Kahihu v. Brunson , 234 N.C. App. 142 ( 2014 )

NO. COA13-1121
NORTH CAROLINA COURT OF APPEALS
Filed: 3 June 2014
JACKSON KAHIHU,
Plaintiff,
v. Durham County
No. 11 CVD 5031
RAYMOND BRUNSON,
Defendant.
Appeal by plaintiff from order entered 12 March 2013 by
Judge Nancy E. Gordon in Durham County District Court. Heard in
the Court of Appeals 5 February 2014.
The Law Offices of Andrew J. Kisala, PLLC, by Andrew J.
Kisala, for plaintiff-appellant.
Law Offices of Robert E. Ruegger, by Robert E. Ruegger, for
defendant Integon National Insurance Company, defendant-
appellee.
McCULLOUGH, Judge.
Plaintiff Jackson Kahihu challenges an order granting
defendant Integon National Insurance Company’s motion for
directed verdict. For the reasons stated herein, we affirm the
order of the trial court.
I. Background
On 23 September 2011 Plaintiff Jackson Kahihu filed a
complaint against defendant Raymond Brunson. Plaintiff alleged
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the following: On 22 April 2011, plaintiff and defendant
Brunson were involved in a car accident in Durham, North
Carolina. Plaintiff was driving west in the right lane on
Holloway Street near U.S. 70 when defendant Brunson was driving
west in the left lane on the same street. As defendant Brunson
was approaching the PVA turnoff to 2101 Holloway Street, he
“immediately and without warning swerved across the right lane
and suddenly applied his brakes which caused him to rapidly
decelerate in front of Plaintiff’s vehicle, leaving Plaintiff
unable to stop before colliding with Defendant [Brunson].” “The
sudden swerving and braking action by Defendant [Brunson] left
Plaintiff unable to stop before colliding into the back of
Defendant [Brunson]’s vehicle.” Plaintiff alleged that due to
defendant Brunson’s negligence, plaintiff had suffered damage to
his property, physical injuries, and other expenses.
The civil summons, issued on 23 September 2011, was
returned to plaintiff on 2 November 2011, stating that defendant
Brunson was not served. The civil summons included the
following notation: “No contact mult. attempts + note.”
On 8 November 2011, plaintiff filed a “Motion for Entry of
Default” for entry of default and default judgment against
defendant Brunson for failure to plead. On the same day,
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plaintiff’s counsel filed an “Affidavit of Service by Certified
Mail.” Plaintiff’s counsel testified that upon filing the
complaint on 23 September 2011, he mailed a file-stamped Civil
Summons and Complaint to defendant Brunson via United States
postal service certified mail, addressed to defendant, return
receipt requested. Plaintiff’s counsel testified that on 24
September 2011, the summons and complaint were delivered to
defendant Brunson’s place of residence and “signed for by a
person presumably of suitable age and discretion who is an agent
for Defendant.” On 8 November 2011, the trial court entered an
“Entry of Default” against defendant Brunson for failure to
plead.
On 10 February 2012, plaintiff filed an amended complaint.
That same day, plaintiff filed a “Motion to Set Aside Entry of
Default” as to defendant Brunson. Plaintiff argued in the
motion that “[a]ll responsible parties were not known to
Plaintiff on the date of his Motion for Entry of Default through
no fault of his own, and could not have been discovered through
due diligence.” Based on the foregoing, plaintiff asserted that
he failed to correctly serve all responsible parties pursuant to
Rule 4 of the North Carolina Rules of Civil Procedure and wished
to amend his complaint. On 10 February 2012, the trial court
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entered an “Order Setting Aside Entry of Default” as to
defendant Brunson.
On 23 March 2012, plaintiff filed a “Motion for Entry of
Default” against defendant Brunson. Thereafter, the trial court
filed an “Entry of Default” against defendant Brunson.
