856 S.E.2d 131
N.C. Ct. App.2021Background
- Campbell contracted to build a house; Mendoza was hired to build a boulder retaining wall, which collapsed twice after drainage/foundation failure.
- Mendoza hired Caroline-A-Contracting, LLC (CAC) to remove the damaged wall, stabilize the slope, and rebuild; CAC was not Campbell’s agent and had a contract only with Mendoza.
- Campbell ordered CAC off the site, then hired replacement contractor Burress and spent approximately $106,000 to rebuild; Mendoza later paid Campbell substantial sums (reported $105,000 to Campbell and additional payments to Burress).
- CAC sued both Campbell and Mendoza; CAC dismissed its claim against Mendoza with prejudice before trial in the action against Campbell.
- At trial, the jury awarded Campbell $41,678.09 on its negligence counterclaim against CAC and awarded CAC $5,000 in quantum meruit; the trial court excluded evidence of Mendoza’s payments under the collateral source rule and denied CAC a credit for those payments.
- CAC appealed, arguing it was entitled to a credit for Mendoza’s payments; the Court of Appeals affirmed, holding Mendoza’s payments were from a collateral source and not creditable against CAC’s liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAC is entitled to a credit against its tort liability for payments Mendoza made to Campbell | CAC: Mendoza's payments should offset Campbell's recovery (one satisfaction rule/Holland) | Campbell: Mendoza was an independent source; collateral source rule bars offset | Collateral source rule applies; Mendoza was independent; CAC not entitled to credit |
Key Cases Cited
- Hairston v. Harward, 371 N.C. 647, 821 S.E.2d 384 (N.C. 2018) (defining collateral source independence inquiry and limiting Holland's scope)
- Young v. Balt. & Ohio R.R., 266 N.C. 458, 146 S.E.2d 441 (N.C. 1966) (examples and explanation of collateral source rule)
- Holland v. S. Pub. Utils. Co., 208 N.C. 289, 180 S.E.2d 592 (N.C. 1935) (one-recovery principle where settlements with joint tortfeasors can release others)
- RPR & Assocs., Inc. v. Univ. of N.C.-Chapel Hill, 153 N.C. App. 342, 570 S.E.2d 510 (N.C. Ct. App. 2002) (distinguishing contract/agent relationships where offsets are allowed)
- Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (N.C. 1991) (principle that employers generally not liable for independent contractor negligence)
- Wilson v. Burch Farms, Inc., 176 N.C. App. 629, 627 S.E.2d 249 (N.C. Ct. App. 2006) (collateral source rule prevents tortfeasor windfall when plaintiff receives independent payments)