McLeod v. Nationwide Mut. Ins. Co.

• Decision Date: 21 June 1994
• Docket Number: No. 9211SC756,9211SC756
• Citation: 115 N.C.App. 283,444 S.E.2d 487
• Parties: Betty M. McLEOD, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE CO. and Allstate Insurance Co., Defendants.
• Court: North Carolina Court of Appeals

Page 487

444 S.E.2d 487

115 N.C.App. 283

Betty M. McLEOD, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE CO. and Allstate Insurance Co. Defendants.

No. 9211SC756.

Court of Appeals of North Carolina.

June 21, 1994.

J. Douglas Moretz, P.A. by Beverly D. Basden, Sanford, for plaintiff-appellee.

Bryan, Jones, Johnson & Snow by Robert C. Bryan and Dwight W. Snow, Dunn, for defendant-appellant Nationwide.

JOHN, Judge.

Defendant Nationwide contends the trial court erred by: (1) granting plaintiff's motion for summary judgment; and (2) denying Nationwide's motion for summary judgment. Defendant's arguments are persuasive, and we therefore reverse the trial court and remand with direction that summary judgment be entered in favor of defendant Nationwide.

The parties have stipulated there are no factual issues and the questions to be decided are purely legal in nature. The facts giving rise to this appeal are as follows: In May 1987, John Green was an employee of P.M. Concepts, Inc. d/b/a Toyota Sanford (Sanford Toyota). Green's employer permitted him to use dealership license tags. He was attempting to sell a 1977 Pontiac (the Pontiac) automobile which he personally owned and which did not have a license plate. Green affixed one of Sanford Toyota's dealership tags to the Pontiac.

Although the exact date and reason for the use are unclear, at some point Green began allowing Tom Skinner to drive his Pontiac while the dealership tags were attached to the vehicle. On 10 May 1987, Skinner crossed the centerline of a highway and struck a van, injuring plaintiff Betty McLeod who was a passenger in the van. Prior to the collision, officers of Sanford Toyota had witnessed Skinner operating the Pontiac on Toyota's premises with dealership tags attached.

Plaintiff sued Skinner's estate, John Green, and Sanford Toyota alleging negligence. On 20 September 1991, a jury found Skinner negligent and awarded plaintiff $95,000; however, the jury absolved Green and Sanford Toyota of liability. Thereafter, plaintiff sought recovery of the $95,000 pursuant to: (1) a Nationwide garage policy issued to Sanford Toyota (the garage policy); and (2) the uninsured motorist (UM) coverage provided by her Allstate policy. Both insurance companies denied coverage and plaintiff therefore filed the present lawsuit against Nationwide and Allstate.

All parties moved for summary judgment. On 5 May 1992, the trial court entered an order which granted plaintiff's motion for summary judgment against Nationwide--thereby ordering Nationwide to pay $95,000 under the garage policy. By means of this same order, the trial court ruled that Allstate was secondarily liable in the amount of $25,000. On 5 June 1992, nunc pro tunc 5 May 1992, the trial court entered an order denying Nationwide's motion for summary judgment.

I.

Before examining the merits of defendant Nationwide's appeal, we deem it appropriate to address several collateral matters.

First, the automobile collision which resulted in plaintiff's injuries has been the subject of a previous appeal. In Johnson v. Skinner, 99 N.C.App. 1, 392 S.E.2d 634, disc. review denied, 327 N.C. 429, 395 S.E.2d 680 (1990), we reviewed a judgment which awarded plaintiff John Johnson $750,000 based upon the negligent acts of defendants Skinner, Green, and Sanford Toyota. Betsy McLeod, the plaintiff in the case sub judice, was a passenger in John Johnson's vehicle.

Second, we note plaintiff originally appealed that portion of the trial court's 5 May 1992 order which limited Allstate's liability to $25,000. Plaintiff's appeal presented questions concerning the "stacking" of UM coverage under her Allstate coverage. After our Supreme Court issued its opinion in Lanning v. Allstate Insurance Co., 332 N.C. 309, 420 S.E.2d 180 (1992), plaintiff moved to dismiss her appeal against defendant Allstate; on 4 May 1993, this motion was allowed. Consequently only defendant Nationwide's appeal is at issue.

Third, Nationwide has argued in its appellate brief that the trial court erred by denying its motion for summary judgment. Denial of a motion for summary judgment is an interlocutory order from which there is ordinarily no right to appeal. DeArmon v. B. Mears Corp., 312 N.C. 749, 758, 325 S.E.2d 223, 230 (1985). After reviewing the parties' briefs and the nature of the issues presented, we conclude that our review of the trial court's order will expedite a decision in the public interest and serve the interests of judicial economy. Accordingly, we treat Nationwide's attempted appeal of the court's denial of its motion for summary judgment as a petition for writ of certiorari, which we grant. See National Fruit Product Co. v. Justus, 112 N.C.App. 495, 498, 436 S.E.2d 156, 157 (1993), disc. review denied, 335 N.C. 771, 442 S.E.2d 519 (1994).

