Page v. Lexington Ins. Co., COA05-1012.

• Citation: 628 S.E.2d 427
• Case Date: April 18, 2006
• Court: Court of Appeal of North Carolina (US)

628 S.E.2d 427 Howard and Maymie PAGE, Plaintiffs-Appellants,
v.
LEXINGTON INSURANCE COMPANY, Defendant-Appellee. No. COA05-1012. Court of Appeals of North Carolina. April 18, 2006.

Page 428

Appeal by plaintiffs from order entered 23 May 2005 by Judge Anderson D. Cromer in Superior Court, Forsyth County. Heard in the Court of Appeals 7 March 2006.

Maupin Taylor, P.A., by Kurt J. Olson, Raleigh, for plaintiffs-appellants.

Cozen O'Connor, by Tracy L. Eggleston, Charlotte, for defendant-appellee.

McGEE, Judge.

Howard and Maymie Page (plaintiffs) filed a complaint on 28 July 2004 against Lexington Insurance Company (defendant), alleging claims for breach of contract, breach of fiduciary duty, bad faith, unfair and deceptive trade practices (UDTP), and waiver and estoppel.

Plaintiffs alleged the following: On 21 February 2001, an employee of BellSouth Telecommunications, Inc. ruptured an underground septic/sewer pipeline on plaintiffs' real property. The rupture caused an undetermined amount of wastewater to spill into plaintiffs' residence. As a result, plaintiffs suffered property damage and adverse physical reactions such as accelerated heart rates, shortness of breath, skin rashes and headaches. Plaintiffs vacated their residence on 23 February 2001.

Plaintiffs further alleged they filed an insurance claim with defendant in accordance with the terms and conditions of their insurance policy with defendant. A detailed recitation of the remainder of plaintiffs' allegations is not necessary to the determination of the legal issues presented by this appeal. Those allegations which are relevant are set forth in the analysis section of this opinion.

Defendant filed an answer and motion to dismiss plaintiffs' complaint based upon the applicable statutes of limitations. The trial court granted defendant's motion to dismiss in an order filed 23 May 2005. Plaintiffs appeal.

I.

Plaintiffs first argue the trial court committed reversible error by dismissing their UDTP claim. We agree. At the hearing on defendant's motion to dismiss, the trial court stated the bases for its dismissal of plaintiffs' UDTP claim:

The [Trial] Court realizes that [the statute of limitations for] the [UDTP claim], nothing else appearing, is four years. However, the same factual basis for alleging estoppel is being alleged as the basis for the [UDTP claim].

The [Trial] Court finds that that basis is not sufficient to raise a[] [UDTP] claim, and for that reason — plus that it would be bad policy to allow — for every expired claim against an insurance company to basically allow one more year to bring a[] [UDTP claim].

The [Trial] Court is going to grant the motion.

When ruling upon a 12(b)(6) motion to dismiss, a trial court must determine as a matter of law whether the allegations in the complaint, taken as true, state a claim for relief under some legal theory. Leary v. N.C. Forest Prods., Inc., 157 N.C.App. 396, 400, 580 S.E.2d 1, 4, aff'd per curiam, 357 N.C. 567, 597 S.E.2d 673 (2003). On appeal of a 12(b)(6) motion to dismiss for failure to state a claim, our Court "conduct[s] a de novo review of the pleadings to determine their legal sufficiency and to determine whether the trial court's ruling on the motion to dismiss was correct." Id.

In this case, the trial court stated two grounds for its ruling, which we address separately. The trial court first stated that plaintiffs' alleged factual basis for their UDTP claim was insufficient to state a claim. N.C. Gen.Stat. § 75-1.1(a) (2005) provides that "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." N.C. Gen.Stat. § 75-16 (2005) creates a cause of action to redress injuries caused by violations of Chapter 75 of the General Statutes and provides that any damages recovered shall be trebled. These two statutes establish a private cause of action for consumers. Gray v. N.C. Ins. Underwriting Ass'n, 352 N.C. 61, 68, 529 S.E.2d 676, 681 (2000). The statute of limitations applicable to UDTP claims is four years. N.C. Gen.Stat. § 75-16.2 (2005).

Page 429

"In order to establish a violation of N.C.G.S. § 75-1.1, a plaintiff must show: (1) an unfair or deceptive act or practice, (2) in or affecting commerce, and (3) which proximately caused injury to [the] plaintiff[]." Gray, 352 N.C. at 68, 529 S.E.2d at 681. By statute, an unfair or deceptive act or practice includes:

Unfair Claim Settlement Practices. — Committing or performing with such frequency as to indicate a general business practice of any of the following: Provided, however, that no violation of this subsection shall of itself create any cause of action in favor of any person other than the Commissioner:

....

b. Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;

....

d. Refusing to pay claims without conducting a reasonable investigation based upon all available information;

e. Failing to affirm or deny coverage of claims within a reasonable time after proof-of-loss statements have been completed;

f. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear[.]

N.C. Gen.Stat. § 58-63-15(11) (2005).

In Gray, our Supreme Court held as follows:

An insurance company that engages in the act or practice of "[n]ot attempting in good faith to effectuate prompt, fair and equitable...