Saunders v. ADP TotalSource Fi Xi, Inc. ( 2019 )

IN THE SUPREME COURT OF NORTH CAROLINA
No. 399PA16
Filed 1 February 2019
In re Appeal of the Fee Award of the North Carolina Industrial Commission in
N.C.I.C. Nos. W82780 & W98474
KEITH SAUNDERS
v.
ADP TOTALSOURCE FI XI, INC.,
Employer,
LIBERTY MUTUAL/HELMSMAN MANAGEMENT SERVICES,
Carrier
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision
of the Court of Appeals, 249 N.C. App. 361, 791 S.E.2d 466 (2016), vacating and
remanding an order entered on 4 September 2015 by Judge Alan Z. Thornburg in
Superior Court, Buncombe County that reversed in part an opinion and award filed
on 23 February 2015 by the North Carolina Industrial Commission. Heard in the
Supreme Court on 27 August 2018.
The Sumwalt Law Firm, by Mark T. Sumwalt, Vernon Sumwalt, and Lauren
H. Walker; and Grimes Teich Anderson, LLP, by Henry E. Teich, for plaintiff-
appellant.
Hedrick Gardner Kincheloe & Garofalo LLP, by M. Duane Jones, Kari L.
Schultz, and Linda Stephens, for defendant-appellees.
HUDSON, Justice.
Plaintiff Keith Saunders appealed the Opinion and Award of the North
Carolina Industrial Commission (the Commission), which declined to award certain
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Opinion of the Court
attorney’s fees to plaintiff’s attorneys, to the Superior Court in Buncombe County
pursuant to N.C.G.S. § 97-90(c). The superior court reversed the Commission’s
decision and ordered attorney’s fees to be paid to plaintiff’s attorneys from the
reimbursement for retroactive attendant care medical compensation that the
Commission had awarded to plaintiff. Both plaintiff and defendants ADP
TotalSource Fi Xi, Inc. and Liberty Mutual/Helmsman Management Services,
appealed from the superior court’s order. On appeal, the Court of Appeals vacated
the superior court’s order and remanded the matter to the court for further remand
to the Commission, holding that the superior court exceeded the “narrow scope” of its
statutory authority to review the reasonableness of a Commission’s fee award under
N.C.G.S. § 97-90(c) by taking and considering new evidence that was not presented
before the Commission. Saunders v. ADP TotalSource Fi Xi, Inc., 248 N.C. App. 361,
376, 791 S.E.2d 466, 477-78 (2016). Because we conclude that N.C.G.S. § 97-90(c)
authorizes the superior court to consider additional evidence and exercise its
“discretion” in reviewing the reasonableness or setting the amount of attorney’s fees,
we reverse.
Background
Plaintiff was employed as a bartender for defendant-employer when on 6
March 2010 and 7 July 2010 he sustained two work-related injuries by accident to
his lower back. On 15 October 2010, defendants filed a Form 60 with the North
Carolina Industrial Commission, in which they accepted plaintiff’s claim as
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compensable under the Workers’ Compensation Act (the Act) and described the injury
as “extruded disk herniation left side L4-5.” On 21 October 2010, plaintiff underwent
back surgery performed by Stephen David, M.D. “involving L4 and L5-S1
laminectomies, bilateral partial medial facetectomies, and bilateral foraminotomies
with discectomy.” In spite of his surgery, as well as extended physical therapy,
plaintiff continued to experience “severe disabling pain” and he developed left foot
drop and “reflex sympathetic dystrophy (RSD), or complex regional pain syndrome
(CRPS).”
On 3 November 2010, plaintiff retained Henry E. Teich to represent him before
the Commission. Plaintiff and Mr. Teich entered into a fee agreement that provided
Mr. Teich’s law firm a contingency fee of “25% of any recovery as Ordered by the
North Carolina Industrial Commission.” At the time of this agreement, there were
no issues involving attendant care or home modification. Plaintiff and Mr. Teich later
supplemented this agreement to provide for an attorney’s fee of 25% of ongoing
temporary total disability payments. On 23 April 2012, the Commission filed an
order approving this arrangement through which Mr. Teich’s firm received every
fourth temporary total disability check due plaintiff.
Plaintiff’s deteriorating medical condition resulted in his “suffer[ing] several
falls or near-falls, . . . which place him at a significant[ly] increased risk of suffering
a fall,” and plaintiff was ultimately rendered incapable of “perform[ing] activities of
daily living or otherwise liv[ing] independently.” Multiple medical providers
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recommended that plaintiff install safety equipment and assistance devices in his
home and that he receive attendant care medical services. Defendants received notice
of plaintiff’s attendant care needs at least as of January 2012, and they agreed to
provide attendant care to plaintiff starting on 4 February 2012, but they conditioned
continued payments for attendant care upon being allowed to take depositions of two
of plaintiff’s doctors without an evidentiary hearing. Following a dispute about the
depositions, defendants ceased providing attendant care payments to plaintiff on 8
May 2012. In the absence of continued attendant care provided by a home health
agency, plaintiff’s then-partner and now-husband, Glenn Holappa, began providing
the necessary attendant care services to plaintiff on a daily basis.