Also on 23 March 2012, plaintiff’s counsel filed an
“Affidavit of Service by Certified Mail,” amended 26 March 2012,
alleging that on 24 September 2011, a summons and complaint was
delivered to defendant Brunson’s place of residence and signed
by a person presumably of suitable age and discretion who is
agent for defendant Brunson. The affidavit also stated that
after learning that this case would proceed as an uninsured
motorists claim, plaintiff’s counsel mailed a file-stamped Civil
Summons and Complaint on 16 February 2012 to plaintiff’s
insurance company and provider of his uninsured motorists
policy, GMAC Insurance Management Corporation (“GMAC”) or
previously named Integon National Insurance Company. The
summons and complaint were sent via United States postal service
certified mail, addressed to GMAC’s registered agent on file
with the North Carolina Secretary of State, return receipt
requested. Plaintiff’s counsel testified that on 17 February
2012, the summons and complaint were delivered to GMAC’s
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registered agent and signed for by a person presumably of
suitable age and discretion who is an agent for GMAC.
On 28 March 2012, Integon National Insurance Company
(“defendant Integon”) filed an Answer. Defendant Integon moved
to dismiss plaintiff’s action for lack of jurisdiction over the
person, insufficiency of process, and insufficiency of service
of process. Defendant Integon also moved to dismiss plaintiff’s
action for lack of jurisdiction over defendant Brunson,
insufficiency of process over defendant Brunson, and
insufficiency of service of process over defendant Brunson.
On 7 May 2012, plaintiff filed a motion for default
judgment against defendant Brunson and defendant Integon.
Plaintiff argued that the final day for defendant Brunson to
timely file an answer to plaintiff’s 10 February 2012 amended
complaint was 16 March 2012. Plaintiff also asserted that
defendant Integon’s final day to timely file an answer was 22
March 2012.
On 14 May 2012, the trial court entered an order finding
the following:
2. [Defendant Brunson and defendant Integon]
have been legally served with process.
3. [Defendant Brunson and defendant Integon]
have failed to timely answer in a manner
allowed by the North Carolina Rules of
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Civil Procedure, and are adjudged to be
in default.
4. Plaintiff maintained a policy of
uninsured motorists coverage with
Defendant INTEGON.
Accordingly, plaintiff’s motion for default judgment was granted
and default judgment was entered against defendant Brunson and
defendant Integon.
On 13 June 2012, defendant Integon filed a “Motion to Set
Aside Default Judgment” pursuant to Rules 60(b)(1), (3), and (6)
of the North Carolina Rules of Civil Procedure. Defendant
Integon argued that plaintiff erroneously proceeded with a
motion for default judgment on 14 May 2012 against defendant
Integon, without first obtaining an entry of default against
defendant Integon. Defendant Integon asserted that no entry of
default could have been entered against defendant Integon
because the trial court lacked “authority to enter an Entry of
Default against a party after that party has filed its Answer.”
Following a hearing held on 16 July 2012 on defendant
Integon’s motion to set aside the default judgment, the trial
court entered an “Order Setting Aside Default Judgment Against
Unnamed Defendant” on 20 July 2012. The trial court concluded,
inter alia, that defendant Brunson and defendant Integon are two
separate entities and that an entry of default against defendant
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Brunson is not binding as an entry of default against defendant
Integon. Thus, the trial court granted defendant Integon’s
motion to set aside default judgment pursuant to Rule 60(b)(6)1.
On 30 October 2012, plaintiff filed a motion for summary
judgment against defendant Brunson. On 20 November 2012, the
trial court entered an order granting plaintiff partial summary
judgment against defendant Brunson as to the property damages
specifically pled in plaintiff’s amended complaint.
The case came on for trial at the 12 March 2013 session of
Durham County District Court. At the close of plaintiff’s
evidence, defendant Integon moved for a directed verdict.
On 12 March 2013, the trial court entered an order, finding
that no summons was ever served on defendant Integon.
Furthermore, the trial court found that defendant Integon
preserved its challenge to jurisdiction in its answer and did
not stipulate in the pre-trial order that the trial court had
jurisdiction in this action. Thus, defendant Integon’s motion
for directed verdict was allowed for failure to serve a civil
summons and complaint as required by Rule 4 of the North
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N.C. Gen. Stat. § 1A-1, Rule 60(b)(6) (2013) provides that “[o]n
motion and upon such terms as are just, the court may relieve a
party or his legal representative from a final judgment, order,
or proceeding for the following reasons: . . . (6) Any other
reason justifying relief from the operation of the judgment.”
