Nationwide Mut. Ins. Co. v. Mabe
| Decision Date | 21 June 1994 |
| Docket Number | No. 9317SC40,9317SC40 |
| Citation | 444 S.E.2d 664,115 N.C.App. 193 |
| Court | North Carolina Court of Appeals |
| Parties | NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. Brenda Kay MABE, et al., Defendants. Jesse Willard SCOTT, Jr., Individually, as the Parent of Lucinda Sue Scott, and as the Administrator of the Estate of Carolyn Mabe Scott, and Lucinda Sue Scott, by her Guardian ad litem, Anne Connolly, Third-Party Plaintiffs, v. NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, Third-Party Defendant. Brenda Kay MABE, Roger Lee Mabe, Kimberly Hope Mabe, a minor b/h/g/a/l S. Mark Rabil and Heather Dora Mabe, a minor b/h/g/a/l Gregory W. Schiro, Plaintiffs, v. Robert Leonard GREGORY, and Mary Elizabeth Wilson, Defendants. Jesse Willard SCOTT, Jr., Individually as the parent of Lucinda Sue Scott and as the Administrator of the Estate of Carolyn Mabe Scott, and Lucinda Sue Scott, b/h/g/a/l Anne Connolly, Plaintiffs v. Robert Leonard GREGORY, Mary Elizabeth Wilson, and Jody Ray Bullins, Defendants. |
Petree Stockton by James H. Kelly, Jr. and Edwin W. Bowden, Winston-Salem, for plaintiff--Nationwide.
Theodore M. Molitoris, Winston-Salem, for defendants and third-party plaintiffs--Jesse Willard Scott, Jr., Individually and as the Parent of Lucinda Sue Scott and for Lucinda Sue Scott.
John E. Gehring, Walnut Grove, for defendant and third-party plaintiff--Jesse Willard Scott, Jr., as the Administrator of the Estate of Carolyn Mabe Scott.
Metcalf, Vrsecky & Beal by Anthony J. Vrsecky, Walnut Grove, for defendants--Brenda Kay Mabe, Roger Lee Mabe, Kimberly Hope Mabe and Heather Dora Mabe.
Nichols, Caffrey, Hill, Evans & Murrelle by Paul D. Coates and David L. Brown, Greensboro, for defendant--North Carolina Farm Bureau Mut. Ins. Co.
The facts of this case arise out of an automobile accident, but due to the numerous parties and issues involved, its resolution has become more than complex. On 16 February 1990, Lucinda Sue Scott, Brenda Kay Mabe, Kimberly Hope Mabe, and Heather Dora Mabe were all passengers in a vehicle operated by Carolyn Mabe Scott traveling along North Carolina Highway 89 when it was struck head-on by a 1989 Toyota truck. As a result of the accident, Carolyn Mabe Scott was killed and the remaining passengers all suffered extensive injuries. The occupants of the Toyota truck were Robert Leonard Gregory ("Gregory") and Jody Ray Bullins ("Bullins"). It was unclear who was driving the Toyota truck, but the parties consented that judgment would be entered against Gregory. At the time of the accident, the Toyota truck was titled in the name of Gregory's mother, Mary Elizabeth Wilson ("Wilson"), and it was alleged that Gregory was driving the truck with his mother's permission. Nationwide Mutual Insurance Company ("Nationwide") had in effect a liability policy on the Toyota truck providing coverage in the amount of $100,000 per person and $300,000 per accident. In addition, North Carolina Farm Bureau Mutual Insurance Company ("Farm Bureau") had in effect a business automobile policy issued to Jesse Willard Scott which provided underinsured motorist coverage (UIM) of $100,000.
On 4 May 1990, a complaint was filed on behalf of Brenda Kay Mabe, Roger Lee Mabe, Kimberly Hope Mabe and Heather Dora Mabe (hereafter "the Mabes") against Gregory and Wilson. The complaint alleged that Gregory had driven the Toyota truck in a negligent manner while intoxicated and that his use of the truck fell within the family purpose doctrine. Thereafter, on 24 September 1990, Jesse Willard Scott, Jr., and his daughter, Lucinda Sue Scott (hereafter "the Scotts"), filed suit against Gregory and Wilson alleging the same causes of action as in the Mabes' complaint. The Mabes and the Scotts will be referred to collectively as "the claimants."
