Sproles v. Greene

• Decision Date: 14 August 1991
• Docket Number: No. 482PA90,482PA90
• Court: North Carolina Supreme Court
• Parties: Carolyn M. SPROLES and Husband, Charles B. Sproles v. David Reed GREENE, Travelers Indemnity Insurance Company and United States Fidelity and Guaranty Company. James A. PHILLIPS and Wife, Rita L. Phillips v. David Reed GREENE, Travelers Indemnity Insurance Company and Aetna Casualty & Surety Company. Carolyn M. SPROLES and Husband, Charles B. Sproles v. TRAVELERS INDEMNITY COMPANY OF AMERICA, United States Fidelity and Guaranty Company and the Aetna Casualty & Surety Company. Carolyn M. SPROLES and Husband, Charles B. Sproles v. INTEGON GENERAL INSURANCE CORPORATION.

Page 497

407 S.E.2d 497

329 N.C. 603

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

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

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

Fidelity and Guaranty Company and the Aetna

Casualty & Surety Company.

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

No. 482PA90.

Supreme Court of North Carolina.

Aug. 14, 1991.

On discretionary review of the decision of the Court of Appeals, 100 N.C.App. 96, 394 S.E.2d 691 (1990), affirming in part and reversing in part an order entered by Lamm, J., in the Superior Court, Mitchell County, on 5 February 1988. Heard in the Supreme Court 10 April 1991.

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

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

Roberts, Stevens & Cogburn, P.A. by Steven D. Cogburn and W.O. Brazil, III, Asheville, for defendant-appellant Integon General Ins. Corp.

Weinstein & Sturges, P.A. by Cynthia Stakias, Charlotte, for defendant-appellee The Aetna Cas. & Sur. Co., Inc.

Manning, Fulton & Skinner by John B. McMillian, for Nat. Ass'n of Independent Insurers and North Carolina Farm Bureau Mut. Ins. Co.; Moore & Van Allen by George M. Teague, Raleigh, for Ins. Guar. Ass'n and Alliance of American Insurers, amici curiae.

FRYE, Justice.

In this appeal plaintiffs contend that the Court of Appeals erred in determining that they were not covered by underinsured motorist (UIM) coverage provided by defendant Aetna Casualty and Surety Company (Aetna) to plaintiffs' employer Lakeview Nursery and Garden Center, Inc. (Lakeview). Defendant Integon General Insurance Corporation (Integon) contends that the Court of Appeals erred in determining that Integon was obligated to pay prejudgment and postjudgment interest on $750,000, the entire amount of damages awarded to plaintiff Carolyn Sproles as a result of the negligence of defendant David Reed Greene, who is insured by defendant Integon. We conclude that the Court of Appeals was correct in its determination that plaintiffs were not covered by Lakeview's UIM coverage. We further conclude that the Court of Appeals did err in determining that Integon is liable for additional prejudgment and postjudgment interest.

On 27 January 1984, while returning from a business trip, plaintiffs Carolyn Sproles, Rita Phillips, and James A. Phillips, who were all employed by Lakeview, were injured in a collision with defendant David Reed Greene. Greene's automobile, a 1971 Chevrolet, ran into the rear of the 1983 GMC van in which plaintiffs were riding and caused plaintiffs' van to run off the highway and turn over several times. Sproles suffered extensive injuries from the collision which led to her permanent, total disability.

At the time of the accident, Greene was insured under a liability policy issued by defendant Integon. This policy had a liability limit of $25,000 per person and $50,000 per accident. The van in which plaintiffs were riding was owned by Avery County Recapping Company, Inc., rather than by their employer Lakeview. However, Lakeview had a liability insurance policy with Aetna which provided UIM coverage of $100,000.

On 3 June 1986, plaintiff Sproles and her husband Charles Sproles filed suit against Greene, among others, alleging that he was responsible for the accident and claiming damages for Ms. Sproles' injuries and damages for loss of consortium on behalf of Mr. Sproles. Judgment was entered on behalf of the Sproles against Greene in the amount of $750,000 for Ms. Sproles and $200,000 for Mr. Sproles. On 20 January, both Rita and James Phillips filed suit against Greene and others claiming damages for the injuries they had sustained in the accident. At the time of this appeal no judgment had been entered against defendant Greene on behalf of the Phillips.

On 26 January 1987, the Sproles filed a declaratory judgment action against, among others, defendant Aetna requesting adjudication of whether Ms. Sproles was covered by the UIM policy Aetna had issued to Ms. Sproles' employer Lakeview. All parties moved for summary judgment.

