N.C. Farm Bureau Mut. Ins. Co. v. Strickland's Auto & Truck Repairs, Inc.

• Decision Date: 18 February 2021
• Docket Number: 1:19CV513
• Court: U.S. District Court — Middle District of North Carolina
• Parties: NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC. as subrogee of RONALD WESLEY BASSETT and LISA BASSETT d/b/a BASSETT RACING and as subrogee of BASSETT GUTTERS AND MORE, INC., Plaintiff, v. STRICKLAND'S AUTO & TRUCK REPAIRS, INC., Defendant-Third Party Plaintiff, v. RONALD WESLEY BASSETT, LISA BASSEEETT, BASSETT GUTTERS AND MORE, INC., and BR RACING, LLC, Third-Party Defendants.

NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY,INC. as subrogee of RONALD WESLEY BASSETTand LISA BASSETT d/b/a BASSETT RACINGand as subrogee of BASSETT GUTTERS AND MORE, INC., Plaintiff, v. STRICKLAND'S AUTO & TRUCK REPAIRS, INC., Defendant-Third Party Plaintiff, v. RONALD WESLEY BASSETT, LISA BASSEEETT,BASSETT GUTTERS AND MORE, INC., and BR RACING, LLC, Third-Party Defendants.

1:19CV513

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

February 18, 2021

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

This matter is before the Court on a motion for partial summary judgment by Plaintiff North Carolina Farm Bureau Mutual Insurance Company, Inc. ("Farm Bureau"), as subrogee of Ronald Wesley Bassett and Lisa Bassett d/b/a Bassett Racing ("Bassett Racing") and as subrogee of Bassett Gutters and More, Inc. ("Bassett Gutters").¹ (Docket Entry 20.) Alsobefore the Court is Defendant-Third Party Plaintiff Strickland's Auto & Truck Repairs, Inc.'s ("Strickland's Auto") motion for summary judgment. (Docket Entry 27.) Responses have been filed and the matters are ripe for disposition. A brief telephone hearing was held in this matter on February 17, 2021. For the reasons that follow, the undersigned will recommend that Farm Bureau's partial motion for summary judgment be granted in part and denied in part, and Strickland's Auto's motion for summary judgment be granted in part and denied in part.

I. PROCEDURAL BACKGROUND

On May 15, 2019, Farm Bureau commenced this action against Strickland's Auto asserting its subrogation rights acquired from insurance payments to the insured—the Bassetts—pursuant to their insurance agreements. (See Complaint ¶¶ 55-60, Docket Entry 1.) In its complaint, Farm Bureau alleges three causes of action: (1) negligence, (2) negligence (res ipsa loquitur), and (3) breach of warranty/contract under common law and the Uniform Commercial Code ("UCC") as codified in North Carolina and Virginia.² (Id. ¶¶ 61-102.) On June 10, 2019, Strickland's Auto filed an answer and third-party complaint against Ronald and Lisa Bassett, Bassett Gutters, and BR Racing, LLC. (Answer/Third-Party Compl. (hereinafter "Answer"), Docket Entry 8.)

In their Answer, Strickland's Auto asserts a number of affirmative defenses. (Id. at 12-16.)³ Of note, Strickland's Auto asserts that the settlement resolving the litigation betweenthe Bassetts and Strickland's Auto ("the Bassett Action")⁴ includes a release from Farm Bureau's subrogation claim. (Id. at 12-13; see also Release ("the Release"), Ex. 3 to Ans., Docket Entry 8-3.) Farm Bureau filed a motion for partial summary judgment on Strickland's Auto's First, Third, and Fourth affirmative defenses⁵ on April 16, 2020. Strickland's Auto filed a motion for summary judgment on July 8, 2020.

II. FACTUAL BACKGROUND

A. The Underlying Incident

Ronald and Lisa Bassett owed property in Winston-Salem, North Carolina where they operated Bassett Racing and Bassett Gutters. (Compl. ¶¶ 13, 15, 17; Barry Fountain Affidavit ¶¶ 2-3, Docket Entry 22.) On the Bassett's property, there was a large metal building ("the Garage") where the Bassetts and Bassett Racing stored and maintained race cars and specialized machines, tools, supplies, equipment, parts, and other personal property. (Compl. ¶ 16; Fountain Aff. ¶ 4.) In or around May 2016, Bassett Gutters owned a 2005 Freightliner tractor ("the Tractor") that was used by the Bassetts to haul race cars, equipment, parts, and supplies. (Compl. ¶ 18; Fountain Aff. ¶ 7.)

In or about April 2016, the Tractor engine became inoperable. (Compl. ¶ 24.) Ronald Bassett agreed to purchase a used replacement engine from Strickland's Auto, and both further agreed that Strickland's Auto would perform the necessary labor to remove the inoperable engine and install the replacement engine in the Tractor (the "Transaction"). (Id. ¶¶ 25-29.)To memorialize the agreement, Ronald Bassett signed a Repair Order on April 13, 2016. (Repair Order, Docket Entry 1-1.) The Repair Order included the following language: "60 Day WARRANTY Against Major Engine Failure Warranty does not include oil leaks, tow bills, downtime or labor. For warranty to be applicable engine must be returned to Strickland's Auto & Truck." (Id.)

