Bellefonte Underwriters Ins. Co. v. Alfa Aviation, Inc.

• Decision Date: 05 April 1983
• Docket Number: No. 823SC441,823SC441
• Citation: 300 S.E.2d 877,61 N.C.App. 544
• Parties: BELLEFONTE UNDERWRITERS INSURANCE COMPANY v. ALFA AVIATION, INC., William Axson Smith, Jr., Mary Jo Beck, Donna Stocks, William T. Taylor, and J.D. Dawson Company.
• Court: North Carolina Court of Appeals

Page 877

300 S.E.2d 877

61 N.C.App. 544

BELLEFONTE UNDERWRITERS INSURANCE COMPANY v. ALFA AVIATION, INC., William Axson Smith, Jr., Mary Jo Beck Donna Stocks, William T. Taylor, and J.D. Dawson Company.

No. 823SC441.

Court of Appeals of North Carolina.

April 5, 1983.

Maupin, Taylor & Ellis by Thomas W.H. Alexander and M. Keith Kapp, Raleigh, for plaintiff-appellant.

Taft, Taft & Haigler by Kenneth E. Haigler and Thomas F. Taft, Greenville, for defendant-appellee Alfa Aviation, Inc.

James, Hite, Cavendish & Blount by M.E. Cavendish and Charles R. Hardee, Greenville, for defendant-appellee William Axson Smith, Jr.

Williamson, Herrin, Stokes & Heffelfinger by Ann J. Heffelfinger, Greenville, for defendant-appellee Mary Jo Beck.

Dixon, Horne & Duffus by John D. Duffus, Jr., Greenville, for defendant-appellee Donna Stocks.

Speight, Watson & Brewer by William C. Brewer, Jr., Greenville, for defendant-appellee J.D. Dawson Co.

BRASWELL, Judge.

The controlling question before us is whether the trial court erred in ruling as a matter of law that defendants were entitled to recovery under the terms of the insurance policies in question. For the reasons stated below, we reverse that ruling. Summary judgment should have been granted for plaintiff and defendants' motion should have been denied.

This action results from an airplane accident, occurring on 20 June 1978, in which the insured single-engine aircraft was destroyed, and the pilot, defendant William Axson Smith, Jr., and the passengers, Mary Jo Beck, William T. Taylor and Donna Stocks, were injured. Smith had rented the plane as the agent of his employer, defendant J.D. Dawson Company, from defendant Alfa Aviation, Inc., at Pitt-Greenville Airport in Greenville. Smith was attempting to land the plane at Riverside Campground in Belhaven when the crash occurred.

The two insurance policies in effect at the time of the accident had been issued to defendant Alfa Aviation by plaintiff Bellefonte Underwriters Insurance Company, Inc. One was an airport liability policy, required of Alfa Aviation under the terms of its lease from Pitt County-City of Greenville Airport Authority; the other was an aircraft policy covering the plane rented by Smith.

Plaintiff denied liability for all claims arising under both policies. Coverage under the airport liability policy was denied because of a specific exclusion stating: "This policy does not apply to any aircraft owned by, hired by, loaned to, or operated for the account of the Insured." Plaintiff maintained that coverage under the aircraft policy was specifically excluded by a requirement that a lessee of an aircraft from Alfa Aviation have a current medical certificate meeting Federal Aviation Administration Regulations. The aircraft policy specifically denied coverage "to any occurrence or to any loss or damage occurring while the aircraft is operated in flight by other than the pilot or pilots set forth under Item 7 of the Declaration." Item 7 provides that only pilots holding valid certificates will fly the aircraft and refers to Endorsement 15. Endorsement 15, the Pilot Clause Endorsement, also provides: "Only the following pilot(s) holding valid and effective pilot and medical certificates with ratings as required by the Federal Aviation Administration for the flight involved will operate the aircraft in flight."

During discovery, defendant Smith admitted that the last medical certificate issued to him prior to the accident, pursuant to the FAA Regulations, was a third-class medical certificate issued on 16 October 1975, two years and eight months before the crash. According to the Code of Federal Regulations in effect on 20 June 1978, a third-class medical certificate expired 24 months after the date of examination shown on the certificate. 14 C.F.R. § 61.23(3) (1978). Smith also admitted that, under the terms of his arrangement with Alfa Aviation, he was to pay rental to Alfa Aviation for his use of the aircraft involved in the accident.

When the injured defendants filed negligence suits against defendants Smith and Alfa Aviation, and they in turn sought coverage under the two policies underwritten by plaintiff, plaintiff sought declaratory judgment, contending that plaintiff had no duty under the policies to indemnify or defend Smith and Alfa Aviation. Defendants also joined in seeking relief by declaratory judgment.

The Declaratory Judgment Act, G.S. 1-253 et seq., affords an appropriate procedure for alleviating uncertainty in the interpretation of written instruments and for clarifying litigation. Insurance Co. v. Curry, 28 N.C.App. 286, 221 S.E.2d 75, disc. rev. denied, 289 N.C. 615, 223 S.E.2d 396 (1976). The Act is applicable to construction of insurance contracts and in determining the extent of coverage under a policy. Insurance Co. v. Simmons, Inc., 258 N.C. 69, 128 S.E.2d 19 (1962). Thus, the trial court properly undertook to interpret the insurance policies in question.

Summary judgment may be entered upon the motion of either the plaintiff ...