Benton v. Hanford

• Decision Date: 20 January 2009
• Docket Number: No. COA08-44.,COA08-44.
• Citation: 671 S.E.2d 31
• Parties: Johnny V. BENTON, Jr. and Veronica Tyndall, Plaintiffs, v. Timothy S. HANFORD and Progressive Southeastern Insurance Company, Defendants.
• Court: North Carolina Court of Appeals

671 S.E.2d 31

Johnny V. BENTON, Jr. and Veronica Tyndall, Plaintiffs, v. Timothy S. HANFORD and Progressive Southeastern Insurance Company, Defendants.

No. COA08-44.

Court of Appeals of North Carolina.

January 20, 2009.

Appeal by defendant from order entered 28 September 2007 by Judge Quentin T. Sumner in Nash County Superior Court. Heard in the Court of Appeals 26 August 2008.

Wyrick Robbins Yates & Ponton LLP, by K. Edward Greene and Tobias S. Hampson, Raleigh, and Henson & Fuerst, P.A., by William S. Hoyle, Rocky Mount, for plaintiff-appellees.

Young Moore and Henderson P.A., by Glenn C. Raynor, Raleigh, for defendant-appellant.

Maynard & Harris, PLLC, by C. Douglas Maynard, Jr., Winton-Salem, for amicus curiae North Carolina Academy of Trial Lawyers.

STROUD, Judge.

This case presents two issues to this Court: (1) whether a tortfeasor's underinsured motorist ("UIM") insurance policy which covers a person occupying the tortfeasor's vehicle may be stacked with the injured party's separate UIM policy in order to determine the total UIM coverage available to the injured party, and (2) how the credit for the applicable liability coverage should be divided between the tortfeasor's insurer and the injured party's insurer. For the reasons which follow, we affirm the trial court.

I. Background

On 27 October 2005 plaintiff Benton was a passenger in a 2001 Toyota operated by defendant Hanford. The Toyota collided with a tree causing bodily injury to Benton.

At the time of the accident, defendant Hanford was insured as a named driver in Nationwide Policy No. 6132S626920 ("the Nationwide policy"). The Nationwide policy provided $50,000.00 per person in liability coverage and $50,000.00 per person in UIM coverage for, inter alia, a person occupying the covered vehicle. Plaintiff Benton was insured as a "household resident" on Progressive Southeastern Policy No. 11951100-1 ("the Progressive policy") owned by his mother, plaintiff Tyndall. The Progressive policy provided for $100,000.00 per person in UIM coverage. After the accident, Nationwide paid plaintiffs $50,000.00 in liability insurance benefits under its policy.

On 30 January 2007 plaintiffs filed a complaint in Superior Court, Nash County, seeking inter alia, "a judicial determination as to whether Progressive is responsible for paying up to a total of $100,000.00 in underinsured motorist coverage for this claim." Defendant Progressive filed an answer on 19 April 2007, asserting that its $100,000.00 UIM policy limit should be reduced by a credit for Nationwide's liability payment of $50,000.00, thereby limiting Progressive's UIM coverage to only $50,000.00. On 1 June 2007 defendant Progressive moved for summary judgment, requesting the trial court to declare that Progressive's coverage was limited to $50,000.00.

On 28 September 2007, the trial court entered summary judgment in favor of plaintiffs, declaring:

6. The Nationwide policy provided UIM coverage in the sum of $50,000.00 for the damages sustained by plaintiffs in the October 27, 2005 accident.

....

8. The Nationwide policy provides primary UIM coverage for purposes of the damages sustained by the plaintiffs in the October 27, 2005 accident, and the Progressive Southeastern policy provides excess UIM insurance benefits.

9. Nationwide is entitled to a credit of $50,000.00 to its $50,000.00 UIM limit, for the amount of the liability insurance paid under Nationwide's policy to the plaintiffs.

10. The Progressive Southeastern policy is entitled to no credit for the liability proceeds paid under the Nationwide policy to the plaintiffs.

11. The Progressive Southeastern policy provides available UIM coverage in the amount of $100,000.00 for the damages sustained by the plaintiffs in the October 27, 2005 accident.

Defendant Progressive appeals.

II. Underinsured Highway Vehicle

Defendant first argues that the Nationwide policy does not provide UIM coverage to plaintiff Benton as a passenger in the Toyota because the Toyota was not an "underinsured vehicle" for purposes of the Nationwide policy. Defendant argues that the definition of "underinsured motor vehicle" found in the Nationwide policy is dispositive, particularly the provision which expressly excludes from the definition "any vehicle . . . [w]hich is insured under Liability Coverage of this policy if such policy's limit of liability for Combined Uninsured/Underinsured Motorists Coverage is equal to or less than its limit of liability for Liability Coverage." Defendant reasons that because the liability limits and the UIM limits in the Nationwide policy are equal, the Toyota does not meet the definition of an "underinsured motor vehicle" under the terms of the policy. Therefore, defendant concludes, the Nationwide policy does not provide UIM coverage to plaintiff Benton. We disagree.

