              IN THE COURT OF APPEALS OF NORTH CAROLINA

                                    No. COA16-872

                                Filed: 7 March 2017

Craven County, No. 15 CVS 1600

KEY RISK INSURANCE COMPANY, Plaintiff,

            v.

CHAD PECK, Defendant/Third-Party Plaintiff,

             v.

MARK ANDREW MCGUIRE, Third-Party Defendant.


      Appeal by plaintiff from orders entered 25 April 2016 by Judge W. Allen Cobb

in Craven County Superior Court. Heard in the Court of Appeals 6 February 2017.


      Macrae, Perry, Macrae & Whitley, LLP, by Gregory T. Whitley, for plaintiff-
      appellant.

      Ennis, Baynard, Morton, Medlin & Brown P.A., by Stephen C. Baynard, for
      defendant-appellee Peck.


      TYSON, Judge.


      Key Risk Insurance Company (“Key Risk”) appeals from orders entered

granting Chad Peck’s (“Defendant”) motion to dismiss and denying Key Risk’s motion

to substitute a party. We affirm.

                               I. Factual Background
                              KEY RISK INS. CO. V. PECK

                                  Opinion of the Court



      Judith Holliday (“Holliday”) was employed at CarolinaEast Medical Center,

Inc. (“CarolinaEast”).   Key Risk provided workers’ compensation insurance to

CarolinaEast.

      On 3 February 2013, Holliday and Third-Party Defendant, Mark Andrew

McGuire (“McGuire”), responded to an emergency call.             McGuire drove the

ambulance, while Holliday was seated in the front passenger seat. Key Risk alleged

the ambulance approached an intersection with its emergency lights and sirens

activated while en route. Key Risk further alleged Defendant failed to yield, entered

the intersection, and collided with the ambulance.

      Holliday and Defendant received and alleged injuries resulting from the

collision. Defendant signed a “Property Damage Release” releasing CarolinaEast,

McGuire, and American Alternative Insurance Corporation from further liability for

the collision in exchange for payment of $5,724.56. Defendant also signed a “Release

in Full” wherein he released CarolinaEast, McGuire, Glatfelter Claims Management,

Inc., and American Alternative Insurance Corporation from further liability for the

collision in exchange for payment of $4,143.45 for his bodily injuries.

      Holliday received extensive medical care for her injuries. Key Risk’s complaint

alleged it paid Holliday $63,965.58 as CarolinaEast’s provider of workers’

compensation insurance. Key Risk’s complaint further alleged it filed the proper

forms with the North Carolina Industrial Commission, which admitted Holliday’s



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                                  Opinion of the Court



right to compensation for medical treatment for the injuries she had sustained in the

collision.

       On 3 December 2015, Key Risk filed its complaint. Key Risk alleged Defendant

was negligent in the operation of his vehicle, and it was entitled to recover the

workers’ compensation benefits paid to Holliday from Defendant. Defendant filed an

answer and a third-party complaint against McGuire. McGuire filed an answer and

a motion for judgment on the pleadings.

       Defendant moved to dismiss the action on 29 March 2016 pursuant to Rules

12(b)(1) and 12(b)(6) of the North Carolina Rules of Civil Procedure. On 13 April

2016, Key Risk moved to substitute Holliday as the named plaintiff pursuant to N.C.

Gen. Stat. § 97-10.2.

       After hearing oral arguments of counsel and reviewing the submissions of the

parties, the trial court denied McGuire’s motion for judgment on the pleadings, denied

Key Risk’s motion to substitute a party, and granted Defendant’s motion to dismiss.

Key Risk appeals.

                                   II. Jurisdiction

       Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b) (2015).

                                      III. Issues

       Key Risk argues the trial court erred by granting the motion to dismiss for lack

of standing. In the alternative, Key Risk argues, even if it did not have standing to



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                                  Opinion of the Court



bring the claim, the trial court abused its discretion by denying its motion to

substitute a party.

                               IV. Standard of Review

      “A motion to dismiss a party’s claim for lack of standing is tantamount to a

motion to dismiss for failure to state a claim upon which relief can be granted

according to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.” Slaughter

v. Swicegood, 162 N.C. App. 457, 464, 591 S.E.2d 577, 582 (2004).