In June 2012, with the consent of plaintiff and Mr. Holappa, Mr. Teich
associated Mark T. Sumwalt and The Sumwalt Law Firm to assist in litigating the
attendant care issues in plaintiff’s claim. Mr. Teich had associated Mr. Sumwalt in
previous workers’ compensation cases involving attendant care issues because of Mr.
Sumwalt’s significant experience and expertise in attendant care litigation. On 7
January 2013, plaintiff filed a Form 33 requesting a hearing before the Commission
because “defendants are refusing to pay compensation for attendant care services.”
Plaintiff’s counsel extensively litigated the attendant care issues, as well as issues
“pertaining to home modifications, equipment needs, prescription medications, and
psychological treatment.” Plaintiff sought, inter alia, ongoing future attendant care
through a home health care agency and retroactive compensation for the attendant
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care services provided by Mr. Holappa following defendants’ refusal to provide
attendant care beyond 8 May 2012. Defendants denied any compensation for past
attendant care, future attendant care, and psychological treatment.
Deputy Commissioner J. Brad Donovan heard the matter on 19 March 2013.
On 23 December 2013, Deputy Commissioner Donovan entered an “Opinion and
Award in which he awarded retroactive attendant care compensation to Plaintiff’s
family for eight hours per day, seven days per week, at a rate of $18.00 per hour, and
ongoing attendant care compensation for eight hours per day, seven days per week at
a rate of $18.00 per hour.” Moreover, Deputy Commissioner Donovan “approved a
reasonable attorneys’ fees [sic] of 25% of the value of the retroactive attendant care
services provided by Plaintiff’s family from May 8, 2012 to December 23, 2013, which
were payable to plaintiff and/or his family.” Defendants appealed to the Full
Commission, which heard the case on 15 May 2014.
On 23 February 2015, the Full Commission issued an “Opinion and Award in
which it awarded retroactive attendant care compensation to Mr. Holappa, for six
hours per day, seven days per week, at a rate of $10.00 per hour, and ongoing
attendant care compensation through a home health agency for eight hours per day,
seven days per week.” The Commission found that because plaintiff had not paid Mr.
Holappa for the attendant care services he provided, “any payment for retroactive
attendant care services should be paid to the provider in the first instance, i.e., Mr.
Holappa, as opposed to plaintiff as reimbursement for what he paid out of pocket.”
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Furthermore, the Commission found that “[t]he only attorney fee agreement of record
at the Industrial Commission is the one entered into between Grimes & Teich, L.L.P.
and plaintiff.” With regard to the attorney’s fee of twenty-five percent of the
reimbursement for retroactive attendant care compensation, the Commission
concluded:
In the case at bar, the Full Commission finds and concludes
that the fee agreement between plaintiff and plaintiff’s
counsel is reasonable, as is the attorney fee plaintiff’s
counsel has received and will continue to receive from
plaintiff’s ongoing indemnity compensation. However,
“[m]edical and hospital expenses which employers must
provide pursuant to N.C.G.S. § 97-25 are not a part of
‘compensation’ as it always has been defined in the
Workers’ Compensation Act.” Hyler v. GTE Products Co.,
333 N.C. 258, 264, 425 S.E.2d 698, 702 (1993) (citation
omitted). “[T]he relief obtainable as general ‘compensation’
is different and is separate and apart from the medical
expenses recoverable under the Act’s definition of ‘medical
compensation.” Id. at 265, 425 S.E.2d at 703. There is no
evidence of a fee agreement between plaintiff’s counsel and
any of plaintiffs medical providers, including Mr. Holappa.
The Full Commission concludes that to the extent
plaintiff’s counsel’s fee agreement with plaintiff, and
specifically the phrase “any recovery,” could be interpreted
to include medical compensation, it is unreasonable under
the facts of this case. The Full Commission therefore
declines to approve an attorney fee for plaintiff’s counsel
out of the medical compensation which defendants have
been ordered to pay to Mr. Holappa.
Plaintiff appealed the Commission’s denial of attorney’s fees to the Superior
Court in Buncombe County pursuant to N.C.G.S. § 97-90(c), which authorizes the
senior resident superior court judge to “consider the matter and determine in his
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discretion the reasonableness of said agreement or fix the fee” in situations in which
there is an agreement and “[i]n all other cases where there is no agreement for fee or
compensation . . . [to] consider the matter of such fee and determine in his discretion
the attorneys’ fees to be allowed in the cause.” On 27 April 2015, defendants filed a
motion to intervene, which was allowed by the superior court.
