Sproles v. Greene

• Decision Date: 21 August 1990
• Docket Number: No. 8824SC641,8824SC641
• Court: North Carolina Court of Appeals
• Parties: Carolyn M. SPROLES and Husband, Charles B. Sproles, Plaintiffs, v. David Reed GREENE, Travelers Indemnity Insurance Company and United States Fidelity and Guaranty Company, Defendants. James A. PHILLIPS and Wife, Rita L. Phillips, Plaintiffs, v. David Reed GREENE, Travelers Indemnity Insurance Company and Aetna Casualty & Surety Company, Defendants. Carolyn M. SPROLES and Husband, Charles B. Sproles, Plaintiffs, v. TRAVELERS INDEMNITY COMPANY OF AMERICA, United States Fidelity and Guaranty Company and the Aetna Casualty & Surety Company, Defendants. Carolyn M. SPROLES and Husband, Charles B. Sproles, Plaintiffs, v. INTEGON GENERAL INSURANCE CORPORATION, Defendant.

Page 691

394 S.E.2d 691

100 N.C.App. 96

Carolyn M. SPROLES and Husband, Charles B. Sproles, Plaintiffs, v. David Reed GREENE, Travelers Indemnity Insurance Company and United States Fidelity and Guaranty Company, Defendants.

James A. PHILLIPS and Wife, Rita L. Phillips, Plaintiffs, v. David Reed GREENE, Travelers Indemnity Insurance Company and Aetna Casualty & Surety Company, Defendants.

Carolyn M. SPROLES and Husband, Charles B. Sproles, Plaintiffs, v. TRAVELERS INDEMNITY COMPANY OF AMERICA, United States

Fidelity and Guaranty Company and the Aetna

Casualty & Surety Company, Defendants.

Carolyn M. SPROLES and Husband, Charles B. Sproles, Plaintiffs, v. INTEGON GENERAL INSURANCE CORPORATION, Defendant.

No. 8824SC641.

Court of Appeals of North Carolina.

Aug. 21, 1990.

Van Winkle, Buck, Wall, Starnes and Davis, P.A. by Roy W. Davis, Jr. and Michelle Rippon, Asheville, for plaintiffs appellants-appellees Sproles.

Patla, Straus, Robinson & Moore, by Harold K. Bennett, Asheville, for plaintiffs appellants-appellees Phillips.

Harrell & Leake by Larry Leake, for defendant appellant-appellee U.S. Fidelity and Guar. Co. Palmer, Miller, Campbell & Martin, P.A. by Douglas M. Martin, Asheville, for defendant appellee Aetna Cas. and Sur. Co.

Roberts Stevens & Cogburn, P.A. by Steven D. Cogburn and Glenn S. Gentry, Asheville, for defendant appellee Integon Gen. Ins. Corp.

PHILLIPS, Judge.

The appeals in these consolidated cases are from an order and judgment establishing the rights and obligations of the parties under certain automobile insurance policies issued by the defendant insurance companies. Each plaintiff--except Charles B. Sproles, who was not there and sued only for lost consortium--was seriously injured on 27 January 1984 when the GMC station wagon they were riding in was struck by a Chevrolet automobile operated by defendant Greene, whose car was insured by defendant Integon General Insurance Corporation for the minimum bodily injury limits of $25,000 per person and $50,000 per accident. Greene's liability to the Phillips has not yet been determined; his liability to the Sproles was established at $950,000 by a judgment entered in case number 86CVS152 on 17 July 1987--$750,000 to Mrs. Sproles, $200,000 to Mr. Sproles. On Greene's liability to Mrs. Sproles, Integon paid the court $27,312.36 on 30 July 1987; the payment covered Greene's $25,000 policy limit, pre-judgment interest on $25,000 from the time suit was filed, and Greene's other court costs. Denying that its policy covers Mr. Sproles' judgment Integon has paid nothing on it. The actions allege that underinsured motorist insurance provided by the following policies apply to the damages of some or all of the plaintiffs; a policy issued by Travelers Insurance Company on the station wagon which was owned by Avery County Recapping Company, Inc. and operated by James A. Phillips; a policy issued by United States Fidelity and Guaranty Company on the personal automobiles of the Sproles; and a policy issued by Aetna Casualty & Surety Company on the business of Lakeview Nursery and Garden Center, Inc., the employer of the Phillips and Mrs. Sproles, who were on a business trip for Lakeview at the time. Aetna's policy also provided workers' compensation insurance for Lakeview's employees and Mrs. Sproles has received various payments thereunder.

After considering the provisions of the various policies and the other evidence presented by the parties, the court made in substance the following adjudications:

(a) The underinsured motorist coverage in Travelers' policy on the station wagon, with limits of $100,000 for the accident, is available to both sets of plaintiffs and is primary to other coverages of this type; its maximum liability was reduced to $75,000 by Integon's $25,000 and $50,000 policy on Greene's vehicle.

(b) The underinsured motorist coverage in Aetna's policy on Lakeview Nursery and Garden Center is not available to any of the plaintiffs because the policy covered only vehicles belonging to Lakeview.

