Register v. White, No. 579PA03.

• Docket Nº: No. 579PA03.
• Citation: 358 N.C. 691, 599 S.E.2d 549
• Case Date: August 13, 2004
• Court: United States State Supreme Court of North Carolina

599 S.E.2d 549
358 N.C. 691

Melissa REGISTER
v.
Steve Allen WHITE

No. 579PA03.

Supreme Court of North Carolina.

August 13, 2004.

599 S.E.2d 551

Harris, Creech, Ward and Blackerby, P.A., by Charles E. Simpson, Jr. and Joseph E. Elder, New Bern, for unnamed defendant-appellant North Carolina Farm Bureau Mutual Insurance Company

Duffus & Associates, P.A., by J. David Duffus, Jr., Greenville, for plaintiff-appellee.

MARTIN, Justice.

On 30 June 1998, at approximately 6:15 p.m., plaintiff Melissa Register was injured in an automobile accident. At the time of the accident, plaintiff was riding as a passenger in a vehicle driven by defendant Steve Allen White.

The automobile driven by defendant was owned by Jimmy White (Mr. White). Mr. White held a $50,000.00 liability insurance policy provided by State Farm Insurance Company (State Farm). Plaintiff's father, Terry Register, Sr. (Mr. Register), owned a policy of insurance issued by unnamed defendant North Carolina Farm Bureau Mutual Insurance Company (Farm Bureau). The Farm Bureau policy (the policy) provided underinsured motorist (UIM) coverage in the amount of $100,000.00 per person, $300,000.00 per accident, for bodily injury claims.

On 28 July 2000, plaintiff filed a complaint against defendant White in Craven County Superior Court, alleging that she suffered various spinal injuries as a result of the accident. On 5 September 2000, Farm Bureau filed a request for monetary relief sought, to which plaintiff responded that she was seeking $400,000.00 in damages for her personal injuries. On or about 20 September 2000, Farm Bureau filed an answer generally denying the liability and damage allegations in plaintiff's complaint and reserving its right to defend the case in its name or in the name of defendant.

On 3 November 2000, the trial court ordered a mediated settlement conference, which resulted in an impasse on 27 February 2001. The case was subsequently calendered for trial the week of 13 August 2001. Mr. White's liability carrier, State Farm, tendered its liability limits of $50,000.00 on 8 August 2001.

In a letter to Farm Bureau dated 24 September 2001, plaintiff demanded arbitration pursuant to the UIM provision in Mr. Register's insurance policy. Farm Bureau acknowledged receipt of plaintiff's arbitration demand in a letter dated 2 October 2001, asking plaintiff's attorney, "[h]ow do you want to do it?" Approximately two weeks

599 S.E.2d 552

later, on 15 October 2001, Farm Bureau stated in a letter to plaintiff that it was "tak[ing] the position that the demand for arbitration is now time barred, and arbitration is no longer an alternative dispute resolution mechanism available."

Plaintiff filed a complaint on 24 January 2002, seeking a declaration obligating Farm Bureau to arbitrate the matter. Farm Bureau filed an answer on 2 April 2002. On 24 May 2002, with the declaratory judgment action still pending, plaintiff filed a motion to compel arbitration. Farm Bureau filed a response on 31 May 2002. Plaintiff voluntarily dismissed the declaratory judgment action without prejudice on 10 June 2002.

The trial court filed an order denying plaintiff's motion to compel on 5 August 2002. In its order, the trial court stated that, by the terms of the policy, plaintiff could demand arbitration only "within the time limit allowed for bodily injury or death actions in the State where the accident occurred." The trial court found that the accident occurred on 30 June 1998 and that plaintiff demanded arbitration on 24 September 2001. Thus, the trial court concluded, plaintiff's motion to compel arbitration was time-barred. Plaintiff appealed.

On appeal, the Court of Appeals reversed and remanded with instructions to enter an order compelling arbitration. Register v. White, 160 N.C.App. 657, 587 S.E.2d 95 (2003). On 15 December 2003, we allowed Farm Bureau's petition for discretionary review.

The sole issue before this Court is whether, under the terms of the policy, plaintiff's contractual right to demand arbitration became time-barred over one month before it accrued. Questions concerning the meaning of contractual provisions in an insurance policy are reviewed de novo on appeal. See Humphries v. City of Jacksonville, 300 N.C. 186, 187, 265 S.E.2d 189, 190 (1980); Parker v. State Capital Life Ins. Co., 259 N.C. 115, 117, 130 S.E.2d 36, 38 (1963).