      When considering a motion to dismiss under Rule 12(b)(6), “[t]he question for

the court is whether, as a matter of law, the allegations of the complaint, treated as

true, are sufficient to state a claim upon which relief may be granted under some

legal theory, whether properly labeled or not.” Grant Constr. Co. v. McRae, 146 N.C.

App. 370, 373, 553 S.E.2d 89, 91 (2001) (quoting Harris v. NCNB, 85 N.C. App. 669,

670, 355 S.E.2d 838, 840 (1987)). The allegations in the complaint must be viewed in

the light most favorable to the non-moving party. Donovan v. Fiumara, 114 N.C. App.

524, 526, 442 S.E.2d 572, 574 (1994).

      A trial court’s order denying a motion to substitute a party is reviewed for an

abuse of discretion. Revolutionary Concepts, Inc. v. Clements Walker PLLC, 227 N.C.

App. 102, 112, 744 S.E.2d 130, 137 (2013) (holding the trial court did not abuse its

discretion in denying a motion to substitute where plaintiffs failed to offer any

compelling reason why they failed to make the motion in a reasonable time after a



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                                  Opinion of the Court



merger). “Under the abuse-of-discretion standard, we . . . determine whether a

decision is manifestly unsupported by reason, or so arbitrary that it could not have

been the result of a reasoned decision.” Mark Grp. Int’l., Inc. v. Still, 151 N.C. App.

565, 566, 566 S.E.2d 160, 161 (2002).

                 V. Insurers’ Rights under N.C. Gen. Stat. § 97-10.2

      Key Risk reads and asserts the provisions of N.C. Gen. Stat. § 97-10.2 (2015)

provide standing to bring this action. We disagree.

      When our courts engage in statutory interpretation, the primary task “is to

ensure that the legislative intent is accomplished. The best indicia of legislative

purpose are the language of the statute, the spirit of the act, and what the act seeks

to accomplish.” Radzisz v. Harley Davidson of Metrolina, Inc., 346 N.C. 84, 88-89, 484

S.E.2d 566, 569 (1997) (internal citations and quotation marks omitted).

      Statutory interpretation begins by examining the plain and ordinary meanings

of words in the statute. Dion v. Batten, __ N.C. App. __, 790 S.E.2d 844, 848 (2016).

“When the language of a statute is clear and unambiguous, there is no room for

judicial construction, and the courts must give it its plain and definite meaning.”

Lemons v. Old Hickory Council, 322 N.C. 271, 276, 367 S.E.2d 655, 658 (1988); see

also State v. Wiggins, 272 N.C. 147, 153, 158 S.E.2d 37, 42 (1967) (“It is elementary

that in the construction of a statute words are to be given their plain and ordinary

meaning unless the context, or the history of the statute, requires otherwise.”).



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                                   Opinion of the Court



      N.C. Gen. Stat. § 97-10.2 exclusively provides for the rights and remedies of

employees, employers, and insurance carriers against third parties under the

Workers’ Compensation Act. Radzisz, 346 N.C. at 86, 484 S.E.2d at 568. N.C. Gen.

Stat. § 97-10.2(a) states:

             The respective rights and interests of the employee-
             beneficiary under this Article, the employer, and the
             employer’s insurance carrier, if any, in respect of the
             common-law cause of action against such third party and
             the damages recovered shall be as set forth in this section.

N.C. Gen. Stat. § 97-10.2(a) (emphasis supplied).

      Under this statute, the employee possesses the exclusive right to proceed

against a third-party tortfeasor during the first twelve months after the date of

injury. N.C. Gen. Stat. § 97-10.2(b). If the employee does not bring such an action

within those first twelve months, and the employer has filed the appropriate

admission of liability with the Industrial Commission, “then either the employee or

the employer shall have the right to proceed to enforce the liability of the third party

by appropriate proceedings.” N.C. Gen. Stat. § 97-10.2(c) (emphasis supplied). If

neither the employee nor the employer have instituted an action against the third-

party tortfeasor prior to sixty days before the expiration of the applicable statute of

limitations, the right to bring the action reverts exclusively to the employee. Id.

