Nationwide Prop. & Cas. Ins. Co. v. Brinley's Grading Serv., Inc.
| Decision Date | 05 February 2013 |
| Docket Number | No. COA12–276.,COA12–276. |
| Citation | 737 S.E.2d 192 |
| Court | North Carolina Court of Appeals |
| Parties | NATIONWIDE PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff, v. BRINLEY'S GRADING SERVICE, INC., Ismael Dominguez, Thomas E. Brinley, Sr., and Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr., Defendants. |
OPINION TEXT STARTS HERE
Appeal by defendants from order entered 2 December 2011 by Judge Shannon R. Joseph in Wake County Superior Court. Heard in the Court of Appeals 11 September 2012.
Bailey & Dixon, L.L.P., by David S. Coats and Philip A. Collins, for plaintiff-appellee.
Smyth & Cioffi, LLP, by Theodore B. Smyth; and Wilson & Ratledge, PLLC, by James E.R. Ratledge, for defendants-appellants Brinley's Grading Service, Inc., and Thomas E. Brinley, Sr.
Abrams & Abrams, P.A., by Douglas B. Abrams, Margaret S. Abrams, and Noah B. Abrams; and Taft, Taft & Haigler, P.A., by Thomas F. Taft, for defendant-appellant Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr.
This appeal involves a dispute over plaintiff Nationwide Property & Casualty Insurance Company's duty to defend and duty to provide coverage with respect to a wrongful death action (“the underlying action”) brought by Donna W. Taft, as administratrix of the estate of Michael Wayne Paul, Jr., against Brinley's Grading Services, Inc., Thomas E. Brinley, Sr. (president of Brinley's Grading), and Ismael Dominguez (an employee of Brinley's Grading). Defendants in this action—Ms. Taft, Brinley's Grading, and Mr. Brinley—appeal from the trial court's order granting summary judgment to plaintiff Nationwide and concluding that Nationwide had no duty to defend Brinley's Grading and Mr. Brinley and had no duty to provide coverage for Ms. Taft's claims against Brinley's Grading, Mr. Brinley, and Mr. Dominguez.
Applying the controlling test for the duty to defend set out most recently in Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield, L.L.C., 364 N.C. 1, 6, 692 S.E.2d 605, 610 (2010), we hold that the trial court erred in concluding Nationwide had no duty to defend Brinley's Grading and Mr. Brinley. With respect to the coverage issue, however, we hold that the trial court properly concluded that Nationwide's policy did not provide coverage for Ms. Taft's claims against Brinley's Grading or Mr. Dominguez. A genuine issue of material fact exists, however, as to coverage for the claims against Mr. Brinley. We, accordingly, affirm the trial court's order in part and reverse in part.
On 26 January 2010, following an accident resulting in Mr. Paul's death, Ms. Taft filed a wrongful death action against Brinley's Grading, Mr. Brinley, and Mr. Dominguez for negligence. In her complaint, Ms. Taft alleged that on 14 February 2008, Mr. Paul was an employee of Pro–Tech Management & Equipment Services, Inc. and was doing work for Brinley's Grading pursuant to a contract between Pro–Tech and Brinley's Grading. The Taft complaint further alleged that at approximately 7:23 a.m. on 14 February 2008, Mr. Paul was bent over beside a large commercial trailer when Mr. Dominguez, an employee of Brinley's Grading, attempted to start a pickup truck. The truck lurched forward and struck Mr. Paul, and Mr. Paul died of his injuries. According to the Taft complaint, Mr. Dominguez immediately fled the scene and has not returned to North Carolina.
On 31 March 2010, Nationwide filed this action against Brinley's Grading, Mr. Dominguez, Mr. Brinley, and Ms. Taft. On 4 March 2011, Nationwide amended its complaint. In its amended complaint, Nationwide alleged that Brinley's Grading was the named insured under a business automobile policy issued by Nationwide (“the Policy”). Nationwide sought a declaration that it had no duty to make any payment to any of the defendants, to the estate of Mr. Paul, or to any beneficiaries or heirs for any settlement, verdict, or judgment entered in the underlying action brought by Ms. Taft or any other proceeding arising out of the events described in the underlying action's complaint. Nationwide further sought a declaration that it had no duty to defend Brinley's Grading, Mr. Brinley, or Mr. Dominguez in the underlying action.
The Policy contained the following provisions regarding coverage:
SECTION II—LIABILITY COVERAGE
A. Coverage
We will pay all sums an “Insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto”.
....
We have the right and duty to defend any “insured” against a “suit” asking for such damages.... However, we have no duty to defend any “insured” against a “suit” seeking damages for “bodily injury” ... to which this insurance does not apply....
