Hendrickson v. Lee

• Decision Date: 18 July 1995
• Docket Number: No. 9310SC651,9310SC651
• Citation: 119 N.C.App. 444,459 S.E.2d 275
• Parties: David L. HENDRICKSON, Plaintiff, v. James L. LEE, Nationwide Mutual Insurance Company, C/S Sovran Credit Corporation, Pennsylvania Manufacturers Association Insurance Company and North Carolina Farm Bureau Mutual Insurance Company, Defendants.
• Court: North Carolina Court of Appeals

Page 275

459 S.E.2d 275

119 N.C.App. 444

David L. HENDRICKSON, Plaintiff, v. James L. LEE, Nationwide Mutual Insurance Company, C/S Sovran Credit Corporation, Pennsylvania Manufacturers Association Insurance Company and North Carolina Farm Bureau Mutual Insurance Company, Defendants.

No. 9310SC651.

Court of Appeals of North Carolina.

July 18, 1995.

Edwards & Kirby by David F. Kirby and Tiana H. Irvin, Raleigh, for plaintiff-appellee.

Young, Moore, Henderson & Alvis, P.A. by Ralph W. Meekins and Glenn C. Raynor, Raleigh, for defendant-appellant Pennsylvania Manufacturers Ins. Co.

Cranfill, Sumner & Hartzog by Theodore B. Smyth and Kari L. Russwurm, Raleigh, for defendant-appellee North Carolina Farm Bureau Mut. Ins. Co.

James L. Lee, Rocky Mount, NC, pro se.

JOHN, Judge.

In this declaratory judgment action, defendant Pennsylvania Manufacturers Association Insurance Company (PMA) appeals the trial court's entry of summary judgment in favor of plaintiff David L. Hendrickson (plaintiff). The court's ruling was based upon its determination that PMA policy number BAP 159000 758451 9 (the PMA policy) provided plaintiff with underinsured motorist (UIM) coverage up to the limits of bodily injury liability coverage established in the policy. PMA argues, however, that the court erred in not finding that its insured, defendant C/S Sovran Credit Corporation (Sovran), had previously rejected UIM coverage equal to the liability limits and instead selected UIM coverage in the amount of $60,000.00.

We disagree with PMA's contentions.

Pertinent factual and procedural information is as follows: On 23 October 1990, plaintiff was seriously injured in an automobile collision caused by the failure of defendant James L. Lee (Lee) to stop his vehicle at a stop-light. When the accident occurred, plaintiff was operating a 1985 Plymouth owned by his employer, defendant Sovran. This automobile was covered by the PMA policy, a general commercial insurance policy issued to Sovran in January 1990. Lee was insured on the date of the collision by Nationwide Mutual Insurance Company (Nationwide) under a personal automobile liability policy.

Seeking recovery for his injuries (including amputation of one leg), plaintiff filed a negligence action against Lee in Edgecombe County Superior Court on 14 November 1991. Nationwide subsequently accepted liability on Lee's behalf and tendered its limits of $100,000.00 to plaintiff. Plaintiff thereafter notified PMA of his claim for UIM benefits under the PMA policy.

On 19 December 1991, citing PMA's denial of UIM coverage in excess of $60,000.00, plaintiff filed the instant action for declaratory relief against PMA and North Carolina Farm Bureau Mutual Insurance Company (Farm Bureau). In his complaint, plaintiff alleged his damages exceeded the $100,000.00 submitted by Nationwide and requested a declaration that the amount of UIM coverage available to him under the PMA policy was equal to the limits of bodily injury liability coverage established within that policy.

Farm Bureau's answer, filed 11 February 1992, admitted issuance of several policies in effect on the accident date which provided UIM coverage for certain members of plaintiff's family. However, Farm Bureau asked the court to declare that plaintiff was entitled to UIM coverage at limits of $1,000,000.00 under the PMA policy, and further that PMA's UIM coverage be deemed primary to whatever coverage, if any, the court found to be provided by Farm Bureau's various policies.

PMA's answer asserted that Sovran specifically "rejected underinsured motorists coverage for any amounts over $60,000" as reflected on the policy's declarations page and as evidenced by Sovran's April 1989 execution of a standard rejection form (the rejection form). PMA thereafter requested the court's declaration that the policy provided plaintiff no more than $60,000.00 UIM coverage.

On 17 March 1992, plaintiff moved for summary judgment pursuant to N.C.R.Civ.P. 56 (1990) "on the issue of the underinsured motorist coverage afforded by [PMA]." PMA likewise moved for summary judgment on 16 April 1992. After a hearing held 29 April 1992, the court granted plaintiff's motion and denied that of PMA. Included in the court's order was the following language:

IT IS THEREFORE ORDERED:

....

3. That PMA motor vehicle policy no. BAP 159000 758451 9 provides underinsured motorist coverage for damages sustained by plaintiff in the motor vehicle wreck of October 23, 1990.

4. That the limits of underinsured motorist coverage in PMA motor vehicle policy no. BAP 159000 758451 9 are equal to the limits of bodily injury liability coverage in that policy.

