Court Opinion

ID: 3004794
Source: CourtListenerOpinion
Date Created: 2015-09-25 16:11:37.92318+00
Date Added: 2024-06-11T11:45:58.561486
License: Public Domain

IN THE SUPREME COURT OF NORTH CAROLINA

                                   No. 123A14

                          FILED 25 SEPTEMBER 2015

VINCENT BURLEY, Employee

             v.
U.S. FOODS, INC.,
         Employer,

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA,
        Carrier
(GALLAGHER BASSETT SERVICES, INC., Third-Party Administrator)

      Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of

the Court of Appeals, ___ N.C. App. ___, 756 S.E.2d 84 (2014), reversing an opinion

and award filed on 28 June 2013 by the North Carolina Industrial Commission, and

remanding for rehearing. Heard in the Supreme Court on 17 March 2015.

      Sumwalt Law Firm, by Vernon Sumwalt, for plaintiff-appellee.

      McAngus, Goudelock & Courie, P.L.L.C., by Raymond J. Williams, III and
      Jordan Benton, for defendant-appellants.

      Hedrick Gardner Kincheloe & Garofalo, LLP, by Nicole C. Shoemaker and M.
      Duane Jones, for North Carolina Association of Defense Attorneys, amicus
      curiae.

      JACKSON, Justice.

      In this case we consider whether an employment contract was “made in this

State” when it was formed in South Carolina and allegedly modified in North

Carolina. N.C.G.S. § 97-36 (2013). We conclude that the modification that occurred
                             BURLEY V. U.S. FOODS, INC.

                                  Opinion of the Court

here did not alter the state in which the contract was made. Accordingly, we reverse

the decision of the Court of Appeals.

      Plaintiff is a resident of Augusta, Georgia. In May 2000, U.S. Foods, Inc.

extended plaintiff an offer of employment, which plaintiff accepted by signing the

offer letter. According to plaintiff’s testimony, he was in Fort Mill, South Carolina,

when he signed the offer letter. Subsequently, plaintiff began working for U.S. Foods

as a delivery truck driver. Plaintiff’s job responsibilities included driving a planned

route with stops in Georgia and South Carolina, but no travel in North Carolina was

involved.

      As the result of a merger with another company in 2002, U.S. Foods ceased

operating in the Columbia, South Carolina location where plaintiff was assigned.

U.S. Foods then gave plaintiff the choice either to terminate his employment and

receive a severance package or to have supervision of his employment transferred to

Charlotte, North Carolina, or Lexington, South Carolina. Plaintiff elected to transfer

to the company’s Charlotte division, and the transfer was approved by U.S. Foods’

Human Resources Department in Charlotte. Throughout the transfer, plaintiff was

employed by U.S. Foods continuously. Thereafter, he performed the same job, and

his title and responsibilities did not change. Plaintiff made deliveries to different

customers after the transfer, and he earned more money because of a change in the

way his pay was calculated. But although plaintiff’s supervision was transferred to

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                             BURLEY V. U.S. FOODS, INC.

                                  Opinion of the Court

Charlotte, plaintiff never had a route that involved any deliveries in North Carolina

during his employment with U.S. Foods.

      On 23 September 2009, plaintiff received a back injury during a delivery in

Georgia. Plaintiff’s claim for benefits was accepted by defendants pursuant to the

Georgia Workers’ Compensation Act, and plaintiff began receiving disability and

medical compensation according to Georgia law. On 8 July 2011, plaintiff filed a

claim for benefits with the North Carolina Industrial Commission. After a hearing

on 17 April 2012, Deputy Commissioner Philip A. Baddour, III concluded that the

Commission did not have subject matter jurisdiction over plaintiff’s claim. Plaintiff

appealed to the Full Commission, which affirmed Deputy Commissioner Baddour’s

ruling.

      Plaintiff appealed, and in a divided opinion, the Court of Appeals reversed,

holding that the Commission has jurisdiction over plaintiff’s claim. Burley v. U.S.

Foods, Inc., ___ N.C. App. ___, ___, 756 S.E.2d 84, 90 (2014). The majority concluded

that plaintiff’s transfer to U.S. Foods’ Charlotte division involved a modification of

plaintiff’s employment contract, id. at ___, 756 S.E.2d at 90, and that such a

modification “may be a proper basis to find a contract is ‘made’ within North Carolina”

for purposes of establishing the jurisdiction of the Commission pursuant to N.C.G.S.

