N.C. Farm Bureau Mut. Ins. Co. v. Lunsford

• Court: North Carolina Court of Appeals
• Writing for the Court: BROOK, Judge.
• Citation: N.C. Farm Bureau Mut. Ins. Co. v. Lunsford, 843 S.E.2d 677, 271 N.C.App. 234 (N.C. App. 2020)
• Decision Date: 05 May 2020
• Docket Number: No. COA19-458,COA19-458
• Parties: NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Plaintiff, v. Judy LUNSFORD, Defendant.

271 N.C.App. 234

843 S.E.2d 677

NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Plaintiff,

v.Judy LUNSFORD, Defendant.

No. COA19-458

Court of Appeals of North Carolina.

Filed: May 5, 2020

William F. Lipscomb, Wilkesboro, for the Plaintiff-Appellee.

Burton Law Firm, PLLC, by Jason M. Burton, for the Defendant-Appellant.

BROOK, Judge.

Judy Lunsford ("Defendant") appeals from the trial court's grant of a motion for judgment on the pleadings in favor of North Carolina Farm Bureau Mutual Insurance Company, Inc. ("Plaintiff") and issuance of a declaratory judgment that Defendant is not entitled to underinsured motorist coverage under her policy issued by Plaintiff. We affirm the Order and Declaratory Judgment of the trial court.

I. Factual and Procedural Background

On 22 May 2017, Defendant was a passenger in her sister's 2015 Chevrolet Silverado when the two were involved in a tragic accident. Defendant's sister lost control of the vehicle, ran over the median, and collided head-on with an oncoming 18-wheeler traveling in the opposite lane of traffic. Defendant's sister lost her life in the accident and Defendant suffered serious injuries. The accident occurred in DeKalb County, Alabama. At the time of the accident, Defendant was a resident of North Carolina and her sister was a resident of Tennessee.

At the time of the accident, both Defendant and her sister carried automotive insurance. Defendant's policy was issued by Plaintiff in North Carolina and her sister's policy was issued by Nationwide in Tennessee, where each resided in May 2017. The coverage amounts in the policies are similar. Both policies limit the respective insurer's liability for personal injuries to $100,000 per occurrence and for injuries to under- or un-insured motorists to $100,000 per occurrence.

Plaintiff initiated an action for a declaratory judgment on 24 October 2018 in Guilford County Superior Court requesting a determination that the underinsured motorist coverage in the policy it issued Defendant did not apply to the accident because her underinsured motorist coverage limits equaled her sister's personal injury coverage, meaning Defendant was not underinsured at the time of the accident. After Defendant answered, Plaintiff moved the trial court for judgment on the pleadings on 19 December 2018 under Rule 12(c) of the North Carolina Rules of Civil Procedure. Following a 28 January 2019 hearing on the matter, the trial court granted Plaintiff's motion and entered an Order and Declaratory Judgment in favor of Plaintiff on 13 February 2019. Plaintiff entered timely notice of appeal on 14 March 2019.

II. Analysis

The dispositive issue in this appeal is whether the vehicle in which Defendant was traveling with her sister at the time of the May 2017 accident qualified as an "underinsured motor vehicle" as that term is defined under North Carolina law. Because it did not, we affirm the Order and Declaratory Judgment of the trial court.

A. Standard of Review

Under Rule 12(c) of the North Carolina Rules of Civil Procedure, "any party may move for judgment on the pleadings." N.C. Gen. Stat. § 1A-1, Rule 12(c) (2019). "A motion for judgment on the pleadings should not be granted unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Carpenter v. Carpenter , 189 N.C. App. 755, 761, 659 S.E.2d 762, 767 (2008). However, the motion should be granted when "the moving party has shown that no material issue of fact exists ... and that he is clearly entitled to judgment." Affordable Care v. N.C. State Bd. of Dental Exam'rs , 153 N.C. App. 527, 532, 571 S.E.2d 52, 57 (2002). "This Court reviews a trial court's grant of a motion for judgment on the pleadings de novo. " Carpenter , 189 N.C. App. at 757, 659 S.E.2d at 764.

B. Underinsured Motorist Coverage Under North Carolina Law

North Carolina law defines "underinsured motor vehicle" as

a highway vehicle with respect to the ownership, maintenance, or use of which, the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of underinsured motorist coverage for the vehicle involved in the accident and insured under the owner's policy.

N.C. Gen. Stat. § 20-279.21(b)(4) (2019) (emphasis added). The statutory definition thus requires that the "sum of the limits of liability under all bodily injury liability ... insurance policies applicable" be less "than the applicable limits of underinsured motorist coverage" for a vehicle involved in an accident to be considered underinsured. Id.