After a hearing, the superior court entered an order on 25 August 2015,
followed by an amended order on 4 September 2015 in order to cure an ambiguity in
the final paragraph of the initial order. The superior court reversed the Commission’s
denial of attorney’s fees from the reimbursement for retroactive attendant care
medical compensation. In its order, the superior court found, in pertinent part:
7. With the knowledge and approval of Plaintiff
and Mr. Holappa, attorney Mark T. Sumwalt and his firm
The Sumwalt Law Firm were subsequently associated to
assist in litigating the attendant care issues that had
arisen in Plaintiff’s claim as a result of Defendants’ refusal
to voluntarily provide the recommended attendant care to
Plaintiff and compensate Mr. Holappa for the attendant
care services he provided to Plaintiff.
8. Mr, Holappa, through Plaintiff’s counsel,
submitted an affidavit to this Court in which he stated that
he consented and agreed to Plaintiff’s counsel’s pursuit of
such recovery on his behalf with the understanding and
desire that any recovery made on his behalf through
Plaintiff’s workers’ compensation claim would be subject to
the 25% fee previously agreed to in the retainer agreement.
9. Mr. Sumwalt was associated in
approximately June 2012, and litigation commenced with
the clear understanding of all parties involved that any
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compensation recovered on behalf of Mr. Holappa for
providing attendant care services to Plaintiff would be
subject to the previously agreed upon amount of 25% of any
benefits ordered by the Industrial Commission, in
accordance with the parties’ retainer agreement contract.
....
13. Plaintiff’s counsel did not request fees from
the home modifications, equipment needs, prescription
medications, or compensation for psychological treatment
that Plaintiff’s counsel obtained on Plaintiff’s behalf
through litigation, despite the significant monetary value
of these awards. Plaintiff’s counsel requested an attorneys’
fee only from the attendant care compensation obtained for
Mr. Holappa in accordance with the retainer agreement.
....
20. At the hearing in this matter, Mr. Sumwalt
represented to this Court that his firm has invested over
500 hours of attorney time in this case and over $13,000.00
in litigation costs.
21. As a result of Mr. Sumwalt’s and Mr. Teich’s
representation, Mr. Holappa recovered over $61,000.00 in
retroactive attendant care compensation.
....
26. Neither Plaintiff nor Defendants were able to
cite any case where the Industrial Commission failed to
award an attorneys’ fee from retroactive family member-
provided attendant care compensation.
From its findings of fact, the court made the following conclusions of law:
3. In reaching its decision, this Court
considered, with regard to the efforts of Mr. Teich and Mr.
Sumwalt to achieve an award for retroactive attendant
care services, the following: the significant time
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investment of the attorneys, the amount involved, the
favorable results achieved, the contingent nature of the fee
retainer agreement, the customary nature of the 25% fee
for similar services, the specialized skill level and
significant experience of Mr. Sumwalt in the area of
attendant care service recovery, and the appropriate and
necessary nature of the attorneys’ services given the
Defendant[s’] denial of the claim. N.C. Gen. Stat. § 97-
90(c).
4. After consideration of these factors, this
Court determined that Mr. Sumwalt performed significant
legal services and expended substantial sums in litigation
costs in this matter, which services and costs were
necessary and essential to the prosecution of Plaintiff’s
case and the achievement of the award for retroactive
attendant care services.
5. This Court therefore concludes that Plaintiff’s
counsel’s fee agreement of “25% of any recovery as Ordered
by the North Carolina Industrial Commission” is
reasonable.
....
7. This Court does not find Defendants’
argument that [Palmer v. Jackson] prohibits an award of
attorneys’ fees from retroactive family member-provided
attendant care compensation to be persuasive. In Palmer,
the plaintiff’s attorneys did not have a fee agreement with,
or the consent of, the medical provider in that case (a
hospital) to pursue the recovery of its fees, and the hospital
objected to having to pay an attorneys’ fee from the fees
that the plaintiff’s attorneys recovered on the hospital’s
behalf outside of an attorney-client relationship. Those are
not the facts of the instant case. Plaintiff’s counsel had the
consent of and a fee agreement with both Plaintiff and Mr.
Holappa.
....
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9. Awards of the value of retroactive attendant
care services are not prohibited, and neither are reasonable
attorneys’ fees based on such awards.
Accordingly, the court “in its discretion, determine[d] that a reasonable attorney’s fee
for the retroactive attendant care compensation recovered [on] Mr. Holappa’s behalf
for services he provided to Plaintiff is 25% and shall therefore be allowed.” Both
parties appealed to the Court of Appeals.1
At the Court of Appeals, defendants argued that the superior court did not
have subject-matter jurisdiction to review the Commission’s denial of attorney’s fees
because N.C.G.S. § 97-90(c) limits the superior court solely to reviewing the
reasonableness of an attorney’s fee under an explicit or implied fee agreement
between an attorney and a claimant that was presented to the Commission for
approval. Defendants asserted that the only fee agreement presented to the
Commission here was between plaintiff and his counsel and that the superior court
therefore lacked the authority to consider new affidavits and to review the
reasonableness of a purported implied agreement between plaintiff’s counsel and Mr.
