Moss v. N.C. Dep't of State Treasurer ( 2022 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
2022-NCCOA-206
No. COA21-60
Filed 5 April 2022
Wake County, No. 19 CVS 00816
DEBORAH SINK MOSS and CARLA SHUFORD, on behalf of themselves and others
similarly situated, Plaintiffs,
v.
N.C. DEPARTMENT OF STATE TREASURER, RETIREMENT SYSTEMS
DIVISION, Defendant.
Appeal by Plaintiffs from orders entered 9 July 2020 by Judge Paul C.
Ridgeway in Wake County Superior Court. Heard in the Court of Appeals 6 October
2021.
Zaytoun Ballew & Taylor, PLLC, by John R. Taylor, Robert E. Zaytoun and
Clare F. Kurdys, for Plaintiffs-Appellants.
Attorney General Joshua H. Stein, by Special Deputy Attorney General
Katherine A. Murphy, for Defendant-Appellee.
WOOD, Judge.
¶1 Deborah Sink Moss and Carla Shuford (collectively, “Plaintiffs”) appeal from
orders entered on July 9, 2020, 1) granting Defendant’s motion to dismiss and 2)
affirming the administrative law judge’s final decisions. On appeal, Plaintiffs allege
the trial court erred by granting Defendant’s motion to dismiss and denying their
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petition for judicial review. After a careful review of the record and applicable law,
we affirm the orders of the trial court.
I. Factual and Procedural Background
¶2 When Plaintiff Shuford was 15 years old she was diagnosed with osteogenic
sarcoma and a tumor in her left leg. As a result, her left leg was amputated. On
March 8, 1982, Plaintiff Shuford began working in an administrative position at the
University of North Carolina. While at the University of North Carolina, Plaintiff
Shuford was hospitalized due to post-traumatic stress issues relating to the loss of
her leg and her physical disabilities. On August 23, 1988, she applied for short-term
disability and received approval shortly thereafter. On June 15, 1989, Plaintiff
Shuford applied for long-term disability and was approved for long-term disability
benefits retroactive to August 15, 1988.
¶3 On August 18, 1986, Plaintiff Moss worked as a teacher for the Wake County
Public School Systems. Plaintiff Moss was given credit for 10 years of prior work
experience. From November 1988 to December 1989, Plaintiff Moss was in three
separate automobile accidents which resulted in injuries that caused her to
experience pain while teaching. Subsequently, Plaintiff Moss was diagnosed with
depression and stress from these car accidents. On April 17, 1990, she applied for
short-term disability and was approved shortly thereafter. She then applied for long-
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term disability benefits on April 21, 1991 and was approved on June 11, 1991.
¶4 Each Plaintiff receives Transitional Disability Benefits from the North
Carolina Department of State Treasurer, Retirement Systems Division
(“Defendant”). Under the terms of North Carolina’s Transitional Disability Benefits,
disability payments are reduced by the gross amount of Social Security Disability
benefits to which a person is entitled. As Social Security Disability benefits increase
due to cost of living adjustments, the Plaintiffs’ disability payments from Defendant
are reduced accordingly.
¶5 In 2017, Defendant discovered a programming error which failed to account for
cost of living increases to Plaintiffs’ Social Security benefits. As a result, Defendant’s
payments of benefits to individuals within the transitional disability group had been
overpaid since 2006. Following this discovery, Defendant calculated the amount
Plaintiffs should have received and accordingly reduced Plaintiffs’ monthly benefit
payment amounts to offset the previously overpaid amount.
¶6 In 2017, Defendant informed Plaintiff Moss that she owed $13,235.00 in
overpayments and informed Plaintiff Shuford that she owed $19,702.00 in
overpayments. Defendant then reduced the amounts of Plaintiffs’ monthly disability
benefits in order to recoup the overpayments.
¶7 Plaintiffs Moss and Shuford each filed a petition with the Office of
Administrative Hearings (“OAH”) in December 2017, challenging the reduction in
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their disability payments. Due to similar facts and legal issues, Plaintiffs’ cases were
consolidated on January 2, 2018. The OAH held separate hearings for each Plaintiff.
