Court Opinion

ID: 9578658
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:47:13.613518+00
Date Added: 2024-06-11T13:29:08.280750
License: Public Domain

TYSON, Judge,
dissenting.
The majority’s opinion affirms the decision of the Commission and concludes: (1) “the additional compensation [under N.C. Gen. Stat. § 97-12] is a part of a covered claim to be paid by NCIGA;” (2) “the additional 10% compensation... [does not] constitute^ “punitive and exemplary damages;” and (3) “where Branch has been found to have wilfully violated the OSHA regulations [they] must therefore reimburse NCIGA for any compensation attributed to such conduct.”
The insurance contract between Branch and Reliance provides Branch is to be responsible for “payments in excess of the benefits regularly provided by the workers’ compensation law including those required [if]: 3. [Branch] fail[s] to comply with a health or safety law or regulation.” Uncontested findings of fact show Branch’s failure to comply with twenty OSHA regulations proximately caused decedent’s death. Branch, not the Guaranty Association, is responsible for the additional ten percent compensation provided under N.C. Gen. Stat. § 97-12.1 respectfully dissent.
I. Construction of Insurance Contracts
“[A]n insurance policy is a contract and its provisions govern the rights and duties of the parties thereto.” Gaston County Dyeing Machine Co. v. Northfield Ins. Co., 351 N.C. 293, 299, 524 S.E.2d 558, 563 (2000); see also Allstate Ins. Co. v. Chatterton, 135 N.C. App. 92, 94, 518 S.E.2d 814, 816 (1999) (“The interpretation of language used in an insurance policy is a question of law, governed by well-established rules of construction.”), disc. rev. denied, 351 N.C. 350, 542 S.E.2d 205 (2000). The language in the policy is to be construed as written “without rewriting the contract or disregarding the express language used.” Fidelity Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 380, 348 S.E.2d 794, 796 (1986). “[T]he goal of construction is to arrive at the intent of the parties when the policy was issued.” Woods v. Insurance Co., 295 N.C. 500, 505, 246 S.E.2d 773, 777 (1978).
Where “the language of a contract is plain and unambiguous, the construction of the agreement is a matter of law for the court.” W. S. Clark & Sons, Inc. v. Ruiz, 87 N.C. App. 420, 421, 360 S.E.2d 814, 816 (1987). “The Commission’s conclusions of law are reviewable de novo.” Arnold v. Wal-Mart Stores, Inc., 154 N.C. App. 482, 484, 571 S.E.2d 888, 891 (2002).
*466In Bowles v. BCJ Trucking Servs., Inc., this Court held the Guaranty Association “stepped into the shoes of the insurance company found to be insolvent and is deemed the insurer having ‘all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.’ ” 172 N.C. App. 149, 155, 615 S.E.2d 724, 728 (emphasis original) (quoting N.C. Gen. Stat. § 58-48-35(a)(2)), disc. rev. denied, 360 N.C. 60, 623 S.E.2d 579 (2005).
The Guaranty Association can assert all rights and defenses Reliance could have asserted under the insurance contract. “The agreement did not create a new contract for insurance coverage but solely substituted a new party[.]” Id. In Bowles, the insurance company substituted the employer in the workers’ compensation insurance contract. 172 N.C. App. at 155, 615 S.E.2d at 728.
The Guaranty Association’s liability is limited by statute. Under N.C. Gen. Stat. § 58-48-25(a)(l)-(2) (2005), the Guaranty Association shall:
(1) Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within 30 days after the determination of insolvency, or before the policy expiration date if less than 30 days after the determination, or before the insured replaces the policy or causes its cancellation, if he does so within 30 days of the determination. This obligation includes only the amount of each covered claim that is in excess of fifty dollars ($50.00) and is less than three hundred thousand dollars ($300,000.00)_
(2) Be deemed the insurer to the extent of the Association’s obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.
A “covered claim” means:
(4) [A]n unpaid claim, including one of unearned premiums, which is in excess of fifty dollars ($50.00) and arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this Article applies as issued by an insurer, if such insurer becomes an insolvent insurer after the effective date of this Article and (i) the claimant or insured is a resident of this State at the time of the insured event; or (ii) the property from which the claim arises is permanently located in this State.
N.C. Gen. Stat. § 58-48-20(4) (2005).
*467It is uncontested that Branch and Reliance entered into an insurance contract which states:
B. [Reliance will pay] — [Reliance] will pay promptly when due the benefits required of you by the workers’ compensation law.
. . . .
F. Payments [Branch] Must Make — [Branch is] responsible for any payments in excess of the benefits regularly provided by the workers’ compensation law including those required because:
1: of [Branch’s] serious and willful misconduct-,

. . . .

