Eatman Leasing v. Empire Fire & Marine

• Decision Date: 07 August 2001
• Docket Number: No. COA00-571.,COA00-571.
• Citation: 550 S.E.2d 271,145 NC App. 278
• Court: North Carolina Court of Appeals
• Parties: EATMAN LEASING, INC. and Russell O. Leitch, Sr., Plaintiffs-Appellees, v. EMPIRE FIRE & MARINE INSURANCE COMPANY, Defendant-Appellant, and Douglas W. Shipley, Defendant-Appellee.

550 S.E.2d 271

145 NC App. 278

EATMAN LEASING, INC. and Russell O. Leitch, Sr., Plaintiffs-Appellees, v. EMPIRE FIRE & MARINE INSURANCE COMPANY, Defendant-Appellant, and Douglas W. Shipley, Defendant-Appellee.

No. COA00-571.

Court of Appeals of North Carolina.

August 7, 2001.

Poyner & Spruill, LLP., by Randall R. Adams, Rocky Mount, for Plaintiff-Appellee Eatman Leasing, Inc.

Marshall, Williams, & Gorham, LLP., by W. Robert Cherry, Jr., Wilmington, for Plaintiff-Appellee Leitch.

McGuire, Woods, Battle & Boothe, LLP., by Kurt E. Lindquist, II and Arden Lynn Achenberg, Charlotte, for Defendant-Appellant.

Thompson, Smyth & Cioffi, LLP., by Theodore B. Smyth, Raleigh, for Defendant-Appellee Shipley.

BRYANT, Judge.

Empire Fire & Marine Insurance Company (Empire) issued four business auto policies (two primary and two excess) to Eatman Leasing which were in effect on 11 January 1997. On that date, Plaintiff Russell O. Leitch, Sr. and Defendant Douglas W. Shipley, were involved in an automobile accident. The vehicle driven by Leitch was owned by Eatman Leasing. Eatman Leasing was in the business of leasing, renting and selling automobiles. Leitch was traveling to Wilmington in order to transport the vehicle to Eatman Leasing's Wilmington operation.

Plaintiffs Eatman Leasing and Leitch filed a complaint for a declaratory judgment against Defendants Empire and Shipley on 23 April 1999. Plaintiffs sought a declaration that Empire had a duty to fully indemnify them under the four insurance policies. Both defendants filed motions for summary judgment. The trial court granted defendant Shipley's motion for summary judgment on 17 February 2000. Empire filed a notice of appeal on 10 March 2000.

There are two basic issues on appeal: whether the trial court erred in granting summary judgment in favor of Shipley in I) finding that the four insurance policies afforded coverage to Eatman and Leitch and II) finding the policies provided for prejudgment interest over the policy limits. For the reasons which follow, we find no error in the trial court's rulings.

I.

The trial court held that: 1) all four policies were in effect on the date of the accident; 2) the vehicle driven by Leitch and owned by Eatman is a covered auto under policy numbers SG231000 and SL231000; 3) Eatman is an insured under the policies because it is the named insured; 4) Leitch is an insured because he operated the vehicle with the permission of Eatman as set forth in the "Who is an Insured" section of the primary policies; 5) the vehicle driven by Leitch and owned by Eatman was a covered auto under Policy Number SF231000, pursuant to the amendatory language of Endorsement EM0808GR; 6) both Eatman and Leitch are insureds under Policy Number SX231000 because that policy incorporates by reference the "insureds" and "covered autos" definitions in the primary policy, SF231000.

Empire first argues that the trial court erred in granting Shipley's summary judgment motion and finding that all four insurance policies afforded coverage to Eatman Leasing and Leitch. Empire argues that the trial court's decision was in direct contravention of the express language of the policies. We disagree.

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C.G.S. § 1A-1, Rule 56(c)(2000). Once the moving party makes the required showing, the burden shifts to the non-moving party to produce a forecast of evidence demonstrating specific facts showing that he can at least establish a prima facie case at trial. Gaunt v. Pittaway, 135 N.C.App. 442, 447, 520 S.E.2d 603, 607 (1999), cert. denied, 353 N.C. 371, 547 S.E.2d 810 (2001) citing Moore v. Coachmen Industries, Inc., 129 N.C.App. 389, 393-94, 499 S.E.2d 772, 775 (1998)

.

