Carter v. West American Ins. Co.

• Decision Date: 20 May 2008
• Docket Number: No. COA07-781.,COA07-781.
• Citation: 661 S.E.2d 264
• Court: North Carolina Court of Appeals
• Parties: Audrey CARTER, Plaintiff, v. WEST AMERICAN INSURANCE CO., Graham Underwriters Agency, Inc., and Frank Biggerstaff, Defendants.

661 S.E.2d 264

Audrey CARTER, Plaintiff, v. WEST AMERICAN INSURANCE CO., Graham Underwriters Agency, Inc., and Frank Biggerstaff, Defendants.

No. COA07-781.

Court of Appeals of North Carolina.

May 20, 2008.

Appeal by plaintiff from order entered 27 November 2006 by Judge W. Osmond Smith, III, in Superior Court, Alamance County. Heard in the Court of Appeals 9 January 2008.

Law Offices of Jonathan S. Dills, P.A. by Jonathan S. Dills, Winston-Salem, for plaintiff-appellant.

Hedrick, Gardner, Kincheloe & Garofalo, L.L.P., by Reid Russell, Raleigh, for defendant-appellee West American Insurance Company.

Teague, Rotenstreich, Stanaland, Fox & Holt, LLP, by Stephen G. Teague, Greensboro, for defendant-appellee Graham Underwriters Agency, Inc.

STROUD, Judge.

Plaintiff Audrey Carter appeals from the trial court order granting summary judgment in favor of defendants West American Insurance Company, Inc. ("West American") and Graham Underwriters Agency, Inc. ("Graham") as to all claims. For the following reasons, we affirm.

I. Factual Background

The evidence in the record, drawing all inferences in favor of plaintiff, Collingwood v. G.E. Real Estate Equities, 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989), tends to show the following: From 1965 to 2001, plaintiff's home was insured under policies procured by defendant Graham, an insurance agent. Plaintiff's husband, Haywood Jackson Carter ("Mr. Carter" or "Haywood"), handled all of the family's insurance matters until his death in 1985. Sometime before Mr. Carter died, he told plaintiff that the home was insured with "replacement insurance." Shortly before Mr. Carter died, plaintiff had the carpet in her home replaced by insurance because of water damage. The insurance adjuster who handled the claim told her at that time that she had "replacement insurance." After Mr. Carter died, plaintiff told Mary Uttley, an employee of defendant Graham, "when [you] writ[e] the insurance [you] kn[ow] what Haywood always did, and he believed in good coverage and [you] just . . . cover it."

From February 1991 to February 2001, plaintiff's home was insured under a policy issued by defendant West American which was procured for plaintiff by defendant Graham. The dwelling coverage amount of the policy regularly increased to reflect current local construction costs. Those increases amounted to, approximately, four percent in February 1997, three percent in February 1998, one percent in February 1999, and four percent in February 2000. As of 25 July 2000, the dwelling coverage on plaintiff's home was one hundred nineteen thousand five hundred dollars ($119,500).

Plaintiff's home was appraised on 25 August 1998 for the purpose of re-financing. The total estimated "cost new" on the appraisal was one hundred twenty-nine thousand four hundred ninety-six dollars ($129,496). Graham was not advised of the appraisal.

On 25 July 2000, plaintiff's home suffered extensive damage from a fire which started in an electrical outlet, rendering the home uninhabitable. The fire was reported to West American the same day. On or about 14 August 2000, plaintiff's son Larry Carter estimated the cost to replace the house at over two hundred thousand dollars ($200,000), and indicated he would sue on account of plaintiff being underinsured. In October 2000, West American offered to pay plaintiff $119,500, the limit of her policy, for the loss of her dwelling. She refused. On or about 11 December 2000, plaintiff hired counsel to represent her with respect to her insurance claim.

On 14 June 2001, Ohio Casualty Group (OCG), the parent company of West American, tendered a check to plaintiff in the amount of one hundred twenty-five thousand four hundred seventy-five dollars ($125,475). The memorandum on the face of the check read:

SETTLEMENT OF FIRE AS FOLLOWS:

                  DWELLING               $119,500.00
                  DEBRIS REMOVAL         $  5,975.00
                

REFLECTS TOTAL RECOVERABLE UNDER THESE COVERAGES

By letter dated 31 October 2001, plaintiff, through her attorney, objected to the wording of the memorandum and requested that OCG reissue the check without the memorandum. OCG reissued the check on 31 January 2002 with a memorandum on the face of the check which read:

FIRE DAMAGE TO DWELLING:

                  DWELLING              $119,500.00
                  DEBRIS REMOVAL        $  5,975.00
                

Plaintiff deposited the 31 January 2002 check.