      When a proceeding is instituted against a third party, “the person having the

right” to bring the proceeding must bring it “in the name of the employee or his



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                                   Opinion of the Court



personal representative[.]” N.C. Gen. Stat. § 97-10.2(d).       An exception to this

requirement exists where the employee or his personal representative “refuse[s] to

cooperate with the employer by being the party plaintiff[.]” Id. In these cases, the

statute states the action “shall be brought in the name of the employer and the

employee or his personal representative shall be made a party plaintiff or party

defendant by order of court.” Id. (emphasis supplied). In any properly instituted

proceeding, neither the employer nor the insurance carrier are considered necessary

or proper parties. Id.

      After outlining which parties are permitted to institute proceedings within the

applicable time periods against a third party, N.C. Gen. Stat. § 97-10.2(g) specifically

provides for the rights of the insurance carrier:

             The insurance carrier affording coverage to the employer
             under this Chapter shall be subrogated to all rights and
             liabilities of the employer hereunder but this shall not be
             construed as conferring any other or further rights upon
             such insurance carrier than those herein conferred upon
             the employer, anything in the policy of insurance to the
             contrary notwithstanding.

      Here, Key Risk argues the statute grants insurance carriers subrogation to all

the rights and liabilities of the employer, and as such insurance carriers have

standing under the statute to enforce the liability of the third party. The plain

language of N.C. Gen. Stat. § 97-10.2(b)-(d) does not support this reading. See

Lemons, 322 N.C. at 276, 367 S.E.2d at 658.



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                                    Opinion of the Court



      The language of these sections explicitly states “the employer shall have the

right to proceed to enforce the liability of the third party.” N.C. Gen. Stat. § 97-10.2(c)

(emphasis supplied). The insurance carrier is only mentioned once in the sections

outlining the procedure for bringing an action against a third party. The statute

provides that when a proceeding is brought against a third party “by the person

having the right” to bring such a proceeding, “the insurance carrier shall not be a

necessary or proper party thereto.” N.C. Gen. Stat. § 97-10.2(d). The next sentence

states where an employee refuses to cooperate, “the action shall be brought in the

name of the employer.” Id. (emphasis supplied). Based upon the plain language of the

statute, an insurance carrier does not have the right to bring an action against a third

party in its own name, if the employee refuses to cooperate.

                                 VI. Legislative History

      A review of the legislative history also supports this reading of the statute.

Before the statute was re-codified and amended in 1959, prior versions of N.C. Gen.

Stat. §97-10 provided:

             The employer or his carrier shall have the exclusive right
             to commence an action in his own name and/or in the name
             of the injured employee or his personal representative for
             damages on account of such injury or death[.]

N.C. Gen. Stat. § 97-10 (1943), as amended by N.C. Gen. Stat. § 97-10.2 (2015).

      The paragraph on the insurance carrier’s subrogation rights stated:

             When any employer is insured against liability for


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                                    Opinion of the Court



               compensation with any insurance carrier, . . . , it shall be
               subrogated to all rights and duties of the employer, and
               may enforce any such rights in the name of the injured
               employee or his personal representative; but nothing herein
               shall be construed as conferring upon the insurance carrier
               any other or further rights than those existing in the
               employer[.]

Id. When the statute was re-codified and amended as N.C. Gen. Stat. § 97-10.2 in

1959, all references to an insurance carrier’s right to bring a direct suit against a

third party in its own name or in the name of the employee were removed. N.C. Gen.

Stat. § 97-10.2(c) & (g) (1959).

      Based upon the plain language of the statute and the legislative history,

nothing shows the General Assembly intended to provide the insurance carrier with

the right to bring a direct action against a third party. See Radzisz, 346 N.C. at 86,

484 S.E.2d at 568. The trial court did not err in concluding that Key Risk did not

have standing to bring this action and dismissing the action. The trial court’s ruling

is affirmed.

