Nationwide Affinity Ins. Co. of Am. v. Bei , 259 N.C. App. 626 ( 2018 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-1086
Filed: 15 May 2018
Wake County, No. 16-CVS-5773
NATIONWIDE AFFINITY INSURANCE COMPANY OF AMERICA, Plaintiff,
v.
LE BEI, ADMINISTRATOR OF THE ESTATE OF TEI PAW, THLA AYE,
ADMINISTRATOR OF THE ESTATE OF KHAI HNE, KHAI TLO, NU CING AND
TIN AUNG, Defendants.
Appeal by Plaintiff from order entered 17 July 2017 by Judge A. Graham
Shirley, II in Wake County Superior Court. Heard in the Court of Appeals 8 March
2018.
Simpson Law Firm PLLC, by George L. Simpson, IV, for plaintiff-appellant.
Arnold & Smith, PLLC, by Paul A. Tharp, for defendant-appellees.
HUNTER, JR., Robert N., Judge.
Nationwide Affinity Insurance Company of America (“Plaintiff”) appeals from
an order granting Le Bei, Administrator of the Estate of Tei Paw, and Thla Aye’s,
Administrator of the Estate of Khai Hne, (collectively “Defendants”) motion for
summary judgment and denying Plaintiff’s motion for summary judgment. On
appeal, Plaintiff argues the trial court improperly allowed Defendants to recover
underinsured motorist coverage (“UIM”). We affirm.
I. Factual and Procedural Background
NATIONWIDE AFFINITY INS. CO. OF AM. V. BEI
Opinion of the Court
On 3 May 2016, Plaintiff filed a complaint for declaratory judgment, seeking a
declaration regarding automobile insurance issued by Plaintiff to Sa Hietha. The
complaint alleged the following narrative.
On 26 September 2014, around 11:00 p.m., Hietha drove his Honda Pilot on I-
77, near Fort Mill, South Carolina. Hietha traveled northbound, in the far, right
lane. Tei Paw, Khia Hne, Khia Tlo, Tin Aung, and Nu Cing rode as passengers in
Hietha’s vehicle. David Hope drove an American Red Cross bus ahead of Hietha, in
the same lane. Mabel Gutierrez drove a Honda Accord in the neighboring lane, also
northbound.
Hietha traveled too quickly for the conditions.1 Consequently, he collided with
the rear of the American Red Cross bus. Hietha’s vehicle then “spun into the adjacent
lane in front of” and collided with Gutierrez’s Honda Accord. Tin Aung and Nu Cing
suffered personal injuries from the accident. Tei Paw, Khai Hne, and Khai Tlo died
as a result from injuries sustained from the accident.
From 28 May 2014 to 28 November 2014, Plaintiff insured Hietha’s vehicle
through a personal automobile insurance policy (“Hietha policy”). The Hietha policy
provided liability insurance coverage with limits of $50,000 per person and $100,000
1 The complaint provides no other details for Hietha’s driving beyond that he “traveled too fast
for the conditions[.]” Pursuant to Rule 9(c)(1) of the North Carolina Rules of Appellate Procedure, the
record includes a narrative form of matters presented at the summary judgment hearing. N.C. R. App.
P. 9(c)(1) (2017). The narrative includes the following, additional details. Hope, driving the American
Red Cross bus, slowed down in the right lane, to exit I-77. Hietha “travell[ed] too fast for conditions
(inattention) [and] ran into the rear of” the bus.
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per accident. The policy also provided UIM coverage with limits of $50,000 per person
and $100,000 per accident.
Plaintiff distributed the following amounts under the maximum per accident
limit of liability coverage: $26,000 to Tei Paw; $26,000 to Khai Hne; $26,000 to Khai
Tlo; $13,000 to Tin Aung; $5,000 to Mabel Gutierrez; $2,500 to David Hope; and
$1,500 to Nu Cing. The parties disagreed on whether the passengers were entitled
to recover under Hietha’s UIM coverage for the difference between the amounts
received under the liability coverage and the per person limits of UIM coverage.
Thus, Plaintiff requested the trial court declare UIM under Hietha’s policy “[wa]s not
triggered for any of the Defendants under the Policy.”
On 25 July 2016, Defendants filed their answer. Defendants asserted they
were entitled to UIM coverage under the Hietha policy. At the time of the accident,
Hne had a separate insurance policy with Plaintiff. This separate policy provided
UIM coverage with limits of $50,000 per person and $100,000 per accident. Paw also
had a separate insurance policy with Plaintiff. Paw’s policy provided coverage with
UIM limits of $100,000 per person and $300,000 per accident. Defendants contended
the UIM coverage under their separate policies should be “stacked” with the UIM
coverage under the Hietha policy.
On 30 January 2017, the trial court held a hearing for approval of proposed
settlements. In orders entered 31 January 2017, the trial court approved of
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Opinion of the Court
settlements of $30,800 of liability-policy funds to Defendant Aye and $1,000 of
liability-policy funds to Defendant Bei. In both orders, the trial court specifically
stated the settlements “shall not affect any rights of [Defendants] to pursue any
underinsured motorist claims against any party, including . . . Sa Hietha[.]”