¶8 On October 9, 2018, Plaintiff Moss’s case was heard by the administrative law
judge, and on October 9 and 15, 2018, Plaintiff Shuford’s case was heard by the
administrative law judge. At the hearing, Plaintiff Shuford offered her bank account
statements and a spreadsheet as evidence of Defendant’s miscalculation of her
benefits. At the conclusion of each hearing, Defendant made a Rule 41(b) motion for
involuntary dismissal after the evidence was presented for Plaintiff Moss and
Plaintiff Shuford.
¶9 On December 17, 2018, the administrative law judge issued final decisions in
favor of Defendant and dismissed Plaintiffs’ cases with prejudice. Although Plaintiff
Shuford had proffered her bank account statements at her hearing, the
administrative law judge found they were “insufficient evidence to prove that her
gross . . . [Social Security] Benefits differed from Respondent’s accounting.” The
administrative law judge further held that disability benefit overpayments were
State property, not Plaintiffs’ personal property. The administrative law judge
concluded Plaintiffs (1) offered insufficient evidence to prove that the overpayment
calculations were incorrect; (2) knew Social Security disability payments were to be
deducted from their payments under the Transitional Disability Benefits; and (3)
failed to prove Defendant substantially prejudiced their rights.
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¶ 10 On January 16, 2019, Plaintiffs filed petitions in Wake County Superior Court
for judicial review of the OAH Decisions, asserting both errors of law and fact.
Defendant filed a motion to dismiss. On July 9, 2020, the Superior Court entered an
order granting Defendant’s motion to dismiss and entered another order affirming
the OAH Decisions. From entry of these two orders, Plaintiffs now appeal.
II. Discussion
¶ 11 Plaintiffs raise multiple issues on appeal; each will be addressed in turn.
A. Motion to Dismiss
¶ 12 Plaintiffs first argue the trial court erred by granting Defendant’s motion to
dismiss because Plaintiffs had established valid claims for breach of contract. We
disagree.
¶ 13 We begin our review by noting a motion to dismiss is reviewed de novo.
Arnesen v. Rivers Edge Golf Club & Plantation, Inc., 368 N.C. 440, 448, 781 S.E.2d 1,
8 (2015); Holton v. Holton, 258 N.C. App. 408, 414, 813 S.E.2d 649, 654 (2018). Here,
the Superior Court granted Defendant’s motion to dismiss under both Rule 12(b)(1)
and 12(b)(6).
1. 12(b)(6) Motion
¶ 14 Turning first to Rule 12(b)(6), a Rule 12(b)(6) motion to dismiss “tests the legal
sufficiency of the complaint . . . .” Isenhour v. Hutto, 350 N.C. 601, 604, 517 S.E.2d
121, 124 (1999) (quoting Forsyth v. Memorial Hosp. v. Armstrong World Indus., 336
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N.C. 438, 442, 444 S.E.2d 423, 425 (1994)). “When reviewing the denial of a motion
to dismiss pursuant to Rule 12(b)(6), the factual allegations in plaintiff’s complaint
are treated as true.” Id. (citing Cage v. Colonial Bldg. Co., 337 N.C. 682, 683, 448
S.E.2d 115, 116 (1994)).
¶ 15 A Rule 12(b)(6) motion reviews whether “as a matter of law, the allegations of
the complaint, treated as true, are sufficient to state a claim upon which relief can be
granted under some [recognized] legal theory.” Forsyth Memorial Hosp., 336 N.C. at
442, 444 S.E.2d at 425-26 (citation omitted). See Lynn v. Overlook Dev., 328 N.C. 689,
692, 403 S.E.2d 469, 471 (1991). “The complaint must be liberally construed, and the
court should not dismiss the complaint unless it appears beyond a doubt that the
plaintiff could not prove any set of facts to support his claim which would entitle him
to relief.” Block v. County of Person, 141 N.C. App. 273, 277-78, 540 S.E.2d 415, 419,
(2000). See also Peoples Sec. Life Ins. Co. v. Hooks, 322 N.C. 216, 218, 367 S.E.2d 647,
649 (1988) (“A claim should be dismissed under Rule 12(b)(6) where it appears that
the plaintiff is entitled to no relief under any statement of facts which could be
proven.”).