Whether an underinsured motorist policy is applicable at the time of an accident under N.C. Gen. Stat. § 20-279.21(b)(4) depends upon whether the claimant qualifies as a "person insured" as that term is defined by subdivision (3) of subsection (b) of the statute, which provides:

"persons insured" means the named insured and, while resident of the same household, the spouse of any named insured and relatives of either, while in a motor vehicle or otherwise, and any person who uses with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above or any other person or persons in lawful possession of the motor vehicle.

Id. § 20-279.21(b)(3). The Supreme Court has explained:

[t]his section of the statute essentially establishes two "classes" of "persons insured": (1) the named insured and, while resident of the same household, the spouse of the named insured and relatives of either and (2) any person who uses with the consent, express or implied, of the named insured, the insured vehicle, and a guest in such vehicle.

Sproles v. Greene , 329 N.C. 603, 608, 407 S.E.2d 497, 500 (1991) (citation omitted).

The reason the applicability of an underinsured motorist policy depends on whether the claimant qualifies as a "person insured" is that "[i]n North Carolina, insurance coverage for damages caused by uninsured and underinsured motorists ‘follows the person, not the vehicle[.]’ " Beddard v. McDaniel , 183 N.C. App. 476, 645 S.E.2d 153, 153-54 (2007) (quoting Nationwide Mut. Ins. Co. v. Mabe , 115 N.C. App. 193, 204, 444 S.E.2d 664, 671 (1994) ). The Supreme Court put it slightly differently in Sproles , observing that "[c]lass one insureds have UIM coverage even if they are not in a ‘covered vehicle’ when injured." 329 N.C. at 608, 407 S.E.2d at 500. The Supreme Court also noted in Sproles that "[a]ll other persons are class two insureds and are only covered while using [or guests in] ‘the motor vehicle to which the policy applies.’ " Id. Our Court has therefore described underinsured motorist insurance as "essentially person oriented, unlike liability insurance[,] which is vehicle oriented." Honeycutt v. Walker , 119 N.C. App. 220, 222, 458 S.E.2d 23, 25 (1995).

C. Application

In the present case, the parties do not dispute whether Defendant is a named insured under the policy issued to her by Plaintiff; instead, they dispute, amongst other things, whether Tennessee or North Carolina law supplies the legal standards applicable to determining whether Ms. Chapman was underinsured at the time of the accident. While Defendant's policy issued by Plaintiff is an insurance contract entered into by a North Carolina insurer and a North Carolina insured, and concerning the interests of a North Carolina citizen, and North Carolina law therefore applies to its construction and application, the policy does not cover her injuries from the May 2017 accident.¹ The limits of the policy issued by Plaintiff are $50,000 per person and $100,000 per accident, which are the same as the limits of the personal injury coverage under her sister's policy with Nationwide. Because these are the only two policies at issue, and the limits of Defendant's underinsured motorist coverage and her sister's personal injury coverage are equal, in this case "the sum of the limits of liability under [the] bodily injury liability ... policies applicable" is not less "than the applicable limits of underinsured motorist coverage[.]" N.C. Gen. Stat. § 20-279.21(b)(4) (2019). Defendant's sister's vehicle therefore was not underinsured as that term is defined by North Carolina law.

In arguing otherwise, Defendant contends—and the dissent accepts—that Defendant is entitled to "stack the $50,000.00 limit of UIM coverage in [Ms.] Chapman's Nationwide policy with the $50,000.00 limit of UIM coverage in [Defendant's] NCFB policy." See infra at 683 (Murphy, J., dissenting). But this argument smuggles its conclusion from its first premise. This conclusion would follow if Defendant and her sister were members of the same household because then, Defendant and her sister would both be class one insureds as that term was defined by our Supreme Court in Sproles . See 329 N.C. at 608, 407 S.E.2d at 500. If Defendant and her sister were members of the same household, both the underinsured motorist coverage of $50,000 per person and $100,000 per accident in Defendant's policy and the "uninsured" motorist coverage of $50,000 per person and $100,000 per accident in Defendant's sister's policy would qualify as "policies applicable" under N.C. Gen. Stat. § 20-279.21(b)(4) ; the sum of their limits would be more than the personal injury liability limits of $50,000 per person and $100,000 per accident in Defendant's sister's policy; and, therefore, the 2017 accident would be covered by Defendant's underinsured motorist policy because her sister's vehicle would have been an "underinsured motor vehicle" at the time of the accident as North Carolina law defines that term. See N.C. Gen. Stat. § 20-279.21(b)(4) (2019). However, at the time of the accident, Defendant was a resident of North Carolina and Defendant's sister was a resident of Tennessee. The...