Coakley v. Horace Mann Insurance Co., No. 3929 (NC 1/24/2005), No. 3929

CitationNo. 3929
Case DateJanuary 24, 2005
CourtUnited States State Supreme Court of North Carolina

Page 1

J. Samuel Coakley, individually and as Trustee of a Special Needs Trust for Christian Coakley, Respondent,
Horace Mann Insurance Co., Scott Andrew Mitchell, Christopher N. Mitchell and Claudia Dee Dee Mitchell, Appellants.
No. 3929
Court of Appeals of North Carolina.
Heard November 17, 2004
Filed January 24, 2005

Appeal from Spartanburg County J. Derham Cole, Circuit Court Judge.

Phillip E. Reeves, and Jennifer D. Eubanks, both of Greenville, for Appellants.

Benjamin C. Harrison, and David H. Tyner, both of Spartanburg, for Respondent.


Respondent filed this declaratory judgment action to determine the applicability of certain automobile liability policies issued by Horace Mann Insurance Company (Horace Mann). The circuit court found coverage under all three policies. We affirm.


On August 19, 1994, sixteen-year-old Christian Coakley was a passenger in a car being driven by seventeen-year-old Scott Andrew Mitchell. As they were traveling towards a friend's house, Scott lost control and the car slammed into a tree. The force of the impact shattered a vertebra in Christian's neck, partially severing his spinal cord. As a result of these injuries, Christian is a permanent quadriplegic.

The automobile, a 1984 Mazda RX-7, belonged to Scott's older brother Christopher Mitchell and was titled in Christopher's name. Christopher, a student at Clemson University, resided in an apartment in Clemson, normally kept the car with him, and was its primary user.1 Prior to the accident, Christopher went on a trip to California and left the car at his mother's house. Christopher was on the way back from California when the accident occurred. Scott was a high school student and lived with his mother in Spartanburg, South Carolina.2 Claudia "Dee Dee" Mitchell, Scott and Christopher's mother, testified in her deposition that Scott had permission to use the car.

The car was insured through Horace Mann, with Dee Dee being the named insured. The policy provided liability limits of $50,000.00 for personal injury. Dee Dee also maintained policies on three other vehicles. Two of these policies carry liability limits of $50,000.00, and the third has a liability limit of $250,000.00. None of these other policies provided primary coverage for the vehicle involved in the accident.

The special needs trust (the Trust) created on behalf of Christian commenced this action seeking compensation for Christian's injuries.3 The Trust sought recovery under the policy covering the RX-7, as well as excess coverage under the policies on the other three cars. Horace Mann initially denied liability, but following discovery, the parties entered into a covenant not to execute. Pursuant to the covenant, Horace Mann paid out the liability limits on the policy covering the RX-7. The covenant also allowed the Trust to bring a declaratory judgment action to determine the applicability of the three additional policies. In exchange for permission to bring the action, the Trust agreed that recovery, if any, would be limited to $350,000.00—the combined total of the three policies.

The Trust then filed this declaratory judgment action alleging that although the other policies do not provide primary coverage on the RX-7, they provide excess coverage for "non-owned" vehicles. The Trust argued the RX-7 was a non-owned vehicle because Christopher owned the car and was not a relative within the meaning of the policies.

The parties agreed to transfer the litigation to a non-jury docket and the case was submitted upon memoranda of authority, copies of the policies in dispute, and the deposition testimony of the Mitchell defendants. On March 5, 2003, the trial court issued its order, in which it found excess liability coverage was available to Christian under all three policies. Accordingly, judgment was entered in the amount of $350,000.00. Horace Mann, Scott, Christopher, and Dee Dee (collectively "Appellants") have appealed from that Order.


A declaratory judgment action to determine coverage under an automobile liability policy is an action at law. Travelers Indem. Co. v. Auto World of Orangeburg, Inc., 334 S.C. 137, 140, 511 S.E.2d 692, 694 (Ct. App. 1999). In an action at law tried by a judge without a jury, the judge's findings will not be disturbed on appeal unless no reasonable evidence supports the judge's conclusions. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). Since Appellants have admitted that no facts are in dispute in this case, this court can review conclusions of law based on those facts. Midland Guardian Co. v. Thacker, 280 S.C. 563, 568, 314 S.E.2d 26, 29 (Ct. App. 1984).

