Prentiss v. Allstate Ins. Co.

Decision Date19 June 2001
Docket NumberNo. COA00-711.,COA00-711.
Citation548 S.E.2d 557,144 NC App. 404
CourtNorth Carolina Court of Appeals
PartiesCharles B. PRENTISS, III, and Margaret O. Prentiss, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Defendant.

Van Winkle, Buck, Wall, Starnes and Davis, P.A., by Allan R. Tarleton, Asheville, for plaintiff-appellants.

McGuire, Wood & Bissette, P.A., by Joseph P. McGuire, Asheville; and Sonnenschein Nath & Rosenthal, by Mark L. Hanover, Chicago, IL, for defendant-appellee.

MARTIN, Judge.

Plaintiff Charles B. Prentiss, III, was involved in a two-car motor vehicle accident in Haywood County on 22 September 1997; both cars sustained damage but neither party was injured. Plaintiff was cited for operating a motor vehicle "by failing to see before turning from a direct line that such movement could be made in safety." The charge was dismissed in the District Court of Haywood County without adjudication.

At the time of the accident, plaintiff was covered by an automobile insurance policy issued by defendant Allstate Insurance Company. Defendant determined that plaintiff was at fault in the accident. Because the property damage exceeded $2,000, defendant eliminated plaintiff's safe driver discount and imposed a premium surcharge for three driving record points in accordance with the North Carolina Safe Driver Incentive Plan. Plaintiffs paid the increased premium under protest.

Plaintiffs filed a class action complaint in Haywood County on 1 February 1999 asserting: (1) a private insurer's determination of fault with the imposition of increased premiums is an unconstitutional delegation of judicial power prohibited by Article IV, Section 1 of the Constitution of the State of North Carolina; (2) the imposition of increased premiums without adjudication of fault is an unconstitutional civil penalty prohibited by Article I, Section 19 of the Constitution of North Carolina; and, (3) the North Carolina Rate Bureau has not provided reasonable means for a person to dispute the insurer's determination of fault as required by G.S. § 58-36-1(2) and § 58-36-65(h). Plaintiffs sought reimbursement of the premium surcharges assessed and other injunctive or equitable relief as appropriate. Defendant removed the action to the United States District Court for the Western District of North Carolina, and filed a motion to dismiss. The magistrate judge issued a memorandum and recommendation, which was adopted by the District Court, and the case was remanded back to state court on 9 November 1999 pursuant to the Burford abstention doctrine on the grounds that federal review would disrupt the state's efforts to establish a coherent automobile insurance policy. Prentiss v. Allstate Insurance Co., 87 F.Supp.2d 514 (W.D.N.C.1999) (citing Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943)). On remand to the Haywood County Superior Court, defendant's motion to dismiss the complaint was granted on 28 March 2000. Plaintiffs appeal from the order of dismissal.

The North Carolina Rate Bureau [hereinafter "Bureau"] was created by G.S. § 58-36-1 to "promulgate and propose rates ... for insurance against theft of or physical damage to nonfleet private passenger motor vehicles." N.C. Gen.Stat. § 58-36-1(3). All companies or other organizations that write insurance in North Carolina must first subscribe to and become a member of the Bureau. N.C. Gen.Stat. § 58-36-5. The rates proposed by the Bureau are subject to review by the Commissioner of Insurance. N.C. Gen.Stat. § 58-36-65(a). The statute further requires the Bureau to file a Safe Driver Incentive Plan (SDIP) that "distinguishes among various classes of drivers that have safe driving records and various classes of drivers that have a record of at-fault accidents; a record of convictions of major moving traffic violations; a record of convictions of minor moving traffic violations; or a combination thereof; and that provides for premium differentials among those classes of drivers"; this plan also requires the approval of the Commissioner. N.C. Gen.Stat. § 58-36-65(b).

Plaintiffs challenge the insurer's assessment of driving record points pursuant to the SDIP because they contend G.S. § 58-36-65 requires insurers to make determinations that an insured was at-fault in an accident when there has been no adjudication of fault, and that this requirement is an unconstitutional delegation of judicial power. We conclude, however, the underlying substance of plaintiffs' claim is an attack on the rates system, rather than a constitutional challenge to the statute. Instructive to this Court in reaching this conclusion is the fact that plaintiffs have opted to bring the action against Allstate, the insurer who made the at-fault determinations in dispute, instead of suing the State which is enforcing the allegedly unconstitutional provision. Such course of action appears to us inconsistent with plaintiffs' contention that this suit is not a challenge to the rates system but instead a challenge to the constitutionality of a statute.

Thus, because the substance of the claim is an attack on the rates system, we must consider whether the action is properly before the courts. G.S. § 150B-43 provides for judicial review of administrative actions and states:

Any person who is aggrieved by the final decision in a contested case, and who has exhausted all administrative remedies made available to him by statute or agency rule, is entitled to judicial review of the decision under this Article.

N.C. Gen.Stat. § 150B-43. This section requires that a plaintiff first exhaust all administrative remedies prior to bringing the matter before the courts. The administrative remedy set out by Chapter 58 for plaintiff in this case is contained in G.S. § 58-36-65(h), which states:

If an insured disputes his insurer's determination that the operator of an insured vehicle was at fault in an accident, such dispute shall be resolved pursuant to G.S. 58-36-1(2), unless there has been an adjudication or admission of negligence of such operator.

N.C. Gen.Stat. § 58-36-65(h). G.S. § 58-36-1(2) provides "[t]he Bureau shall provide reasonable means to be approved by the Commissioner whereby any person affected by a rate or loss costs made by it may be heard in person or by the person's authorized representative before the governing committee or other proper executive of the Bureau." There is no evidence in the record in this case to show any attempt by plaintiffs to dispute the at-fault determination by seeking the recourse provided under the statute, nor is there evidence that plaintiffs have sought review of the determination pursuant to the provisions in Article 3A of the Administrative Procedure Act (APA). See N.C. Gen.Stat. § 150B-38.

However, plaintiffs argue they are not required to exhaust their administrative remedies because no agency decision is at issue and the APA, therefore, does not apply. Instead, plaintiffs contend they are challenging a statute enacted by the legislature, and an action by Allstate, a non-agency, in...

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    ...the insurance commissioner, and therefore that "this case involve[ed] an agency decision which is subject to the APA." 144 N.C.App. 404, 408, 548 S.E.2d 557, 560 (2001). {39} This prohibition on sidestepping the exhaustion of administrative remedies doctrine does not change when a plaintiff......
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  • Gaynor v. Melvin
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    ...orders in conflict with the statutes and to the extent they are in conflict, those orders are void. See Prentiss v. Allstate Ins. Co., 144 N.C.App. 404, 407, 548 S.E.2d 557, 559 (2001) (courts do not have power to interpolate or superimpose provisions and limitations into a clear and unambi......
  • Burrill v. Long, No. COA06-955 (N.C. App. 8/7/2007)
    • United States
    • North Carolina Court of Appeals
    • 7 Agosto 2007
    ...of Insurance timely filed notice of appeal. The facts of this case are nearly identical to the facts in Prentiss v. Allstate Ins. Co., 144 N.C. App. 404, 548 S.E.2d 557, appeal dismissed and disc. review denied, 354 N.C. 220, 554 S.E.2d 343 (2001). In Prentiss, plaintiffs challenged the con......
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