Davidson v. Knauff Ins. Agency, Inc.

• Decision Date: 21 February 1989
• Docket Number: No. 8726SC1234,8726SC1234
• Citation: 376 S.E.2d 488,93 N.C.App. 20
• Parties: William A. DAVIDSON v. KNAUFF INSURANCE AGENCY, INC., individually and as agent of United States Fidelity and Guaranty Company, and United States Fidelity and Guaranty Company.
• Court: North Carolina Court of Appeals

Page 488

376 S.E.2d 488

93 N.C.App. 20

William A. DAVIDSON v. KNAUFF INSURANCE AGENCY, INC., individually and as agent of United States Fidelity and Guaranty Company, and United States Fidelity and Guaranty Company.

No. 8726SC1234.

Court of Appeals of North Carolina.

Feb. 21, 1989.

Hamel, Hamel & Pearce, P.A. by Hugo A. Pearce III, Charlotte, and Lewis, Babcock, Pleicones & Hawkins by A. Camden Lewis and Daryl G. Hawkins, Columbia, S.C., for plaintiff.

Jones, Hewson & Woolard by Harry C. Hewson and Hunter M. Jones, Charlotte, for defendants.

GREENE, Judge.

This appeal arises from plaintiff's purchase of an automobile liability policy issued by defendant United States Fidelity and Guaranty Company ("USFG"). The policy was originally procured for plaintiff by Knauff Insurance Agency, Inc. ("Knauff") on or about 11 July 1973 and renewed on each anniversary thereafter through July 1984. Pursuant to the Legislature's enactment of underinsured motorist coverage effective 1 January 1980, the USFG policy issued 11 July 1980 began providing underinsured motorist coverage limits of $25,000 for each person and $50,000 for each accident; these limits remained the same during the 1981, 1982 and 1983 renewal periods. Plaintiff paid an additional annual premium of $1.00 for this underinsured motorist coverage. In March 1983, plaintiff was involved in an automobile accident which caused him serious injuries resulting in medical expenses exceeding $100,000. After plaintiff settled with the driver of the other automobile for $25,000, USFG denied liability for any additional expenses under its policy's underinsurance coverage.

An earlier declaratory judgment action by plaintiff resulted in the determination by this court that both the USFG policy as written as well as the relevant version of Section 20-279.21(b)(4) unambiguously provided that USFG's responsibility under its $25,000 underinsurance coverage would be reduced by plaintiff's $25,000 settlement with the other driver, leaving nothing due from USFG: this holding was affirmed per curiam by our Supreme Court. Davidson v. U.S. Fidelity and Guar. Co., 78 N.C.App. 140, 336 S.E.2d 709 (1985), aff'd per curiam, 316 N.C. 551, 342 S.E.2d 523 (1986); N.C.G.S. Sec. 20-279.21(b)(4) (1983). As plaintiff's uninsured motorist coverage already insured against motorists with less than the statutorily required minimum liability coverage of $25,000, we noted plaintiff's contention that "there are no circumstances under which he can collect on his underinsured coverage [of $25,000] and he has paid his premium for this coverage in exchange for nothing. It appears that the plaintiff is correct in this argument but it does not justify our rewriting the policy." 78 N.C.App. at 143, 336 S.E.2d at 711 (emphasis added); cf. N.C.G.S. Sec. 20-279.21(b)(3) (1983) (defining "uninsured motor vehicle" as one without at least minimum liability coverage).

As a result of our judicial determination that plaintiff could not collect under his underinsurance policy with USFG, plaintiff instituted several claims against Knauff and USFG in which he alleged: (1) that Knauff breached its alleged fiduciary duty to disclose the underinsurance coverage was "worthless" and otherwise negligently procured or renewed the USFG policy; and (2) that USFG committed negligence as well as fraud in issuing the policy as subsequently renewed. Plaintiff also alleged that both defendants' actions constituted unfair and deceptive trade practices. Plaintiff conducted discovery which included serving interrogatories on USFG; plaintiff was unsatisfied with its answers and moved that USFG be compelled to answer. Upon the trial court's denial of that motion, both defendants moved for summary judgment on all claims. The trial court subsequently dismissed all claims against USFG. While the trial court also dismissed the claim against Knauff for unfair and deceptive trade practices, the court declined to dismiss plaintiff's negligence claim against Knauff. Plaintiff and defendant Knauff both appeal from the court's summary judgment.

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These facts present the following issues: I) as the trial court's summary judgment determined fewer than all the claims between the parties, whether plaintiff and/or Knauff may maintain interlocutory appeals from the court's judgment; and II) whether the trial court properly granted summary judgment (A) dismissing plaintiff's claims against USFG for negligence, fraud and unfair trade practices and (B) dismissing plaintiff's unfair trade practice claim against Knauff.

