Landlord‑tenant status saves negligence claim from workers’ comp bar

The North Carolina Court of Appeals revived a negligence suit brought by the plaintiff, a former employee who alleges chronic illness from toxic mold in the workplace, holding that neither the Workers’ Compensation Act’s exclusivity provision nor a post‑termination release shields the defendants from liability.

The plaintiff worked for a technology company beginning in 2011. Although the defendants served as corporate officers, they owned the office building in their individual capacities and leased it to the employer. After years of flu‑like symptoms, the plaintiff discovered heavy mold contamination and alerted the defendants; when no remedial action followed, he filed an OSHA complaint that confirmed mold in roughly 80 percent of the space.

The employer ultimately settled the plaintiff’s workers’‑compensation claim for $25,000, and the plaintiff signed a general release covering “officers and employees … acting in their official capacities” for the company.

When the plaintiff later sued the defendants for negligence and punitive damages, the trial court dismissed under Rule 12(b)(1), reasoning that workers’‑compensation exclusivity and the release barred the action. The appellate panel disagreed. It emphasized that the defendants, as landlords, operated a separate enterprise from the employer; thus they were not statutory “employers” entitled to the Act’s immunity. The court also read the release narrowly, concluding that it extended only to corporate officers acting within the scope of their employment, not to individuals acting as property owners. Because the complaint alleged landlord negligence unrelated to corporate duties, the release did not apply and subject‑matter jurisdiction lay in the superior court.

Finding no absolute bar on the face of the pleadings, the panel reversed the dismissal and remanded for further proceedings.

The 13-page opinion is Nelson v. Smith, Lawyers Weekly No. 011‑119‑25.