Leonard v. Johns-Manville Sales Corp. , 59 N.C. App. 454 ( 1982 )

WELLS, Judge.

The sole question before us is whether we will apply the Virginia rule or the North Carolina rule with regard to whether a third party may defeat a negligent employer’s subrogation rights when the injured employee sues the third party at common law after recovering worker’s compensation benefits from his employer or his employer’s insurance carrier. Both North Carolina and Virginia law are clear to the effect that a negligent third party may not seek contribution from a jointly negligent employer when the employee obtains a judgment against the third party. Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 75 S.E. 2d 768 (1953); Virginia Electric and Power Co. v. Wilson, 221 Va. 979, 277 S.E. 2d 149 (1981). Under the Virginia Workmen’s Compensation Act, the employer is allowed to recoup from a negligent third party any money paid to its employee under the Act. See Va. Code Ann. §§ 65.1-41 to -43 (1980). Such a recoupment by the employer is subject to a pro rata deduction of attorney fees and costs for the benefit of the claimant. Va. Code § 65.1-42. Virginia statutory and case law is conspicuously lacking in any means by which the third party may defeat the employer’s right to subrogation; it appears that Virginia employers are entitled to recoup sums paid regardless of whether their negligence contributed to the employee’s injury for which he seeks recovery from the third party. See 2A Larson’s, Workmen’s Compensation Law, § 76.20. This is the majority rule. 2A Larson’s § 75.22.

North Carolina appellate courts developed a rule through which the third party, when sued at common law by an injured employee who has recovered from the employer a worker’s compensation award, could prove the employer’s concurring negligence and thereby defeat the employer’s recovery of sums paid or payable to the injured worker. See Essick v. Lexington, 233 N.C. 600, 65 S.E. 2d 220 (1951); Larson’s § 75.22. This rule is based on the proposition that a negligent party should not be allowed to take advantage of his own wrong. Lovette v. Lloyd, 236 N.C. 663, 73 S.E. 2d 886 (1953). In 1959, the General Assembly enacted what is now G.S. 9740.2(e), codifying the rule in Essick. Although the North Carolina rule does not subject the employer to joint liability at common law or to actions for contribution brought by the negligent third party, it does require the employer to help pay for injuries caused by its negligence.

Generally, our courts still apply the law of the state of the plaintiff’s injury, the lex loci delicti. Henry v. Henry, 291 N.C. 156, 229 S.E. 2d 158 (1976); Suskin v. Hodges, 216 N.C. 333, 4 S.E. 2d 891 (1939). We must take judicial notice of the law of our sister states. G.S. 8-4; Thames v. Nello L. Teer Co., 267 N.C. 565, 148 S.E. 2d 527 (1966). We apply the law of other states, even when we are not precluded by the U.S. Constitution from applying our own law, under the doctrine of comity. Ellison v. Hunsinger, 237 N.C. 619, 75 S.E. 2d 884 (1953). Comity will not be so extended where the situs rule is abhorrent to the public policy of our state, Id., or where it would operate in opposition to settled statutory policy or override express statutory provisions of this state. Bank v. Ramsey, 252 N.C. 339, 113 S.E. 2d 723 (1960) and cases cited therein. Where we apply the law of sister states to a cause in our courts, North Carolina law is applied to procedural matters. Young v. Railroad, 266 N.C. 458, 146 S.E. 2d 441 (1966).

We hold that the court below erred in denying Stone & Webster’s motion to strike defendants’ last defense and in applying the North Carolina rule with regard to the rights of defendants vis-a-vis Stone & Webster’s subrogation rights. Since the situs of decedent’s injury was Virginia, Virginia substantive law will be applied to the issue before us. Henry v. Henry, supra. The rule with regard to whether a negligent third party tort-feasor may defeat an employer’s right to recoup from it damages paid under a worker’s compensation award is a rule of substantive, not procedural, law. Cf. Charnock v. Taylor, 223 N.C. 360, 26 S.E. 2d 911, 148 A.L.R. 1126 (1943) (situs state’s rule not allowing contribution between joint tort-feasors is a substantive rule). Our public policy is not affected by applying the Virginia rule to the present case; the award paid out was paid from a fund collected from Virginia employers. The rights asserted are rights which arise under worker’s compensation law and the only worker’s compensation law involved in this case is that of Virginia. Decedent’s employment was in Virginia and this state has no interest in how its sister states administer their laws intended to compensate their employees for injuries sustained in employment in those states. The only party to this lawsuit with sufficient North Carolina connections to create a policy-based preference for one of the two conflicting rules of law is the plaintiff, and her right to recover will not be affected by the choice as to which rule we apply. The North Carolina Worker’s Compensation Act has no application to the circumstances that exist in the present case: the injury did not occur in this state, the employer’s principal place of business is not in this state and the record does not show that the contract of employment was made in this state. See G.S. 97-36.

The Virginia rule applies: it gives defendants no right to defeat Stone & Webster’s right to recoup monies paid or payable from defendants should plaintiff recover from them in this action. Since the trial court erred in denying Stone & Webster’s motion to strike defendants’ “Last Defense,” the order of the trial court is

Reversed.

Judges VAUGHN and WHICHARD concur.