I

The trial court's summary judgment dismissed all claims against USFG, and all but the claim against Knauff that it breached alleged fiduciary duties in negligently procuring underinsurance coverage of plaintiff's automobile. Thus, the court's summary judgment is an interlocutory judgment since it "does not dispose of the case, but leaves it for further action for the trial court in order to settle and determine the entire controversy." Veazey v. City of Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950). However, there are two avenues for appealing judgments which are interlocutory under Veazey. First, if there has been a final disposition of at least one but fewer than all claims, the final disposition of those claims may be appealed if the trial judge in addition certifies that there is no just reason to delay the appeal. N.C.G.S. Sec. 1A-1, Rule 54(b) (1988); Oestreicher v. American Nat'l Stores, Inc., 290 N.C. 118, 129, 225 S.E.2d 797, 804 (1976) (Rule 54(b) "expedites review of each separable portion of a multiple claim or multiple party action that has been finally adjudicated"); see id. at 144, 225 S.E.2d at 813 (Sharpe, concurring in part) (Rule 54(b) simply focuses on individual claims as "unit to which finality concept would be applied"). However, since the court in this case failed to certify in its judgment that there was no just reason to delay the appeal, there can be no appeal of the court's summary judgment under Rule 54(b).

Second, even if no appeal is permitted under Rule 54(b), an interlocutory adjudication may nevertheless be appealed if it qualifies under the pertinent provisions of Section 1-277 and Section 7A-27(d). N.C.G.S. Sec. 1-277 (1983); N.C.G.S. Sec. 7A-27(d) (1986); Oestreicher, 290 N.C. at 131, 225 S.E.2d at 805 (reference in Rule 54(b) to appeal under "other statutes" permits appeal under Sections 1-277 and 7A-27(d)). Interlocutory appeals are most commonly allowed under Sections 1-277 and 7A-27(d) if delaying the appeal will prejudice any substantial rights. Sec. 1-277(a); Sec. 7A-27(d)(1). In determining whether a substantial right will be prejudiced by delaying an interlocutory appeal, our Supreme Court has emphasized that "it is usually necessary to resolve the question in each case by considering the particular facts of that case and the procedural context in which the order from which the appeal is sought is entered." Bernick v. Jurden, 306 N.C. 435, 439, 293 S.E.2d 405, 408 (1982) (quoting Waters v. Qualified Personnel, Inc., 294 N.C. 200, 208, 240 S.E.2d 338, 343 (1978)).

However, certain guidelines have emerged. Our Supreme Court has agreed with the general proposition that, "The right to avoid one trial on ... disputed [fact] issues is not normally a substantial right that would allow an interlocutory appeal while the right to avoid the possibility of two trials on the same issues can be such a substantial right." Green v. Duke Power Co., 305 N.C. 603, 606, 290 S.E.2d 593, 595 (1982). This general proposition is based on the following rationale: when common fact issues overlap the claim appealed and any remaining claims, delaying the appeal until all claims have been adjudicated creates the possibility the appellant will undergo a second trial of the same fact issues if the appeal is eventually successful. This possibility in turn "creat[es] the possibility that a party will be prejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issue." Green, 305 N.C. at 608, 290 S.E.2d at 596; accord Bernick, 306 N.C. at 439, 293 S.E.2d at 408-09. Under Section 1-294, perfecting an appeal stays further proceedings upon the judgment appealed from "and upon the matters embraced therein." N.C.G.S. Sec. 1-294 (1983). As the trial of any remaining factually related claims is presumably stayed under Section 1-294, the possibility of two trials of the same factual issues is thereby averted. See Survey of Developments in North Carolina, 57 N.C.L.Rev. 827, 909 n. 113 (1979); see also Survey of Developments in North Carolina Law, 61 N.C.L.Rev. 957, 1008 (1982) (stating Green -type cases subordinate judicial efficiency to jury's need for simple issues by allowing interlocutory appeals of different claims arising from same facts).

The Green proposition concerning the trial of common fact "issues" refines the court's earlier holding in Oestreicher concerning the trial of related "causes": where plaintiff raised related claims for breach of contract, fraud, and punitive damages arising from performance of the same lease contract, the Oestreicher Court held "plaintiff had a substantial right to have all three causes tried at the same time by the same judge and jury." 290 N.C. at 130, 225 S.E.2d at 805. It has been suggested that a loose application of the Oestreicher Court's reference to the substantial right to try all "causes" at once may produce results inconsistent with the Green Court's reference to the more limited right to try only common fact "issues" at once. J & B Slurry Seal Co. v. Mid-South Aviation Inc., 88 N.C.App. 1, 7-9, 362 S.E.2d 812, 817 (1987).

However, given the related fact issues underlying the "causes" in Oestreicher, it is clear under either Oestreicher or Green that if the final disposition of multiple claims depends upon the determination of any common fact issues, then the parties ordinarily have a substantial...