Hairston v. Harward

• Decision Date: 07 December 2018
• Docket Number: No. 416A17,416A17
• Court: North Carolina Supreme Court
• Parties: William HAIRSTON, Jr. v. Ashwell Bennett HARWARD, Jr.

371 N.C. 647

821 S.E.2d 384

William HAIRSTON, Jr.

v.Ashwell Bennett HARWARD, Jr.

No. 416A17

Supreme Court of North Carolina.

Filed December 7, 2018

Maynard & Harris, Attorneys at Law, PLLC, by C. Douglas Maynard, Jr., Winston-Salem; Higgins Benjamin, PLLC, by John F. Bloss, Greensboro; and Roane Law, by James M. Roane, III, Greensboro, for plaintiff-appellant.

Davis and Hamrick, LLP, by Kent L. Hamrick and Ann C. Rowe, Winston-Salem, for defendant-appellee Ashwell Bennett Harward, Jr.

Burton, Sue & Anderson, LLP, by Stephanie W. Anderson, Greensboro, for unnamed defendant-appellee Erie Insurance Exchange.

Pinto Coates Kyre & Bowers, PLLC, by Deborah J. Bowers and Andrew G. Pinto, Greensboro, for North Carolina Association of Defense Attorneys, amicus curiae.

ERVIN, Justice.

The question before us in this case is whether the trial court erred by crediting a payment made to plaintiff William Hairston, Jr., under his own underinsured motorist coverage against the amount of the judgment that plaintiff obtained against defendant Ashwell Bennett Harward, Jr., arising from a motor vehicle collision. After carefully considering the record in light of the applicable law, we hold that the trial court erred by crediting the amount of this payment against the amount that defendant owed to plaintiff under the judgment and remand this case to the Court of Appeals for further remand to the Superior Court, Davidson County, for further proceedings.

On 20 November 2009, defendant was driving an automobile that, as a result of defendant's negligence, collided with a motor vehicle operated by plaintiff at an intersection in Lexington. At the time of the collision, plaintiff was insured under an automobile liability insurance policy issued by Erie Insurance Exchange that included, among other things, underinsured motor vehicle coverage subject to a coverage limit of $250,000 per person,¹ while defendant was insured under an automobile liability insurance policy issued by State Farm Mutual Automobile Insurance Company that was subject to a per person liability limit of $100,000.

On 27 July 2011, plaintiff filed a complaint against defendant alleging that the collision in which plaintiff was injured resulted from defendant's negligence and seeking a judgment against defendant encompassing compensation for past and future medical expenses, lost wages, permanent injuries, and pain and suffering. On 15 January 2013, plaintiff moved to amend his complaint to assert a medical negligence claim against his treating physician arising from the treatment that was provided to plaintiff following the motor vehicle accident, with this motion having been allowed on the following day. On 17 April 2013, Erie made an appearance in this case as an unnamed defendant. On 14 March 2014, plaintiff took a voluntary dismissal with prejudice of his medical negligence claim against his treating physician.

Plaintiff's case against defendant came on for trial before the trial court and a jury at the 11 August 2014 civil session of the Superior Court, Davidson County. On 14 August 2014, the jury returned a verdict finding defendant to be negligent and awarding plaintiff $263,000 in compensation for his personal injuries.

On 11 September 2014, Erie issued a check to plaintiff in the amount of $145,000, which, according to Erie, represented "the amount of [underinsured motorist coverage to which plaintiff was entitled] under [plaintiff's] Erie policy."² On 15 September 2014, defendant filed a motion seeking to have the trial court determine the amount to be set off and credited against the amount that the jury had awarded plaintiff in which defendant alleged, among other things, that plaintiff had already received $3,000 from defendant's liability carrier and at least $30,000 from his treating physician arising from the settlement of plaintiff's medical negligence claim, with these amounts to be deducted from the jury's damage award prior to the entry of judgment. In addition, defendant, in light of the fact that Erie had waived its right to be subrogated to plaintiff's rights against defendant, sought to obtain a credit against the amount of damages determined to be appropriate by the jury in the amount of $145,000 arising from the payment that Erie made to plaintiff. On 3 October 2014, plaintiff executed a "settlement agreement and full and final release of all claims against Erie only." (All capital letters in original.) On 9 October 2014, State Farm sent plaintiff a check for $97,000.