Holappa that had not been presented to the Commission. In the alternative,
1 On appeal, plaintiff argued that the superior court erred in granting defendants’
motion to intervene and that defendants lacked standing to challenge a contract to which
they were not a party. The Court of Appeals determined that the superior court did not err
in allowing defendants’ motion to intervene and that defendants did have standing to
challenge the superior court’s order on appeal. Saunders, 249 N.C. App. at 364-69, 791 S.E.2d
at 471-74. Plaintiff raised these issues in his petition for discretionary review, but this Court
did not allow review of these issues and they are therefore not before this Court.
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defendants argued that the Act does not allow attorney’s fees to be paid out of medical
compensation.
The Court of Appeals examined the language and legislative history of
N.C.G.S. § 97-90(c), noting that subsection (c) was added in response to the decision
in Brice v. Robertson House Moving, Wrecking & Salvage Co., 249 N.C. 74, 105 S.E.2d
439 (1958), in order “to rectify the specific problem of the trial court not having
jurisdiction over attorneys’ fees in [ ] workers’ compensation cases.” Saunders, 249
N.C. App. at 371, 791 S.E.2d at 475 (quoting Palmer v. Jackson, 157 N.C. App. 625,
632, 579 S.E.2d 901, 906 (2003), disc. rev. improvidently allowed, 358 N.C. 373, 595
S.E.2d 145 (2004)). The court determined that “the statute solely applies to an
appellate reasonableness review of a fee award on a contract between the claimant-
employee and his attorney previously reviewed by the Full Commission, and not a de
novo hearing.” Id. at 371, 791 S.E.2d at 474. According to the Court of Appeals,
subsection (c)’s “narrow scope” authorizes the superior court “to consider the factors
set forth in the statute in reviewing the Commission’s determination of the
‘reasonableness’ of a fee agreement” but does not authorize the superior court “to look
beyond the evidence presented before the Commission or to take new evidence.” Id.
at 374, 791 S.E.2d at 476 (citing Blevins v. Steel Dynamics, Inc., 202 N.C. App. 584,
691 S.E.2d 133, 2010 WL 521029 (2010) (unpublished)).
The Court of Appeals determined that the superior court here, in contravention
of this statutory authority,
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considered evidence, the purported “fee agreement”
between Plaintiff’s attorney and Mr. Holappa, which was
not considered before the Industrial Commission.
Plaintiff’s counsel took the indemnity and disability fee
contract between Plaintiff and Mr. Teich, added an
affidavit, which had never been considered by or ruled
upon by the Industrial Commission, and argued for the
first time before the superior court that these documents
“created” an implied third party contract between
Plaintiff’s counsel and Mr. Holappa.
Plaintiff’s counsel did not petition the superior court
for appellate review of the “reasonableness” of the
Industrial Commission’s decision related to the “agreement
for fee or compensation” between Plaintiff and his
attorneys referenced in the Full Commission’s Opinion and
Award, but instead presented a theory and a purported “fee
contract,” which was never presented to or reviewed by the
Industrial Commission. See N.C. Gen. Stat. § 97-90(c).
Id. at 373-74, 791 S.E.2d at 476. Accordingly, the Court of Appeals concluded that
the superior court had “acted beyond the scope of its statutory and limited appellate
review of the reasonableness of the Commission’s fee award by taking and
considering new evidence, which was not presented to the Commission.” Id. at 375,
791 S.E.2d at 477. The court also questioned whether, given that the enactment of
subsection (c) predated the establishment of the Court of Appeals, to which appeals
from the Commission under the Act typically lie, “the reasonableness review by the
superior court under subsection (c) may have become an obsolete relic.” Id. at 375,
791 S.E.2d at 477. Nonetheless, the court “refer[red] this issue to the General
Assembly and request[ed] its review of . . . the continuing need for this limited
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appellate review by the superior court of the reasonableness of the Commission’s
attorney’s fee awards.” Id. at 376, 791 S.E.2d at 477.
The Court of Appeals further determined that the superior court “ruled far
beyond an appellate review of the ‘reasonableness’ of the attorney’s fee” in that “[t]he
superior court purported to adjudicate a question of workers’ compensation law, i.e.,
whether the Commission may order an attorney’s fee to be paid from the award of
medical compensation.” Id. at 374, 791 S.E.2d at 476. According to the Court of
Appeals:
This determination is outside the scope [of] the superior
court’s appellate jurisdiction under N.C. Gen. Stat. § 97-
90(c), and rests within the statutes governing the
Industrial Commission, subject to appeal to this Court.
N.C. Gen. Stat. § 97-91 (2015). Our Court has determined
“medical compensation is solely in the realm of the
Industrial Commission, and § 97-90(c) gives no authority
to the superior court to adjust such an award under the
guise of attorneys’ fees. Doing so constitutes an improper
invasion of the province of the Industrial Commission, and
constitutes an abuse of discretion.”
