Nationwide Affinity Ins. Co. of Am. v. Le Bei

• Citation: 259 N.C.App. 626,816 S.E.2d 251
• Decision Date: 15 May 2018
• Docket Number: No. COA17-1086,COA17-1086
• Parties: NATIONWIDE AFFINITY INSURANCE COMPANY OF AMERICA, Plaintiff, v. LE BEI, Administrator of the Estate of Tei Paw, Thla Aye, Administrator of the Estate of Khai Hne, Khai Tlo, Nu Cing and Tin Aung, Defendants.
• Court: North Carolina Court of Appeals

259 N.C.App. 626

816 S.E.2d 251

NATIONWIDE AFFINITY INSURANCE COMPANY OF AMERICA, Plaintiff,

v.LE BEI, Administrator of the Estate of Tei Paw, Thla Aye, Administrator of the Estate of Khai Hne, Khai Tlo, Nu Cing and Tin Aung, Defendants.

No. COA17-1086

Court of Appeals of North Carolina.

Filed: May 15, 2018

Simpson Law Firm PLLC, by George L. Simpson, IV, for plaintiff-appellant.

Arnold & Smith, PLLC, Charlotte, by Paul A. Tharp, for defendant-appellees.

HUNTER, JR., Robert N., Judge.

Nationwide Affinity Insurance Company of America ("Plaintiff") appeals from an order granting Le Bei, Administrator of the Estate of Tei Paw, and Thla Aye's, Administrator of the Estate of Khai Hne, (collectively "Defendants") motion for summary judgment and denying Plaintiff's motion for summary judgment. On appeal, Plaintiff argues the trial court improperly allowed Defendants to recover underinsured motorist coverage ("UIM"). We affirm.

I. Factual and Procedural Background

On 3 May 2016, Plaintiff filed a complaint for declaratory judgment, seeking a declaration regarding automobile insurance issued by Plaintiff to Sa Hietha. The complaint alleged the following narrative.

On 26 September 2014, around 11:00 p.m., Hietha drove his Honda Pilot on I-77, near Fort Mill, South Carolina. Hietha traveled northbound, in the far, right lane. Tei Paw, Khia Hne, Khia Tlo, Tin Aung, and Nu Cing rode as passengers in Hietha's vehicle. David Hope drove an American Red Cross bus ahead of Hietha, in the same lane. Mabel Gutierrez drove a Honda Accord in the neighboring lane, also northbound.

Hietha traveled too quickly for the conditions.¹ Consequently, he collided with the rear of the American Red Cross bus. Hietha's vehicle then "spun into the adjacent lane in front of" and collided with Gutierrez's Honda Accord. Tin Aung and Nu Cing suffered personal injuries from the accident. Tei Paw, Khai Hne, and Khai Tlo died as a result from injuries sustained from the accident.

From 28 May 2014 to 28 November 2014, Plaintiff insured Hietha's vehicle through a personal automobile insurance policy ("Hietha policy"). The Hietha policy provided liability insurance coverage with limits of $50,000 per person and $100,000 per accident. The policy also provided UIM coverage with limits of $50,000 per person and $100,000 per accident.

Plaintiff distributed the following amounts under the maximum per accident limit of liability coverage: $26,000 to Tei Paw; $26,000 to Khai Hne; $26,000 to Khai Tlo; $13,000 to Tin Aung; $5,000 to Mabel Gutierrez; $2,500 to David Hope; and $1,500 to Nu Cing. The parties disagreed on whether the passengers were entitled to recover under Hietha's UIM coverage for the difference between the amounts received under the liability coverage and the per person limits of UIM coverage. Thus, Plaintiff requested the trial court declare UIM under Hietha's policy "[wa]s not triggered for any of the Defendants under the Policy."

On 25 July 2016, Defendants filed their answer. Defendants asserted they were entitled to UIM coverage under the Hietha policy. At the time of the accident, Hne had a separate insurance policy with Plaintiff. This separate policy provided UIM coverage with limits of $50,000 per person and $100,000 per accident. Paw also had a separate insurance policy with Plaintiff. Paw’s policy provided coverage with UIM limits of $100,000 per person and $300,000 per accident. Defendants contended the UIM coverage under their separate policies should be "stacked" with the UIM coverage under the Hietha policy.

On 30 January 2017, the trial court held a hearing for approval of proposed settlements. In orders entered 31 January 2017, the trial court approved of settlements of $30,800 of liability-policy funds to Defendant Aye and $1,000 of liability-policy funds to Defendant Bei. In both orders, the trial court specifically stated the settlements "shall not affect any rights of [Defendants] to pursue any underinsured motorist claims against any party, including ... Sa Hietha[.]"

On 13 February 2017, Defendants filed a joint motion for summary judgment. Defendants requested the trial court "declare that they are entitled to UIM coverage under Sa Hietha's policy, in amounts sufficient to exhaust said UIM coverage[.]" On 1 May 2017, Plaintiff filed its own motion for summary judgment. Plaintiff contended the multiple claimant exception in the Financial Responsibility Act precluded Defendants from recovering UIM coverage under the Hietha policy.

