Johns v. Automobile Club Ins. Co.

• Decision Date: 04 April 1995
• Docket Number: No. 9428SC475,9428SC475
• Citation: 455 S.E.2d 466,118 N.C.App. 424
• Parties: Mary Ellen JOHNS and James M. Baley, III, Ancillary Administrator of the Estate of Jesse Thomas Johns, Plaintiffs/Appellees, v. AUTOMOBILE CLUB INSURANCE COMPANY and Allstate Insurance Company, Defendants/Appellants.
• Court: North Carolina Court of Appeals

Page 466

455 S.E.2d 466

118 N.C.App. 424

Mary Ellen JOHNS and James M. Baley, III, Ancillary Administrator of the Estate of Jesse Thomas Johns Plaintiffs/Appellees, v. AUTOMOBILE CLUB INSURANCE COMPANY and Allstate Insurance Company, Defendants/Appellants.

No. 9428SC475.

Court of Appeals of North Carolina.

April 4, 1995.

Gudger and Gudger by Lamar Gudger, Asheville, and James H. Toms & Associates, P.A. by James H. Toms and Christopher A. Bomba, Henderson, for plaintiffs/appellees.

Hedrick, Eatman, Gardner & Kincheloe by Lisa C. Bell, Charlotte, for defendants/appellants Auto. Club Ins. Co., et al.

Ball, Barden, Contrivo & Bell, P.A. by Frank J. Contrivo and Cynthia C. Harbin, Asheville, for defendant/appellant Allstate.

JOHNSON, Judge.

On 6 March 1992, plaintiff Mary Ellen Johns was a passenger in the left rear seat of a 1989 Ford Tempo passenger vehicle owned and driven by her son, Jerry C. Johns. Plaintiff Mary Ellen Johns' other son, Jesse T. Johns, rode in the right rear seat. At 5:50 p.m. on that rainy day, while traveling east on Interstate 26 in Buncombe County, North Carolina, Jerry C. Johns lost control of his vehicle on the wet pavement, crossed the median, and collided with three other vehicles. Jerry C. Johns and Jesse Johns were both killed in the collision, and plaintiff Mary Ellen Johns was injured. The three family members resided together in a mobile home in Maryville, Tennessee.

Plaintiff Mary Ellen Johns and plaintiff James M. Bailey as administrator of the estate of Jesse Johns filed a complaint alleging negligence on the part of Jerry C. Johns and seeking a declaratory judgment that Allstate Insurance Company as the uninsured motorist carrier for plaintiff Mary Ellen Johns, had coverage for injuries sustained by plaintiffs.

Jerry C. Johns was the sole named insured on an Automobile Club Insurance Company automobile insurance policy covering his 1989 Ford. Plaintiff Mary Ellen Johns was the sole named insured on an Allstate automobile insurance policy on a 1988 Isuzu.

Section II, Exclusions, Paragraph 2 of plaintiff Mary Ellen Johns' policy contains the policy terms concerning uninsured (UM)/underinsured (UIM) coverage, states that the UM/UIM coverage does not apply "to bodily injury to an insured ... sustained by him while occupying an automobile ... owned by ... any relative resident in the same household."

Jerry C. Johns' Automobile Club policy contains a similar exclusion under its liability coverage. A "Tennessee Amendatory Endorsement" declines "Liability Coverage for any person for 'bodily injury' to you or any 'family member.' " "Family member" is defined, in part, as a person related by blood or marriage to the named insured, or to the named insured's co-resident spouse, "who is a resident of your (i.e., the named insured's or the named insured's spouse's) household."

Both policies were issued to plaintiff Mary Ellen Johns and Jerry C. Johns while they were residents of Tennessee, and residents of the same household. Jesse Johns was a member of the same household.

Both defendants admit plaintiffs' allegation that their companies have permission to do business in the State of North Carolina and that defendant Allstate "does business in Buncombe County, North Carolina." Defendant Allstate admitted that it provided liability and uninsured motorist coverage to plaintiff Mary Ellen Johns; this Allstate policy provides coverage throughout "the United States of America, its territories or possessions or Canada or between parts thereof...."

Defendant Allstate contemporaneously with defendant Automobile Club Insurance Company moved for summary judgment. The motion was denied on 14 February 1994. Plaintiffs also moved for summary judgment on the coverage issue; the trial court allowed plaintiffs' motion. Defendant Allstate appeals. Defendant Automobile Club Insurance Company withdrew its appeal prior to filing of the record of appeal.

Defendant Allstate contends that the trial court committed reversible error in denying its motion for summary judgment and granting plaintiffs' motion for summary judgment on the issue of coverage.

Defendant Allstate argues that Tennessee law should be applied to the construction of plaintiff Mary Ellen Johns' policy of insurance with defendant Allstate. The first issue to be resolved is which state's choice of law is to be applied, i.e., whether Tennessee contract law controls the insurance coverage and exclusions in the policy under review in the instant case or North Carolina's contract law.

Our Supreme Court has said that a contract of insurance is to be interpreted in accordance with the laws of the state where the contract was made and delivered, notwithstanding the fact that liability of the insured resulted from a collision occurring in North Carolina. Roomy v. Insurance Co., 256 N.C. 318, 123 S.E.2d 817 (1962). See also Connor v. Insurance Co., 265 N.C. 188, 143 S.E.2d 98 (1965). "Under North Carolina law, the substantive law of the state where the last act to make a contract occurs governs all aspects of the contract." Tolaram Fibers, Inc. v. Tandy Corp., 92 N.C.App. 713, 717, 375 S.E.2d 673, 675, disc. review denied, 324 N.C. 436, 379 S.E.2d 249 (1989); See also Land Co., v. Wood, 40 N.C.App. 133, 252 S.E.2d 546 (1979). This contract action was entered into in Tennessee where the parties resided; however, our analysis does not stop here simply because the contract was entered into in the state of Tennessee.

In Collins & Aikman Corp. v. Hartford Accident & Indemnity Co., 335 N.C. 91, 436 S.E.2d 243 (1993), our Supreme Court applied North Carolina law even though the application for and delivery of the insurance contract occurred in California. The Court concluded North Carolina had close connections with the interests insured by the policy because most of the insured's vehicles were titled in North Carolina and the insured's transportation division was located in North Carolina. Id. Our Supreme Court in Collins & Aikman Corp. noting that the connection of the state with the interests insured is the preeminent issue, held that the law of North Carolina governs in interpreting the policy where North Carolina has close connections with the interests insured by the policy. Id.

In the case sub judice, close ties with North Carolina do not exist. There are no significant contacts with North Carolina in this insurance contract action other than the fact that the injuries occurred in North Carolina. All of the significant connections occurred in Tennessee. The contract was made in Tennessee, the parties intended to be obligated by the Tennessee policy, and the parties involved resided in Tennessee; thus, the accident is the only contact the parties had with North Carolina. Thus, Tennessee law governs coverage of the insurance policy herein.

Plaintiffs argue that we should not...