§ 97-36, id. at ___, 756 S.E.2d at 88. Judge Dillon dissented, maintaining that

modification of plaintiff’s existing contract, in light of the facts presented here, is

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                              BURLEY V. U.S. FOODS, INC.

                                   Opinion of the Court

insufficient to confer jurisdiction upon the Commission. Id. at ___, 756 S.E.2d at 91

(Dillon, J., dissenting). Based upon the dissent, defendants appealed to this Court as

of right pursuant to N.C.G.S. § 7A-30(2).

      On appeal defendants argue that once an employment contract has achieved

an identifiable situs, that situs is not changed by a subsequent modification of the

contract in another state. Defendants therefore contend that, notwithstanding the

alleged modification in the case sub judice, plaintiff’s employment contract was not

made in North Carolina and does not establish the Commission’s jurisdiction

pursuant to section 97-36. We agree.

      Generally, appellate review of the Commission’s decisions is limited to

“whether any competent evidence supports the Commission’s findings of fact and

whether [those] findings . . . support the Commission’s conclusions of law.” McRae v.

Toastmaster, Inc., 358 N.C. 488, 496, 597 S.E.2d 695, 700 (2004) (alterations in

original) (quoting Deese v. Champion Int’l Corp., 352 N.C. 109, 116, 530 S.E.2d 549,

553 (2000)). But “the Commission’s findings of jurisdictional fact are not conclusive

on appeal, even if supported by competent evidence.” Perkins v. Arkansas Trucking

Servs., Inc., 351 N.C. 634, 637, 528 S.E.2d 902, 903-04 (2000) (citing, inter alia, Lucas

v. Li’l Gen. Stores, 289 N.C. 212, 218, 221 S.E.2d 257, 261 (1976)). Accordingly, this

Court must review the evidence and make findings of fact independently. Id. at 637,

528 S.E.2d at 904 (quoting Lucas, 289 N.C. at 218, 221 S.E.2d at 261).              “The

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                             BURLEY V. U.S. FOODS, INC.

                                   Opinion of the Court

Commission’s conclusions of law are reviewed de novo.” McRae, 358 N.C. at 496, 597

S.E.2d at 701 (citing Grantham v. R.G. Barry Corp., 127 N.C. App. 529, 534, 491
S.E.2d 678, 681 (1997), disc. rev. denied, 347 N.C. 671, 500 S.E.2d 86 (1998)).

      Section 97-36 specifies when an employee may be entitled to compensation for

an accident that occurs during employment outside of North Carolina. This statute

states in pertinent part:

                    Where an accident happens while the employee is
             employed elsewhere than in this State and the accident is
             one which would entitle him or his dependents or next of
             kin to compensation if it had happened in this State, then
             the employee or his dependents or next of kin shall be
             entitled to compensation (i) if the contract of employment
             was made in this State, (ii) if the employer’s principal place
             of business is in this State, or (iii) if the employee’s
             principal place of employment is within this State . . . .

N.C.G.S. § 97-36.    Because the only issue addressed by the dissenting opinion

concerns whether the Court of Appeals correctly concluded that plaintiff’s

employment contract was “made in this State,” Burley, ___ N.C. App. at ___, 756

S.E.2d at 91; see also id. at ___ n.1, 756 S.E.2d at 87 n.1 (majority), we consider only

that basis for compensation pursuant to section 97-36, see N.C. R. App. P. 16(b).

“Under North Carolina law, a contract is made in the place where the last act

necessary to make it binding occurred.” Tom Togs, Inc. v. Ben Elias Indus. Corp., 318
N.C. 361, 365, 348 S.E.2d 782, 785 (1986) (citing Goldman v. Parkland of Dallas, Inc.,

277 N.C. 223, 227, 176 S.E.2d 784, 787 (1970)); see also Thomas v. Overland Express,

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                              BURLEY V. U.S. FOODS, INC.

                                  Opinion of the Court

Inc., 101 N.C. App. 90, 96, 398 S.E.2d 921, 925-26 (1990), disc. rev. denied, 328 N.C.
576, 403 S.E.2d 522 (1991).

