Court Opinion

ID: 9614330
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:24:24.760605+00
Date Added: 2024-06-11T18:03:35.196443
License: Public Domain

Justice TIMMONS-GOODSON
dissenting.
Because I believe that Profile’s appeal is interlocutory, premised on grounds not raised or ruled on in the trial court, and misinterprets ' *640the LLC statute such that it is likely to have repercussions far beyond the realm of workers’ compensation, I respectfully dissent.
Interlocutory Nature
In the first instance, assuming arguendo that Profile is entitled to the immunity it seeks under either the Workers’ Compensation or the Limited Liability Corporation (LLC) statutes, Profile’s reasoning for why this appeal should go forward is unconvincing. It is uncontroverted that Profile’s appeal from the trial court’s denial of its motion for summary judgment is interlocutory. See Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) (“An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.’’(citation omitted)). “Generally, there is no right of immediate appeal from interlocutory orders and judgments.” Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990).
There are sound reasons for this. We have previously held that “[tjhere is no more effective way to procrastinate the administration of justice than that of bringing cases to an appellate court piecemeal through the medium of successive appeals from intermediate orders.” Veazey, 231 N.C. at 363, 57 S.E.2d at 382. However, interlocutory orders are immediately appealable if they: “(1) affect a substantial right and (2) [will] work injury if not corrected before final judgment.” Goldston, 326 N.C. at 728, 392 S.E.2d at 737 (citing Wachovia Realty Invs. v. Hous., Inc., 293 N.C. 93, 232 S.E.2d 667 (1977)). Therefore, the only way Profile can maintain this appeal is if it can show that it will lose a “substantial right” if the case proceeds any further at the trial level.
To that end, Profile argues that it has the substantial right not to be potentially subjected to two trials on the same issue, and therefore to be exposed to inconsistent verdicts. However, Profile’s argument overlooks the key fact that Terra-Mulch obtained summary judgment in its favor. Therefore, the only potential trial that Profile could face would be as the sole defendant in. a court proceeding designed to determine its own liability. With a single defendant and single set of facts, there is absolutely no possibility of inconsistent verdicts. As such, there is no substantial right implicated which would give rise to an immediate appeal.
The majority does not attempt to offer a reason as to why the Court of Appeals erred in finding that there was no substantial right *641generating a right of immediate appeal, other than finding merit in appellant’s claim that it is entitled to immunity under the LLC or workers’ compensation statutes. The majority’s approach to this case is backward. The analysis starts with evaluating the merits of Profile’s claim. Having ruled in Profile’s favor on the basis of hitherto unrecognized LLC immunity, only then does it somehow bootstrap that into a right of immediate appeal.
I note that both this Court and the Court of Appeals have uniformly rejected similar attempts by non-sovereign appellants claiming “immunity” in order to obtain immediate appellate review of an adverse ruling. We have specifically held that the right to avoid a trial in the wake of an unsuccessful motion for summary judgment is not a substantial right offering the route of immediate appeal. See, e.g., Tridyn Indus., Inc. v. Am. Mut. Ins. Co., 296 N.C. 486, 491-92, 251 S.E.2d 443, 447-48 (1979). Furthermore, we have previously noted that “[p]ractically all courts which have considered the question, including our Court of Appeals, have held that the denial of a motion for summary judgment is not appealable.” Waters v. Qualified Pers., Inc., 294 N.C. 200, 208, 240 S.E.2d 338, 344 (1978) (listing cases). See also Robinson v. Gardner, 167 N.C. App. 763, 769, 606 S.E.2d 449, 453 disc. review denied, 359 N.C. 322, 611 S.E.2d 417 (2005) (“Defendants do not seek to avoid inconsistent decisions; they seek to avoid any litigation at all.”)
Since “[i]t is the appellant’s burden to present appropriate grounds for this Court’s acceptance of an interlocutory appeal,” Johnson v. Lucas, 168 N.C. App. 515, 518, 608 S.E.2d 336, 338 (quoting Thompson v. Norfolk S. Ry., 140 N.C. App. 115, 121, 535 S.E.2d 397, 401 (2000) (citations and internal quotation marks omitted)), aff'd per curiam, 360 N.C. 53, 619 S.E.2d 502 (2005), I would affirm the determination of the Court of Appeals that this appeal is interlocutory.
Procedural Posture
Procedurally, I believe that the issue of immunity premised on the LLC statute is not properly before us. The majority is correct in its assertion that Profile argued before the trial court that its conduct was immune as a member-manager, but it is important to understand that it sought this immunity under the Workers’ Compensation Act not the LLC statute.