¶ 16 Turning to Plaintiff’s argument that they had established valid claims for
breach of contract, the elements for a breach of contract claim are the existence of a
valid contract and a breach of the terms therein. Supplee v. Miller-Motte Bus. Coll.,
Inc., 239 N.C. App. 208, 216, 768 S.E.2d 582, 590 (2015); see Poor v. Hill, 138 N.C.
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App. 19, 26, 530 S.E.2d 838, 843 (2000).
¶ 17 The relationship between State employees and the long-term disability system
is contractual in nature. See Wells v. Consolidated Judicial Retirement Sys., 136 N.C.
App. 671, 673, 526 S.E.2d 486, 488 (2000). The long-term disability system is
governed by Article 6 Chapter 135 of the North Carolina General Statutes. N.C. Gen.
Stat. § 135-100(a) (2021). Chapter 135 was enacted in 1987 and became effective on
January 1, 1988. An Act to Make Appropriations for Current Operations of State
Departments, Institutions, and Agencies, and For Other Purposes Except For Aid to
Certain Governmental and Nongovernmental Units, ch. 738, § 29(r), 1987 N.C.
Session Laws 1354, 1392. The contractual right to long-term disability benefits vests
after “five or more years of membership service.” N.C. Gen. Stat. § 135-106(a) (1988).
However, a transitional provision provides an opportunity for employees who were
employed at the time of Chapter 135’s enactment to receive disability benefits despite
having less than five years of membership service:
Any participant in service as of the date of ratification of
this Article and who becomes disabled after one year of
membership service will be eligible for all benefits provided
under this Article notwithstanding the requirement of five
years’ membership service to receive the long-term benefit;
provided, however, any beneficiary who receive[s] benefits
as a result of this transition provision before completing
five years of membership service shall receive lifetime
benefits in lieu of service accruals under the Retirement
System as otherwise provided in [N.C.] G[en]. S[tat]. [§]
135-4(y).
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N.C. Gen. Stat. § 135-112(a) (1988).
¶ 18 Here, Plaintiffs were both employed as teachers for the State for at least one
year, and thus, Plaintiffs qualified for long-term disability benefits. To the extent
Plaintiffs and Defendant differ as to whether Plaintiffs were vested beneficiaries of
the Teachers’ & State Employees’ Retirement System, or only in the transitional
disability group per Section 135-112(a), we need not reach the merits of this
argument. In the case sub judice, Plaintiffs only challenge Defendant’s right to
recoup disability benefits. Thus, whether Plaintiffs were vested beneficiaries or not,
Plaintiffs were still eligible for, and indeed received, disability payments under
Chapter 135. These disability payments, in turn, are governed by the statutory
requirements within Chapter 135. See Wells, 136 N.C. App. at 673, 526 S.E.2d at
488.
¶ 19 Under N.C. Gen. Stat. § 135-106(b), the amount of long-term disability benefits
received were supposed to be offset dollar-for-dollar by the Social Security Disability
benefit for which Plaintiffs would otherwise be eligible. N.C. Gen. Stat. § 106(b)
(1988). Additionally, each contract contained a recoupment provision pursuant to
N.C. Gen. Stat § 135-9. When Chapter 135 became effective in 1988, Section 135-9(b)
stated
[n]otwithstanding any provisions to the contrary, any
overpayment of benefits to a member in a state-
administered retirement system or the former Disability
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Salary Continuation Plan or the Disability Income Plan of
North Carolina may be offset against any retirement
allowance, return of contributions or any other right
accruing under this Chapter to the same person, the
person’s estate, or designated beneficiary.