      Although this case involves a matter of first impression in North Carolina,

courts of several other states that have considered similar factual situations long

have held that a modification of a contract did not change the location where the

contract was made. In Sims v. Truscon Steel Co., 343 Mo. 1216, 126 S.W.2d 204, cert.

denied, 307 U.S. 646, 59 S. Ct. 1045, 83 L. Ed. 1526 (1939), a company hired a worker

via a contract made in Missouri, but later argued that a new contract was entered

into by correspondence between the employee, who was then working in Kansas, and

the employer’s Illinois office. Id. at 1220, 126 S.W.2d at 206. The Missouri Supreme

Court rejected this contention, concluding that, although the correspondence resulted

in “additional duties and additional pay” for the employee, there still was “only one

contract of employment”: the original contract made in Missouri. Id. at 1224, 126

S.W.2d at 208. Similarly, in Selser v. Bragmans Bluff Lumber Co., 146 So. 690 (La.

Ct. App. 1933), a Louisiana appellate court determined that a “change in [the

employee’s] position and the increase of his salary” that occurred in another

jurisdiction “in no way abrogated or set aside” the remaining terms of the original

contract. Id. at 696. Furthermore, in Benguet Consolidated Mining Co. v. Industrial

Accident Commission, 36 Cal. App. 2d 158, 97 P.2d 267 (1939), a California appellate

court concluded that a three-year contract of hire originally made in California “was

still in effect in spite of the changes in duties and salary agreed upon in the

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                             BURLEY V. U.S. FOODS, INC.

                                   Opinion of the Court

Philippines” and remained binding even after subsequent mutual agreements made

in the Philippines extended the worker’s employment beyond the time specified in

the original contract. Id. at 167, 97 P.2d at 272. Consistent with these decisions,

Larson’s Workers’ Compensation Law states that “[o]nce the contract has achieved an

identifiable situs, that situs is not changed merely because the contract is modified

in another state, as when there is a change in salary or other benefits made in the

second state.” 9 Arthur Larson & Lex K. Larson, Larson’s Workers’ Compensation

Law § 143.03[4], at 143-22 (2012) (citing United Airlines, Inc. v. Indus. Comm’n, 96
Ill. 2d 126, 449 N.E.2d 119 (1983); Crawford v. Trans World Airline, 27 N.J. Super.
567, 99 A.2d 673 (1953); Tobin v. Rouse, 118 Vt. 40, 99 A.2d 617 (1953)). We find this

authority persuasive.

      Kuzel v. Aetna Insurance Co., 650 S.W.2d 193 (Tx. App. 1983), which plaintiff

references and which the Court of Appeals cited, does not contradict this result. The

court in Kuzel concluded that, based upon the specific facts before it, the initial

agreement regarding the plaintiff’s employment in that case “was no more than

preliminary negotiations,” while “[a] contract [was] established [in another state]

when agreement [was] reached on all terms, and the preliminary agreements

[were] . . . incorporated into the final offer and acceptance.” Id. at 195. As a result,

Kuzel did not involve a modification of an existing contract, but rather concerned

preliminary negotiations culminating in a subsequent final written employment

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                               BURLEY V. U.S. FOODS, INC.

                                     Opinion of the Court

agreement. Accordingly, the court’s analysis in Kuzel is not persuasive in the case

sub judice.

       Although the Fifth Circuit in Kilburn v. Grande Corp., 287 F.2d 371 (5th Cir.

1961), concluded that a modification may create a new contract, that decision was

based in part upon the premise that, because the employee’s “salary was to be paid

on an hourly basis,” thus indicating a less than “ ‘permanent’ type of employment,”

whatever employment contract existed “had life on a pay-period-to-pay-period basis,

and . . . a new contract was impliedly made each time that [the employee] reported to

work and was given work following a pay period.” Id. at 373. Because North Carolina

law looks to “the final act necessary to make [the contract] a binding obligation,”

Thomas, 101 N.C. App. at 96, 398 S.E.2d at 925, and does not imply the creation of a

new contract after each pay period, we find Kilburn unpersuasive.1 See also, e.g.,

Murray v. Ahlstrom Indus. Holdings, Inc., 131 N.C. App. 294, 296-97, 506 S.E.2d 724,

726 (1998) (citing Thomas and concluding that a contract for employment was

complete when the plaintiff accepted the employer’s offer in North Carolina, even

though the plaintiff completed the necessary paperwork in another state, where he

was assigned to perform his work).