On 14 March 1991, Nationwide, in an attempt to settle the claims arising out of the accident, offered to pay its policy limits to the claimants. Believing that the potential claims exceeded the extent of its liability coverage, Nationwide proposed a pro rata distribution in the following amounts and conditioned settlement upon concurrent acceptance by all of the claimants:
Estate of Carolyn Mabe Scott-- $ 35,050.00
Lucinda Sue Scott-- $ 42,600.00
Heather Dora Mabe-- $ 18,380.00
Kimberly Hope Mabe-- $100,000.00
Brenda Kay Mabe-- $100,000.00
The Scotts, however, were unable to give their unconditional acceptance, because if they were unable to obtain UIM coverage from other sources, they felt they were entitled to a larger portion of Nationwide's liability coverage. On 5 July 1991, after the claimants had refused to unconditionally accept the offer, Nationwide filed an interpleader action and named all of the claimants as defendants. Nationwide then tendered its $300,000 policy limits to the court and asked for an order declaring that it had satisfied its policy obligations.
In lieu of trial, mediation followed and the parties consented that judgments would be entered against Gregory in the following amounts:
Lucinda Sue Scott $125,000.00
Carolyn Mabe Scott Estate $400,000.00
Brenda Kay Mabe $500,000.00
Kimberly Hope Mabe $600,000.00
Heather Dora Mabe $ 40,000.00
Roger Lee Mabe $ 15,000.00
Based on these judgments, Nationwide agreed to pay its $300,000.00 policy limits pro rata in the following amount:
Lucinda Sue Scott $ 29,280.00
Carolyn Mabe Scott Estate $ 55,040.00
Brenda Kay Mabe $100,000.00
Kimberly Hope Mabe $100,000.00
Heather Dora Mabe $ 11,000.00
Roger Lee Mabe $ 3,900.00
The entry of the consent judgment and the subsequent pro rata distribution of Nationwide's coverage left only two issues to be determined by the trial court: (1) whether Nationwide owed prejudgment interest, and (2) the extent of Farm Bureau's UIM coverage. All parties moved for summary judgment and a hearing was held on 8 September 1992. The trial court ordered that Nationwide owed prejudgment interest to each of the claimants based on their respective pro rata shares of the $300,000 liability coverage. The trial court further ordered that Farm Bureau's UIM liability to the Scott's was $200,000. All parties gave timely notice of appeal and this matter is properly before this Court.
The first issue we address is the extent, if any, to which Nationwide must pay prejudgment interest. There are three possible outcomes to this issue. The first, argued by the claimants, is that Nationwide must pay prejudgment interest on the total amount of the consent judgments. The second option, urged by Nationwide, is that $300,000 is the extent of its liability since the combined judgments exceed this amount. The last option, and the one chosen by the trial court, is that Nationwide is required to pay prejudgment interest on the respective pro rata shares of the claimants. We find the second option advanced by Nationwide to be the better reasoned position, and reverse the ruling of the trial court.
Prejudgment interest is governed by N.C.G.S. § 24-5 which provides in pertinent part:
In an action other than contract, the portion of money judgment designated by the fact finder as compensatory damages bears interest from the date the action is instituted until the judgment is satisfied. Interest on an award in an action other than contract shall be at the legal rate.
N.C.G.S. § 24-5(b) (1991). There is no statutory duty which requires a liability insurance carrier to pay prejudgment interest in addition to its limit of liability under the policy. Sproles v. Greene, 329 N.C. 603, 407 S.E.2d 497 (1991). Nor is N.C.G.S. § 24-5 a part of the Financial Responsibility Act so as to require that it be written into every liability policy. Baxley v. Nationwide Mut. Ins. Co., 334 N.C. 1, 430 S.E.2d 895 (1993). Accordingly, a liability carrier's obligation to pay prejudgment interest in addition to its stated limits is governed solely by the language of the policy.
In interpreting insurance policies, our appellate courts have established several rules of construction. Of these, the most fundamental rule is that the language of the policy controls. See Smith v. Nationwide Mut. Ins. Co., 328 N.C. 139, 400 S.E.2d 44 (1991). Other rules include: if a policy is not ambiguous, then the court must enforce the policy as written and may not reconstruct the policy under the guise of interpreting an ambiguous provision. Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 172 S.E.2d 518 (1970). If a policy defines a term, then that definition is to be applied. Id. It does not matter that a broader or narrower meaning is normally given to the term. York Indus. Center, Inc. v. Michigan Mut. Liab. Co., 271 N.C. 158, 155 S.E.2d 501 (1967). In addition, all parts of an insurance policy are to be construed harmoniously so as to give effect to each of the policy's provisions. See Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500, 246 S.E.2d 773 (1978).
As originally issued, the Nationwide policy contained the following relevant provisions:
In addition to our limit of liability, we will pay on behalf of a covered person:
3. Interest accruing after a judgment is entered in any suit we defend. Our duty to pay interest ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage. (Emphasis added).
The limit of liability shown in the Declarations for "each person" for Bodily Injury Liability is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. Subject to this limit for "each person", the limit of liability shown in the Declarations for "each accident" for Bodily Injury Liability is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident.......
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