On 24 May 2017, the trial court held a hearing on the parties' motions. In an order entered 17 July 2017, the trial court granted Defendants' motion for summary judgment and denied Plaintiff's motion for summary judgment. The trial court ordered "the movant-Defendants are entitled to payment under at-fault Sa Hietha's per-person underinsured motorist coverage provided by Plaintiff, subject to any applicable credits." On 15 August 2017, Plaintiff filed timely notice of appeal.

II. Standard of Review

"Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows that ‘there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.’ " In re Will of Jones , 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting Forbis v. Neal , 361 N.C. 519, 523-24, 649 S.E.2d 382, 385 (2007) ).

"Under a de novo review, the court considers the matter anew and freely substitutes its own judgment for that of the lower tribunal." Craig v. New Hanover Cty. Bd. of Educ. , 363 N.C. 334, 337, 678 S.E.2d 351, 354 (2009) (internal quotation marks and citation omitted).

III. Analysis

On appeal, Plaintiff contends the trial court erred by granting summary judgment in favor of Defendants. Specifically, Plaintiff argues the multiple claimant exception in N.C. Gen. Stat. § 20-279.21(b)(4) (2017) applies to the matters at hand. Accordingly, Plaintiff contends the trial court erred in allowing Defendants to recover UIM coverage under Hietha's policy. We disagree.

"Statutory interpretation begins with ‘the cardinal principle of statutory construction ... that the intent of the legislature is controlling. In ascertaining the legislative intent, courts should consider the language of the statute, the spirit of the statute, and what it seeks to accomplish.’ " Benton v. Hanford , 195 N.C. App. 88, 92, 671 S.E.2d 31, 34 (2009) (brackets omitted) (ellipses in original) (quoting State ex rel. Util. Comm'n v. Pub. Staff , 309 N.C. 195, 210, 306 S.E.2d 435, 443-44 (1983) ). Moreover, "[l]egislative intent can be ascertained not only from the phraseology of the statute but also from the nature and purpose of the act and the consequences which would follow its construction one way or the other." Sutton v. Aetna Cas. & Sur. Co. , 325 N.C. 259, 265, 382 S.E.2d 759, 763 (1989) (citations omitted), superseded by statute on other grounds , N.C. Farm Bureau Mut. Ins. Co. v. Stamper , 122 N.C. App. 254, 468 S.E.2d 584, 585-86 (1996). "The Court will not adopt an interpretation which results in injustice when the statute may reasonably be otherwise consistently construed with the intent of the act." Nationwide Mut. Ins. Co. v. Chantos , 293 N.C. 431, 440, 238 S.E.2d 597, 603 (1977) (citation omitted).

At the outset, our analysis is guided by the "avowed purpose" of the Financial Responsibility Act, which is:

to compensate the innocent victims of financially irresponsible motorists. The Act is remedial in nature and is to be liberally construed so that the beneficial purpose intended by its enactment may be accomplished. The purpose of the Act, we have said, is best served when every provision of the Act is interpreted to provide the innocent victim with the fullest possible protection.

Liberty Mut. Ins. Co. v. Pennington , 356 N.C. 571, 573-74, 573 S.E.2d 118, 120 (2002) (citations, quotation marks, ellipses, and brackets omitted).

The Financial Responsibility Act permits interpolicy stacking of UIM coverage to calculate the "applicable limits of underinsured motorist coverage for the vehicle involved in the accident."

N.C. Farm Bureau Mut. Ins. Co. v. Bost , 126 N.C. App. 42, 50-51, 483 S.E.2d 452, 458 (1997). After stacking, the parties use the stacked amount to determine if the tortfeasor's vehicle is an underinsured highway vehicle, under N.C. Gen. Stat. § 20-279.21(b)(4). Id. at 51, 483 S.E.2d at 458.

Our case law and a statutory amendment in 2004 shaped the relevant definition of an underinsured highway vehicle under N.C. Gen. Stat. § 20-279.21(b)(4). First, our Court decided Ray v. Atlantic Casualty Insurance Co. , 112 N.C. App. 259, 435 S.E.2d 80 (1993). In Ray , another vehicle crossed the centerline and struck one plaintiff's vehicle. Id. at 260, 435 S.E.2d at 80. One plaintiff, and the two passengers in her vehicle, all suffered injuries. See id. at 260, 435 S.E.2d at 80. Aetna Insurance Company insured the tortfeasor under a vehicle insurance policy. Id. at 260, 435 S.E.2d at 80. The policy provided for coverage with a liability limit of $100,000 per person and $300,000 per accident. Id. at 260, 435 S.E.2d at 80. The defendant insurer insured the plaintiff. Id. at 260, 435 S.E.2d at 80. Defendant's policy provided for coverage with a UIM limit of $100,000 per person and $300,000 per accident. Id. at 260-61, 435 S.E.2d at 80.

Aetna paid an occupant in the tortfeasor's car $98,000, pursuant to the liability coverage under the policy. Id. at 261, 435 S.E.2d at 80-81. Thus, $202,000 remained in liability coverage, to be split amongst the three plaintiffs—the driver and her two passengers. Id. at 260-61, 435 S.E.2d at 81. Plaintiffs sought a judgment declaring defendant insurer's policy provided for UIM coverage. Id. at 261, 435 S.E.2d at 81. Defendant insurer filed a motion for summary judgment, which the trial court granted. Id. at 261, 435 S.E.2d at 81. Plaintiffs appealed. Id. at 260, 435 S.E.2d at 80.

This Court analyzed whether an...