On 13 February 2017, Defendants filed a joint motion for summary judgment.
Defendants requested the trial court “declare that they are entitled to UIM coverage
under Sa Hietha’s policy, in amounts sufficient to exhaust said UIM coverage[.]” On
1 May 2017, Plaintiff filed its own motion for summary judgment. Plaintiff contended
the multiple claimant exception in the Financial Responsibility Act precluded
Defendants from recovering UIM coverage under the Hietha policy.
On 24 May 2017, the trial court held a hearing on the parties’ motions. In an
order entered 17 July 2017, the trial court granted Defendants’ motion for summary
judgment and denied Plaintiff’s motion for summary judgment. The trial court
ordered “the movant-Defendants are entitled to payment under at-fault Sa Hietha’s
per-person underinsured motorist coverage provided by Plaintiff, subject to any
applicable credits.” On 15 August 2017, Plaintiff filed timely notice of appeal.
II. Standard of Review
“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
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law.’ ” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting
Forbis v. Neal, 361 N.C. 519, 523-24, 649 S.E.2d 382, 385 (2007)). “Under a de novo
review, the court considers the matter anew and freely substitutes its own judgment
for that of the lower tribunal.” Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334,
337, 678 S.E.2d 351, 354 (2009) (internal quotation marks and citation omitted).
III. Analysis
On appeal, Plaintiff contends the trial court erred by granting summary
judgment in favor of Defendants. Specifically, Plaintiff argues the multiple claimant
exception in N.C. Gen. Stat. § 20-279.21(b)(4) (2017) applies to the matters at hand.
Accordingly, Plaintiff contends the trial court erred in allowing Defendants to recover
UIM coverage under Hietha’s policy. We disagree.
“Statutory interpretation begins with ‘the cardinal principle of statutory
construction . . . that the intent of the legislature is controlling. In ascertaining the
legislative intent, courts should consider the language of the statute, the spirit of the
statute, and what it seeks to accomplish.’ ” Benton v. Hanford, 195 N.C. App. 88, 92,
671 S.E.2d 31, 34 (2009) (brackets omitted) (ellipses in original) (quoting State ex rel.
Util. Comm’n v. Pub. Staff, 309 N.C. 195, 210, 306 S.E.2d 435, 443-44 (1983)).
Moreover, “[l]egislative intent can be ascertained not only from the phraseology of the
statute but also from the nature and purpose of the act and the consequences which
would follow its construction one way or the other.” Sutton v. Aetna Cas. & Sur. Co.,
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325 N.C. 259, 265, 382 S.E.2d 759, 763 (1989) (citations omitted), superseded by
statute on other grounds, N.C. Farm Bureau Mut. Ins. Co. v. Stamper, 112 N.C. App.
254, 257-58, 468 S.E.2d 584, 585-86 (1996). “The Court will not adopt an
interpretation which results in injustice when the statute may reasonably be
otherwise consistently construed with the intent of the act.” Nationwide Mut. Ins.
Co. v. Chantos, 293 N.C. 431, 440, 238 S.E.2d 597, 603 (1977) (citation omitted).
At the outset, our analysis is guided by the “avowed purpose” of the Financial
Responsibility Act, which is:
to compensate the innocent victims of financially
irresponsible motorists. The Act is remedial in nature and
is to be liberally construed so that the beneficial purpose
intended by its enactment may be accomplished. The
purpose of the Act, we have said, is best served when every
provision of the Act is interpreted to provide the innocent
victim with the fullest possible protection.
Liberty Mut. Ins. Co. v. Pennington, 356 N.C. 571, 573-74, 573 S.E.2d 118, 120 (2002)
(citations, quotation marks, ellipses, and brackets omitted).
The Financial Responsibility Act permits interpolicy stacking of UIM coverage
to calculate the “applicable limits of underinsured motorist coverage for the vehicle
involved in the accident.” N.C. Farm Bureau Mut. Ins. Co. v. Bost, 126 N.C. App. 42,
50-51, 483 S.E.2d 452, 458 (1997). After stacking, the parties use the stacked amount
to determine if the tortfeasor’s vehicle is an underinsured highway vehicle, under
N.C. Gen. Stat. § 20-279.21(b)(4). Id. at 51, 483 S.E.2d at 458.
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Our case law and a statutory amendment in 2004 shaped the relevant
definition of an underinsured highway vehicle under N.C. Gen. Stat. § 20-
279.21(b)(4). First, our Court decided Ray v. Atlantic Casualty Insurance Co., 112
N.C. App. 259, 435 S.E.2d 80 (1993). In Ray, another vehicle crossed the centerline
and struck one plaintiff’s vehicle. Id. at 260, 435 S.E.2d at 80. One plaintiff, and the
two passengers in her vehicle, all suffered injuries. See id. at 260, 435 S.E.2d at 80.
Aetna Insurance Company insured the tortfeasor under a vehicle insurance policy.
Id. at 260, 435 S.E.2d at 80. The policy provided for coverage with a liability limit of
$100,000 per person and $300,000 per accident. Id. at 260, 435 S.E.2d at 80. The
defendant insurer insured the plaintiff. Id. at 260, 435 S.E.2d at 80. Defendant’s
policy provided for coverage with a UIM limit of $100,000 per person and $300,000
per accident. Id. at 260-61, 435 S.E.2d at 80.