On 16 October 2014, the trial court entered an order finding that "the parties agree that Defendant is entitled to setoffs or credits totaling $33,000.00," "that the judgment amount will be $230,000.00," and that prejudgment interest would cease accruing as of 1 October 2014. In addition, the trial court found that "[t]he parties continue to disagree over whether ... to credit the judgment ultimately entered in this case by the amount of the $145,000.00 underinsured motorists coverage payment made by [Erie] to Plaintiff" and, pursuant to an agreement between the parties, delayed making a determination regarding whether the amount of the payment that plaintiff received from Erie should be deducted from the judgment amount "until the mandate from the North Carolina Supreme Court in the case of Wood v. Nunnery ... inasmuch as the Wood case may be dispositive of this disagreement between the parties." On 10 April 2015, this Court filed an opinion in Wood v. Nunnery , 368 N.C. 30, 771 S.E.2d 762 (2015) (per curiam), stating that discretionary review had been improvidently allowed in that case.

On 17 September 2015, plaintiff filed a response to defendant's motion for setoffs and credits in which he requested the trial court to enter judgment against defendant prior to considering defendant's motion for setoffs and credits and moving to strike an affidavit submitted by defendant's counsel in support of defendant's claim that Erie had waived its subrogation rights on the grounds that "[w]hether or not [Erie], as Plaintiff's UIM carrier[,] has waived its subrogation right (and reimbursement right) is not relevant to the judgment entered against a tortfeasor." In addition, plaintiff requested the trial court, in the event that it considered the affidavit or "other evidence on the waiver of subrogation," to authorize plaintiff "to take post-verdict depositions of appropriate Erie and State Farm personnel and their agents to determine ... whether the doctrines of estoppel, waiver, unclean hands, or some other legal or equitable remedy preclude [Defendant Harward] and State Farm from arguing such waiver would inure to the benefit of Defendant [Harward]." On 25 September 2015, Erie filed an affidavit stating that Erie had waived its subrogation rights against defendant. On 29 October 2015, plaintiff filed a motion seeking to have Erie's affidavit stricken or allowing post-verdict depositions to be taken, with this relief being sought on the same grounds that led to the filing of plaintiff's earlier motion to the same effect.

On 1 December 2015, the trial court entered an order allowing defendant's motion for credits and setoffs in which it concluded as a matter of law that "[Defendant] is entitled to credit for the $145,000.00 payment made by the UIM carrier." In reaching this result, the trial court, acting in reliance upon Baity v. Brewer , 122 N.C. App. 645, 470 S.E.2d 836 (1996), and Seafare Corp. v. Trenor Corp. , 88 N.C. App. 404, 363 S.E.2d 643, disc. rev. denied , 322 N.C. 113, 367 S.E.2d 917 (1988), focused upon "the common law principle that a plaintiff should not be permitted a double recovery for a single injury." The trial court distinguished the initial decision of the Court of Appeals in Wood v. Nunnery , 222 N.C. App. 303, 730 S.E.2d 222 (2012), in which the Court of Appeals held that payments made by the plaintiff's underinsured motor vehicle insurance carrier should not be credited to the defendant,³ with the trial court emphasizing that in Wood , unlike this case, the underinsured motorist carrier had not waived its subrogation rights. In view of the fact that "no subrogation rights remain[ed]" for Erie, the trial court determined that defendant was entitled to a credit for the amount that Erie had paid to plaintiff. Finally, the trial court made no ruling on plaintiff's argument that the payment that he had received from Erie should be treated as a collateral source on the grounds that "such issue would be more properly addressed by the Appellate Courts."⁴ Based upon these findings and conclusions, the trial court entered a judgment providing that plaintiff have and recover $46,527.12 from defendant.⁵ Plaintiff noted an appeal to the Court of Appeals from the trial court's judgment.

In seeking relief from the trial court's judgment before the Court of Appeals, plaintiff contended that the trial court's decision to reduce the judgment amount by the $145,000 payment that plaintiff had received from Erie violated the collateral source rule, which prohibits a "plaintiff's recovery [from] be[ing] reduced ... by some source collateral to the defendant," Young v. Baltimore & Ohio Railroad Co. , 266 N.C. 458, 466, 146 S.E.2d 441, 446 (1966), on the theory that the payment that plaintiff had received from Erie "is completely independent from" and, for that reason, collateral to, defendant. In addition, plaintiff argued that the trial court's failure to determine whether the monies that plaintiff had received from Erie represented payment from a collateral source constituted an independent legal error, citing Pierson v. Ray , 386 U.S. 547, 554, 87 S.Ct. 1213, 1218, 18 L.Ed.2d 288, 294 (1967) (stating that "[i]t is a judge's duty to decide all cases within his jurisdiction that are brought before him"). According to plaintiff, the trial court's order conflicted with the decision of the Court of Appeals in Wood , 222 N.C. App. at 303, 730 S.E.2d at 222, which, in plaintiff's view,...