Newton v. Standard Fire Ins. Co.

• Decision Date: 04 November 1976
• Docket Number: No. 123,123
• Citation: 291 N.C. 105,229 S.E.2d 297
• Court: North Carolina Supreme Court
• Parties: Charles A. NEWTON, doing business as Newton's Home Furnishings v. The STANDARD FIRE INSURANCE COMPANY.

Page 297

229 S.E.2d 297

291 N.C. 105

Charles A. NEWTON, doing business as Newton's Home Furnishings v. The STANDARD FIRE INSURANCE COMPANY.

No. 123.

Supreme Court of North Carolina.

Nov. 4, 1976.

Basil L. Whitener and Anne M. Lamm, Gastonia, for plaintiff-appellant.

Hollowell, Stott & Hollowell by L. B. Hollowell, Jr., Gastonia, for defendant-appellee.

EXUM, Justice.

There are two questions presented for decision. The first is whether the Court of Appeals erred in dismissing plaintiff's appeal on the ground that the trial court's order of dismissal affected only one of plaintiff's claims, the trial court did not determine there was 'no just reason for delay,' and the appeal, therefore, was not from a final judgment within the meaning of General Statute 1A--1, Rule 54(b). We think it did. The second, therefore, is whether the trial court erred in dismissing plaintiff's claim for punitive damages for the allegedly 'heedless, wanton and oppressive conduct' of defendant insurer in failing to pay plaintiff's claim, and in striking the allegations of the complaint which support the claim for punitive damages. We think it did not.

The Court of Appeals based its dismissal of plaintiff's appeal on the superior court's failure to determine expressly in its order that 'there was no just reason for delay.' It held that such a determination was required by Rule 54(b) which reads as follows:

'(b) Judgment Upon Multiple Claims or Involving Multiple Parties.--When more than one claim for relief is presented in an action, whether as a claim, counterclaim, crossclaim, or third-party claim, or when multiple parties are involved, the court may enter a final judgment as to one or more but fewer than all of the claims or parties only if there is no just reason for delay and it is so determined in the judgment. Such judgment shall then be subject to review by appeal or as otherwise provided by these rules or other statutes. In the absence of entry of such a final judgment, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties and shall not then be subject to review either by appeal or otherwise Except as expressly provided by these rules or other statutes. Similarly, in the absence of entry of such a final judgment, any order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.' (Emphasis added.)

The effect of this rule upon the appealability of the dismissal of plaintiff's claim for punitive damages has been decided by this Court in the strikingly similar case of Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976). We there held that Rule 54(b) did not bar appellate review of a summary judgment entered for the defendant on the plaintiff's claim for punitive damages even though the judgment did not expressly determine also that 'there was no just reason for delay' and there were other claims extant in the lawsuit. That this case involves a dismissal under Rule 12(b)(6) rather than a summary judgment does not affect the applicability of our holding in Oestreicher.

In Oestreicher this Court illustrated the important distinction between the North Carolina rule and its federal counterpart resulting from the addition of the words italicized in the North Carolina rule quoted above. Federal Rule of Civil Procedure 54(b) is clearly intended to mitigate the rigors of the federal requirement of finality by allowing a trial court to render final a decision which ordinarily would not be so, and thus would not otherwise be appealable. By finding 'no just reason for delay' and making such a determination expressly in the judgment, the federal court secures to itself the power to render final judgment as to 'fewer than all of the claims or parties.'

In North Carolina there are well recognized and often used exceptions to the requirement of finality before appeal can be taken. Two statutory provisions, in particular, G.S. 1--277 and G.S. 7A--27(d), allow appeal from certain interlocutory orders or judgments, notably those which affect substantial rights of the parties. The addition of the italicized language in the North Carolina counterpart of Rule 54(b) is clearly intended, as is recognized in Oestreicher, to except from the prohibition of review of non-final partial adjudications, those orders or judgments which, by virtue of General Statutes 1--277 and 7A--27(d), are reviewable despite their interlocutory nature. The rule in North Carolina, as in the federal courts, is essentially remedial, and while allowing the trial court to render a final, though partial, adjudication which might not be appealable otherwise, it will not be construed to limit the effect of any other rule or statute allowing review of non-final orders or judgments. G.S. 1A--1, Rule 54(b) expands, rather than restricts, the compass of review of orders and judgments in North Carolina.