       1  Moreover, we note that the original agreement in Kilburn was never reduced to
writing by the parties, which further distinguishes Kilburn from the instant case. The lack
of a written agreement led the Fifth Circuit to find the absence of “an enforceable contract
of employment for any period of time in existence when [the employee] moved to [the other
state].” Kilburn, 287 F.2d at 373.

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                              BURLEY V. U.S. FOODS, INC.

                                    Opinion of the Court

      Ultimately, section 97-36 authorizes compensation pursuant to North Carolina

law if an individual’s employment contract was “made” in North Carolina—the

statute does not include the word “modified.” After interpreting this statute in light

of its plain language and upon consideration of decisions from other jurisdictions, we

conclude that section 97-36 does not apply to a contract initially made in another

state and subsequently modified in North Carolina.

      Here the evidence in the record establishes that when plaintiff began working

for U.S. Foods, his employment contract was not made in North Carolina. After being

hired in South Carolina in 2000, plaintiff worked continuously for U.S. Foods and

never left the job until he was terminated following his injury. Plaintiff’s 2002

transfer involved administrative changes, new customers, and increased pay, but his

job title and responsibilities did not change. Plaintiff’s supervisor stated that plaintiff

had the “[s]ame job” following the transfer. In addition, although plaintiff’s pay

eventually increased by a substantial amount, much of the increase occurred between

2004 and 2005, long after the 2002 transfer at issue here. Plaintiff testified that he

was not informed about this change in salary before its implementation, suggesting

that it was not part of how he understood the transfer process at the time it was

taking place. We decline to hold that this internal transfer of supervision, which

essentially allowed plaintiff to continue working for U.S. Foods in the same capacity

throughout the merger, established a new employment contract. Accordingly, the

decision of the Court of Appeals is reversed.

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            BURLEY V. U.S. FOODS, INC.

                Opinion of the Court

REVERSED.

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                             BURLEY V. U.S. FOODS, INC.

                                HUDSON, J., dissenting

      Justice HUDSON dissenting.

      The majority holds that an employment contract modified in North Carolina

does not qualify as one “made” in North Carolina for purposes of conferring subject

matter jurisdiction on the North Carolina Industrial Commission, even when the

modifications to the employment relationship are substantial and where it is

undisputed that it was impossible for the employment relationship to continue on the

original terms. In my view, this holding contradicts the long-standing rule that North

Carolina courts must liberally construe the Workers’ Compensation Act in favor of

providing relief to workers injured in the scope of their employment. Accordingly, I

respectfully dissent.

      The statute at issue here, N.C.G.S. § 97-36, governs when an employee may be

entitled to compensation for a work-related accident that occurs outside North

Carolina. Section 97-36 provides in relevant part:

                    Where an accident happens while the employee is
             employed elsewhere than in this State and the accident is
             one which would entitle him or his dependents or next of
             kin to compensation if it had happened in this State, then
             the employee or his dependents or next of kin shall be
             entitled to compensation . . . if the contract of employment
             was made in this State . . . .

N.C.G.S. § 97-36 (2013). In interpreting this provision, it is well settled that the

Workers’ Compensation Act, including section 97-36, “must necessarily be viewed

with liberality in order to accomplish its purpose[ ]” of providing compensation to

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                              BURLEY V. U.S. FOODS, INC.

                                 HUDSON, J., dissenting

employees injured during the course and within the scope of their employment.

Essick v. City of Lexington, 232 N.C. 200, 208, 60 S.E.2d 106, 112 (1950); see also

Johnson v. Asheville Hosiery Co., 199 N.C. 38, 40, 153 S.E. 591, 593 (1930) (“It is

generally held by the courts that the various Compensation Acts of the Union should

be liberally construed to the end that the benefits thereof should not be denied upon

technical, narrow and strict interpretation.”).      The question presented here is

whether a contract of employment qualifies as a contract “made” in North Carolina

when an employee is given a choice between termination and continuing the

relationship under terms so significantly different that the arrangement amounts, in

effect, to a new contract. I conclude that, on the facts presented here and against that

liberal interpretive backdrop, it does.