1. Who is An Insured
The following are “Insureds”:
a. You for any covered “auto”.
b. Anyone else while using with your permission a covered “auto” you own, hire or borrow[.]
....
c. Anyone liable for the conduct of an “Insured” described above but only to the extent of that liability.
“You,” as used in the Policy, referred to the “Named Insureds” shown in the Policy's declarations. The schedule of Named Insureds in the Policy's declarations included, among others, Brinley's Grading, Pro–Tech, and “Thomas & Marian Brinley Senior.”
Nationwide filed a motion for summary judgment on 8 September 2011 and an amended motion for summary judgment on 1 November 2011 contending that no coverage or duty to defend existed as to the underlying action because Ms. Taft's claims fell within various exclusions set out in the Policy. On 2 December 2011, the trial court entered an order granting Nationwide's amended motion for summary judgment as to all defendants.
The order provided that Nationwide “has no duty to defend Brinley's Grading Service, Inc., Thomas E. Brinley, Sr., or Ismael Dominguez for any claims asserted in the Underlying Action.” The order further provided:
2. Plaintiff [Nationwide] has no duty or obligation under Business Auto Policy ... (“the Policy”) to make any payment to Defendant Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr. for the claims asserted in a wrongful death action commenced in Pitt County, North Carolina, Superior Court captioned Donna W. Taft, Administratrix of the Estate of Michael Wayne Paul, Jr., Plaintiff, v. Brinley's Grading Services, Inc., Ismael Dominguez, and Thomas E. Brinley, Sr., bearing docket number 10 CVS 224 (the “Underlying Action”)[.]
Brinley's Grading, Mr. Brinley, and Ms. Taft each timely appealed to this Court.
“In reviewing the propriety of summary judgment, the appellate court is restricted to assessing the record before it.” Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 690, 340 S.E.2d 374, 377 (1986). “If on the basis of that record it is clear that no genuine issue of material fact existed and that the movant was entitled to judgment as a matter of law, summary judgment was appropriately granted.” Id.
Our Supreme Court has explained that, “[g]enerally speaking, the insurer's duty to defend the insured is broader than its obligation to pay damages incurred by events covered by a particular policy.” Id. at 691, 340 S.E.2d at 377. “When the pleadings state facts demonstrating that the alleged injury is covered by the policy, then the insurer has a duty to defend, whether or not the insured is ultimately liable.” Id. An insurer is excused from its duty to defend only “if the facts are not even arguably covered by the policy.” Id. at 692, 340 S.E.2d at 378.
In order to answer the question whether an insurer has a duty to defend, our courts apply the “ ‘comparison test,’ reading the policies and the complaint ‘side-by-side ... to determine whether the events as alleged are covered or excluded.’ “ Harleysville, 364 N.C. at 6, 692 S.E.2d at 610 (quoting Waste Mgmt., 315 N.C. at 693, 340 S.E.2d at 378). To apply this test, Id. at 7, 692 S.E.2d at 611.
Our Supreme Court has further explained regarding the nature of the duty to defend:
In addressing the duty to defend, the question is not whether some interpretation of the facts as alleged could possibly bring the injury within the coverage provided by the insurance policy; the question is, assuming the facts as alleged to be true, whether the insurance policy covers that injury. The manner in which the duty to defend is “broader” than the duty to indemnify is that the statements of fact upon which the duty to defend is based may not, in reality, be true. As we observed in Waste Management, “[w]hen the pleadings state facts demonstrating that the alleged injury is covered by the policy, then the insurer has a duty to defend, whether or not the insured is ultimately liable.” [Waste Mgmt., 315 N.C. at 691, 340 S.E.2d at 377] (emphasis added) (citations omitted).
Thus, “[u]nder Harleysville, the duty to defend is broader than the duty to indemnify only ‘in the sense that an unsubstantiated allegation requires an insurer to defend against it so long as the allegation is of a covered injury; however, even a meritorious allegation cannot obligate an insurer to defend if the alleged injury is not within, or is excluded from, the coverage provided by the insurance policy.’ “ Kubit v. MAG Mut. Ins. Co., 210N.C.App. 273, ––––, 708 S.E.2d 138, 145 (2011) (quoting Harleysville, 364 N.C. at 7, 692 S.E.2d at 611).
Regarding Brinley's Grading, Nationwide argues it had no duty to defend the company because the facts alleged in the underlying complaint, if true, fall within the Policy's “Employee Indemnification And Employer's Liability” exclusion. That exclusion provides:
This insurance does not apply to any of the...
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