Stanback v. Westchester Fire Ins. Co., 8319SC551

• Decision Date: 01 May 1984
• Docket Number: No. 8319SC551,8319SC551
• Citation: 68 N.C.App. 107,314 S.E.2d 775
• Parties: Fred J. STANBACK, Jr. v. WESTCHESTER FIRE INSURANCE COMPANY.
• Court: North Carolina Court of Appeals

Page 775

314 S.E.2d 775

68 N.C.App. 107

Fred J. STANBACK, Jr. v. WESTCHESTER FIRE INSURANCE COMPANY.

No. 8319SC551.

Court of Appeals of North Carolina.

May 1, 1984.

Petree, Stockton, Robinson, Vaughn, Glaze & Maready by George L. Little, Jr., and Robert J. Lawing, Winston-Salem, for plaintiff.

Henson & Henson by Perry C. Henson and Paul D. Coates, Greensboro, for defendant.

WELLS, Judge.

Defendant in its first argument contends "[t]he trial court committed reversible error in concluding that the complaint filed by Mrs. Stanback in the parent action sought to recover damages for personal injury within the coverage afforded by the defendant's policy, and that the defendant was required to provide a defense for ... [plaintiff] in the parent action." The policy which is the subject of this action contained the following pertinent provisions:

I. COVERAGE--

To pay on behalf of the insured the ultimate net loss in excess of the retained limit which the insured shall be legally obligated to pay:

(a) Personal Liability. As damages because of personal injury or property damage;

* * *

II. DEFENSE-SETTLEMENT-COVERAGE I. (a)--

With respect to any occurrence not covered by the underlying policies or insurance described in Schedule A hereof or any other underlying insurance available to the insured, but covered by the terms and conditions of this policy except for the amount of the retained limit specified in Item 4(D) of the declarations, the company shall:

(a) Defend any suit against the insured alleging such injury or damage and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient;

* * *

This policy shall not apply, with respect to coverage 1(a):

... (e) to any act committed by or at the direction of the insured with intent to cause personal injury or property damage:

* * *

(b) "Personal injury" means:

(1) Bodily injury, sickness, disease, disability, shock, mental anguish and mental injury;

(2) False arrest, false imprisonment, wrongful eviction, wrongful detention, malicious prosecution or humiliation;

(3) Libel, slander, defamation of character, or invasion of right of privacy; and

(4) Assault and battery not committed by or at the direction of the insured, unless committed for the purpose of preventing or eliminating danger in the operation of automobiles or watercraft or for the purpose of protecting persons or property;

* * *

Defendant contends that it "did not owe a duty to the plaintiff to defend the law suit by Vanita Stanback since her complaint did not allege a cause of action which was covered by the terms of the policy, and since the defendant could not be legally obligated to pay ... for the damages claimed by Mrs. Stanback for such 'personal injury.' " Defendant bases this contention on the fact that our supreme court found that count two of the parent action lacked the substantive elements of a claim for malicious prosecution and that count one only alleged a cause of action for breach of contract, and punitive damages for emotional distress. Defendant argues that its duty to defend did not arise because even if all the facts alleged in the complaint were true Mrs. Stanback could not have recovered any damages for which defendant would have been liable. We disagree.

The insurance policy issued to the plaintiff imposed two duties on defendant. First, defendant had a duty to pay the net loss in excess of the retained limits which plaintiff became liable for when his actions caused personal injury. Secondly, defendant had a duty to "[d]efend any suit against the insured alleging such injury or damage and seeking damages ... even if such suit is groundless, false or fraudulent...." Justice Lake writing for our supreme court in Insurance Co. v. Insurance Co., 269 N.C. 358, 152 S.E.2d 513 (1967) explained the differences between these duties:

Each of the plaintiffs, by its policy, contracted with Jerry Denning to do two different things. First, it contracted to pay on his behalf all sums for the payment of which he became legally liable, because of bodily injury sustained by any person arising out of the use of an automobile not owned by him, to the extent that such liability exceeded other valid and collectible insurance and did not exceed the limit fixed by its policy. Second, it contracted to defend, at its expense, on his behalf, any suit, even though groundless, brought against him, alleging such bodily injury and seeking damages payable under the terms of the policy.

It will be observed that the first of these undertakings requires the plaintiff company to step into the shoes of Jerry Denning and pay a sum for the payment of which he became liable. The second undertaking is not of that nature. In the performance of it the company does not step into the shoes of the policyholder. Its liability under that undertaking is not contingent upon the existence of a liability on his part, and its performance of that undertaking does not impose any liability upon him. That undertaking is absolute.

(Emphasis added.)

We hold that the bare allegations of Mrs. Stanback's complaint seeking damages for mental anguish and anxiety and for abuse of process because the federal action was commenced "maliciously, wrongfully ... and without probable cause" were enough to bring the complaint within defendant's duty to defend on plaintiff's behalf. Defendant in support of its contention that there was no duty to defend points to the outcome of the parent action. Defendant argues because the supreme court determined that there was no viable claim for malicious prosecution and only an action for the intentional infliction of mental anguish, defendant had no duty to defend the action.

We find no merit in this argument. Mrs. Stanback was clearly attempting to recover for malicious prosecution and physical injury brought about by mental anguish. These torts are within the coverage of defendant's policy; therefore, even though it was later determined that the suit was groundless under the terms of the policy and the law of this state, defendant nevertheless had a duty to defend.

In its next argument, defendant contends the court erred "in making findings of fact based upon the deposition taken August 5th 1980 of Mrs. Stanback in the parent action." Prior to the trial of this action the parties agreed to the following stipulation:

15. Plaintiff Stanback has been required to employ counsel at his own expense, to defend the action instituted by his former wife in the Superior Court of Rowan County, 76CVS36, and has incurred legal expenses and costs to date as set forth in the attached affidavits which are incorporated herein by reference. With regard to the proceedings and defense efforts required, the parties stipulate the entire contents of the court file in the case 'Vanita B. Stanback, plaintiff vs. Fred J. Stanback, Jr., defendant' 76CVS36.

Defendant argues that since the deposition was taken following the original supreme court decision it should not be considered, and that even if the deposition was timely it was not within the stipulation of the parties. We interpret the stipulation to clearly include the entire contents of the court file for 76CVS36. The deposition was a part of this file and was therefore properly before the trial court. The deposition is consistent with the allegations of the complaint. We find no error in the court's use of the deposition.

In its third argument, defendant contends the court erred by failing to find that...