Id. at 374, 791 S.E.2d at 476-77 (quoting Palmer, 157 N.C. App. at 635, 579 S.E.2d at
908 (citation omitted)). The court concluded that because the superior court “was
without jurisdiction under N.C. Gen. Stat. § 90-97(c) to re-weigh the Commission’s
factual determinations under these facts, or to award, de novo, attorney’s fees from
attendant care medical compensation to be paid to a third party medical provider,”
the superior court’s order “is a nullity and is vacated.” Id. at 376, 791 S.E.2d at 477.
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Accordingly, the court remanded the case to the superior court for further remand to
the Commission. Id. at 376, 791 S.E.2d at 477-78.
On 25 October 2016, plaintiff filed a petition seeking discretionary review of
the following issues:
I. Whether the Court of Appeals’ opinion in Saunders
is inconsistent with the Supreme Court’s previous
decisions in Schofield and Virmani.
II. Whether the Court of Appeals’ opinion in Saunders
is inconsistent with its own prior decisions,
including Kanipe, Boylan II, Koenig, Davis, Boylan
I, Creel, and Priddy.
III. Whether the Court of Appeals’ opinion in Saunders
is consistent with N.C. Gen. Stat. § 97-90(c) and case
law construing the statute.
On 1 November 2017, this Court entered a special order granting discretionary
review solely of Issue III.
Analysis
We conclude that the decision of the Court of Appeals is not consistent with
N.C.G.S. § 97-90(c) and therefore, reverse the Court of Appeals. The issue we agreed
to hear on discretionary review is one of statutory interpretation, meaning it is a
“question[ ] of law and [ ] reviewed de novo.” In re D.S., 364 N.C. 184, 187, 694 S.E.2d
758, 760 (2010) (citing Brown v. Flowe, 349 N.C. 520, 523, 507 S.E.2d 894, 896 (1998));
see also Irving v. Charlotte-Mecklenburg Bd. of Educ., 368 N.C. 609, 611, 781 S.E.2d
282, 284 (2016) (“When considering a case on discretionary review from the Court of
Appeals, we review the decision for errors of law.” (citing N.C. R. App. P. 16(a))). “We
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have held in decision after decision that our Workmen’s Compensation Act should be
liberally construed to effectuate its purpose to provide compensation for injured
employees or their dependants, and its benefits should not be denied by a technical,
narrow, and strict construction.” Hollman v. City of Raleigh, 273 N.C. 240, 252, 159
S.E.2d 874, 882 (1968) (citing 3 Strong’s North Carolina Index: Master and Servant §
45 (1960)); see also Deese v. Se. Lawn & Tree Expert Co., 306 N.C. 275, 278, 293 S.E.2d
140, 143 (1982) (“[I]n all cases of doubt, the intent of the legislature regarding the
operation or application of a particular provision is to be discerned from a
consideration of the Act as a whole—its language, purposes and spirit.”).
Attorney’s fees are regulated under the Act by N.C.G.S. § 97-90, which states
that “[f]ees for attorneys . . . shall be subject to the approval of the Commission.”
N.C.G.S. § 97-90(a) (2017). In addition, the Act mandates that any attorney who
accepts a fee not approved by the Commission or the superior court is guilty of a Class
1 misdemeanor. Id. § 97-90(b) (2017). The superior court’s role in approving
attorney’s fees is defined in subsection (c), which provides:
If an attorney has an agreement for fee or
compensation under this Article, he shall file a copy or
memorandum thereof with the hearing officer or
Commission prior to the conclusion of the hearing. If the
agreement is not considered unreasonable, the hearing
officer or Commission shall approve it at the time of
rendering decision. If the agreement is found to be
unreasonable by the hearing officer or Commission, the
reasons therefor shall be given and what is considered to
be reasonable fee allowed. If within five days after receipt
of notice of such fee allowance, the attorney shall file notice
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of appeal to the full Commission, the full Commission shall
hear the matter and determine whether or not the
attorney’s agreement as to a fee or the fee allowed is
unreasonable. If the full Commission is of the opinion that
such agreement or fee allowance is unreasonable and so
finds, then the attorney may, by filing written notice of
appeal within 10 days after receipt of such action by the
full Commission, appeal to the senior resident judge of the
superior court in the county in which the cause of action
arose or in which the claimant resides; and upon such
appeal said judge shall consider the matter and determine
in his discretion the reasonableness of said agreement or fix
the fee and direct an order to the Commission following his
determination therein. The Commission shall, within 20
days after receipt of notice of appeal from its action
concerning said agreement or allowance, transmit its
findings and reasons as to its action concerning such
agreement or allowance to the judge of the superior court
designated in the notice of appeal. In all other cases where
there is no agreement for fee or compensation, the attorney
or claimant may, by filing written notice of appeal within
five days after receipt of notice of action of the full
Commission with respect to attorneys’ fees, appeal to the
senior resident judge of the superior court of the district of
the county in which the cause arose or in which the
claimant resides; and upon such appeal said judge shall
consider the matter of such fee and determine in his
discretion the attorneys’ fees to be allowed in the cause. The
Commission shall, within 20 days after notice of appeal has
been filed, transmit its findings and reasons as to its action
concerning such fee or compensation to the judge of the
superior court designated in the notice of appeal; provided
that the Commission shall in no event have any
jurisdiction over any attorneys’ fees in any third-party
action. In any case in which an attorney appeals to the
superior court on the question of attorneys’ fees, the
appealing attorney shall notify the Commission and the
employee of any and all proceedings before the superior
court on the appeal, and either or both may appear and be
represented at such proceedings.