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Carolina Rules of Civil Procedure and N.C. Gen. Stat. § 20-
279.21(b)(3)(a).
The case continued as a bench trial and judgment was
entered on 19 March 2013 entitling plaintiff to recover for
personal injury from defendant Brunson. On 21 March 2013,
plaintiff filed a “Motion to Alter or Amend Judgment or New
Trial Pursuant to Rules 59 & 60” which the trial court denied on
6 June 2013.
Plaintiff appeals the 12 March 2013 granting directed
verdict in favor of defendant Integon.
II. Standard of Review
“The standard of review of directed verdict is whether the
evidence, taken in the light most favorable to the non-moving
party, is sufficient as a matter of law to be submitted to the
jury.” Scarborough v. Dillard’s, Inc., 363 N.C. 715, 720, 693
S.E.2d 640, 643 (2009) (citation omitted). “If there is more
than a scintilla of evidence supporting each element of the
nonmovant’s case, the motion for directed verdict should be
denied.” Whisnant v. Herrera, 166 N.C. App. 719, 722, 603
S.E.2d 847, 850 (2004) (citation omitted).
III. Discussion
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Plaintiff argues that the trial court erred (A) in granting
defendant Integon’s motion for directed verdict based on the
finding that defendant Integon was not served with a summons and
(B) by determining that defendant Integon needed to be served
with a copy of the complaint and summons to be made a party to
the action.
A. Directed Verdict
First, plaintiff argues that the trial court erred by
granting defendant Integon’s motion for directed verdict where
plaintiff presented evidence that defendant Integon had been
served with a copy of the summons and amended complaint.
Plaintiff relies on the 26 March 2012 “Amended Affidavit of
Service by Certified Mail” filed by plaintiff’s attorney. He
argues that this affidavit created a presumption of service
which defendant Integon failed to rebut.
We note that section 20-279.21(b)(3) of the North Carolina
General Statutes
unequivocally requires that the [uninsured
motorist] carrier be served with a copy of
the summons and complaint in order to be
bound by a judgment against the uninsured
motorist. Subsection (b)(3) further directs
that upon service of process, the [uninsured
motorist] carrier shall become a party to
the suit and shall have the time allowed by
statute to file responsible pleadings.
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Liberty Mutual Insurance Co. v. Pennington, 356 N.C. 571, 576,
573 S.E.2d 118, 122 (2002) (emphasis added); see also Darroch v.
Lea, 150 N.C. App. 156, 160, 563 S.E.2d 219, 222 (2002).
The filing of an affidavit of service that complies with
the requirements set out in section 1-75.10 of the North
Carolina General Statutes creates a rebuttable presumption of
valid service. See Goins v. Puleo, 350 N.C. 277, 280-81, 512
S.E.2d 748, 750-51 (1999). N.C. Gen. Stat. § 1-75.10 provides:
(a) Where the defendant appears in the
action and challenges the service of
the summons upon him, proof of the
service of process shall be as follows:
. . . .
(4) Service by Registered or Certified
Mail. – In the case of service by
registered or certified mail, by
affidavit of the serving party
averring:
a. That a copy of the summons and
complaint was deposited in the
post office for mailing by
registered or certified mail,
return receipt requested;
b. That it was in fact received as
evidenced by the attached
registry receipt or other
evidence satisfactory to the
court of delivery to the
addressee; and
c. That the genuine receipt or
other evidence of delivery is
attached.
N.C. Gen. Stat. § 1-75.10(a)(4) (2013).
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Here, plaintiff’s attorney filed an “Affidavit of Service
by Certified Mail.” Plaintiff’s affidavit of service stated
that on 16 February 2012, plaintiff’s attorney mailed a file-
stamped summons and amended complaint to defendant Integon via
certified mail, return receipt requested. This affidavit
complied with the requirements set out in N.C. Gen. Stat. § 1-
75.10, thereby creating a rebuttable presumption of valid
service.
Defendant Integon argues that the trial court necessarily
concluded that the affidavit of Andrew Gachaiya, an employee of
Corporation Service Company (“CSC”) who is the registered agent
of defendant Integon, rebutted the presumption of valid service.
