Lozada v. Phoenix Ins. Co.

• Decision Date: 02 January 2003
• Docket Number: No. 1:00-CV-1158.,1:00-CV-1158.
• Citation: 237 F.Supp.2d 664
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Raul G. LOZADA, Plaintiff, v. THE PHOENIX INSURANCE COMPANY, Defendant.

237 F.Supp.2d 664

Raul G. LOZADA, Plaintiff, v. THE PHOENIX INSURANCE COMPANY, Defendant.

No. 1:00-CV-1158.

United States District Court, M.D. North Carolina.

January 2, 2003.

W. Benjamin Smith, Richard L. Anderson, Price Smith Hargett Petho & Anderson, Charlotte, NC, for plaintiff.

Robert Scott Brown, Michael W. Washburn, Brown Crump Vanore & Tierney, L.L.P., Raleigh, NC, for defendant.

MEMORANDUM OPINION

BEATY, District Judge.

I. INTRODUCTION

This matter comes before the Court on Plaintiff Raul G. Lozada's Motion for Summary Judgment [Document # 15] and Defendant Phoenix Insurance Company's Motion for Partial Summary Judgment [Document # 18]. For the reasons that follow, Plaintiff's Motion for Summary Judgment shall be GRANTED in part and DENIED in part. With respect to the separate issue of Plaintiff's claim of unfair and deceptive trade practices, Defendant's Motion for Partial Summary Judgment shall also be GRANTED.

II. FACTUAL AND PROCEDURAL BACKGROUND

On August 13, 1999, Raul G. Lozada ("Plaintiff") was involved in an automobile collision while operating his vehicle. The collision occurred when an automobile operated by Phillip Anthony Prince ("Prince") approached from the opposite direction of travel from Plaintiff, swerved over the center line and struck Plaintiff's vehicle. (Compl. ¶ 5.) Plaintiff suffered severe injuries and incurred medical expenses of over one hundred fifty thousand dollars ($150,000) as a result of the collision. (Pl.'s Br. In Sup. of Mot. for Sum. Judg., at 2.)

The vehicle operated by Prince was not owned by him. The facts are not clear, but the car was owned either by an individual named Angela Terry or by her sister Toinette Terry, neither of whom is otherwise involved in this litigation. Notably, the vehicle driven by Prince did not carry liability insurance coverage. (Compl. ¶ 8.) A review of the investigation report by the North Carolina Highway Patrol revealed that on August 13, 1999, the date of the collision, Prince listed his residence as 11060 Barnes Bridge Road, Laurinburg, North Carolina. (Pl.'s Br. In Sup. of Mot. for Sum. Judg., at 9.) The investigation also revealed that Prince lived at that address with his mother, Lee Doris David. (Id.) Ms. David owned an automobile insured by the Phoenix Insurance Company ("Defendant"). (Id. at ¶ 10.) Plaintiff contends that the policy issued by Defendant to Ms. David provided liability insurance coverage applicable to Plaintiff's claim against Prince because Prince is both a relative of Ms. David and a resident of her household. (Id. at ¶ 11.)

Plaintiff's counsel contacted Defendant via letters dated March 15, 2000, and March 21, 2000, to inform Defendant that Plaintiff was making a claim against Prince and that Plaintiff believed Prince was covered under Ms. David's policy. (Def.'s Memo. of Law In Opp. to Pl.'s Mot. for Sum. Judg., Exh. D and Exh. F). Specifically, in the letter of March 15, 2000 to Defendant's agent, Plaintiff identified the particular policy issued to Ms. David, that is policy # 940444863-101-1, which he contended provided coverage for Prince's negligent actions in this matter. Plaintiff informed Defendant that "Phillip Anthony Prince is the son of your insured, Lee Doris David, who is insured under the above referenced policy number. Further, Mr. Prince resided in the same household as your insured on the date of this accident. As such, a policy of insurance in effect with your company would provide liability coverage applicable to this accident."

Plaintiff had previously advised Defendant's agent that the 1997 Dodge Prince was driving at the time of the accident did not have insurance coverage since it had expired, apparently, in August 1998. Plaintiff further noted in a March 21, 2000 letter to Defendant that Prince took a license tag from a 1987 Ford Mustang jointly owned by Prince and his mother, Ms. David, and switched it to the 1997 Dodge that he was driving on the date of the accident. As it turned out, the insurance on the 1987 Ford Mustang had expired on July 31, 1999, but while in effect, the insurance policy for the 1987 Ford Mustang also listed Prince's address as 11060 Barnes Bridge Road. Importantly here, Plaintiff in this letter of March 21, 2000, advised Defendant that "[a]s such, I believe it is quite clear from our telephone conversations, as well as the police report and insurance documentation that Phillip Prince was living with his mother, your insured, on the date of this accident."