N.C. Gen. Stat. § 135-9(b) (1988) (emphasis added). See N.C. Gen. Stat. § 143-
64.80(a). At the time of Plaintiffs’ hearings in 2018, our General Assembly had
amended the language of Section 135-9(b) so that it read,
[n]otwithstanding any provisions to the contrary, any
overpayment of benefits or erroneous payments to a member
in a State-administered retirement system or the former
Disability Salary Continuation Plan or the Disability
Income Plan of North Carolina, including any benefits paid
to, or State Health Plan premiums or claims paid on behalf
of, any member or beneficiary who is later determined to
have been ineligible for those benefits or unentitled to
those amounts, may be offset against any retirement
allowance, return of contributions or any other right
accruing under this Chapter to the same person, the
person’s estate, or designated beneficiary.
N.C. Gen. Stat. § 135-9(b) (2018) (emphasis added).
¶ 20 Moreover, the State has a duty under Section 143-64.80 to pursue the
recoupment of any overpayment: “No State department, agency, or institution, or
other State-funded entity may forgive repayment of an overpayment of State funds,
but shall have a duty to pursue the repayment of State funds by all lawful means
available, including the filing of a civil action in the General Court of Justice.” N.C.
Gen. Stat. § 143-64.80(b) (2018). The plain language of Section 135-9 in both 1988
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and 2018 required the State to recoup any overpayments resulting from disability
payments. In other words, the statutory terms of Plaintiff Moss and Plaintiff
Shuford’s right to receive disability payments included a recoupment clause which
mandated Defendant to seek reimbursement from any overpayment.
¶ 21 Although we sympathize with the financial difficulties faced by Plaintiffs due
to Defendant’s error, Plaintiffs’ statutory right to disability benefits also mandates
the Defendant to seek recoupment of overpayments. See N.C. Gen. Stat. § 135-9(b)
(2018). Plaintiffs’ argument that Defendant’s lawful action under the terms of
Chapter 135 constitutes a breach of contract fails because Defendant had “a duty to
pursue the repayment of State funds by all lawful means available.” § 143-64.80(b).
Therefore, we hold the trial court did not err by granting Defendant’s motions to
dismiss.
2. 12(b)(1) Motion
¶ 22 Plaintiffs next argue the trial court erred by granting Defendant’s motion to
dismiss under Rule 12(b)(1). A trial court grants a motion to dismiss pursuant to
Rule 12(b)(1) when the court lacks jurisdiction over a subject matter. N.C. Gen. Stat.
§ 1A-1, Rule 12(b)(1) (2021). A party, or the court on its own, may assert lack of
jurisdiction. Dale v. Lattimore, 12 N.C. App. 348, 352, 183 S.E.2d 417, 419 (1971).
“The filing of a motion to dismiss under Rule 12(b)(1) does not raise an issue of fact[,]
[i]t challenges the jurisdiction of the court over the subject matter.” Journeys
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International, Inc. v. Corbett, 53 N.C. App. 124, 125, 280 S.E.2d 5, 6 (1981). A Rule
12(b)(1) motion may not be viewed in the same manner as a Rule 12(b)(6) motion
because under Rule 12(b)(1) “matters outside the pleadings[] . . . may be considered
and weighed by the court in determining the existence of jurisdiction over the subject
matter.” Tart v. Walker, 38 N.C. App. 500, 502, 248 S.E.2d 736, 737 (1978).
¶ 23 Here, Plaintiffs specifically contend that Defendant waived the defense of
sovereign immunity when it entered into a contract with Plaintiffs. See Guthrie v.
North Carolina State Ports Authority, 307 N.C. 522, 535, 299 S.E.2d 618, 625 (1983)
(“Sovereign immunity is a legal principle which states in its broadest terms that the
sovereign will not be subject to any form of judicial action without its express
consent.”). However, because the trial court properly granted Defendant’s motion to
dismiss under 12(b)(6) we need not address Plaintiffs’ argument regarding 12(b)(1).
