Lanning v. Allstate Ins. Co.

• Decision Date: 04 September 1992
• Docket Number: No. 288PA91,288PA91
• Citation: 332 N.C. 309,420 S.E.2d 180
• Court: North Carolina Supreme Court
• Parties: Harry Eugene LANNING, Executor for the Estate of Deborah Jean Lanning; Lawrence C. Stoker, Administrator for the Estate of Cheryl Ann Melton; Linda Diane Christopher, Natural Mother and Guardian ad Litem of Kelly Paula Christopher, Minor Child, v. ALLSTATE INSURANCE COMPANY.

Page 180

420 S.E.2d 180

332 N.C. 309

Harry Eugene LANNING, Executor for the Estate of Deborah

Jean Lanning; Lawrence C. Stoker, Administrator for the

Estate of Cheryl Ann Melton; Linda Diane Christopher,

Natural Mother and Guardian ad Litem of Kelly Paula

Christopher, Minor Child, v. ALLSTATE INSURANCE COMPANY.

No. 288PA91.

Supreme Court of North Carolina.

Sept. 4, 1992.

On petition for discretionary review prior to determination by the Court of Appeals, pursuant to N.C.G.S. § 7A-31, of a summary judgment for defendant on 19 April 1991 by C. Walter Allen, J., in Superior Court, Buncombe County. Heard in the Supreme Court on 16 October 1991 with Requeno v. Integon General Ins. Co., No. 603PA90, and Wheeler v. Welch, No. 149PA91.

Hyler & Lopez, P.A. by George B. Hyler, Jr. and Robert J. Lopez, Asheville, for plaintiffs-appellants Lanning and Stoker.

Lindsay & True by Ronald C. True, Asheville, for plaintiff-appellant Christopher.

McClure & Contrivo, P.A. by Frank J. Contrivo, Asheville, for defendant-appellee.

EXUM, Chief Justice.

This is a declaratory judgment action brought to determine plaintiffs' rights under an automobile insurance policy issued by defendant Allstate Insurance Company (Allstate). At issue is whether N.C.G.S. § 20-279.21 (1989) requires that the UM coverage limits on each of three vehicles insured in the policy be aggregated, or "stacked." If it does not, the next question is whether the nature of the policy itself and the language it employs requires such stacking. We conclude, for the reasons given below, that the answers to both questions are no.

I.

The parties have stipulated the facts to be as follows:

Allstate issued an automobile insurance policy to Harry and Deborah Lanning, the named insureds. The policy insured against the Lannings' liability to third parties and provided collision, comprehensive and UM coverage. The declarations page listed three vehicles, two Pontiac Firebirds and a Subaru, for coverage and showed that the liability and UM coverages applied to all three vehicles. The collision and comprehensive coverages applied only to the Pontiacs. As to each of the three vehicles the bodily injury liability and UM coverages were limited to $25,000 per person and $50,000 per accident. Separate premiums were charged with respect to each vehicle for each coverage provided. For the UM coverage the premium was $4 per vehicle.

On 20 January 1989 one of the Pontiacs listed in the Allstate policy, being driven by Ms. Lanning and occupied by her daughter, Cheryl Ann, and a foster child, Kelly, was struck by an uninsured automobile. Ms. Lanning was killed instantly; Cheryl Ann later died from injuries suffered in the collision; and Kelly was seriously injured.

Plaintiffs Harry Lanning, executor of his wife Deborah's estate, Lawrence C. Stoker, administrator of the estate of Cheryl Ann Melton, and Linda Diane Christopher, the natural mother and guardian ad litem of Kelly Christopher, have filed actions in Buncombe County for wrongful death and personal injury damages against the estate of the tortfeasor, who subsequently died due to conditions unrelated to this litigation. Defendant Allstate has offered the sum of $50,000 to be divided between plaintiffs as settlement of plaintiffs' claims against it pursuant to its UM coverage. Allstate contends that $50,000 constitutes the applicable limit of liability per accident under the UM coverage it afforded to the Lannings. On the other hand, plaintiffs have offered to settle for $150,000. Plaintiffs contend that $150,000 represents the applicable limit of liability per accident under Allstate's UM coverage.

In the case before us defendant moved for summary judgment. At the hearing on the motion the parties offered their stipulation of the facts and Allstate's policy of insurance. On 19 April 1991 Judge Allen granted defendant's motion, in effect holding that Allstate was not required to aggregate, or stack, the intrapolicy UM limits under the policy in question. Pursuant to this ruling Allstate's limit of liability for this accident under its UM coverage was $50,000. We allowed plaintiffs' petition for discretionary review of Judge Allen's ruling prior to determination by the Court of Appeals.

II.