We agree.
Gachaiya’s affidavit stated that CSC documents and
maintains records of “all documents served upon it on behalf of
the companies for which it is registered agent.” Gachaiya
stated that he had reviewed its records to identify all
documents plaintiff had served on it as defendant Integon’s
registered agent. According to Gachaiya, on 17 February 2012,
“CSC’s North Carolina office received via certified mail an
Amended Complaint addressed to Corporation Service Company in
the matter of Jackson Kahihu vs. Raymond Brunson Case Number
-12-
11CVD05031 in the Durham County District Court[.]” Gachaiya’s
affidavit made no mention of receiving a copy of the summons.
In addition, CSC received an affidavit of service and an amended
affidavit of service on 26 March 2012 and 28 March 2012,
respectively. Furthermore, Gachaiya’s affidavit stated that
“prior to March 27, 2012, CSC did not notify or communicate in
any manner the existence of the [matter of Kahihu v. Brunson
Case Number 11 CVD 05031 in Durham County District Court] to
GMAC Insurance Management Corporation.”
Based on the foregoing, we hold that Gachaiya’s affidavit
rebutted the presumption of service by showing that defendant
Integon never received a copy of the summons on 17 February 2012
and the trial court could properly find that defendant Integon
was not served with a copy of the summons as required by N.C.
Gen. Stat. § 20-279.21(b)(3). Accordingly, the trial court was
without jurisdiction over defendant Integon and did not err in
granting defendant Integon’s motion for directed verdict.
B. Insurer as a Separate Party
In his last argument, plaintiff contends that the trial
court erred in its determination that defendant Integon was
required to be served with a copy of the complaint and summons
to be made a party to his action. We disagree.
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Section 20-279.21(b)(3)a (2013) of the North Carolina
General Statutes provides that all liability insurance policies
are subject to the following:
A provision that the insurer shall be bound
by a final judgment taken by the insured
against an uninsured motorist if the insurer
has been served with copy of summons,
complaint or other process in the action
against the uninsured motorist by registered
or certified mail, return receipt requested,
or in any manner provided by law; provided
however, that the determination of whether a
motorist is uninsured may be decided only by
an action against the insurer alone. The
insurer, upon being served as herein
provided, shall be a party to the action
between the insured and the uninsured
motorist though not named in the caption of
the pleadings and may defend the suit in the
name of the uninsured motorist or in its own
name. The insurer, upon being served with
copy of summons, complaint or other
pleading, shall have the time allowed by
statute in which to answer, demur or
otherwise plead (whether the pleading is
verified or not) to the summons, complaint
or other process served upon it. The
consent of the insurer shall not be required
for the initiation of suit by the insured
against the uninsured motorist: Provided,
however, no action shall be initiated by the
insured until 60 days following the posting
of notice to the insurer at the address
shown on the policy or after personal
delivery of the notice to the insurer or its
agent setting forth the belief of the
insured that the prospective defendant or
defendants are uninsured motorists.
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N.C. Gen. Stat. § 20-279.21(b)(3)a establishes that the
insurer is a separate party to the action between the insured
plaintiff and an uninsured motorist. Grimsley v. Nelson, 342
N.C. 542, 546, 467 S.E.2d 92, 95 (1996). It is well established
that “[N.C. Gen. Stat.] § 20-279.21(b)(3)a unambiguously
provides that an uninsured motorist carrier may defend in the
name of the uninsured motorist or in its own name, evincing a
legislative recognition that the uninsured motorist and the
insurer providing uninsured motorist coverage are separate
parties with independent interests.” Reese v. Barbee, 129 N.C.
App. 823, 826, 501 S.E.2d 698, 700 (1998) (citation omitted).
Therefore, “in order for the insurer to be bound by a judgment
against the uninsured motorist, service of process must be
obtained upon the insurer.” Id. Based on the foregoing
reasons, we must reject plaintiff’s arguments.
IV. Conclusion
Where the trial court did not err in granting defendant
Integon’s motion for directed verdict, we affirm the order of
the trial court.
Affirmed.
Judges HUNTER, Robert C., and GEER concur.