INTEGON INDEM. v. Universal Underwriters, COA97-385.
| Decision Date | 03 November 1998 |
| Docket Number | No. COA97-385.,COA97-385. |
| Citation | 507 S.E.2d 66,131 NC App. 267 |
| Court | North Carolina Court of Appeals |
| Parties | INTEGON INDEMNITY CORPORATION, Plaintiff, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Central Mutual Insurance Company, and Griffin Motor Company, Inc., Defendants. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Third-Party Plaintiff, v. Randall BAUCOM, Third-Party Defendant. |
Michael R. Greeson, Jr., Winston-Salem, for plaintiff-appellant.
Kilpatrick Stockton LLP by James H. Kelly, Jr., and Susan H. Boyles, Winston-Salem, for defendant-appellant Universal Underwriters Insurance Company.
In this declaratory judgment action, plaintiff Integon Indemnity Corporation (Integon) and defendant and third-party plaintiff Universal Underwriters Insurance Company (Universal) each appeal the trial court's 31 December 1996 order. The court ruled that an automobile insurance policy issued by Integon furnished primary coverage and a policy issued by Universal provided excess coverage for claims arising out of a 19 May 1995 motor vehicle collision involving third-party defendant Randall Baucom (Baucom). For the reasons set forth below, we reverse the order of the trial court.
Pertinent facts and procedural history include the following: On 18 May 1995, Baucom rented a Pontiac automobile from defendant Griffin Motor Company, Inc. (Griffin), a corporation engaged in leasing and renting automobiles. At that time, Baucom was insured by Integon under an automobile liability policy (the Integon policy) providing bodily injury coverage in the amount of $25,000 per person and $50,000 per accident, and $15,000 for property damage.
The Integon policy covered "damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident." An "insured" was defined as "[y]ou or any family member for the ownership, maintenanance [sic] or use of any auto or trailer." The policy further provided:
If there is other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other collectible insurance.
Baucom executed a written rental agreement with Griffin which included the following language:
The undersigned hereby acknowledges that the lessor is not providing any type of insurance protection or collecting any charges therefor. In consideration of the foregoing acknowledgment the undersigned agrees to pay for all loss and damage to the described automobile and to hold Lessor harmless from any liability as a result of the lessee's usage thereof.
Baucom further represented in the rental agreement that he was insured under the Integon policy.
On 19 May 1995 in Myrtle Beach, South Carolina, Baucom was involved in an automobile collision with a vehicle owned and operated by James Wooten (Wooten), and insured by defendant Central Mutual Insurance Company (Central). Central tendered payment to Wooten and his passengers under its policy, and thereafter instituted a subrogation claim in Union County to recover the amount of its payments from Baucom and Griffin.
At the time of the collision, Griffin was insured under a policy issued by Universal (the Universal policy), known as a "fleet insurance policy," covering Griffin's changing inventory of vehicles. The Universal policy included an endorsement, entitled "RENTAL AND LEASING AUTOS EXCLUDED," which read as follows:
The Universal policy also stated:
With respect to part (4) of WHO IS AN INSURED, the most WE will pay in the absence of any other applicable insurance, is the minimum limits required by the Motor Vehicle Laws of North Carolina. When there is other applicable insurance, WE will pay only OUR pro rata share of such minimum limits.
Integon, the insurer of Baucom as defendant in the Union County subrogation action, instituted the instant declaratory judgment action 3 May 1996, seeking judicial determination "that the coverage provided by [Universal, the insurer of Griffin as defendant in the Union County action] [wa]s primary to [the extent of] the limits of liability" required by law. Universal denied liability and maintained the Integon policy was the only coverage required either by law or by the terms of the policies at issue.
Universal and Integon each moved for summary judgment. Following a hearing and in an order entered 31 December 1996, the trial court declared that the Integon policy "provide[d] primary coverage for the accident on May 19, 1995, up to the stated limits of its policy." The court further stated that the Universal policy "provide[d] excess coverage for any claims against Randall Baucom arising out of the accident on May 19, 1995, under the Financial Responsibility Act." Both Universal and Integon filed timely notice of appeal.