II. Procedural History

Plaintiff filed a complaint¹ on 15 September 2005, seeking damages from defendant West American for unfair or deceptive trade practices (UDTP), breach of contract, and willful, wanton and oppressive breach of contract. In the same complaint, plaintiff sought damages from defendant Graham for breach of contract and breach of fiduciary duty. The gravamen of the complaint was that even though the written contract of insurance set the dwelling coverage amount at $119,500, defendants had orally agreed or impliedly assumed a duty to cover whatever it cost to replace the house, which plaintiff estimated at two hundred forty-four thousand seven hundred sixty dollars ($244,760). Defendant Graham answered on or about 22 December 2005, denying the existence of any oral agreement to pay for the cost of replacing the house beyond the written coverage amount, denying it assumed any duty to periodically appraise the dwelling and increase the written coverage amount, and asserting plaintiff's contributory negligence as an affirmative defense. The answer of Defendant West American was filed on 30 January 2006 and contained substantially similar defenses.

Defendant West American filed a motion for summary judgment on or about 8 September 2006. Defendant Graham filed a motion for summary judgment on or about 12 October 2006. The trial court entered summary judgment in favor of both defendants as to all claims on or about 27 November 2006. Plaintiff appeals from entry of summary judgment in favor of defendants.

III. Procedural Issues

A. Rules Violations

Defendants argue that plaintiff's appeal should be dismissed because of violations of the Rules of Appellate Procedure. However, we will not address this argument because "such motions may not be raised in a brief, but rather must be made in accordance with Rule 37 of the North Carolina Rules of Appellate Procedure." Freeman v. Rothrock, ___ N.C.App. ___, ___, 657 S.E.2d 389, 392 (2008) (citation, internal brackets and quotation marks omitted) (declining to address appellee's argument that appeal should be dismissed for failure to follow the Rules of Appellate Procedure when the argument was labeled "Motion to Dismiss" in the brief); but see Cotter v. Cotter, ___ N.C.App. ___, ___, 648 S.E.2d 552, 554 (2007) (addressing and overruling an appellee's argument similar in substance to that in Freeman but which was labeled "Argument" in the brief), and Hammonds v. Lumbee River Elec. Membership Corp., 178 N.C.App. 1, 12, 631 S.E.2d 1, 9 (addressing and overruling an appellee's argument similar in substance to that in Freeman but which was labeled "Argument" in the brief), disc. review denied, 360 N.C. 576, 635 S.E.2d 598 (2006). Nevertheless, we note of our own initiative that failure of plaintiff's counsel to include a statement of the grounds for appellate review and failure to include a standard of review for each question presented as required by Rule 28 are "indicative of inartful appellate advocacy," Dogwood Dev. & Mgmt. v. White Oak Transport, 362 N.C. 191, 198, 657 S.E.2d 361, 365 (2008), for which plaintiff's counsel should be chastised "with an admonishment to exercise more diligence . . . in briefs prepared for this Court." State v. Parker, ___ N.C.App. ___, ___, 653 S.E.2d 6, 8 (2007).

B. Standard of Review

The trial court must grant summary judgment upon a party's motion when there is no genuine issue as to any material fact and any party is entitled to a judgment as a matter of law. . . . Summary judgment is appropriate if: (1) the non-moving party does not have a factual basis for each essential element of its claim; (2) the facts are not disputed and only a question of law remains; or (3) if the non-moving party is unable to overcome an affirmative defense offered by the moving party[.]

Griffith v. Glen Wood Co., Inc., ___ N.C.App. ___, ___, 646 S.E.2d 550, 554 (2007) (internal citations, quotation marks, ellipses and footnote omitted). "On appeal, an order granting summary judgment is reviewed de novo [,]" id., with the evidence in the record viewed in the light most favorable to the plaintiff, Collingwood, 324 N.C. at 66, 376 S.E.2d at 427.

IV. Substantive Issues

A. Breach of Contract

"The elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of that contract." Poor v. Hill, 138 N.C.App. 19, 26, 530 S.E.2d 838, 843 (2000). It is undisputed that defendant West American paid the entire amount promised in the written contract for dwelling insurance coverage: $119,500. However, plaintiff contends that the written contract did not reflect the true agreement of the parties, and should be reformed on account of the inequitable conduct of defendant Graham as agent for West American.

In support of her argument for reformation, plaintiff states the law of equitable reformation by quoting from Williams v. Greensboro Fire Ins. Co., "[i]t is well settled that in equity a written instrument, including insurance policies, can be reformed by parol evidence, for . . . inequitable conduct . . ." 209 N.C. 765, 769, 185 S.E. 21, 23 (1936). However, the ellipses in plaintiff's statement of the law omit an important portion of the law. Stated fully in relevant part, "in equity a written instrument, including insurance policies, can be reformed by parole evidence, for . . . the mistake of one superinduced by the fraud of the other or inequitable conduct of the other." Id. (emphasis added); see also McCallum v. Old Republic Life Ins. Co., 259 N.C. 573, 577, 131 S.E.2d 435, 438 (1963) ("Fraud or inequitable...