Defendant notified Ms. David on March 29, 2000 that a loss claim had been filed by Plaintiff related to the accident on August 13, 1999 involving Phillip Prince. In a subsequent letter to Plaintiff on April 25, 2000, Defendant advised Plaintiff's attorney that they were denying coverage on Plaintiff's claim based upon their finding that Prince did not fit the legal requirements of a "resident" of Ms. David's household. Also on April 25, 2000, Defendant mailed a letter to Ms. David, with copies of the letter for her to provide to Prince, indicating that Defendant had rendered a decision to deny Plaintiff's claim. In that same letter, Defendant alerted Ms. David of the possibility that Plaintiff may file a lawsuit directly against her involving the accident.

No lawsuit was filed directly against Ms. David. However, on May 1, 2000, based upon the information known to Plaintiff's attorney, a lawsuit was filed against Prince in North Carolina Superior Court, Scotland County. Prince was served with a copy of the Complaint in that action on May 5, 2000 and Defendant was mailed a copy of the Complaint on May 9, 2000. Plaintiff, thereafter, sent a second copy of the Complaint to Defendant by way of Certified Mail on June 8, 2000. (Def.'s Memo. of Law In Opp. to Pl.'s Mot. for Sum. Judg., Exh. C; Matre Depo. Exh. # 8). Prince failed to answer the Complaint in the time allotted by law and Defendant provided no defense on Prince's behalf. As a result, an Entry of Default was entered against Prince on July 13, 2000. Subsequently, on September 11, 2000, a Default Judgment was entered in favor of Plaintiff and against Prince in the amount of five hundred thousand dollars ($500,000). (Compl. at ¶ 7.)

Following the default judgment against Prince, Plaintiff instituted this action by filing suit against Defendant in Scotland County Superior Court on September 29, 2000. Plaintiff's suit against Defendant demands recovery for the judgment entered against Prince, as well as costs and attorney's fees associated with bringing this action.¹ Defendant removed the lawsuit to this Court on November 15, 2000, pursuant to 28 U.S.C. § 1332, on the basis of diversity jurisdiction. This matter is currently before the Court on Plaintiff's Motion for Summary Judgment and Defendant's Motion for Partial Summary Judgment as to Plaintiff's claim of unfair and deceptive trade practices.

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment is appropriate when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is considered "material" if it "might affect the outcome of the suit under the governing law ...." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211 (1986). Under this standard, a genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. As a result, the Court will only enter summary judgment in favor of the moving party when the record "`shows a right to judgment with such clarity as to leave no room for controversy'" and clearly demonstrates that the non-moving party "`cannot prevail under any circumstances.'" Campbell v. Hewitt, Coleman & Assocs., Inc., 21 F.3d 52, 55 (4th Cir. 1994) (quoting Phoenix Sav. & Loan, Inc. v. Aetna Cas. & Sur. Co., 381 F.2d 245, 249 (4th Cir.1967)).

When ruling on a summary judgment motion, the Court views the evidence in the light most favorable to the non-moving party, according that party the "benefit of all reasonable inferences." Bailey v. Blue Cross & Blue Shield of Virginia, 67 F.3d 53, 56 (4th Cir.1995), cert. denied, 516 U.S. 1159, 116 S.Ct. 1043, 134 L.Ed.2d 190 (1996). The moving party bears the initial burden of establishing that there is no genuine issue as to any material fact and that he is entitled to judgment as a matter of law. Catawba Indian Tribe of S.C. v. South Carolina, 978 F.2d 1334, 1339 (4th Cir.1992), cert. denied, 507 U.S. 972, 113 S.Ct. 1415, 122 L.Ed.2d 785 (1993). Once the moving party has met this burden, the adverse, or non-moving party must set forth specific facts showing that there is a genuine issue for trial. Id. In so doing, the adverse party may not rest on mere allegations, denials, or unsupported assertions, but must, through affidavits or otherwise, provide evidence of a genuine dispute. Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202; Catawba Indian Tribe, 978 F.2d at 1339. In other words, the non-moving party must show "more than ... some metaphysical doubt as to the material facts," for the mere existence of a scintilla of evidence in support of his position is insufficient to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Catawba Indian Tribe, 978 F.2d at 1339.

B. Defendant's Motion for Partial Summary Judgment

The Court will first address Defendant's Motion for Partial Summary Judgment. Plaintiff does not oppose this motion. In his brief in support of his motion for summary judgment Plaintiff states: "With regard to the alleged unfair and deceptive trade practices committed by The Phoenix Insurance Company, the undersigned acknowledges that evidence gathered during discovery is insufficient to support a claim for unfair and deceptive trade practices and as such, the Plaintiff will not oppose...