An insurance policy is a contract and like all other contracts, "the goal of construction is to arrive at the intent of the parties when the policy was issued." Woods v. Nationwide Mutual Ins. Co., 295 N.C. 500, 505, 246 S.E.2d 773, 777 (1978). The intent of the parties may be derived from the language in the policy. Kruger v. State Farm Mut. Auto. Ins. Co., 102 N.C.App. 788, 789, 403 S.E.2d 571, 572 (1991). When the policy language is unambiguous, our courts have a "duty to construe and enforce insurance policies as written, without rewriting the contract or disregarding the express language used." Fidelity Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 380, 348 S.E.2d 794, 796 (1986) (citation omitted). "[W]here the language used in the policy is ambiguous and reasonably susceptible to more than one interpretation," judicial construction is necessary. Allstate Ins. Co. v. Runyon Chatterton, 135 N.C.App. 92, 94, 518 S.E.2d 814, 816 (1999), disc. review denied, 351 N.C. 350, 542 S.E.2d 205 (2000) (citation omitted). If there is uncertainty or ambiguity in the language of an insurance policy regarding whether certain provisions impose liability, the language should be resolved in the insured's favor. Williams v. Nationwide Mut. Ins. Co., 269 N.C. 235, 240, 152 S.E.2d 102, 107 (1967). Moreover, exclusions from liability are not favored, and are to be strictly construed against the insurer. Southeast Airmotive Corp. v. U.S. Fire Insur. Co., 78 N.C.App. 418, 420, 337 S.E.2d 167, 169 (1985).

When an insurance policy provides a definition of a term, that definition should be used. However, when no definition is provided in the policy, the nontechnical words have the same meaning as they would in ordinary speech. Woods at 506, 246 S.E.2d at 777. In determining the meaning of a term, the court may consider other portions of the policy and all clauses of it are to be construed, if possible, so as to bring them into harmony. "Each word is deemed to have been put into the policy for a purpose and will be given effect, if that can be done by any reasonable construction...." Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 355, 172 S.E.2d 518, 522 (1970) (citation omitted).

In this case, the four policies issued were: SG231000, entitled "Garage Auto Policy Form" [Primary Garage Policy] with endorsements; SL231000, entitled "Automobile Liability Excess Indemnity Policy Form" [Excess Garage Policy] with endorsements; SF231000 entitled, "Rental Auto Policy Form" [Primary Rental Policy] with endorsements; and SX231000, entitled "Excess Rental Policy" [Excess Rental Policy] with endorsements. Empire does not dispute that Eatman Leasing and Leitch are covered under the Primary Garage Policy, SG231000. However, Empire does challenge the coverage of Eatman and Leitch under the: A) Excess Garage Policy, SL231000; B) Primary Rental Policy, SF231000; and C) Excess Rental Policy, SX231000.

A. Excess Garage Policy [SL231000]

Empire contends that the Excess Garage Policy did not afford coverage for the January 1997 accident because the express provisions of the policy do not cover Leitch. To determine what coverage Leitch is afforded under the Excess Garage Policy, we need to examine this excess policy and the Primary Garage Policy, SG231000, which is specifically referenced in the declarations of the Excess Garage Policy as the "underlying insurance". The relevant portions of the Excess Garage Policy, SL231000 provide:

INSURING AGREEMENT

Excess Indemnity Over Automobile Liability Insurance

"We" will indemnify "you" for "loss" which occurs during the "policy period" in excess (emphasis added) of the "primary insurance."

CONDITIONS

Application of Primary Insurance

Unless a provision to the contrary appears in "our" policy, all the conditions, definitions, agreements, exclusions and limitations of the "primary insurance", including changes by endorsement will apply to "our" policy.

The following "Who is an Insured" provision from the Primary Garage Policy, SG231000 also applies to the excess policy:

1. WHO IS AN INSURED

a. The following are "insureds" for covered "autos":

(1) You for any covered "auto".

(2) Anyone else while using with your permission (emphasis added) a covered "auto" you own, hire or borrow except:

...

(c) Someone using a covered "auto" while he or she is working in a business of selling, servicing, repairing, parking or storing "autos" unless that business is your "garage operations". (emphasis added).

The excess policy defines "you" and "your" to mean or refer to the Insured named in the "declarations". However, EM0951, the Specific Named Insured Endorsement amends the definition of "you" and "your" by providing in part:

Definition 1. under DEFINITIONS is deleted in its entirety and replaced with the following:

1.... The words "you" or "your" mean or refer to:

a. the Insured named in the "declarations"

...

e. only such other individuals who are specifically listed on this endorsement (emphasis added)

Empire contends that the endorsement modifies the definition of "insured" in both the primary and excess policies to include only those non-employees who are named in the declarations. Empire takes the position that the only way Leitch would be covered under the Excess Garage Policy is if Leitch was an employee of Eatman Leasing (as Eatman Leasing is the named insured) or Leitch, as an independent contractor or non-employee of Eatman Leasing, is named on the endorsement.

We disagree and find that the "Who is an Insured" language in the primary insurance policy was not altered by the endorsement. This is because the endorsement modified the definition of "you" and "your" but it did not change the definition of "insureds." Thus the "Who is an Insured" language remains applicable to the excess policy. Eatman is the named insured. Leitch was operating the vehicle with Eatman's permission at the time of the collision. Leitch's operation of the vehicle under these circumstances is covered under the excess policy...