      Here, plaintiff first accepted an offer of employment with defendant U.S. Foods

in May 2000. For two years, he worked as a delivery truck driver with an assigned

drop yard in Columbia, South Carolina and a planned route in the Augusta, Georgia

area. The customers to whom plaintiff made deliveries included health care facilities,

convenience stores, and restaurants. While there was some variation among these

customers, most of them remained the same during the time plaintiff had that route.

      In 2002, U.S. Foods merged with another company, PYA Monarch, and

defendant elected to close the Columbia drop yard.         Plaintiff, like many other

employees based out of the Columbia location, was given a choice: He could either

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                              BURLEY V. U.S. FOODS, INC.

                                 HUDSON, J., dissenting

accept termination and a severance package, or he could transfer to a division based

in Lexington, South Carolina, or one located in Charlotte, North Carolina. Because

the Columbia drop yard was closing, the parties did not have the option of continuing

the employment relationship as it had existed up to that point. Faced with this

decision, plaintiff chose transfer to the Charlotte-based division of the company.

Plaintiff also negotiated for and received an additional benefit; specifically, plaintiff

and defendant agreed that while plaintiff worked out of the Charlotte-based division,

U.S. Foods would deliver plaintiff’s loaded trailer to him in Augusta, Georgia. The

company’s Human Resources Department, which was also located in Charlotte,

approved the transfer in October 2002, thereby finalizing the new agreement.

      Once he came under the supervision of the Charlotte-based division of the

company, plaintiff’s employment changed in several other ways as well. As plaintiff

described in his testimony before the Industrial Commission, he drove a new route

and his “customers changed completely.” While he had previously made deliveries to

health care facilities, convenience stores, and restaurants, the “bulk” of plaintiff’s

deliveries when he was based in Charlotte were to chain restaurants such as Sonic,

KFC, Subway, and IHOP. In addition, the method by which plaintiff’s pay was

calculated was changed. When he was based in South Carolina, plaintiff was paid

based on an hourly weight-based commission system, under which he earned

approximately $400 to $500 per week. In North Carolina, however, he was first paid

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                               BURLEY V. U.S. FOODS, INC.

                                   HUDSON, J., dissenting

an hourly rate, then under a component-based system.2 Under the component-based

system, plaintiff eventually earned more than twice as much as under the

commission-based system, up to $1400 per week.

         In sum: When U.S. Foods merged with PYA Monarch, plaintiff was faced with

either termination or transfer to a division based in another State. Plaintiff chose

transfer to North Carolina and bargained for the inclusion of specific contractual

terms under the new arrangement. Upon approval by defendant’s Charlotte-based

Human Resources Department, plaintiff had a new supervisor stationed in a new

state.       Plaintiff then drove a new route, served new customers, and earned

significantly more money through the use of a new method of calculating his pay. On

the whole, it appears that the only characteristics of the employment relationship

that remained the same were plaintiff’s general duties and title as a delivery driver,

and the name of his employer.

         In my view, then, this was no mere modification, as when an employee accepts

a modest pay increase in exchange for taking on modest new responsibilities. Rather,

I conclude that the required break from the old employment arrangement, paired

with significant changes in how plaintiff’s employment would proceed moving

forward, warrants treating this arrangement as a new contract—one finalized when

        Under the commission system, delivery drivers’ wages were based primarily on the
         2

weight of the cargo they delivered. In contrast, under the component system, in addition to
receiving a base pay, drivers are paid based on a number of factors including a safety bonus,
the hours worked, and the number of stops and items of cargo.

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                              BURLEY V. U.S. FOODS, INC.

                                 HUDSON, J., dissenting

defendant’s Human Resources Department in Charlotte approved the arrangement.

Based on these facts, and in light of the requirement that we liberally construe the

Workers’ Compensation Act in favor of awarding benefits, see, e.g., Essick, 232 N.C.

at 208, 60 S.E.2d at 112, I would hold that the contract in place when plaintiff suffered

his work-related injury on 23 September 2009 was a contract “made” in North

Carolina for purposes of N.C.G.S. § 97-36, and that the North Carolina Industrial

Commission has jurisdiction over plaintiff’s claim. On this basis, I would affirm the

decision of the Court of Appeals. Therefore, I respectfully dissent.

      Justices BEASLEY and ERVIN join in this dissenting opinion.

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