B. Plaintiffs’ Petition for Judicial Review
¶ 24 Next, Plaintiffs contend the trial court erred by affirming the administrative
law judge’s decisions. “When the trial court exercises judicial review over an agency’s
final decision, it acts in the capacity of an appellate court.” N.C. Dep’t of Env’t &
Natural Res. v. Carroll, 358 N.C. 649, 662, 599 S.E.2d 888, 896 (2004) (first citing
Mann Media, Inc. v. Randolph County Planning Bd., 356 N.C. 1, 12, 565 S.E.2d 9, 17
(2002); and then citing Avant v. Sandhills Ctr. For Mental Health, Development
Disabilities & Substances Abuse Servs., 132 N.C. App. 542, 545, 513 S.E.2d 79, 82
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(1999)).
¶ 25 Under N.C. Gen. Stat. § 150B-51, the reviewing court may affirm or remand a
final decision. N.C. Gen. Stat. § 150B-51(b) (2021). The reviewing court may also
“reverse or modify the decision if the substantial rights of the petitioners may have
been prejudiced because the findings, inferences, conclusions, or decisions are:” 1) A
“violation of constitutional provisions”; 2) an “excess of the statutory authority or
jurisdiction of the agency or administrative judge”; 3) an “unlawful procedure”; or 4)
“[a]ffected by other error of law . . . .” § 150B-51(b)(1)-(4). If a petitioner alleges any
of the above has been violated, the reviewing court must apply a de novo standard of
review. § 150B-51(c). However, if a reviewing court is determining whether the
findings, inferences, conclusions, or decisions are “[u]nsupported by substantial
evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire
record as submitted” or “[a]rbitrary, capricious, or an abuse of discretion,” a whole
record standard of review is to be applied. § 150B-51(b)(5)-(6), (c).
¶ 26 When this Court reviews an appeal from a superior court which either affirmed
or reversed an administrative agency’s decision, we review for two factors: “(1)
whether the superior court applied the appropriate standard of review and, if so, (2)
whether the superior court properly applied this standard.” Mayo v. N.C. State Univ.,
168 N.C. App. 503, 507, 608 S.E.2d 116, 120 (2005) (citing In re Appeal by McCrary,
112 N.C. App. 161, 166, 435 S.E.2d 359, 363 (1993), aff’d, 360 N.C. 52, 619 S.E.2d 502MOSS V. N.C. DEP’T OF STATE TREASURER
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(2005).
1. Bank Account Statements
¶ 27 Plaintiffs initially allege the administrative law judge’s decisions are not
supported by competent evidence because they did not consider Plaintiff Shuford’s
financial records. Plaintiffs argue that the financial records provided by Plaintiff
Shuford were conclusive to show the State’s mathematical calculations used to
withhold Plaintiffs’ disability statements were incorrect. Since Plaintiffs allege the
decisions were not supported by substantial evidence, the trial court was required to
apply a whole record standard of review. See § 150B-51(c). The trial court
appropriately applied such standard, stating “[w]ith respect to assertions of fact-
based errors, the Court has applied a whole record standard of review.” Thus, we
conclude the trial court did not err in its standard of review.
¶ 28 Next, we examine whether the trial court applied the whole record standard of
review correctly. The whole record test “requires the examination of all competent
evidence to determine if the administrative agency’s decision is supported by
substantial evidence.” Rector v. North Carolina Sheriffs’ Educ. & Training
Standards Com., 103 N.C. App. 527, 532, 406 S.E.2d 613, 616 (1991) (citing
Henderson v. N.C. Dep’t of Human Resources, 91 N.C. App. 527, 530, 372 S.E.2d, 887,
889 (1988)). Substantial evidence is relevant evidence “a reasonable mind might
accept as adequate to support a conclusion.” Avant v. Sandhills Ctr. for Mental
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Health, Developmental Disabilities & Substance Abuse Servs., 132 N.C. App. 542, 546,
513 S.E.2d 79, 83 (1999) (quoting Lackey v. N.C. Dep’t of Human Resources, etc., 306
N.C. 231, 238, 293 S.E.2d 171, 176 (1982)). Notably, the whole record test is not a
“tool of judicial intrusion; instead, it merely gives a reviewing court the capability to
determine whether an administrative decision has a rational basis in the evidence.”