I. The Insurance Policy

"Insurance policies are subject to general rules of contract construction." State Farm Mut. Auto. Ins. Co. v. Calcutt, 340 S.C. 231, 234, 530 S.E.2d 896, 897 (Ct. App. 2000) (citations omitted). Accordingly, courts "should give policy language its plain, ordinary and popular meaning." Id. Furthermore, courts should not rewrite policy language or torture its meaning to extend coverage never intended by the parties. Torrington Co. v. Aetna Cas. & Sur. Co., 264 S.C. 636, 643, 216 S.E.2d 547, 550 (1975). When an insurance contract is unambiguous, clear, and explicit, it must be construed according to the terms the parties have used. Century Indem. Co. v. Golden Hills Builders, Inc., 348 S.C. 559, 565, 561 S.E.2d 355, 358 (2002). However, "[a]mbiguous or conflicting terms in an insurance policy must be construed liberally in favor of the insured and strictly against the insurer." Stewart v. State Farm Mut. Auto Ins. Co., 341 S.C. 143, 151, 533 S.E.2d 597, 601 (Ct. App. 2000).

In the instant case, all four Horace Mann policies issued to Dee Dee Mitchell contain identical policy language. The policies extend liability coverage to payment of damages which an insured becomes legally liable to pay because of bodily injury to others caused by or resulting from the ownership, maintenance or use of the covered vehicle. Scott is an "insured" under the policy because he is a relative of Dee Dee.

The policies also extend liability coverage to the use of other cars by an insured. The pertinent language provides as follows: "Bodily Injury and Property Damage Liability coverages extend to the use, by an insured, of . . . a non-owned car while being used with the permission of the owner." (emphasis omitted). The policies further provide that if there is other coverage, the applicable policy will be excess: "If an insured is using a . . . non-owned car, our liability insurance will be excess over other collectible insurance." (emphasis omitted).

The definition of "non-owned car" has been replaced by an amendatory endorsement. As amended, the definition provides as follows:

Non-owned car means a private passenger car . . . not:

1. owned by;

2. registered in the name of; or

3. furnished or available for the regular use of you or your relatives. The use must be within the scope of consent of the owner or person in lawful possession of it.

The policies define "relative" as follows: "Relative means a person related to you by blood, marriage or adoption who lives with you. It includes your unmarried and dependent child who is away at school." (emphasis omitted).

Horace Mann has conceded liability on the liability policy covering the RX-7 and tendered the limits on that policy. The other three policies do not cover the RX-7, but they do cover non-owned vehicles. These policies specifically provide that if there is other coverage on a non-owned vehicle, they provide excess coverage. The heart of the issue is whether the RX-7 was a non-owned vehicle, and that question turns on whether Christopher owned the car or was a relative within the meaning of the policy.

II. Ownership of the Car

Appellants first argue the RX-7 could not have been a non-owned car because Dee Dee Mitchell, not Christopher, was the owner of the vehicle. The trial court found Christopher owned the car and this finding will not be disturbed on appeal unless no reasonable evidence supports the court's conclusions. Townes, 266 S.C. at 86, 221 S.E.2d at 775. We note that Scott, Dee Dee, and Christopher admitted in their Answer that Christopher owned the RX-7. The Covenant Not to Execute also states that Christopher is the owner. Appellants assert in their brief that the facts in this case are not in dispute and Dee Dee testified that the car is titled in Christopher's name. Therefore, we find sufficient evidence in the record to sustain the trial court's finding that Christopher owned the car, not Dee Dee Mitchell.

III. Status of Christopher in Relation to Dee Dee Mitchell

Since the RX-7 was not "owned by" or "registered in the name of" Dee Dee Mitchell, the named insured, the car could only be a non-owned vehicle if it was not "furnished or available for the regular use of" Dee Dee Mitchell or her "relatives." It is undisputed that the RX-7 was not available for the regular use of Scott at the time of the accident. Additionally, the trial court found, and Appellants have not disputed, that the car was not available for the regular use of Dee Dee at the time of the accident. Therefore, the car qualifies as a non-owned vehicle unless Christopher was a relative of Dee Dee under the policies.


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