(c) The underinsured motorist coverage in USF & G's policy on the Sproles' vehicles is available to Mrs. Sproles but does not apply to Mr. Sproles' consortium claim; the coverage limits are $100,000 for the accident, though the policy's liability limits are $300,000 per accident and $100,000 per person; the limits must be credited with the $25,000 Mrs. Sproles received from Integon; no credit is due USF & G for Travelers' underinsured motorist payments or the workers' compensation payments that Aetna made to Mrs. Sproles.

(d) Integon's liability policy on Greene's car does not apply to any of the consortium claims; Integon is not liable for pre-judgment interest on the Sproles' judgments and has paid all the post-judgment interest due.

The adjudications as to Travelers were settled by that company paying $58,250 to the Sproles and agreeing to pay the Phillips $41,750 in the event they obtain judgment against Greene for that much more than the $25,000 available to them under Integon's policy. Six of the remaining adjudications are challenged by one or more of the plaintiffs and two others are challenged by USF & G. The challenged holdings are addressed in sequence.

I. PLAINTIFF'S APPEAL

A.

The holding that the underinsured motorist insurance provided by Aetna's policy with Lakeview Nursery and Garden Center is not available to any of the plaintiffs because the coverage applied only to vehicles owned by Lakeview.

This holding by the trial court is correct and we affirm it. The policy states in "ITEM TWO. SCHEDULE OF COVERAGES AND COVERED AUTOS" that the only autos covered by its uninsured motorist insurance (of which underinsured motorist insurance is a type, G.S. 20-279.21(b)(4)) were autos classified as Class 2 vehicles by ITEM THREE of the policy. That item defines Class 2 vehicles as "Only those autos you own." This means, of course, that the coverage applied only to vehicles owned by the policy holder, Lakeview Nursery and Garden Center, Inc. Though no vehicle owned by Lakeview was involved in the collision and the vehicle they were injured in was owned by Avery County Recapping Company, plaintiffs argue that the policy terms can and should be construed to cover the vehicle in which they were riding because it was a business policy designed to cover Lakeview's nursery operation, and the Phillips and Mrs. Sproles were employees on a business trip when injured. Though these facts are undisputed, they do not justify expanding the policy terms beyond those explicitly agreed to by the contracting parties. For in obtaining the insurance, as the application shows, Lakeview had the option of having it cover vehicles of several different classifications, including Class 1, defined as "ANY AUTO," or Class 9, defined to include borrowed vehicles used in connection with the business, but chose to cover only its own vehicles. That limitation having been agreed to by the parties to the policy, it is binding upon us and the plaintiffs.

B.

The holding that USF & G's underinsured motorist insurance limits on the Sproles' vehicles are $100,000 for the accident, as the policy states, though the policy's bodily injury liability limits are $300,000 for each accident and $100,000 for each person.

This holding is erroneous and we reverse it. G.S. 20-279.21(b)(4) as it now exists, following the 1985 amendment, explicitly requires, in substance, that unless rejected by the policyholder each automobile insurance policy issued in this state must have underinsured motorist coverage in the same amount as the personal injury liability coverage. Recently our Supreme Court held that G.S. 20-279.21(b)(4) as it existed when this policy was issued, though not as clearly written, meant the same thing. Proctor v. N.C. Farm Bureau Mutual Insurance Co., 324 N.C. 221, 376 S.E.2d 761 (1989). So notwithstanding the lower limits stated in the policy, since the Sproles admittedly did not reject the underinsured motorist coverage and the policy has liability limits of $100,000 per person and $300,000 per accident, the underinsured motorist coverage is in the same amount by operation of the statute. Upon remand, therefore, this ruling must be modified to provide that USF & G's underinsured motorist coverage limits are $100,000 per person and $300,000 per accident.

C.

The holding that USF & G's underinsured motorist insurance coverage does not apply to the consortium claim of Mr. Sproles.

This adjudication is correct and we affirm it. The Limit of Liability provision in the bodily injury section of the USF & G policy states that:

The limit of liability shown in the Declarations for "each person" for Bodily Injury Liability is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. Subject to this limit for "each person", the limit of liability shown in the Declarations for "each accident" for Bodily Injury Liability is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident ... This is the most we will pay as a result of any one auto accident regardless of the number of ... [c]laims made; ..

The Limit of Liability provision in the Uninsured Motorists Coverage section of the policy states the same thing. These clear and unambiguous provisions, not forbidden by law, are binding upon the parties. Under these provisions and our ruling in B above, USF & G's maximum liability for the bodily injury sustained by Mrs. Sproles is $100,000, and since that liability will be exhausted upon paying that amount against her unsatisfied judgment against Greene, we need not determine whether the coverage would apply to Mr. Sproles' derivative claim based upon Mrs. Sproles' injury if her damages were less than $100,000. Robinson v. Seaboard System Railroad, Inc., 87 N.C.App. 512, 361 S.E.2d 909 (1987), disc. rev. denied, 321 N.C. 474, 364 S.E.2d 924 (1988).

D.

The holding that ...