5. That the limits of underinsured motorist coverage in PMA motor vehicle liability policy no. BAP 159000 758451 9 are One Million Dollars (1,000,000.00).

_____

PMA contends the trial court erred by determining that the policy provided plaintiff with UIM coverage equal to that policy's $1,000,000.00 bodily injury liability limits. Through three interrelated assignments of error, PMA argues Sovran had previously rejected liability limits UIM coverage and selected UIM coverage in the amount of $60,000.00. Limiting our holding to the circumstances of the case sub judice, we disagree.

Summary judgment is a procedural device designed to permit penetration of an unfounded claim or defense in advance of PMA initially contends plaintiff was not afforded UIM coverage equal to the liability limits contained in his employer's policy because Sovran specifically rejected that amount of coverage in April 1989. PMA also maintains the validity of Sovran's rejection was not affected by use of a form differing from that promulgated in 1986 by the North Carolina Rate Bureau (the Rate Bureau). Because these contentions involve overlapping questions, we will discuss them jointly.

                trial, allowing for summary disposition in either party's favor when a fatal weakness in the claim or defense is exposed.  See, e.g., Thompson v. Insurance Co., 44 N.C.App. 668, 672, 262 S.E.2d 397, 400 (citing Moore v. Fieldcrest Mills, Inc., 296 N.C. 467, 470, 251 S.E.2d 419, 422 (1979)), disc. review denied, 300 N.C. 202, 269 S.E.2d 620 (1980).  Summary judgment is "an appropriate procedure in a declaratory judgment action," Montgomery v. Hinton, 45 N.C.App. 271, 273, 262 S.E.2d 697, 698 (1980) (citations omitted), but is only properly granted when 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."   See Rule 56(c).  Accordingly, we must examine the evidence herein to determine whether it reveals a genuine issue of material fact regarding the amount of UIM coverage provided in the policy;  if not, the trial court properly granted plaintiff judgment as a matter of law.  See, e.g., Oliver v. Roberts, 49 N.C.App. 311, 314, 271 S.E.2d 399, 401 (1980) (citation omitted), disc. review denied, --- N.C. ----, 276 S.E.2d 283 (1981)
                

We note at the outset that "[w]hen examining cases to determine whether insurance coverage is provided by a particular automobile liability insurance policy, careful attention must be given to the type of coverage, the relevant statutory provisions, and the terms of the policy." Smith v. Nationwide Mutual Ins. Co., 328 N.C. 139, 142, 400 S.E.2d 44, 47, reh'g denied, 328 N.C. 577, 403 S.E.2d 514 (1991). In the case sub judice, the type of coverage at issue is UIM and the governing statute is the version of N.C.Gen.Stat. § 20-279.21(b)(4) in effect at the time of the incidents giving rise to the instant action. See N.C.Gen.Stat. § 20-279.21(b)(4) (1988).

The Financial Responsibility Act (the Act), which includes G.S. § 20-279.21(b)(4), is a remedial statute which must be liberally construed in order to achieve the "beneficial purpose intended by its enactment." Sutton v. Aetna Casualty & Surety Co., 325 N.C. 259, 265, 382 S.E.2d 759, 763 (citation omitted), reh'g denied, 325 N.C. 437, 384 S.E.2d 546 (1989). It is well-established that "[t]he purpose of [the Act] ... is the protection of innocent victims who may be injured by financially irresponsible motorists." Proctor v. N.C. Farm Bureau Mutual Ins. Co., 324 N.C. 221, 224, 376 S.E.2d 761, 763 (1989) (citation omitted). As our Supreme Court has stated, the Act's purpose is "best served when the statute is interpreted to provide the innocent victim with the fullest possible protection " from the negligent acts of an underinsured motorist. Id. at 225, 376 S.E.2d at 764 (emphasis added). Further, the provisions of the Act "are 'written' into every automobile liability policy as a matter of law, and, when the terms of [a] policy conflict with the statute, the provisions of the statute will prevail." Insurance Co. v. Chantos, 293 N.C. 431, 441, 238 S.E.2d 597, 604 (1977) (citations omitted).

G.S. § 20-279.21(b)(4) provided as follows at the time of plaintiff's accident:

(b) Such owner's policy of liability insurance:

....

(4) Shall ... provide underinsured motorist coverage, to be used only with policies that are written at limits that exceed those prescribed by subdivision (2) [i.e., $25,000.00] of this section and that afford uninsured motorist coverage as provided by subdivision (3) of this subsection, in an amount equal to the policy limits for automobile bodily injury liability as specified in the owner's policy.

....

The coverage required under this subdivision shall not be applicable where any insured named in the policy rejects the coverage ... Rejection of this coverage for policies issued after October 1, 1986, shall be made in writing by the named insured on a form promulgated by the North Carolina Rate Bureau and approved by the Commissioner of Insurance.

(Emphasis added).

Our Supreme Court has held that where (as here) liability insurance is in excess of the statutory minimum, ...