In re Rogers, 297 N.C. 48, 65, 253 S.E.2d 912, 922 (1979). Even if the record contains
evidence contrary to an agency’s findings, an appellate court may not substitute its
judgment in lieu of the agency’s judgment. Avant, 132 N.C. App. at 547, 513 S.E.2d
at 83.
¶ 29 Applying the whole record standard of review, we consider the following
evidence. Plaintiff Shuford offered her bank account statements and a spreadsheet
into evidence. Plaintiff Shuford’s spreadsheet showed the amount of social security
payments deposited into her bank account, amount of disability payments deposited
into her bank account, benefits paid by the state, social security offset amount
calculated by the state, benefit amount the state should have paid, and social security
offset amount the state should have paid from January 2006 until July 2017.
Defendant also provided a spreadsheet detailing the amount it actually paid Plaintiff
Shuford versus the amount it should have paid. The social security offset amount on
Plaintiff Shuford’s spreadsheet differed from the social security offset amount on the
spreadsheet prepared by Defendant. For instance, Plaintiff Shuford’s spreadsheet
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showed the social security offset amount for December 2006 was $1,056.00, while
Defendant’s spreadsheet showed Plaintiff Shuford’s social security offset amount for
the same date was $1,090.00.
¶ 30 These discrepancies are not due to a calculation error by Defendant, but rather
are indicative of potential withholdings. Thomas Causey, a witness on behalf of
Defendant, testified the social security offset amount illustrated on Plaintiff
Shuford’s spreadsheet statements does not consider potential money withheld by the
Social Security Administration. Causey further testified that “Social Security has
other deductions that they take out before . . . direct deposits are made for members.
. . . So . . . the direct deposits, again, would not help us to know the amount that
should be deducted.” In other words, the amount of social security offset in Plaintiff
Shuford’s spreadsheet shows only the net amount of her social security benefits if
money was withheld, not the gross amount of the benefits. The social security offset
amount in Defendant’s spreadsheet showed the gross amount of social security
benefits received by Plaintiff Shuford prior to any withholdings. As a result, if the
Social Security Administration was withholding money from the gross amount
provided to an individual, this would be reflected in a lower amount being deposited
into the individual’s bank account. Nowhere within the record did Plaintiff Shuford
offer evidence of the gross amount she received from the Social Security
Administration, only proffering evidence as to the net amount. Therefore, the
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administrative law judge had substantial evidence from Defendant’s spreadsheet to
support its decisions.
¶ 31 Assuming arguendo Plaintiff Shuford’s spreadsheet sufficed as contrary
evidence for the purpose of calculating the overpayment amount, we are not
permitted to substitute our judgment for that of the administrative law judge just
because contrary evidence existed. See id.; see also City of Rockingham v. N.C. Dep’t
of Env’t & Natural Res., 224 N.C. App. 228, 239, 736 S.E.2d 764, 771 (2012) (“In an
administrative proceeding, it is the prerogative and duty of that administrative body,
once all the evidence has been presented and considered, to determine the weight and
sufficiency of the evidence and the credibility of the witnesses, to draw inferences
from the facts, and to appraise conflicting and circumstantial evidence.” (internal
quotation marks omitted)). In light of the foregoing findings, we hold substantial
evidence existed regarding the financial records to support the administrative law
judge’s decisions.
2. Cost of Living Adjustments
¶ 32 Plaintiffs also contend the administrative law judge erred by not considering
Defendant’s possible overpayments in the years when the Social Security
Administration did not increase benefits due to a cost of living adjustments (“COLA”).