Plaintiffs first contend that N.C.G.S. § 20-279.21 of the Motor Vehicle Safety and Financial Responsibility Act of 1953, as amended effective 1 October 1985 (the Act), and as interpreted by our decision in Sutton v. Aetna Casualty & Surety Co., 325 N.C. 259, 382 S.E.2d 759, reh'g denied, 325 N.C. 437, 384 S.E.2d 546 (1989), requires that Allstate aggregate its intrapolicy UM coverage provided with respect to each of the three vehicles named in the policy. We find no such requirement in the Act.

Language in a policy of insurance is the determining factor in resolving coverage questions unless that language is in conflict with applicable statutory provisions governing such coverage. Sutton, 325 N.C. 259, 382 S.E.2d 759; Nationwide Mut. Ins. Co. v. Chantos, 293 N.C. 431, 238 S.E.2d 597 (1977).

[W]hen a statute is applicable to the terms of a policy of insurance, the provisions of that statute become part of the terms of the policy to the same extent as if they were written into it, and if the terms of the policy conflict with the statute, the provisions of the statute will prevail.

Sutton, 325 N.C. at 263, 382 S.E.2d at 762; accord Chantos, 293 N.C. at 441, 238 S.E.2d at 604.

UM insurance is largely governed by subdivision (b)(3) of the Act; whereas UIM insurance is largely governed by subdivision (b)(4). Smith v. Nationwide Mutual Ins. Co., 328 N.C. 139, 400 S.E.2d 44, reh'g denied, 328 N.C. 577, 403 S.E.2d 514 (1991). This distinction is crucial to our holding. Subdivision (b)(3) of the Act provides:

No policy of bodily injury liability insurance ... shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State unless coverage is provided therein or supplemental thereto ... for the protection of persons insured thereunder who are legally entitled to recover damages from the owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, an insured is entitled to secure additional coverage up to the limits of bodily injury liability in the owner's policy of liability insurance that he carries for the protection of third parties.... The coverage required under this subdivision shall not be applicable where any insured named in the policy shall reject the coverage. If the named insured rejects the coverage required under this subdivision, the insurer shall not be required to offer the coverage in any renewal, reinstatement substitute, amended, altered, modified, transfer or replacement policy unless the named insured makes a written request for the coverage.

Beyond the above-cited provisions, subdivision (b)(3) is largely procedural in nature. ¹

On the other hand, subdivision (b)(4) of the Act provides in pertinent part:

[T]he limit of underinsured motorist coverage applicable to any claim is determined to be the difference between the amount paid to the claimant pursuant to the exhausted liability policy and the total limits of the owner's underinsured motorist coverages provided in the owner's policies of insurance; it being the intent of this paragraph to provide to the owner, in instances where more than one policy may apply, the benefit of all limits of liability of underinsured motorist coverage under all such policies: Provided that this paragraph shall apply only to nonfleet private passenger motor vehicle insurance ....

(Emphasis added.) Although this Court has acknowledged that UIM coverage is "an outgrowth from and development of uninsured motorist insurance," Sutton, 325 N.C. at 263, 382 S.E.2d at 762 (citing J. Snyder, Jr., N.C. Automobile Insurance Law, § 30-1 (1988)), ² we must also recognize that there are differences in the coverages, as evinced by the General Assembly's use of separate statutory provisions and separate language. See also Smith, 328 N.C. at 142, 400 S.E.2d at 47. "The cardinal principle of statutory construction is that the intent of the Legislature is controlling." Sutton, 325 N.C. at 265, 382 S.E.2d at 763 (quoting State v. Fulcher, 294 N.C. 503, 520, 243 S.E.2d 338, 350 (1978)) (emphasis added).

In Sutton, we held that the language quoted above in subdivision (b)(4) explicitly mandates intrapolicy and interpolicy stacking of UIM coverages for the benefit of an injured policy owner. The General Assembly, however, has never included in subdivision (b)(3) language similar to that in subdivision (b)(4). Subdivision (b)(3) is in fact silent on the issue of stacking coverages. Our decision in Sutton, consequently, is not controlling on the issue presented here.

Plaintiffs also argue that, because subdivision (b)(4) explicitly incorporates the provisions of subdivision (b)(3), subdivision (b)(3) in turn incorporates the provisions and, therefore, the requirements of (b)(4). Because (b)(4) requires both interpolicy and intrapolicy stacking, plaintiffs argue (b)(3) does, too. Plaintiffs are relying on the following language of subdivision (b)(4): "The provisions of subdivision (b)(3) ... shall apply to the coverage required by this subdivision." This language apparently incorporates the provisions of (b)(3) into those of (b)(4). There is, however, no similar language in the Act incorporating the provisions of (b)(4) into those of (b)(3). A fair reading of the Act compels us to conclude that the legislature intended the provisions of (b)(3) to be incorporated into (b)(4) but did not intend the provisions of (b)(4) to be incorporated into those of (b)(3). Plaintiffs' argument to the contrary must fail.

Plaintiffs further contend that our decision in Moore v. Hartford Fire Ins. Co. Group, 270 N.C. 532, 155...