In a section titled "ARBITRATION," Part C2 of the policy provides an insured with a contractual right to demand arbitration under specified circumstances. The arbitration provision states, in pertinent part:

If we and an insured do not agree:

1. Whether that insured is legally entitled to recover compensatory damages from the owner or driver of an... underinsured motor vehicle; or

2. As to the amount of such damages; the insured may demand to settle the dispute by arbitration.

The following procedures will be used:

....

5. Any arbitration action against the company must begin within the time limit allowed for bodily injury or death actions in the state where the accident occurred.

According to Farm Bureau, the arbitration provision's "time limit allowed for bodily injury or death actions" incorporates by reference North Carolina's statute of limitations for bodily injury actions, N.C.G.S. § 1-52(16). N.C.G.S. § 1-52(16) imposes a three-year statutory limitations period on bodily injury actions, and further provides that "the cause of action ... shall not accrue until bodily harm to the claimant or physical damage to his property becomes apparent or ought reasonably to have become apparent to the claimant, whichever event first occurs." N.C.G.S. § 1-52(16) (2003). In the instant case, Farm Bureau contends that the bodily harm to plaintiff became apparent on the date of the accident, 30 June 1998. Thus, Farm Bureau argues, the three-year limitations period commenced on that date, and plaintiff's 24 September 2001 demand for arbitration was contractually time-barred.

The Court of Appeals agreed that a three-year limitations period applied to plaintiff's right to demand arbitration, but concluded that the limitations period had not expired at the time plaintiff made such a demand. Register, 160 N.C.App. at 661-62, 587 S.E.2d at 97-98. The court stated that because plaintiff had no right to seek UIM coverage before 8 August 2001, her right to demand arbitration to resolve a UIM dispute could not expire before that date. Id. at 662, 587 S.E.2d at 98. Thus, the Court of Appeals reasoned, the arbitration provision was ambiguous

599 S.E.2d 553

as to when the "time limit" for plaintiff's contractual right to demand arbitration began to run. Id. The Court of Appeals concluded that the arbitration "time limit" provided a three-year limitations period that began on the date plaintiff acquired a contractual right to demand arbitration — in this case, 8 August 2001. Id. Accordingly, the Court of Appeals held that plaintiff's 24 September 2001 demand for arbitration was within the contractual time limit. Id.

Before this Court, Farm Bureau contends the arbitration provision in the policy is plain and unambiguous as to when the three-year "time limit" begins to run, and the Court of Appeals erred in construing it other than according to its plain meaning. We disagree.

The primary goal in interpreting an insurance policy is to discern the intent of the parties at the time the policy was issued. See Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500, 505, 246 S.E.2d 773, 777 (1978); Jamestown Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 266 N.C. 430, 438, 146 S.E.2d 410, 416 (1966). If the terms of the policy are "`plain, unambiguous, and susceptible of only one reasonable construction, the courts will enforce the contract according to its terms.'" Klein v. Avemco Ins. Co., 289 N.C. 63, 66, 220 S.E.2d 595, 597 (1975) (quoting Walsh v. United Ins. Co., 265 N.C. 634, 639, 144 S.E.2d 817, 820 (1965)). "`If, however, the meaning of words or the effect of provisions is uncertain or capable of several reasonable interpretations, the doubts will be resolved against the insurance company and in favor of the policyholder.'" C.D. Spangler Constr. Co. v. Indus. Crankshaft & Eng'g Co., 326 N.C. 133, 142, 388 S.E.2d 557, 563 (1990) (quoting Woods, 295 N.C. at 506, 246 S.E.2d at 777).

An ambiguity exists in a contract when either the meaning of words or the effect of provisions is uncertain or capable of several reasonable interpretations. See Woods, 295 N.C. at 506, 246 S.E.2d at 777; see also Dawes v. Nash Cty., 357 N.C. 442, 448-49, 584 S.E.2d 760, 764 (2003); Gaston Cty. Dyeing Mach. Co. v. Northfield Ins. Co., 351 N.C. 293, 299-300, 524 S.E.2d 558, 563 (2000); Lanning v. Allstate Ins. Co., 332 N.C. 309, 317, 420 S.E.2d 180, 185 (1992); C.D. Spangler, 326 N.C. at 142, 388 S.E.2d at 563; Silvers v. Horace Mann Ins. Co., 324 N.C. 289, 295, 378 S.E.2d 21, 25 (1989). An ambiguity can exist when, even though the words themselves appear clear, the...