination on statements made by the
plaintiff to his psychologist, Dr. Lawless,
and to his rehabilitation nurse,
Ms. Kropelnicki.  However, plaintiff’s
statement that he was “spending some time” at
his brother’s car dealership was, according
to testimony at the hearing, made to
Dr. Lawless in 1992, as was the corroborating
statement made by plaintiff’s wife to
Dr. Lawless.  In addition, the statement made
by plaintiff to Ms. Kropelnicki that he was
visiting his brother’s car lot was made in
early January 1994.  We fail to see how these
statements were relevant to the Commission’s
credibility determination as plaintiff did
not become involved in the auto sales
business until February 1994.
Thus, since this was the only finding to
support the Commission’s determination that
defendant was credible, we conclude there was
insufficient evidence to support such a
finding.
Deese v. Champion Int’l Corp., 133 N.C. App. 278, 283, 515 S.E.2d
239, 243 (1999).  The court further held that it agreed with
defendants’ argument that the full Commission applied the wrong
legal standard in determining disability and that “plaintiff’s
post-injury earning capacity rather than his actual wages earned
is the relevant factor in assessing the disability.”  Id. at 284,
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515 S.E.2d at 244.  For the reasons stated below, we reverse the
Court of Appeals on both issues before this Court for review.
The first issue we must review is whether the full
Commission’s findings of fact and conclusions of law are
supported by competent evidence.  We begin our review by applying
Adams, 349 N.C. 676, 509 S.E.2d 411, to this case.
In Adams, this Court carefully detailed the respective
roles of the Industrial Commission and the appellate courts when
reviewing workers’ compensation claims and challenges.  The Court
also explained the appropriate standard of review to be applied
by the Court of Appeals when reviewing Commission decisions.  In
Adams, we said the following:
N.C.G.S. § 97-85 provides in part:
If application is made to the
Commission within 15 days from the date
when notice of the award shall have been
given, the full Commission shall review
the award, and, if good ground be shown
therefor, reconsider the evidence,
receive further evidence, rehear the
parties or their representatives, and,
if proper, amend the award . . . .
N.C.G.S. § 97-85 (1991).  We have stated that
“[i]n reviewing the findings found by a
deputy commissioner . . . , the Commission
may review, modify, adopt, or reject the
findings of fact found by the hearing
commissioner.”  Watkins v. City of
Wilmington, 290 N.C. 276, 280, 225 S.E.2d
577, 580 (1976).
. . . .
. . . Under our Workers’ Compensation
Act, “the Commission is the fact finding
body.”  Brewer v. Powers Trucking Co., 256
N.C. 175, 182, 123 S.E.2d 608, 613 (1962). 
“The Commission is the sole judge of the
credibility of the witnesses and the weight
to be given their testimony.”  Anderson v.
-8-
Lincoln Constr. Co., 265 N.C. 431, 433-34,
144 S.E.2d 272, 274 (1965).
Whether the full Commission conducts a
hearing or reviews a cold record, N.C.G.S. §
97-85 places the ultimate fact-finding
function with the Commission--not the hearing
officer.  It is the Commission that
ultimately  determines credibility, whether
from a cold record or from live testimony. 
Consequently, in reversing the deputy
commissioner’s credibility findings, the full
Commission is not required to demonstrate
. . . “that sufficient consideration was paid
to the fact that credibility may be best
judged by a first-hand observer of the
witness when that observation was the only
one.”  Sanders, 124 N.C. App. at 641, 478
S.E.2d at 226. 
. . . .
“The findings of fact by the Industrial
Commission are conclusive on appeal if
supported by any competent evidence.” 
Gallimore v. Marilyn’s Shoes, 292 N.C. 399,
402, 233 S.E.2d 529, 531 (1977).  Thus, on
appeal, [an appellate court] “does not have
the right to weigh the evidence and decide
the issue on the basis of its weight.  The
court’s duty goes no further than to
determine whether the record contains any
evidence tending to support the finding.” 
Anderson, 265 N.C. at 434, 144 S.E.2d at 274.
N.C.G.S. § 97-86 provides that “an award
of the Commission upon such review, as
provided in G.S. 97-85, shall be conclusive
and binding as to all questions of fact.” 
N.C.G.S. § 97-86 (1991).  As we stated in
Jones v. Myrtle Desk Co., 264 N.C. 401, 141
S.E.2d 632 (1965), “[t]he findings of fact of
the Industrial Commission are conclusive on
appeal when supported by competent evidence,
even though there be evidence that would
support findings to the contrary.”  Id. at
402, 141 S.E.2d at 633.  The evidence tending
to support plaintiff’s claim is to be viewed
in the light most favorable to plaintiff, and
plaintiff is entitled to the benefit of every
reasonable inference to be drawn from the
evidence.
Adams, 349 N.C. at 680-81, 509 S.E.2d at 413-14.
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This Court in Adams made readily apparent two points: 
(1) the full Commission is the sole judge of the weight and
credibility of the evidence, and (2) appellate courts reviewing
Commission decisions are limited to reviewing whether any
competent evidence supports the Commission’s findings of fact and
whether the findings of fact support the Commission’s conclusions
of law.