"[W]hether the tortfeasor's vehicle is an `underinsured highway vehicle' as the term is used in N.C.G.S. § 20-279.21(b)(4)" is the "threshold question" in determining if UIM coverage applies. Harris v. Nationwide Mut. Ins. Co., 332 N.C. 184, 187, 420 S.E.2d 124, 126 (1992); Ray v. Atlantic Casualty Ins. Co., 112 N.C.App. 259, 261, 435 S.E.2d 80, 81 ("UIM coverage ... necessarily depends on whether the tortfeasor's vehicle is an underinsured highway vehicle."), disc. review denied, 335 N.C. 559, 439 S.E.2d 151 (1993); see also State Farm Mut. Auto. Ins. Co. v. Young, 122 N.C.App. 505, 506, 470 S.E.2d 361, 361 (1996) ("[A]n underinsured highway vehicle as defined in G.S. § 20-279.21(b)(4) can include a motor vehicle owned by the named insured, and the provisions in the policies issued by plaintiff attempting to exclude such coverage are invalid and unenforceable." (Citation and quotation marks omitted.)), disc. review denied, 345 N.C. 353, 483 S.E.2d 191 (1997).

Notwithstanding the express language in the Nationwide policy quoted by defendant, the "provisions of the Financial Responsibility Act [], N.C. Gen.Stat. Chapter 20, Article 9A [], are written into every insurance policy as a matter of law. Where the language of an insurance policy conflicts with the provisions of the Act, the provisions of the Act prevail." Austin v. Midgett, 159 N.C.App. 416, 420, 583 S.E.2d 405, 408 (2003) (citations omitted), modified on rehearing on other grounds, 166 N.C.App. 740, 603 S.E.2d 855 (2004). Because the Financial Responsibility Act ("the Act") specifically defines "underinsured highway vehicle[,]" N.C. Gen.Stat. § 20-279.21(b)(4) (2005), we turn to the Act and the cases interpreting it without regard to the definition of the term in the Nationwide policy.

Defendant contends that even if we reject the language of the policy and rely on the language of the Act, we should reach the same result, i.e., that the Toyota involved in the accident is not an "underinsured highway vehicle" under the terms of the statute. Again, we disagree.

The Act defines "underinsured highway vehicle" generally as:

a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner's policy.

N.C. Gen.Stat. § 20-279.21(b)(4) (2005). Statutory interpretation begins with "[t]he cardinal principle of statutory construction ... that the intent of the legislature is controlling. In ascertaining the legislative intent, courts should consider the language of the statute, the spirit of the statute, and what it seeks to accomplish." State ex rel. Utilities Commission v. Public Staff, 309 N.C. 195, 210, 306 S.E.2d 435, 443-44 (1983) (citations omitted). Specific to the Act, the North Carolina Supreme Court has stated:

The avowed purpose of the Financial Responsibility Act is to compensate the innocent victims of financially irresponsible motorists. The Act is remedial in nature and is to be liberally construed so that the beneficial purpose intended by its enactment may be accomplished. The purpose of the Act, we have said, is best served when every provision of the Act is interpreted to provide the innocent victim with the fullest possible protection.

Liberty Mut. Ins. Co. v. Pennington, 356 N.C. 571, 573-74, 573 S.E.2d 118, 120 (2002) (citations, quotation marks, ellipses and brackets omitted; emphasis added).

In keeping with the purpose of the Act, applicable UIM coverage may be stacked interpolicy to calculate the "applicable limits of underinsured motorist coverage for the vehicle involved in the accident" for the purpose of determining if the tortfeasor's vehicle is an "underinsured highway vehicle." N.C. Farm Bureau Mut. Ins. Co. v. Bost, 126 N.C.App. 42, 50-51, 483 S.E.2d 452, 458 (the legislature's use of the plural "limits" in the statutory definition of "underinsured highway vehicle" means that an insured may stack all applicable UIM policies to determine if the definition is met), disc. review denied, 347 N.C. 138, 492 S.E.2d 25 (1997).

Despite Bost and other cases which have recognized interpolicy stacking of UIM coverages, see, e.g., Harrington v. Stevens, 334 N.C. 586, 434 S.E.2d 212 (1993), defendant contends that the multiple claimant exception added to the definition of "underinsured highway vehicle" in 2004 controls, disallowing stacking in this case. The multiple claimant exception (or "2004 amendment") reads, with the portion relied on by defendant underlined:

For purposes of an underinsured motorist claim asserted by a person injured in an accident where more than one person is injured, a highway vehicle will also be an "underinsured highway vehicle" if the total amount actually paid to that person under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle...