Country Cafaye, Inc. v. Travelers Cas. Ins. Co. of Am. ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in
accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of
A p p e l l a t e P r o c e d u r e .
NO. COA 14-226
NORTH CAROLINA COURT OF APPEALS
Filed: 16 September 2014
COUNTRY CAFAYE, INC., and
RODNEY BOOTH,
Plaintiffs,
v. Stokes County
No. 12 CVS 508
TRAVELERS CASUALTY
INSURANCE COMPANY OF AMERICA,
and WHITLEY INSURANCE
AGENCY, INC., d/b/a WHITLEY
REAVIS INSURANCE AGENCY,
Defendants.
Appeal by Plaintiffs from orders entered 19 August and 29
August 2013 by Judge Edgar B. Gregory in Stokes County Superior
Court. Heard in the Court of Appeals 13 August 2014.
J. Clark Fischer for Plaintiffs.
Womble Carlyle Sandridge & Rice, by Philip J. Mohr and
Garth A. Gersten, for Defendant Travelers Casualty
Insurance Co of America.
McNair Law Firm, P.A., by Andrew W. Lax and Samuel I. Moss,
for Defendant Whitley & Associates, Inc.1
1
This defendant is erroneously denominated “Whitley Reavis
Insurance Agency” in the caption of this action. This defendant
has pointed out this error in its answer and motion for summary
judgment, but has not raised the incorrect party name as a legal
-2-
STEPHENS, Judge.
Factual Background and Procedural History
This appeal arises from an action alleging improper
cancellation of an insurance policy and denial of coverage. The
facts before the trial court are as follows:
Plaintiff Rodney Booth was the owner and operator of
Plaintiff Country Cafaye, Inc., a company formed for the
operation of a casual dining restaurant located in King, North
Carolina. In 2010, Booth obtained a general commercial
liability insurance policy for Country Cafaye from Roy Whitley
of Defendant Whitley & Associates, Inc. Booth had previously
dealt with Whitley in connection with a policy insuring a radio
station owned by Booth’s parents, but managed by Booth. The
policy for Country Cafaye was the first insurance policy which
Booth had purchased directly through Whitley. The general
commercial liability insurance policy for Country Cafaye was
issued by Defendant Travelers Casualty Insurance Company of
issue in this litigation. Following the custom and practice of
this Court, we employ in the caption of our opinion the party
names exactly as they appear in the orders from which this
appeal is taken.
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America. Booth renewed this policy in November 2011 to be
effective from 7 January 2012 through 7 January 2013.
Booth opted to pay the premium for the insurance policy in
monthly installments of $290.90. Bills for each premium payment
were sent out monthly by Travelers to the address for Country
Cafaye stated on the insurance policy: P.O. Box 1172, King, NC
27021. Premium payments were due on the seventh of each month.
Plaintiffs paid the premiums for January and February 2012.
Each premium was paid after the due date, but was accepted by
Travelers. A bill for the March premium dated 16 February 2012
was sent to and received by Plaintiffs.
Plaintiffs and Travelers disputed the facts surrounding the
payment of the March 2012 premium and the mailing of a notice of
cancellation to Plaintiffs. Plaintiffs forecast evidence in
sworn affidavits from Booth and his employee, Faye Watts, that
on 16 March 2012 Booth wrote and signed a check from an account
in the name of Rodney T. Booth Enterprises, Inc., for payment of
the March 2012 premium. Booth then watched Watts mail the
premium check with appropriate postage to Travelers from the
King Post Office. Booth further stated in his affidavit that he
did not receive the notice of cancellation purportedly mailed by
Travelers.
-4-
Travelers forecast evidence showing that the March premium
check Booth allegedly mailed was never received. Travelers
performed an “internal search for any checks written by Country
Cafaye or Booth or any affiliated entities,” but has been unable
to find any such check. Travelers further produced documents
tending to show that it mailed a notice of cancellation of
Country Cafaye’s policy on 19 March 2012 to the address given on
the policy, P.O. Box 1172, King, NC 27021. The notice of
cancellation stated that Country Cafaye’s insurance policy would
be cancelled effective 8 April 2012 unless a minimum payment of
$581.80 was received by Travelers on or before 8 April 2012.
Plaintiffs did not make payment of $581.80 to Travelers on or
before 8 April 2012, although Booth did mail a check for the
regular April premium amount of $290.90 to Travelers on 19 April
2012. Travelers received that check on 26 April 2012.
On the evening of 19 April 2012, a grease fire destroyed
the restaurant owned by Plaintiffs. On the morning of 20 April
2012, Booth informed Roy Whitley of the fire and “catastrophic
damage” to the restaurant. Roy Whitley told Booth that he would
speak to Travelers regarding a claim for the damage to the
restaurant.
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That afternoon, Roy Whitley informed Booth that Country
Cafaye’s insurance policy had been cancelled on 8 April 2012
because Travelers had purportedly not received the March premium
payment. Whitley asserts that it was not aware of this notice
of cancellation until Roy Whitley found it on his desk on 20
April 2012. Roy Whitley asked Booth if he had proof that the
March premium had been paid. Booth was able to find and fax to
Whitley the check stub for the payment purportedly sent to
Travelers in payment of the March premium. Booth confirmed with
his bank that the check was never cashed. Travelers denied
coverage for damage to the restaurant on the basis that the
insurance policy had been cancelled as of 8 April 2012.
On 20 April 2012, Travelers sent a bill to Country Cafaye
for $150.20 representing the earned premium amount for the
period from 7 March through 8 April 2012. The bill stated in
multiple places that Country Cafaye’s insurance policy had been
cancelled as of 8 April 2012. Booth paid the bill by check on
26 April 2012 using the payment coupon provided without paying
attention to the textual statements in the bill. Travelers
cashed both the 19 April 2012 check for $290.90 and the 26 April
2012 check for $150.20. Travelers subsequently returned $290.90
to Country Cafaye on 21 May 2012.
-6-
On 27 July 2012, Plaintiffs filed this action alleging that
(1) Whitley breached a fiduciary duty to Plaintiffs and
committed professional malpractice and (2) Travelers breached
the contract of insurance and was unjustly enriched. Whitley
moved for summary judgment on 8 May 2013. Travelers moved for
summary judgment on 9 May 2013. On 19 August 2013, the trial
court entered an order granting summary judgment in favor of
Travelers. On 29 August 2013, the court entered an order
granting summary judgment to Whitley. Plaintiffs appeal from
both orders.
Discussion
On appeal, Plaintiffs argue that the trial court erred in
granting summary judgment in favor of (1) Travelers because
there were issues of material fact regarding whether Travelers
breached the insurance contract, and (2) Whitley because there
were issues of material fact regarding whether Whitley breached
a fiduciary duty.
“Our standard of review of an appeal from summary judgment
is de novo; such judgment is appropriate only when the record
shows that there is no genuine issue as to any material fact and
that any party is entitled to a judgment as a matter of law.”
In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576
-7-
(2008) (citation and internal quotation marks omitted; italics
added).
The moving party has the burden of
establishing the absence of any genuine
issue of material fact and that it is
entitled to judgment as a matter of law.
Both before the trial court and on appeal,
the evidence must be viewed in the light
most favorable to the non-moving party and
all inferences from that evidence must be
drawn against the moving party and in favor
of the non-moving party.
White v. Consol. Planning, Inc., 166 N.C. App. 283, 295-96, 603
S.E.2d 147, 157 (2004) (citations omitted), disc. review denied,
359 N.C. 286, 610 S.E.2d 717 (2005).
A defendant may show entitlement to summary
judgment by (1) proving that an essential
element of the plaintiff’s case is non-
existent, or (2) showing through discovery
that the plaintiff cannot produce evidence
to support an essential element of his or
her claim, or (3) showing that the plaintiff
cannot surmount an affirmative defense.
Summary judgment is not appropriate where
matters of credibility and determining the
weight of the evidence exist.
Once the party seeking summary judgment
makes the required showing, the burden
shifts to the nonmoving party to produce a
forecast of evidence demonstrating specific
facts, as opposed to allegations, showing
that he can at least establish a prima facie
case at trial. To hold otherwise would be
to allow [the] plaintiffs to rest on their
pleadings, effectively neutralizing the
useful and efficient procedural tool of
summary judgment.
-8-
Stott v. Nationwide Mut. Ins. Co., 183 N.C. App. 46, 49, 643
S.E.2d 653, 656 (citation, internal quotation marks, and
ellipsis omitted), disc. review denied, __ N.C. __, 653 S.E.2d
876 (2007).
I. Summary Judgment as to Travelers
Plaintiffs first argue that summary judgment in favor of
Travelers was error because the forecast of evidence establishes
a genuine issue of material fact, to wit, whether Travelers
properly cancelled Plaintiffs’ insurance policy and therefore
avoided any breach of contract by denying coverage for the
restaurant fire. We agree.
The notice of cancellation issued 19 March 2012 and
purportedly sent to Plaintiffs stated that the reason for
cancellation of the policy was nonpayment of the premium. Under
the relevant policy conditions, cancellation for nonpayment of
the premium requires ten days’ notice to the policyholder.
Cancellation for any other reason requires thirty days’ notice
to the policyholder. Plaintiffs contend that the March premium
payment Booth and Watts claim was mailed on 16 March 2012 was
received by Travelers prior to the cancellation of the policy.
Travelers contends it was not. This forecast of conflicting
evidence presents a question of material fact because, if the
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March premium was received, Travelers’ cancellation of the
policy and denial of coverage were breaches of the insurance
contract. If the premium was not received, Travelers did not
breach the contract by cancelling the policy and denying
coverage.
Payment of an insurance premium is a condition precedent to
coverage. Engelberg v. Home Ins. Co., 251 N.C. 166, 168, 110
S.E.2d 818, 820 (1959) (citation omitted). It is well
established that a payment made by check is a conditional
payment until paid by the bank on which it is drawn. See Paris
v. Carolina Builders Corp., 244 N.C. 35, 38, 92 S.E.2d 405, 408
(1956). “[W]hen a draft or check is accepted in payment of an
obligation and is paid on presentation, payment ordinarily
relates back to the time the draft or check was delivered to the
payee or his duly authorized agent.” Id. (citations omitted).
“Evidence of the deposit in the mail[] of a letter, properly
stamped and addressed, establishes prima facie that it was
received in the regular course of the mail by the addressee.”
Wilson v. Claude J. Welch Builders Corp., 115 N.C. App. 384,
386, 444 S.E.2d 628, 629 (1994) (citations omitted; italics
added). “Evidence of nonreceipt of the letter by the addressee
or by his agent is some evidence that the letter was not mailed
-10-
and raises a question of fact for the trier of fact.” Id.
(citations omitted; emphasis added).
Travelers correctly notes that the issues of payment and
mailing of the check for payment are not synonymous and cites
cases in which conditional payments by check have not been
recognized. Those cases are easily distinguishable in that they
involve checks that were received by the payee but not honored
when presented to the drawee bank. See Hayworth v. Philadelphia
Life Ins. Co., 190 N.C. 757, 759-60, 130 S.E. 612, 613-14 (1925)
(“A worthless check is not a payment. . . . The failure to have
the funds in the bank to meet the check was the fault of the
drawer, and no loss resulted from any delay on the part of the
payee.”); see also Commercial Cas. Ins. Co. v. Durham Cnty, 190
N.C. 58, 62, 128 S.E. 469, 471 (1925) (“The checks which were
not paid do not constitute payments.”) (citation omitted).
We further agree with Travelers that the evidence is
undisputed that the check purportedly written by Booth on 16
March 2012 was never presented to or paid by the drawee bank.
However, unlike in Hayworth and Commercial Cas. Ins. Co., there
has been no failure of the condition that the check “be . . .
paid on presentation[.]” See Paris, 244 N.C. at 38, 92 S.E.2d
at 408. Rather, the check has not been presented to the drawee
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bank at all. The genuine issue of material fact in this matter
concerns the reason the check was not presented to the drawee
bank: because no check was ever written and mailed by
Plaintiffs, because Travelers received the check but failed to
present it, or because Plaintiffs sent the check and it was lost
in the mail. Resolution of this issue by the finder of fact
will, in turn, determine whether the cancellation notice was
properly issued by Travelers.
Each side has presented evidence that tends to support an
answer to this question of fact in their own favor. Plaintiffs
have presented evidence in the form of a check stub from the
check purportedly written and mailed 16 March 2012 and
affidavits from two witnesses averring that the check was
written and then mailed to Travelers on that date. This
evidence establishes prima facie that the check was received by
Travelers. See Wilson, 115 N.C. App. at 386, 444 S.E.2d at 629.
Travelers has presented evidence of nonreceipt of the 16 March
check in the form of an affidavit from its regional controller
stating that it conducted an “internal search for any checks
written by Country Cafaye or Booth or any affiliated entities,”
but has been unable to find the 16 March 2012 check. As noted
supra, this “[e]vidence of nonreceipt . . . is some evidence
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that the letter was not mailed and raises a question of fact for
the trier of fact.” Id. (citations omitted; emphasis added). We
must reject Travelers’ suggestion that the fact that the 16
March 2012 check was never paid by the drawee bank means there
is no evidence that Plaintiffs paid their March premium.
Travelers is in effect asking this Court to “take its word for
it” that no check was received, just as Plaintiffs urge that we
believe their affidavits that the check was written and properly
mailed. It is the role of a fact-finder at trial, and not of
this Court, to weigh the credibility of such conflicting
evidence.2 Thus, “[s]ummary judgment is not appropriate where
matters of credibility and determining the weight of the
evidence exist.” Stott, 183 N.C. App. at 49, 643 S.E.2d at 656.
Determining the facts on this point is the critical first
step to the proper resolution of this case. Should a fact-
finder conclude that Plaintiffs’ evidence is more credible than
Travelers’ evidence on this point, a further factual issue would
2
We note that the finder of fact could decide that both
Plaintiffs and Travelers are telling the truth, and that the
check was mailed, but lost by the postal service. In those
circumstances, Travelers would have been entitled to cancel
Plaintiffs’ policy upon giving Plaintiffs ten days’ notice. In
that case, the parties have forecast evidence of another
disputed issue of material fact: Travelers claims it mailed
Plaintiffs the cancellation notice, which Plaintiffs claim they
never received.
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arise: whether Travelers would have received the check mailed
16 March 2012 before Travelers sent the notice of cancellation
of Plaintiffs’ policy on 19 March 2012. If the check was
received by Travelers on or before 19 March 2012, the notice,
which states that the reason for cancellation is the nonpayment
of the March premium, was incorrectly issued and without effect.
Cancellation for any other reason would have required thirty
days’ notice under Plaintiffs’ policy. Thus, Travelers’
arguments to this Court as to whether Plaintiffs made the
minimum payment stated in the cancellation notice by the 8 April
2012 deadline are premature. This matter will be relevant only
if the finder of fact determines that the cancellation notice
was properly issued, either because the 16 March 2012 check was
never sent to Travelers or that it was sent but not received
prior to issuance of the cancellation notice. Those questions
of material fact remain unresolved. Accordingly, the trial
court erred in granting summary judgment in favor of Travelers.
II. Summary Judgment as to Whitley
Plaintiffs argue that they have forecast sufficient
evidence to create a genuine issue of material fact as to
whether Whitley had a course of dealing with Plaintiffs that
established a fiduciary duty to notify Plaintiffs of the
-14-
cancellation of the insurance policy. Consequently, Plaintiffs
contend that summary judgment in favor of Whitley was error. We
disagree.
“An insurance agent has a limited fiduciary duty to the
insured, to wit, the agent must correctly name the insured in
the policy and correctly advise the insured of the nature and
extent of his coverage under the policy.” Cobb v. Pa. Life Ins.
Co., 215 N.C. App. 268, 275, 715 S.E.2d 541, 548 (2011)
(citation omitted).
An implied duty to advise may only be shown
if: (1) the agent received consideration
beyond mere payment of the premium; (2) the
insured made a clear request for advice; or
(3) there is a course of dealings over an
extended period of time which would put an
objectively reasonable insurance agent on
notice that his advice was being sought and
relied on.
Id. (citation, internal quotation marks, and brackets omitted).
Evidence of a long-standing business relationship is
insufficient by itself to show a course of dealing which would
put a reasonable insurance agent on notice that his advice is
being sought and relied upon. See Bigger v. Vista Sales & Mktg,
Inc., 131 N.C. App. 101, 105, 505 S.E.2d 891, 893-94 (1998).
Plaintiffs do not allege either that Whitley received
compensation beyond the premium or that Plaintiffs made a clear
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request for advice. The only basis on which Plaintiffs argue
that Whitley had a fiduciary duty is that there was an extended
course of dealing over fifteen years with Booth and his family.
Despite this allegation, however, the record is clear that
Plaintiffs themselves had no insurance contract with Whitley
prior to the 2011 policy purchased for Country Cafaye. Further,
Plaintiffs do not present any evidence of specific
communications which would put a “reasonable insurance agent on
notice that his advice was being sought and relied on.” Cobb,
215 N.C. App. at 275, 715 S.E.2d at 548 (citation, internal
quotation marks, and brackets omitted). Instead, Booth merely
states in his affidavit that “if an issue ever arose Whitley
would call and discuss the matter with me.” This statement did
not differentiate between the policy at issue and the previous
policies owned by other Booth family members. The only specific
communication, beyond procuring the policy, that Booth contends
that he had with Whitley regarding the Country Cafaye policy had
to do with obtaining a copy of the renewal policy. Booth
plainly states in his deposition that he had no other
communication with Whitley regarding the Country Cafaye policy.
Even considered in the light most favorable to Plaintiffs, this
communication is not a solicitation of advice from Whitley and
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is certainly not sufficient to put a reasonable insurance agent
on notice that his advice is being sought and relied upon.
Plaintiffs further offered the affidavits of Elizabeth
Newsom, Booth’s niece, and Peggy T. Booth, Booth’s mother, to
support the extent of the relationship with Whitley. Both
affidavits aver that the Booth family had been a long time
customer of Whitley, and that Roy Whitley would call Booth to
discuss “any issues” with the various insurance policies the
family has held. However, neither affidavit presents nor
forecasts any evidence of specific conduct creating a course of
dealing between Whitley and Plaintiffs. Booth expressly states
that he relied on Whitley based on their “lengthy relationship,”
referring to his family’s relationship with Whitley. Even if
Booth could use Whitley’s conduct regarding insurance policies
owned by his parents to create a course of dealing with regard
to his own insurance policy for Country Cafaye, the evidence
presented is insufficient. Plaintiffs present evidence of a
long-standing business relationship only, which is not enough to
put a reasonable insurance agent on notice that his advice is
being sought and relied upon. Therefore, Plaintiffs did not
present evidence sufficient to show the existence of a fiduciary
-17-
duty on the part of Whitley. Accordingly, we affirm the trial
court’s grant of summary judgment in favor of Whitley.
REVERSED IN PART; AFFIRMED IN PART.
Judges CALABRIA and ELMORE concur.
Report per Rule 30(e).