Austin v. Midgett

• Decision Date: 02 November 2004
• Docket Number: No. COA02-1127-2.,COA02-1127-2.
• Citation: 166 NC App. 740,603 S.E.2d 855
• Court: North Carolina Court of Appeals
• Parties: Medford L. AUSTIN, Administrator of the Estate of Medford Jerome Austin, Deceased, Plaintiff, v. Richard Aaron MIDGETT and Theodore Stockton Midgett, Jr., Defendants.

603 S.E.2d 855

166 NC App. 740

Medford L. AUSTIN, Administrator of the Estate of Medford Jerome Austin, Deceased, Plaintiff, v. Richard Aaron MIDGETT and Theodore Stockton Midgett, Jr., Defendants.

No. COA02-1127-2.

Court of Appeals of North Carolina.

November 2, 2004.

Law Offices of Johnny S. Gaskins, by Johnny S. Gaskins, Raleigh, for plaintiff-appellee.

Bennett & Guthrie, P.L.L.C., by Rodney A. Guthrie, Winston-Salem, for unnamed defendant-appellant, Integon National Insurance Company.

STEELMAN, Judge.

This matter was previously heard by the Court of Appeals on 14 May 2003, and a decision was rendered in Austin v. Midgett, 159 N.C.App. 416, 583 S.E.2d 405 (2003). On 23 September 2003, pursuant to Rule 31 of the North Carolina Rules of Appellate Procedure, this Court granted the petition of the unnamed defendant, Integon National Insurance Company (Integon), for rehearing. This Court granted the petition to rehear on the limited issue of the proper application of a credit arising out of a $50,000.00 payment made by Farm Bureau in this matter.

The facts in this matter are set forth in this Court's previous opinion, Austin v. Midgett, 159 N.C.App. 416, 583 S.E.2d 405 (2003). Integon contends that this Court erred in the application of the credits due to Integon as an underinsured motorist (UIM) carrier for the payments made by the primary liability insurance carrier. We agree and remand this matter to the trial court for further findings.

This issue requires the construction of N.C. Gen.Stat. § 20-279.21(b)(4), which defines the limit of underinsured motorist coverage:

Underinsured motorist coverage is deemed to apply to the first dollar of an underinsured motorist coverage claim beyond amounts paid to the claimant under the exhausted liability policy. In any event, the limit of underinsured motorist coverage applicable to any claim is determined to be the difference between the amount paid to the claimant under the exhausted liability policy or policies and the limit of underinsured motorist coverage applicable to the motor vehicle involved in the accident.

N.C. Gen.Stat. § 20-279.21(b)(4) (2003) (emphasis added).

In our original decision we held that the payments made under the exhausted liability policy reduced the limit of liability of the UIM carrier. While this holding was correct in terms of the total potential exposure of the UIM carrier, it resulted in an incorrect computation of the amount that the appellant Integon was required to pay to plaintiff. We now hold that there are two determinations that must be made in determining the amount due to a plaintiff from an underinsured motorist coverage policy.

First, we must determine the "limit of underinsured motorist coverage applicable to the motor vehicle involved in the accident." N.C. Gen.Stat. § 20-279.21(b)(4). This is determined by taking Integon's policy limits for underinsured motorist coverage of $100,000.00 and subtracting the portion of the credit for the Farm Bureau policy to which Integon is entitled of $25,000.00.¹ This leaves a total of $75,000.00 of underinsured motorist coverage available to plaintiff under Integon's policy. This is the limit of Integon's exposure in this case.

Second, we must determine the amount that plaintiff is entitled to recover under the provisions of N.C. Gen.Stat. § 20-279.21(b)(4) and 20-279.21(e). Our previous opinion held that plaintiff was entitled to recover from Integon, the sum of $66,573.51 under the UIM coverage, together with any accrued prejudgment interest up to its limit of liability of $75,000.00. However, this calculation failed to take into account the fact that plaintiff had already received $25,000.00 towards the Integon portion of the UIM claim from Farm Bureau. As Integon correctly points out, this computation results in a $25,000.00 windfall to the plaintiff.

In this matter, the parties entered into a number of stipulations. Two of these stipulations are relevant to our resolution of this case:

4. The amount of damages sustained by the Estate of Medford Jerome Austin exceeds the sum of two hundred thousand dollars ($200,000.00).

11. In exchange for plaintiff's covenant recited above, State Farm and Integon will consent to a Judgment in this action in favor of the plaintiff in the amount of $200,000.00.

N.C. Gen.Stat. § 20-279.21(e) provides that:

Uninsured or underinsured motorist coverage that is provided as part of a motor vehicle liability policy shall insure that portion of a loss uncompensated by any workers' compensation law and the amount of an employer's lien determined pursuant to G.S. 97-10.2(h) or (j). In no event shall this

...