In the Court of Appeals’ review of the first issue
before this Court, it correctly applied the “supported by any
competent evidence” standard of review reiterated in Adams.  Id.
at 681, 509 S.E.2d at 414.  However, the Court of Appeals
erroneously focused its review and based its conclusion that the
findings of fact were not supported by any competent evidence on
finding of fact eighteen.  Finding of fact eighteen reads as
follows:
18.  Despite the Deputy Commissioner’s
first hand observations of the witness at
hearing, the Full Commission finds that
plaintiff’s testimony regarding his
association with his brother’s car business
and his later investment in said business to
be credible for the following reasons: 
plaintiff informed Dr. Lawless that he had
been spending some time with his brother at
his brother’s car dealership; plaintiff’s
statements to Dr. Lawless are corroborated by
statements to Dr. Lawless by plaintiff’s
wife; Ms. Donna Kropelnicki, the
rehabilitation nurse assigned by defendant to
plaintiff’s case, had knowledge of the fact
that plaintiff was attempting to get out of
the house and that he had been frequently
visiting his brother’s business[;] and[] it
was only after Ms. Kropelnicki reported these
activities to defendant that the later
videotapes were taken.
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As a threshold matter, that portion of finding of fact
eighteen explaining why the full Commission found plaintiff’s
testimony credible was unnecessary.  The Commission made its
findings of fact in the case sub judice in September 1997.  The
only apparent reason the Commission made any findings explaining
its determination about credibility was to comply with the Court
of Appeals’ opinion in Sanders v. Broyhill Furn. Indus., 124 N.C.
App. 637, 478 S.E.2d 223, which, as previously noted, this Court
overruled in Adams.  This Court in Adams made it clear that the
Commission does not have to explain its findings of fact by
attempting to distinguish which evidence or witnesses it finds
credible.  Requiring the Commission to explain its credibility
determinations and allowing the Court of Appeals to review the
Commission’s explanation of those credibility determinations
would be inconsistent with our legal system’s tradition of not
requiring the fact finder to explain why he or she believes one
witness over another or believes one piece of evidence is more
credible than another.  The Commission’s credibility
determinations made in response to Sanders cannot be the basis
for reversing the Commission’s order absent other error.
We now turn to our review of the Commission’s other
findings of fact to determine if there is any competent evidence
to support the Commission’s findings and whether its conclusions
of law are supported by the findings of fact.
Even though there is conflicting testimony, there is
competent evidence in the record to support the Commission’s
findings of fact.  Plaintiff’s surgeon testified that plaintiff
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could not return to a job with manual labor.  Defendants produced
no evidence that plaintiff had been earning wages from any source
or that plaintiff had engaged in any activity that went beyond
his physical limitations.  Additionally, plaintiff testified that
while he invested in the car lot and spent time at the lot, he
never worked at the lot, sold a car to a customer, or received
any pay or wages from the lot.  David Goode also testified that
plaintiff did not work at the lot, that plaintiff had never sold
a car while Goode was present, and that Goode had never told
anyone that plaintiff owned the lot.  Thus, there is some
competent evidence to support the Commission’s findings;
therefore, we hold that the Commission’s findings of fact were
conclusive on appeal.  We also hold that the Commission’s
conclusions of law and award entered are supported by its
findings of fact.  Accordingly, we reverse the decision of the
Court of Appeals as to this issue.
The second question presented for review is whether the
Commission applied the correct legal standard in making its
determination that the plaintiff was temporarily totally disabled
from employment under the Workers’ Compensation Act.
In order to qualify for compensation
under the Workers’ Compensation Act, a
claimant must prove both the existence and
the extent of disability.  In the context of
a claim for workers’ compensation, disability
refers to the impairment of the injured
employee’s earning capacity.
Stone v. G&G Builders, 346 N.C. 154, 157, 484 S.E.2d 365, 367
(1997) (citation omitted).
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Defendants argue that the Commission erred by looking
at plaintiff’s lack of actual wages earned instead of plaintiff’s
earning capacity.  In support of this argument, defendants point
the Court to finding of fact sixteen, which reads as follows:
16.  Mr. William Gregory, a private
investigator hired by defendant, obtained
videotape of plaintiff on the premises of his
brother’s car lot in the fall of 1994.  Prior
investigations by Mr. Gregory produced no
evidence that plaintiff was engaging in any
activity that went beyond his recommended
physical limitations.  Further, there is no
evidence in the record that plaintiff was
earning wages at his former wage level with
defendant from this car business or from any
other employment.
(Emphasis added.)
We do not believe the simple reference in finding of
fact sixteen to the fact that plaintiff was not earning wages at
his former wage level supports a holding that the Commission
applied the wrong standard of review in making its determination
that plaintiff was disabled for purposes of the Workers’
Compensation Act.
Finding of fact twenty-one reads as follows:
21.  As the result of his 4 August 1989
injury by accident, plaintiff has been unable
to earn wages in his former employment with
defendant or in any other employment from
15 February 1994 through the present and
continuing.
The language in finding of fact twenty-one indicates
that the Commission applied the correct standard of review and
that it looked at plaintiff’s wage-earning capacity in making its
determination that plaintiff was disabled for purposes of the
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Workers’ Compensation Act.  Thus, defendants’ argument on this
issue fails.
The decision of the Court of Appeals is reversed, and
the case is remanded to that court for further remand to the
Industrial Commission for reinstatement of its opinion and award.
REVERSED.