Since the order of the trial court dismissing plaintiff's claim for punitive damages did affect a 'substantial right' of the plaintiff and is therefore appealable under both G.S. 1--277 and G.S. 7A--27(d), the Court of Appeals erred in dismissing plaintiff's appeal.

In considering the second issue, which goes to the merits of the trial court's dismissal of plaintiff's claim for punitive damages under Rule 12(b)(6) (failure to state a claim), it is necessary to consider in some detail the allegations of the complaint.

The plaintiff alleged that on August 24, 1974, while its policy insuring against loss by theft was in effect, the plaintiff lost merchandise and experienced damage to its building, furniture and fixtures by theft and burglary in the sum of more than $5500.00. Plaintiff demanded payment of defendant insurer and defendant refused to pay. Since the remaining allegations of the complaint constitute the basis for plaintiff's claim for punitive damages, they are set out at length:

'7. That from time to time the plaintiff has made known to defendant and its agents, servants and employees that he was in desperate need of the proceeds of said insurance policy to which he was entitled to satisfy pressing financial matters caused by the loss above mentioned, and by reason of a loss by fire with which defendant was familiar. Notwithstanding the knowledge of defendant of said conditions, the defendant has neither made nor offered to make payment to plaintiff or to negotiate a settlement of plaintiff's claim under said policy of insurance.

'8. Defendant at said times knew that plaintiff had floor plan and financing arrangements with creditors in the regular course of business and that each day great and high costs of financing were being incurred by plaintiff. Defendant further knew that plaintiff had payments to make upon liens and deeds of trust which constituted an expense of his said business and that said obligations involved the payment of interest each day. Defendant further knew that by reason of the losses sustained by plaintiff and the failure and refusal of defendant to properly settle and pay plaintiff the sums to which he was entitled under the said policy of insurance for the two losses sustained by plaintiff, that plaintiff would not be able to effectively carry on his business and that it was essential that he receive from the defendant the sums to which plaintiff was entitled under said policy of insurance in a prompt and expeditious manner.

'9. Defendant, notwithstanding the foregoing, in heedless disregard of the consequences which it knew plaintiff would experience by defendant's failure to comply with the terms of its policy of insurance and in an oppressive manner failed and refused to comply with the express terms of its policy of insurance issued to plaintiff.

'10. That by reason of its heedless, wanton and oppressive conduct as aforesaid, defendant has subjected itself to the penalty of punitive damages, and the plaintiff is entitled to recover of defendant punitive damages in the sum of at least $50,000.00.'

The superior court allowed defendant's motions to dismiss the claim for punitive damages for failure to state a claim for relief and to strike those allegations which supported that claim as immaterial; judgment was rendered accordingly.

"A complaint should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts which would be proved in support of the claim.' Sutton v. Duke, 277 N.C. 94, 102, 176 S.E.2d 161, 166 (1970) Quoting 2A Moore's Federal Practice § 12.08 (2d ed. 1968). Whether the facts stated in the pleadings are sufficient to bring the case within the rule allowing punitive damages is a question of law, Worthy v. Knight, 210 N.C. 498, 187 S.E. 771 (1936); Picklesimer v. R.R., 194 N.C. 40, 138 S.E. 340 (1927), although the determination whether punitive damages will be allowed and the amount to be allowed, if any, rests in the sound discretion of the jury. Worthy v. Knight, supra.

North Carolina follows the general rule that punitive or exemplary damages are not allowed for breach of contract, with the exception of breach of contract to marry. Oestreicher v. Stores, supra; King v. Insurance Co., 273 N.C. 396, 159 S.E.2d 891 (1968). The general rule in most jurisdictions is that punitive damages are not allowed even though the breach be wilful, malicious or oppressive. See, e.g., John C. McCarthy, Punitive Damages in Bad Faith Cases (1976). Nevertheless, where there is an identifiable tort even though the tort also constitutes, or accompanies, a breach of contract, the tort itself may give rise to a claim for punitive damages. Oestreicher v. Stores, supra, 290 N.C. at 134--35, 225 S.E.2d 797, Citing Saberton v. Greenwald, 146 Ohio St. 414, 66 N.E.2d 224 (1946) and 25...