On appeal, Integon asserts the trial court erred in adjudging the coverage afforded by the Integon policy regarding the 19 May 1995 collision as "primary," i.e., exclusive to the extent of its policy limits of any other available coverage, specifically that set forth in the Universal policy. Universal contends the trial court properly designated Integon's coverage as "primary," but disagrees with the determination that its policy provided excess coverage.
Summary judgment is properly granted if the pleadings, depositions, answers to interrogatories, admissions and affidavits show the movant is entitled to judgment as a matter of law. N.C.R. Civ. P. 56(c); State Farm Mut. Automobile Ins. Co. v. Branch, 114 N.C.App. 234, 237, 441 S.E.2d 586, 588, disc. review denied, 336 N.C. 610, 447 S.E.2d 412 (1994). The meaning of specific language used in a policy of insurance is a question of law, Wachovia Bank & Trust Co. v. Westchester Fire Insurance Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970), and summary judgment may be granted in a declaratory judgment action. Threatte v. Threatte, 59 N.C.App. 292, 294, 296 S.E.2d 521, 523 (1982), appeal dismissed, 308 N.C. 384, 302 S.E.2d 226 (1983). The scope of appellate review thereof is the same as for other actions. N.C.G.S. § 1-258 (1996); Dickey v. Herbin, 250 N.C. 321, 325, 108 S.E.2d 632, 635 (1959).
"The avowed purpose of the Financial Responsibility Act ... is to compensate the innocent victims of financially irresponsible motorists." American Tours, Inc. v. Liberty Mutual Ins. Co., 315 N.C. 341, 346, 338 S.E.2d 92, 96 (1986). Two statutory sections, N.C.G.S. § 20-279.21(b)(2)(Cum.Supp.1997) and N.C.G.S. § 20-281 (1993), govern the obligation of an automobile lessor such as Griffin to insure lessees of its vehicles. Hertz Corp. v. New South Ins., 129 N.C.App. 227, ___, 497 S.E.2d 448, 449-50 (1998). G.S. § 20-281 "accommodates" G.S. § 20-279.21, which is part of the Motor Vehicle Safety and Financial Responsibility Act (FRA) (N.C.G.S. §§ 20-279.1-20.319 (1993)). Jeffreys v. Snappy Car Rental, Inc., 128 N.C.App. 171, 172, 493 S.E.2d 767, 768-69 (1997),disc. review denied, 348 N.C. 73, 505 S.E.2d 872 (1998).
G.S. § 20-281. Both sections require the identical minimum limit of insurance, see Hertz, 129 N.C.App. at ___, 497 S.E.2d at 450, i.e., coverage in the amounts of $25,000 for bodily injury or death of one person in any one accident, $50,000 for bodily injury or death of two or more persons in any one accident, and $15,000 for injury to or destruction of property of others in any one accident (25/50/15). See G.S. § 20-279.21(b)(2) and G.S. § 20-281.
Preliminarily, we express our disapproval of the language in Griffin's rental agreement purporting to disavow provision of liability insurance in "consideration" of the lessee's acknowledgment of complete liability. G.S. § 20-279.21 and G.S. § 20-281 specifically and unambiguously impose upon Griffin, as a corporation in the business of leasing or renting automobiles, the obligation to provide certain minimal insurance. Indeed, Universal acknowledges that "if ... Baucom did not have his own insurance [policy], G.S. § 20-281 would [have] required [Griffin Motor Company] to provide 25/50/15 coverage on the rental vehicle." See Ins. Co. of North America v. Aetna Life & Casualty Co., 88 N.C.App. 236, 242-43, 362 S.E.2d 836, 840 (1987),
disc. review denied, 321 N.C. 743, 366 S.E.2d 860 (1988)(rental company's policy must provide minimum coverage to...
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