3. [Branch] fail[s] to comply with a health or safety law or regulation-, or
. . . .
If [Reliance] makes any payments in excess of the benefits regularly provided by the workers’ compensation law on [Branch’s] behalf, [Branch] will reimburse [Reliance] promptly.
(Emphasis supplied). The Commission entered the following uncontested and binding findings of fact:
6. . . .[on] October 3, 2001, Reliance was declared insolvent in an order of liquidation entered in Pennsylvania. Following the insolvency of Reliance, the North Carolina Insurance Guaranty Association (“NCIGA”) assumed its statutory obligations in connection with this claim pursuant to the Insurance Guaranty Association Act (“Guaranty Act”).
. . . .
1. On March 23, 2000, decedent suffered a compensable injury by accident while in the course and scope of his employment with defendant-employer when a crane broke loose from its platform and fell, striking decedent and causing him to fall 20 feet to the ground. As a direct result of said injury by accident, decedent was killed.
. . . .
3. OSHA performed an investigation of decedent’s March 23, 2000 death by accident and cited defendant-employer for 20 violations of OSHA regulations, all characterized as “serious.” The *468OSHA investigator was of the opinion and the Commission finds that the violations were the proximate cause of decedent’s death.
4. The OSHA report indicated that defendant-employer’s records showed a failure to inspect the crane turret bolts for two years prior to this incident, even though OSHA regulations require a daily inspection of the same when in use. Decedent’s death was caused by the crane falling on him as he was working on.a section of a communications tower erected 18 feet above ground.
5. The OSHA inspector found that the failure to have the crane .and other equipment inspected resulted in defendant-employer’s failure to discover worn, cracked, and rusty bolts on the turret which caused the crane to fall on decedent. The inspector further stated: “According to the crane operator he heard a snap, then the crane boom started to fall, striking the employee [decedent] on the top leg of the tower section. The csho [Safety/Health Compliance Officer] observed that the bolts holding the upper and lower portions of the turret had sheared off. Upon closer examination many bolts showed signs of rust, indicative of cracks. Turret bolts could also be turned by hand, and the csho removed twenty two bolts using no tools. Maintenance records for the crane indicated that in the last two years the crane had not been inspected. Crane operators were not trained. Operators did not inspect the crane prior to, and during use. Severity is high due to death from crushing. Probability is also high due to the continuous use of the crane. NOTE: VIOLATION WAS PROXIMATE CAUSE OF ACCIDENT.”
. . . .
8. The OSHA inspection revealed and the Commission finds that defendant-employer knew or should have been aware of the safety hazards that existed at the job site because the violations were in plain view. Defendant-employer failed to conduct inspections of the crane, rigging equipment, fall protection and general worksite conditions, which resulted in the fatality on March 23, 2000.
See State v. Watkins, 337 N.C. 437, 438, 446 S.E.2d 67, 68 (1994) (findings of fact which are not excepted to are binding on appeal).
Branch and Reliance contracted and agreed that Branch would be responsible for “any payments . . . required because 1. [Branch’s] serious and wilful misconduct. . . [or] 3. [Branch’s] fail[ure] to com*469ply with a health or safety law or regulation.” The Commission’s uncontested findings of fact show Branch’s twenty OSHA regulation violations proximately caused decedent’s death. The Commission properly concluded decedent is entitled to an additional 10% compensation because of Branch’s willful failure to comply with OSHA regulations. N.C. Gen. Stat. § 97-12.
Under the contract, Branch, as employer, is responsible for payments in excess of benefits regularly provided by the workers’ compensation law. The Commission erred when it concluded the “additional compensation is part of a covered claim and must be paid by NCIGA.”
II. Conclusion
The contract between Branch and Reliance plainly and unambiguously states Branch is to be responsible for excess payments because of Branch’s “serious and wilful conduct” and “fail[ure] to comply with a health or safety law or regulation.” Branch is solely responsible for the additional ten percent compensation allowed under N.C. Gen. Stat. § 97-12.
The Commission erred when it concluded “the additional compensation [provided in N.C. Gen. Stat. § 97-12] is part of a covered claim and must be paid by NCIGA.” I vote to reverse the Commission’s order. I respectfully dissent.