                               VII. Motion To Substitute

      Key Risk argues, even if it lacked statutory standing, the trial court abused its

discretion and should have allowed its motion to substitute a party brought pursuant

to N.C. Gen. Stat. § 97-10.2. Key Risk further argues it would have been proper to

allow the motion to substitute a party under Rule 17(a) of the North Carolina Rules

of Civil Procedure.



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                                    Opinion of the Court



                              A. N.C. Gen. Stat. § 97-10.2(d)

       Key Risk first argued “[p]ursuant to N.C.G.S. § 97-10.2(d) [Key Risk] is entitled

to an order from the Court directing that Judith Holliday be made the party-plaintiff

in this action.”

       N.C. Gen. Stat. § 97-10.2(d) only allows for substitution of an employee as the

named plaintiff where the employee or his personal representative “refuse[s] to

cooperate” and the action is “brought in the name of the employer.”

       Here, the action was brought solely in the insurance carrier’s name and not

the employer’s name. Furthermore, no indication in the record shows the employee

refused to cooperate. Key Risk acknowledged both in its motion to substitute and in

its arguments to the trial court that “[a]t the time of initiation of this action, [Key

Risk] and its counsel had not had the opportunity to speak with Ms. Holliday

concerning the action and had thus not secured her consent to cooperate and

participate in the action.” On this record, Key Risk has failed to show the trial court

abused its discretion in denying the motion under N.C. Gen. Stat. § 97-10.2(d).

                                      B. Rule 17(a)

       At the trial court’s hearing on the motions, Key Risk also argued it would be

proper to allow the motion to substitute a party under Rule 17(a) of the North

Carolina Rules of Civil Procedure.

       Rule 17(a) provides:



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                                  Opinion of the Court



             Real party in interest. — Every claim shall be
             prosecuted in the name of the real party in interest . . . .
             No action shall be dismissed on the ground that it is not
             prosecuted in the name of the real party in interest until a
             reasonable time has been allowed after objection for
             ratification of commencement of the action by, or joinder or
             substitution of, the real party in interest; and such
             ratification, joinder, or substitution shall have the same
             effect as if the action had been commenced in the name of
             the real party in interest.

N.C. Gen. Stat. § 1A-1, Rule 17(a) (2015).

      “A real party in interest is a party who is benefited or injured by the judgment

in the case and who by substantive law has the legal right to enforce the claim in

question.” Slaughter, 162 N.C. App. at 463, 591 S.E.2d at 582 (citation and quotation

marks omitted). As held supra, an insurance carrier does not have a statutory right

to bring a direct suit to enforce a claim against a third party under N.C. Gen. Stat. §

97-10.2. Where a case is not brought by the real party in interest, it is within the

discretion of the trial court to allow a motion to substitute under Rule 17(a).

Revolutionary Concepts, Inc., 227 N.C. App. at 112, 744 S.E.2d at 137.

      N.C. Gen. Stat. § 97-10.2(b)-(d) sets out the procedures regarding who can

bring a claim against a third party and when those claims can be instituted under

the Workers’ Compensation Act.          Key Risk did not follow these statutory

requirements to properly bring or assert the claim against Defendant.

      Key Risk was aware that the statutory right to bring a claim would revert

exclusively to the employee sixty days prior to the expiration of the statute of


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                                  Opinion of the Court



limitations, and admitted to the trial court that “this thing was put together last

minute.” Key Risk failed to speak to the employee prior to bringing this action. The

record indicates Key Risk did not secure the employee’s consent to being named party

plaintiff until 13 April 2016, several months after the case had been filed and after

the statute of limitations had expired.

      Based on the facts of this case, Key Risk has failed to show the trial court

abused its discretion by denying its motion to substitute a party.

                                  VIII. Conclusion

      Key Risk does not possess a statutory right to institute this action in its own

name against Defendant under N.C. Gen. Stat. § 97-10.2. Key Risk has failed to show

the trial court abused its discretion by denying its motion to substitute a party. The

trial court’s orders denying Key Risk’s motion to substitute a party are affirmed and

granting Defendant’s motion to dismiss. It is so ordered.

      AFFIRMED.

      Chief Judge McGEE and Judge STROUD concur.




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