An examination of the pertinent portions of the transcript explains the thrust of Profile’s argument:
*642[Defendant’s attorney]: . . . The cases, as I understand them . . . they hold that in order to receive the exclusivity of the workers’ comp statute, 97-9,1 believe it is, that you must control the business of the employer.... Profile Products operated all the business of Terra-Mulch except the plant itself.
It is significant that the rejoinder by plaintiff’s attorney also focused on the exclusivity provisions of the Workers’ Compensation Act.
Indeed, the first reference to LLC immunity apparently appears in the Court of Appeals dissent and its rejoinder from the majority. Hamby v. Profile Prods., L.L.C., 179 N.C. App. 151, 163, 632 S.E.2d 804, 812 (2006) (Tyson, J., dissenting). It is revealing that a review of the Table of Authorities from defendant-appellant’s briefs before the Court of Appeals reveals no citation to either North Carolina’s or Delaware’s statutory LLC immunity provisions (N.C.G.S. § 57C-3-30(a) or Del. Code Ann. tit. 6, § 18-303(a)), the veiy basis of this opinion. Granting immunity on a ground different from the one requested in the court below raises the specter of a Viar error. “It is not the role of the appellate courts, however, to create an appeal for an appellant.” Viar v. N.C. Dep’t. of Transp., 359 N.C. 400, 402, 610 S.E.2d 360, 361 (2005).
Throughout the course of this litigation, Profile has attempted to gain immunity under the Workers’ Compensation Act. The gist of Profile’s argument was that their close nexus with Terra-Mulch entitled it to the same employer immunity enjoyed by the latter. This argument was considered by the Court of Appeals, evaluated in light of our jurisprudence, and soundly rejected. Hamby, 179 N.C. App. at 155, 632 S.E.2d at 807 (majority) (“Where a defendant is nothing ‘more than a related, but separate entity’ from the employer, the exclusivity provisions of the Workers’ Compensation Act are not an absolute bar to recovery.”) (citing Cameron v. Merisel, Inc., 163 N.C. App. 224, 233, 593 S.E.2d 416, [423] (2004)).
Profile argued on the basis of workers’ compensation exclusivity and lost. The majority now grants Profile immunity under the LLC statute, a different basis than the one it argued at the trial and intermediate appellate levels. Such a shift runs contrary to our long standing admonition that parties may not present, nor prevail upon, arguments in the appellate courts that were not argued in the trial court. Weil v. Herring, 207 N.C. 6, 10, 175 S.E. 836, 838 (1934) (where theory argued on appeal was not raised before the trial court, “the law *643does not permit parties to swap horses between courts in order to get a better mount” before an appellate court).
In this case, as reflected in defendant-appellant’s Table of Authorities, LLC immunity was not argued before even the Court of Appeals, let alone the trial court. Therefore, I would hold that Profile may not raise it now.
Substantive Concerns
Profile is chartered in Delaware, and therefore the outcome of the case hinges on the application of that state’s law. The majority misinterprets the Delaware statute such that virtually any conduct by an LLC member is immunized. This radical expansion of the LLC immunity shield is, in my view, not mandated by the statute itself, and is contrary to our precedent. The Delaware statute states only that liability may not be predicated solely on membership in an LLC. See Del. Code Ann. tit. 6, § 18-303(a) (2005) (“Except as otherwise provided by this chapter, the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company, and no member or manager of a limited liability company shall be obligated personally for any such debt, obligation or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company.”) (emphasis added). The majority’s opinion appears to disregard the word “solely,” which appears twice in the relevant statute. As we have held “[i]n the absence of. contrary indication, it is presumed that no word of any statute is a mere redundant expression. Each word is to be construed upon the supposition that the Legislature intended thereby to add something to the meaning of the statute.” Lafayette Transp. Serv., Inc. v. Cty. of Robeson, 283 N.C. 494, 500, 196 S.E.2d 770, 774 (1973) (citations omitted).
The Delaware Court of Chancery itself, when interpreting the same statute has not read it to confer the same sweeping immunity on member-managers as our Hamby opinion. The Delaware Court observed that “Section 18-303(a) protects members and managers of an LLC against liability for any obligations of the LLC solely by reason of being or acting as LLC members or managers. But, [the] phrase, ‘solely by reason of being a member [] does imply that there are situations where LLC members and managers would not be shielded by this provision.”). Pepsi-Cola Bottling Co. of Salisbury, *644Md. v. Handy, No. 1973-S, 2000 WL 364199, at *3 (Del. Ch. Mar. 15, 2000) (No.- 1973-S) (Mem.).