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The Commission, in determining an allowance of
attorneys’ fees, shall examine the record to determine the
services rendered. The factors which may be considered by
the Commission in allowing a reasonable fee include, but
are not limited to, the time invested, the amount involved,
the results achieved, whether the fee is fixed or contingent,
the customary fee for similar services, the experience and
skill level of the attorney, and the nature of the attorney’s
services.
In making the allowance of attorneys’ fees, the
Commission shall, upon its own motion or that of an
interested party, set forth findings sufficient to support the
amount approved.
The Commission may deny or reduce an attorney’s
fees upon proof of solicitation of employment in violation of
the Rules of Professional Conduct of the North Carolina
State Bar.
Id. § 97-90(c) (2017) (emphases added).
Subsection (c) contains no language that limits the superior court solely to “the
[same] factors set forth in the statute” that are to be considered by the Commission
or that prohibits the superior court from “look[ing] beyond the evidence presented
before the Commission or [ ] tak[ing] new evidence.” Saunders, 249 N.C. App. at 374,
791 S.E.2d at 476. On the contrary, the statute vests the superior court judge with
the authority to “consider the matter and determine in his discretion the
reasonableness of said agreement or fix the fee” when there is an agreement, and “[i]n
all other cases where there is no agreement for fee or compensation . . . [to] consider
the matter of such fee and determine in his discretion the attorneys’ fees to be allowed
in the cause.” N.C.G.S. § 97-90(c) (emphases added). We find that the plain language
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of the statute—committing the matter of attorney’s fees to the superior court judge
to “consider the matter” of a fee and “determine [it] in his discretion”—sets forth a
broad, de novo fact-finding role to be played by the superior court. See, e.g., White v.
White, 312 N.C. 770, 777-78, 324 S.E.2d 829, 833 (1985) (explaining that “[i]t is well
established that where matters are left to the discretion of the trial court, appellate
review is limited to a determination of whether there was a clear abuse of discretion,”
and “[a] ruling committed to a trial court’s discretion is to be accorded great
deference” and discussing how “[t]he findings of fact show that the trial court
admitted and considered evidence relating to several of the twelve factors contained
in” the statute at issue (emphasis added) (citations omitted)); see also Little v. Penn
Ventilator Co., 317 N.C. 206, 218, 345 S.E.2d 204, 212 (1986) (“The abuse of discretion
standard of review is applied to those decisions which necessarily require the exercise
of judgment. . . . [T]he reviewing court sits only to insure that the decision could, in
light of the factual context in which it is made, be the product of reason.” (emphasis
added)). Accordingly, we conclude that the Court of Appeals erred by reading strict
limits into the statutory review to be conducted by the superior court. Instead, we
hold that, in accord with the authority given in N.C.G.S. § 97-90(c) to “consider the
matter” of attorney’s fees and “in his discretion” fix the attorney’s fees to be allowed,
the superior court judge may take and consider additional evidence not presented to
the Commission in order to properly consider the matter and exercise the court’s
discretion.
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Opinion of the Court
Here, the Commission found that “[t]he only fee agreement of record at the
Industrial Commission is the one entered into between [Teich’s firm] and plaintiff”
and concluded that “[t]here is no evidence of a fee agreement between plaintiff’s
counsel and any of plaintiff’s medical providers, including Mr. Holappa.” The
superior court, under its authority to “consider the matter” of attorney’s fees and “in
[its] discretion” fix the attorney’s fees to be allowed, considered the evidence,
including an affidavit from Mr. Holappa, and determined that there actually was
such an agreement. In fact, the very same agreement between plaintiff’s counsel and
plaintiff that was before the Commission was the one submitted to the superior court
for review; Mr. Holappa’s affidavit made clear that he was also a party to that
agreement. The superior court thereupon found the following facts:
7. With the knowledge and approval of Plaintiff
and Mr. Holappa, attorney Mark T. Sumwalt and his firm
The Sumwalt Law Firm were subsequently associated to
assist in litigating the attendant care issues that had
arisen in Plaintiff’s claim as a result of Defendants’ refusal
to voluntarily provide the recommended attendant care to
Plaintiff and compensate Mr. Holappa for the attendant
care services he provided to Plaintiff.