On 30 July 1987, Integon paid into the Clerk of Court the $25,000 it was liable for under the terms of Greene's policy and also paid $2,312.36 in interest. On 26 October 1987, the Sproles filed an action against Integon, Greene's insurer, claiming interest on the full amount of the judgment against Greene from the date the suit was filed until payment was tendered. Integon denied liability for interest on the entire amount, and the Sproles moved for summary judgment.

The actions filed by the Sproles and the Phillips were consolidated for a hearing. On 16 February 1988, Judge Lamm entered a judgment which, among other things, dismissed the Sproles' and the Phillips' claims against Aetna for UIM coverage under Lakeview's policy. The trial judge further determined that Integon was not obligated to pay prejudgment and postjudgment interest on the full amount of the Sproles' judgment against Greene or the full amount of any judgment that the Phillips might obtain against Greene. He therefore dismissed the Sproles' claims against Integon for prejudgment and postjudgment interest on the entire $750,000 judgment finding that Integon owed the Sproles nothing more.

The Sproles appealed the dismissal of their claims against Aetna and Integon to the Court of Appeals. The Phillips appealed the dismissal as to Aetna. The Court of Appeals affirmed the trial court's order dismissing the claims against Aetna but concluded that the trial court erred in its determination that Integon was not liable for prejudgment and postjudgment interest on the entire $750,000 judgment entered against Greene, Integon's insured. Sproles v. Greene, 100 N.C.App. 96, 394 S.E.2d 691 (1990). Integon and the Sproles and the Phillips filed petitions for discretionary review with this Court, and these petitions were granted on 10 January 1991.

We will address plaintiffs' appeal first and then address defendant Integon's appeal. Plaintiffs' appeal raises the threshold issue of whether employees of a corporation are included as named insureds when only the corporation is listed as the named insured on the automobile liability insurance policy. Plaintiffs contend that Lakeview's UIM coverage under a policy issued by defendant Aetna should cover Ms. Sproles and the Phillips as if they were named insureds because they were employees of Lakeview and were on a business trip when injured. According to plaintiffs, when the corporation is the named insured, the employees of the corporation should be treated as named insureds or as "family" of the named insured for the purposes of UIM coverage in part because a corporation cannot sustain bodily injury. Plaintiffs point out that the purpose of UIM coverage is to protect people who sustain bodily injuries from underinsured drivers and since the corporate entity is the named insured, if its employees are not also provided UIM coverage afforded to named insureds under the terms of the policy, the policy would essentially not provide any UIM coverage since the corporation cannot sustain bodily injury. To answer this issue, we must turn first to the language of the policy itself and then to the statutory language of N.C.G.S. § 20-279.21(b)(3).

As noted earlier, Lakeview had a liability policy of automobile insurance with Aetna. The policy is labeled as a "Business Auto Policy," and the named insured is "Lakeview Nursery & Garden Center, Inc." Under "Part I--Words and Phrases with Special Meaning," the terms "you" and "your" are defined to be "the person or organization shown as the named insured in ITEM ONE of the declarations." Thus, where the word "you" is found in the policy, it refers to Lakeview, and Lakeview, a corporation, is the only named insured in the policy.

For the purposes of UIM coverage, N.C.G.S. § 20-279.21(b)(3) provides the following definition of "persons insured":

the named insured and, while resident of the same household, the spouse of any such named insured and relatives of either, while in a motor vehicle or otherwise, and any person who uses with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies and a guest in such motor vehicle to which the policy applies or the personal representative of any of the above or any other person or persons in lawful possession of such motor vehicle.

N.C.G.S. § 20-279.21(b)(3) (1989). This section of the statute essentially

establishes two "classes" of "persons insured": (1) the named insured and, while resident of the same household, the spouse of the named insured and relatives of either and (2) any person who uses with the consent, express or implied, of the named insured, the insured vehicle, and a guest in such vehicle.

Smith v. Nationwide Mut. Ins. Co., 328 N.C. 139, 143, 400 S.E.2d 44, 47 (1991) (quoting Crowder v. N.C. Farm Bureau Mut. Ins. Co., 79 N.C.App. 551, 554, 340 S.E.2d 127, 129 (1986)). Thus, according to the statute, the named insured, in this case Lakeview, and the spouse and relatives of the named insured while living in the same household with the named insured are class one insureds and are covered for purposes of UIM coverage "while in a motor vehicle or otherwise." N.C.G.S. § 20-279.21(b)(3) (1989). Class one insureds have UIM coverage even if they are not in a "covered vehicle" when injured. All other persons are class two insureds and are only covered while using "the motor vehicle to which the policy applies." Id.

We find no case law...