Only one question is presented herein: Did the garage policy provide liability coverage for Tom Skinner's negligent use of the Pontiac? The answer is "no," and therefore the trial court should have allowed defendant Nationwide's motion for summary judgment.

II. The Financial Responsibility Act

Our review necessarily begins with an examination of the applicable statutes relating to liability insurance coverage, i.e., the Motor Vehicle Safety and Financial Responsibility Act (the FRA), N.C.G.S. § 20-279.1 to -279.39 (1983) (current version at G.S. § 20-279.1 to -279.39 (1993)). This analysis is required since the minimum FRA coverage is written into every automobile liability policy as a matter of law, and the statute controls if policy provisions conflict with provisions of the FRA. Brown v. Truck Ins. Exchange, 103 N.C.App. 59, 64, 404 S.E.2d 172, 175, disc. review denied, 329 N.C. 786, 408 S.E.2d 515 (1991). Stated otherwise, every automobile liability policy in North Carolina must provide the minimum liability coverage required by the FRA, and any policy language which attempts less coverage is ineffective. Although garage policies are not specifically addressed within the FRA, such policies must nevertheless furnish the minimum liability coverage mandated by G.S. § 20-279.21. See United Services Auto. Assn. v. Universal Underwriters Ins. Co., 332 N.C. 333, 338, 420 S.E.2d 155, 158 (1992).

G.S. § 20-279.21 provides for two types of liability policies: owner's and operator's. G.S. § 20-279.21(a); Ohio Casualty Ins. Co. v. Anderson, 59 N.C.App. 621, 622, 298 S.E.2d 56, 57 (1982), disc. review denied, 307 N.C. 698, 301 S.E.2d 101 (1983). Garage policies, such as the one sub judice, are generally viewed as owner policies and consequently must satisfy the minimum requirements of G.S. § 20-279.21(b). See United Services, 332 N.C. at 338, 420 S.E.2d at 158; Insurance Co. v. Insurance Co., 269 N.C. 341, 352, 152 S.E.2d 436, 444 (1967). In pertinent part, this statutory provision provides:

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

(1) Shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted;

(2) Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, or any other persons in lawful possession, against loss from the liability imposed by law for damages ...

G.S. § 20-279.21(b).

The proper interpretation of G.S. § 20-279.21(b), as with any statute, presents a question of law. See Brooks, Com'r of Labor v. Rebarco, Inc., 91 N.C.App. 459, 464, 372 S.E.2d 342, 345 (1988). The cardinal principle of statutory interpretation is to ensure that legislative intent is accomplished. Harris v. Nationwide Mut. Ins. Co., 332 N.C. 184, 191, 420 S.E.2d 124, 128 (1992). Accordingly, "a court must consider the act as a whole, weighing the language of the statute, its spirit, and that which the statute seeks to accomplish." Shelton v. Morehead Memorial Hospital, 318 N.C. 76, 81-82, 347 S.E.2d 824, 828 (1986).

Applying these principles to the case sub judice, we conclude the FRA does not mandate that the garage policy provide liability coverage for Skinner's use of the Pontiac. In making this determination, our focus is upon section (b)(2) of the statute which states an owner's policy "[s]hall insure the person named therein ... using any [designated] motor vehicle ... against loss from the liability imposed by law for damages...." [emphasis added]. Viewed in isolation, this sub-section arguably requires liability coverage for any vehicle named in the policy--including even non-owned vehicles over which the named insured exercises only tenuous control. However, individual sections of a statute "must be interpreted in the context of the whole[,]" Overcash v. Statesville City Bd. of Educ., 83 N.C.App. 21, 24, 348 S.E.2d 524, 526 (1986), and "should be construed contextually and harmonized if possible to avoid absurd ... consequences." In re King, 79 N.C.App. 139, 142, 339 S.E.2d 87, 89 (1986). Thus, the phraseology "any [designated] motor vehicle" must be construed with reference to the subject-matter of G.S. § 20-279.21(b), which is: "an owner's policy."

The term "owner," for purposes of the mandatory provisions of the Financial Responsibility Act, is defined by N.C.G.S. § 20-4.01(26) (1983) (current version at G.S. § 20-4.01(26) (1993)). Jenkins v. Aetna Casualty and Surety Co., 324 N.C. 394, 397, 378 S.E.2d 773, 775 (1989). "Unless the context requires otherwise," G.S. § 20-4.01, an "owner" is a "person holding the legal title to a vehicle...." G.S. § 20-4.01(26); see also Jenkins, 324 N.C. at 397-401, 378 S.E.2d at 775.

In the case sub judice, it is undisputed that Sanford Toyota (the named insured) did not hold legal title to the Pontiac which was involved in the collision; rather the automobile was owned by one of its employees. There is no evidence indicating the dealership actively promoted the sale of this Pontiac, or otherwise used the vehicle for its business purposes. Instead,...