8. Mr. Holappa, through Plaintiff’s counsel,
submitted an affidavit to this Court in which he stated that
he consented and agreed to Plaintiff’s counsel’s pursuit of
such recovery on his behalf with the understanding and
desire that any recovery made on his behalf through
Plaintiff’s workers’ compensation claim would be subject to
the 25% fee previously agreed to in the retainer agreement.
9. Mr. Sumwalt was associated in
approximately June 2012, and litigation commenced with
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Opinion of the Court
the clear understanding of all parties involved that any
compensation recovered on behalf of Mr. Holappa for
providing attendant care services to Plaintiff would be
subject to the previously agreed upon amount of 25% of any
benefits ordered by the Industrial Commission, in
accordance with the parties’ retainer agreement contract.
....
13. Plaintiff’s counsel did not request fees from
the home modifications, equipment needs, prescription
medications, or compensation for psychological treatment
that Plaintiff’s counsel obtained on Plaintiff’s behalf
through litigation, despite the significant monetary value
of these awards. Plaintiff’s counsel requested an attorneys’
fee only from the attendant care compensation obtained for
Mr. Holappa in accordance with the retainer agreement.
(Emphases added.) The court then concluded:
1. . . . Plaintiff’s counsel participated in complex
litigation, including the defense of the case on appeal
before the Full Commission, predominantly on the issue of
attendant care and with a contingency fee agreement with
Plaintiff and Mr. Holappa in place.
....
5. This Court therefore concludes that Plaintiff’s
counsel’s fee agreement of [ ] “25% of any recovery as
Ordered by the North Carolina Industrial Commission” is
reasonable.
....
7. This Court . . . . [finds that the facts in
Palmer] are not the facts of the instant case. Plaintiff’s
counsel had the consent of and a fee agreement with both
Plaintiff and Mr. Holappa.
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Opinion of the Court
(Emphases added.) (Citation omitted.) Having determined that Mr. Holappa was a
party to the agreement between plaintiff and his counsel providing for attorney’s fees
of “25% of any recovery,” the superior court considered all the factors listed in
subsection (c) and “in its discretion, determine[d] that a reasonable attorney’s fee . . .
is 25% and shall therefore be allowed.”
We note first that “[a] mere recital in an order that it is entered in the exercise
of the court’s discretion does not necessarily make the subject of the order a
discretionary matter” and “[r]ulings of the court on matters of law are as a rule not
discretionary.” Hollingsworth GMC Trucks, Inc. v. Smith, 249 N.C. 764, 767, 107
S.E.2d 746, 749 (1959) (first citing Poovey v. City of Hickory, 210 N.C. 630, 631, 188
S.E. 78, 79 (1936); then citing 2 Thomas Johnston Wilson, II & Jane Myers Wilson,
McIntosh North Carolina Practice and Procedure (2d ed. 1956), § 1782(4) at 209).
Here, the Court of Appeals determined that the superior court exceeded its
discretionary authority under subsection (c) not only by taking additional evidence,
but also by “purport[ing] to adjudicate a question of workers’ compensation law, i.e.,
whether the Commission may order an attorney’s fee to be paid from the award of
medical compensation.” Saunders, 249 N.C. App. at 374, 791 S.E.2d at 476.
According to the Court of Appeals, “medical compensation is solely in the realm of the
Industrial Commission, and § 97-90(c) gives no authority to the superior court to
adjust such an award under the guise of attorneys’ fees.” Id. at 374, 791 S.E.2d at
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Opinion of the Court
476 (quoting Palmer, 157 N.C. App. at 635, 579 S.E.2d at 908). 2 We disagree and
conclude that the superior court below acted exactly within the authority and
discretion provided to it by the plain language of N.C.G.S. § 97-90(c).
Moreover, contrary to the suggestion of the Court of Appeals, we do not
consider N.C.G.S. § 97-90(c) to be an “obsolete relic.” Id. at 375, 791 S.E.2d at 477.
In noting that subsection (c) was added in response to the Brice decision and “prior to
the establishment of the Court of Appeals in 1967 and the establishment of [the Court
of Appeals’] comprehensive jurisdiction to review direct appeals from the Industrial
Commission,” id. at 371, 791 S.E.2d at 475; see also Act of June 2, 1967, ch. 669, sec.
1, 1967 N.C. Sess. Laws 755, 755 (vesting appeals from Commission decisions for
errors of law in the Court of Appeals), the Court of Appeals suggested that subsection
(c)’s review of attorney’s fees was lodged in the superior court merely because the
Court of Appeals was not yet in existence when subsection (c) was enacted. In that
respect, we note that the legislature, following the creation of the Court of Appeals,
more than once has amended subsection (c) without removing the superior court’s
discretion to review attorney’s fees. The Workers’ Compensation Reform Act of 1994,
ch. 679, sec. 9.1, 1993 N.C. Sess. Laws (Reg. Sess. 1994) 394, 417-18; see also Act of
July 11, 2013, ch. 278, sec. 1, 2013 N.C. Sess. Laws 755, 755-56 (authorizing the
2 This contention based on Palmer is misplaced, however, as neither the superior court
nor the Commission purported to adjudicate the question of law that was at issue in Palmer.