Because Plaintiffs challenge whether findings of fact within the decisions were
supported by substantial evidence, the trial court was required to apply a whole
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record standard of review. See § 150B-51(c). The trial court appropriately applied
such standard, stating “[w]ith respect to assertions of fact-based errors, the Court has
applied a whole record standard of review.” Therefore, we must analyze whether the
trial court appropriately applied the whole record standard of review.
¶ 33 In this case, the administrative law judge made the following relevant findings
of fact:
35. Because ORBIT had not been programmed to deduct
the cost-of-living adjustments from the Transitional
Benefit accounts, Petitioner Moss’[s] Transitional
Disability Benefits had not been reduced by the Social
Security cost-of-living adjustment increases which
occurred in the years of 2006, 2007, 2008, 2011, 2012, 2013,
2014, and 2016.
...
56. Subsequently, on June 16, 2017, Respondent notified
Petitioner Shuford that Social Security cost-of-living
adjustments had been given in 2006, 2007, 2008, 2011,
2012, 2013, 2014, and 2016, but that these cost-of-living
adjustments had not been deducted from Shuford’s
Transitional Disability Benefits.
In 2009, 2010, and 2015, no COLA was awarded, and thus, the Social Security
Administration did not increase its benefits. A careful review of Defendant’s “should
have paid” spreadsheets for each Plaintiff reveals Defendant did not increase the
amounts of their social security benefits in the years when no COLA was granted. In
the administrative law judge’s findings, she omitted the years 2009, 2010, and 2015,
the same years COLA was not awarded. Accordingly, we hold the administrative law
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judge considered Defendant’s possible overpayments to Plaintiffs in the years COLA
was not awarded and substantial evidence supported her findings.
3. Breach of Contract
¶ 34 Finally, Plaintiffs contend the trial court erred by denying their petition for
judicial review because the administrative law judge did not consider their
contractual rights to receive disability benefits. We disagree.
¶ 35 As explained above, Plaintiffs’ rights to disability payments were subject to
Chapter 135’s statutory requirements. These requirements, in turn, contained a
mandatory recoupment clause pursuant to N.C. Gen. Stat. § 135-9(b). Thus, by
accepting disability benefits, Plaintiffs agreed Defendant would recoup any
overpayments of benefits to them. Furthermore, a careful review of the
administrative law judge’s decisions shows she properly considered the mandatory
recoupment clause inherent to Plaintiffs’ disability benefits. Therefore, substantial
evidence existed to support the administrative law judge’s conclusions Defendant
acted within its statutory duty to recoup overpayments made to Plaintiffs, and
Plaintiffs’ argument is without merit.
C. Collateral Estoppel
¶ 36 Although Defendant crafted a lengthy argument as to why Plaintiffs are barred
from pursuing their claims in superior court under the doctrine of collateral estoppel,
collateral estoppel is an affirmative defense under Rule 8 and thus must have been
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raised in the trial court in order to preserve this argument for appeal. N.C. Gen. Stat.
§ 1A-1, Rule 8(c) (2021); N.C. R. App. P. 10(a)(1). “Failure to plead an affirmative
defense ordinarily results in waiver of the defense.” Ward v. Beaton, 141 N.C. App.
44, 49, 539 S.E.2d 30, 34 (2000). Defendant raised the affirmative defense of
collateral estoppel for the first time on appeal, and thus failed to preserve this issue
for appeal. See also In re D.R.S., 181 N.C. App. 136, 140, 638 S.E.2d 626, 628 (2007)
(since “respondent raise[d] the defenses of collateral estoppel and res judicata for the
first time on appeal, . . . [respondent] thus failed to properly preserve the issue[]”).
III. Conclusion
¶ 37 For the foregoing reasons, the trial court did not err by granting Defendant’s
motion to dismiss. Additionally, the trial court did not err by affirming the OAH
Decisions entered by the administrative law judge. Accordingly, the orders of the
trial court are affirmed.
AFFIRMED.
Judges ZACHARY and CARPENTER concur.