Once the engine replacement was completed, on April 29, 2016, Ronald Bassett and Shane Hendricks, a friend and/or agent of the Bassetts, retrieved the Tractor from Strickland's Auto and drove it back to the Bassetts' property, parking the tractor outside of the Garage. (Comp. ¶¶ 39-40; Bassett Gutters' Interrog. Resp. No. 6, Docket Entry 27-6 at 5; Ronald Bassett's Interrog. Resp. No. 5, Docket Entry 27-7 at 4.) On May 20, 2016, Ronald Bassett washed and moved the Tractor into the Garage. (Compl. ¶ 41; Ronald Bassett's Interrog. Resp. No. 7, Docket Entry 27-7 at 5.) Within an hour of the Tractor being moved into the Garage, there was an explosion on the Bassett property, and the resulting fire consumed the Garage. (Compl. ¶ 42.) There were neighbors who heard the explosion, but no one was in the Garage at the time of the fire. (Id. ¶ 44; Ronald Bassett's Interrog. Resp. No. 9, Docket Entry 27-7 at 7.) The fire destroyed the Tractor, the Garage, and personal property inside the Garage belonging to the Bassetts. (Compl ¶ 47.) The Bassetts never returned the Tractor engine to Strickland's Auto. (See id. ¶ 95.)

At the time of the underlying incident, Farm Bureau was the insurance provider for the Bassetts. (Compl. ¶¶ 2-3, 55.) Specifically, Farm Bureau issued a business automobile insurance policy to Bassett Gutters, and a commercial lines and commercial property insurance policy to Ronald and Lisa Bassett and Bassett Racing. (Fountain Aff. ¶¶ 5, 6; InsurancePolicies, Docket Entries 22-1, 22-2.) Pursuant to their insurance policies, Farm Bureau paid the Bassetts $746,063.59 for losses incurred from the fire. (Fountain Aff. ¶ 10.) Three separate payments were made by check to the Bassetts dated June 2, 2016, June 21, 2016, and August 1, 2016. (See id.; Farm Bureau Checks, Docket Entry 22-3.) The Bassetts' total claimed damages, however, were in excess of the limits of the business automobile and the commercial lines property insurance policies issued by Farm Bureau. (Fountain Aff. ¶ 11.) Thus, Farm Bureau's payment to the Bassetts partially, not fully, compensated the Bassetts for their damages arising from the fire. (Compl. ¶ 58.)

B. The Settlement from the Bassett Action

On June 27, 2017, the Bassetts filed a complaint in this Court against Strickland's Auto to initiate the Bassett Action. (Bassett Action Complaint, Docket Entry 8-2.)⁶ The Bassetts alleged that the fire occurred as a result of Strickland's Auto's work on the Tractor, asserting similar negligence and breach of warranty claims against Strickland's Auto as Farm Bureau asserts in this action. (Id. ¶¶ 58-105.) Farm Bureau was not a party to the Bassett Action, but its attorneys did participate in some aspects of the litigation, including attending some depositions and participating telephonically at mediation. (Fountain Aff. ¶ 13.) However, Farm Bureau never formally intervened in the Bassett Action.

After some discovery and mediation, the parties in the Bassett Action agreed to settle, and pursuant to the settlement, Strickland's Auto paid the Bassetts $900,000.00 in exchange for dismissal of the Bassett Action and Release of all claims ("the Release"). (Release, DocketEntry 8-3.) The first paragraph of the Release includes a release and discharge of Strickland's Auto:

of and from any and all actions, causes of action, claims, demands, damages, costs, loss of services, loss of consortium, expenses, compensation, and all consequential damage on account of, or in any way growing out of, any and all known and unknown personal injuries and damages resulting or to result from an incident/fire that occurred on or about the 20th day of May, 2016, in the City of Winston-Salem, Forsyth County, North Carolina.

(Id. at 1.) The third paragraph of the Release includes the following language:

It is further agreed that the [Bassetts] shall pay or cause to be paid any and all valid liens against these funds out of these funds whether such lien arises by operation of law, agreement, or otherwise, including but not limited to North Carolina Farm Bureau Mutual Insurance Company's property damages subrogation claim . . . .

(Id.)

The Bassetts accepted the settlement and cashed the check, dismissing the case with prejudice. (Bassett Action Stipulation of Dismissal, Docket Entry 8-4.) Included with the settlement check was an enclosure letter stating the following: "[t]he settlement funds are also provided to you . . . with the understanding that all outstanding liens are to be satisfied out of the funds, including the lien of North Carolina Farm Bureau Mutual Insurance Company, as set forth in the Release." (Enclosure Letter, Docket Entry 27-9.)

III. SUMMARY JUDGMENT STANDARD OF REVIEW

Summary judgment is appropriate when there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Zahodnick v. Int'l Bus. Machs. Corp., 135 F.3d 911, 913 (4th Cir. 1997). The party seeking summaryjudgment bears the initial burden of coming forward and demonstrating the absence of a genuine issue of material fact. Temkin v. Frederick County Comm'rs, 945 F.2d 716, 718 (4th Cir. 1991) (citing Celotex v. Catrett, 477 U.S. 317, 322 (1986)). Once the moving party has met its burden, the non-moving party must then affirmatively demonstrate that there is a genuine issue of material fact which requires trial. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a fact finder to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Sylvia Dev. Corp. v. Calvert County, Md., 48 F.3d...