Other states, following Delaware’s lead, have similarly interpreted the statute’s plain meaning to shield LLC members from liability premised exclusively on their membership, but not from liability on the basis of their actions. See e.g., Weber v. U.S. Sterling Sec., Inc., 282 Conn. 722, 732, 924 A.2d 816, 824 (2007). Federal courts have arrived at the same conclusion. See e.g., Equipoise PM LLC v. Int’l Truck & Engine Corp., -F.3d -, 2006 WL 1594077, at *4 (N.D. Ill. June 5, 2006) (No. 05 C 6008).
Commentators have taken an identical view. See 2 R. Franklin Balotti, Jesse A. Finkelstein, Martin I. Lubaroff & Paul M. Altman, Balotti and Finkelstein’s Delaware Law of Corporations and Business Organizations § 20.7 (2007); Practicing Law Inst, Organization and Operation of the Limited Liability Company: Substantive Issues 937 PLI/Corp. 149, 191 (1996).
It is noteworthy that in the only two prior cases interpreting the statute, North Carolina courts have demonstrated a grasp of the key distinction between imposing liability on the basis of a member-manager’s actions versus mere membership. In State ex rel. Cooper v. NCCS Loans, Inc., 174 N.C. App. 630, 624 S.E.2d 371 (2005), the Court of Appeals held that where an individual repeatedly set up business entities to evade state usury laws, the trial court was correct in looking beyond the corporate (LLC) form to the substance of the transactions in order to restrain the individuals behind conduct. The majority holding here as applied to NCCS would have effectively subordinated the state’s usury laws to the corporate LLC form. In Page v. Roscoe, LLC, 128 N.C. App. 678, 686-87, 497 S.E.2d 422, 428 (1998), the only case other than NCCS construing the LLC immunity statute, our Court of Appeals upheld Rule 11 sanctions against an attorney whose pleadings against an LLC member were premised solely on the defendant’s LLC membership, and not his actions.
It is precisely this pivotal membership-action distinction that the majority obfuscates. Here, plaintiff noted that pursuant to undisclosed agreements between Profile and employer Terra-Mulch, Profile had undertaken certain responsibilities regarding the employer’s operations, including safety. Alleged negligence in performing those operations, and not Profile’s mere status as an LLC member-manager, is the basis for plaintiff’s current action. Under the status versus actions scheme of immunity outlined above there*645fore, Profile is not entitled to the blanket immunity the majority awards it.
The Court of Appeals, including the majority in this case, has recognized this distinction between status and actions, as have virtually all other jurisdictions. Strong public policy reasons favor that we follow their lead and not obliterate it. On substantive grounds therefore, I would uphold the Court of Appeals decision.
Relationship Between Profile and Terra-Mulch
The record reveals that Terra-Mulch and Profile are two distinct entities, with different employees, tax identification numbers, assets, liabilities, product lines and businesses. Furthermore, the record contains evidence about Profile’s role in managing the safety features of Terra-Mulch’s Conover facility, and the deficiencies therein.
Stephen Ade, the Chief Financial Officer of Profile, testified that he coordinated safety activities for the plants.. He admitted that the emergency stop button on the machine that maimed plaintiff had been disconnected, and though he blamed a third party vendor for the disconnection, he candidly conceded that the button had not been tested prior to the injury. Surely the failure of the safety program to test a critical emergency feature raises at least a triable issue of fact with respect to Profile’s negligence in conducting the safety program.
Similarly, a February 25, 2002 letter on behalf of St. Paul Underwriting to Jim Cebulski, Vice President and Controller of Profile warns that despite “some concern” “there has [sic] been very few or no management systems developed or implemented to control employee or premise safety ...” and that the emphasis remains “on improving productivity.” The record also contains an e-mail, apparently from the same individual who wrote the above letter, advising his colleagues at the insurance company:
Basically, the nine recommendations I submitted with My February Report have not been complied with . . . My viewpoint is that this location of Profile Products continues to be the worst workers comp risk I have seen in a long, long time. We should not insure this one!
It is worth noting that all the individuals and activities referenced above relate to Profile, LLC, not Terra-Mulch, the statutory employer. Given the issues raised with respect to Profile’s own negligence, and *646its undisputed status as a separate entity, I cannot agree with the majority’s holding granting Profile immunity on the basis of its LLC status.
Conclusion
Given the importance of the subject, I believe that in light of (i) this case’s skimpy, almost skeletal, procedural and factual background, and (ii) its origin from the Court of Appeals in a dissent premised on an issue neither argued nor briefed before that Court, this case is an inappropriate vehicle to issue a ruling with such tremendous ramifications. Therefore, I respectfully dissent.