See Palmer, 157 N.C. App. at 627-28, 579 S.E.2d at 903-04. We express no opinion on the
decision of the Court of Appeals in Palmer, which is not binding on this Court.
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Opinion of the Court
Commission to hear disputes between an employee’s previous and current attorneys
regarding the division of a fee and providing that “[a]n attorney who is a party to an
action under this subsection shall have the same rights of appeal as outlined in
subsection (c) of this section”). The superior court’s comprehensive factual review of
an attorney’s fee as contemplated by N.C.G.S. § 97-90(c) is quite unlike the kind of
analysis conducted by the Court of Appeals, which typically reviews for errors of law.
See N.C.G.S. § 97-86 (2017) (“[A]ppeal from the decision of [the] Commission to the
Court of Appeals [is] for errors of law under the same terms and conditions as govern
appeals from the superior court to the Court of Appeals in ordinary civil actions.”
(emphasis added)); see also id. § 7A-26 (2017) (providing that the Court of Appeals
has “jurisdiction to review upon appeal decisions of the several courts of the General
Court of Justice and of administrative agencies, upon matters of law or legal
inference” (emphasis added)).
Indeed, the appellate jurisdiction now possessed by the Court of Appeals was
the same as that possessed by the superior court before the enactment of subsection
(c), as explained in Brice:
When the appeal comes on for hearing[,] it is heard by the
presiding [superior court] judge who sits as an appellate
court. His function is to review alleged errors of law made
by the Industrial Commission, as disclosed by the record
and as presented to him by exceptions duly entered.
Necessarily, the scope of review is limited to the record as
certified by the Commission and to the questions of law
therein presented.
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Opinion of the Court
. . . ‘In passing upon an appeal from an award of the
Industrial Commission in a proceeding coming within the
purview of the act, the Superior Court is limited in its
inquiry to these two questions of law: (1) Whether or not
there was any competent evidence before the commission
to support its findings of fact; and (2) whether or not the
findings of fact of the commission justify its legal
conclusions and decision. The Superior Court cannot
consider the evidence in the proceeding in any event for the
purpose of finding the facts for itself.
Brice, 249 N.C. at 82, 105 S.E.2d at 445 (emphasis added) (citations omitted) (first
quoting Penland v. Bird Coal Co., 246 N.C. 26, 33, 97 S.E.2d 432, 438 (1957); then
quoting Thomason v. Red Bird Cab Co., 235 N.C. 602, 605, 70 S.E.2d 706, 708 (1952)).
We conclude that subsection (c)—enacted “in response to the Brice decision,”
Saunders, 249 N.C. App. at 371, 791 S.E.2d at 475—is separate from the appellate
review for errors of law that was formerly vested in the superior court and is now
vested in the Court of Appeals; instead, a review under subsection 97-90(c) is a
unique, fact-based avenue of review covering a limited subject matter3 that the
legislature has chosen to vest in the superior court.
3 Notably, the matter of attorney’s fees is not the only area under the Act that the
legislature has committed to the discretion of the superior court. In 1983, after the creation
of the Court of Appeals, the legislature added N.C.G.S. § 97-10.2(j), providing that when an
employee obtains a judgment pursuant to a settlement from a third-party tortfeasor, the
employee or the employer (or the employer’s insurance carrier) may apply to the superior
court to have the presiding judge determine the amount of the employer’s lien. Act of June
30, 1983, ch. 645, sec. 1, 1983 N.C. Sess. Laws 604, 604; see Act of June 26, 1991, ch. 408, sec.
1, 1991 N.C. Sess. Laws 768, 772 (amending subsection (j) to provide that “with or without
the consent of the employer, the [superior court] judge shall determine, in his discretion, the
amount, if any, of the employer’s lien” (emphasis added)); see, e.g., Easter-Rozzelle v. City of
Charlotte, 370 N.C. 286, 300, 807 S.E.2d 122, 131 (2017) (concluding that the plaintiff did not
waive his right to compensation under the Act by settling with a third-party tortfeasor and
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Opinion of the Court
Conclusion
In sum, we hold that the decision of the Court of Appeals here is inconsistent
with N.C.G.S. § 97-90(c) and that the superior court had jurisdiction to take and
consider additional evidence not previously considered by the Commission. We
further conclude that the superior court based its determination on factual findings
and an exercise of discretion, as specifically authorized in N.C.G.S. § 97-90(c).
Accordingly, we reverse the decision of the Court of Appeals and remand this case to
that court for remand to the superior court for further remand to the Commission for
entry of an order setting attorney’s fees as determined by the superior court, and for
additional proceedings not inconsistent with this opinion.
REVERSED AND REMANDED.
Justice EARLS did not participate in the consideration or decision of this case.
receiving settlement proceeds and that “either party here may apply to the superior court
judge to determine the amount of defendant’s lien”).
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