Aetna paid an occupant in the tortfeasor’s car $98,000, pursuant to the liability
coverage under the policy. Id. at 261, 435 S.E.2d at 80-81. Thus, $202,000 remained
in liability coverage, to be split amongst the three plaintiffs—the driver and her two
passengers. Id. at 260-61, 435 S.E.2d at 81. Plaintiffs sought a judgment declaring
defendant insurer’s policy provided for UIM coverage. Id. at 261, 435 S.E.2d at 81.
Defendant insurer filed a motion for summary judgment, which the trial court
granted. Id. at 261, 435 S.E.2d at 81. Plaintiffs appealed. Id. at 260, 435 S.E.2d at
80.
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This Court analyzed whether an underinsured vehicle, as defined in N.C. Gen.
Stat. § 20-279.21(b)(4), included “a tortfeasor’s vehicle whose available liability
insurance is less than the relevant UIM coverage.” Id. at 261, 435 S.E.2d at 81. At
the time our Court decided Ray, N.C. Gen. Stat. § 20-279.21(b)(4) provided UIM
coverage applies when “all liability bonds or insurance policies providing coverage for
bodily injured caused by . . . the underinsured highway vehicle have been exhausted.”
Id. at 261, 435 S.E.2d at 81 (emphasis omitted) (ellipses in original). Thus, the
language of the statute “required this Court to base this determination on a
comparison of the tortfeasor’s overall liability coverage (not the actual liability
payment) to the victim’s UIM coverage.” Integon Nat’l Ins. Co. v. Maurizzio, 240 N.C.
App. 38, 42, 769 S.E.2d 415, 419 (2015) (analyzing Ray’s holding and the subsequent
amendment of N.C. Gen. Stat. § 20-279.21(b)(4)).
Accordingly, this Court held plaintiffs were not entitled to UIM coverage under
defendant insurer’s policy, because the liability coverage and the UIM coverage
provided were the same. Ray, 112 N.C. App. at 262, 435 S.E.2d at 81. Thus, the
tortfeasor’s vehicle did not meet the definition of an underinsured highway vehicle.
Id. at 262, 435 S.E.2d at 81.
In 2004, in response to Ray, the General Assembly amended N.C. Gen. Stat. §
20-279.21(b)(4). The General Assembly added two sentences, and the statute now
reads, inter alia:
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An “uninsured motor vehicle,” as described in subdivision
(3) of this subsection, includes an “underinsured highway
vehicle,” which means a highway vehicle with respect to
the ownership, maintenance, or use of which, the sum of
the limits of liability under all bodily injury liability bonds
and insurance policies applicable at the time of the
accident is less than the applicable limits of underinsured
motorist coverage for the vehicle involved in the accident
and insured under the owner's policy. For purposes of an
underinsured motorist claim asserted by a person injured
in an accident where more than one person is injured, a
highway vehicle will also be an “underinsured highway
vehicle” if the total amount actually paid to that person
under all bodily injury liability bonds and insurance
policies applicable at the time of the accident is less than
the applicable limits of underinsured motorist coverage for
the vehicle involved in the accident and insured under the
owner’s policy. Notwithstanding the immediately
preceding sentence, a highway vehicle shall not be an
“underinsured motor vehicle” for purposes of an
underinsured motorist claim under an owner’s policy
insuring that vehicle unless the owner’s policy insuring that
vehicle provides underinsured motorist coverage with limits
that are greater than that policy’s bodily injury liability
limits.
N.C. Gen. Stat. § 20-279.21 (b)(4) (emphasis added).
Following the amendment, our Court twice examined the added two sentences
and their effect on claimants’ right to recover UIM. First, in Benton, plaintiff suffered
injuries as a result of a single car accident.2 195 N.C. App. at 89, 671 S.E.2d at 32.
Nationwide insured plaintiff under a vehicle insurance policy. Id. at 89-90, 671
S.E.2d at 32. The policy provided for coverage with a liability limit of $50,000 per
2 In Benton, there were actually two plaintiffs, the other plaintiff being the driver of the vehicle.
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person and a UIM limit of $50,000 per person. Id. at 90, 671 S.E.2d at 32. Defendant
insurer, Progressive Southeastern Insurance Company, also insured plaintiff, under
a household resident policy. Id. at 90, 671 S.E.2d at 32. This policy provided UIM
coverage of $100,000 per person. Id. at 90, 671 S.E.2d at 32.
Nationwide paid plaintiff $50,000, pursuant to the liability limit. Id. at 90,
671 S.E.2d at 32. Defendant insurer contended the vehicle did not meet the definition
of an “underinsured highway vehicle” because the Nationwide policy provided UIM
coverage with limits equal to that of the policy’s liability limits. Id. at 91, 671 S.E.2d
at 33.
Our Court disagreed with defendant insurer. The Court, while specifically
highlighting it “must interpret the provisions of the Act liberally in order to provide
the innocent victim with the fullest possible protection,” held the second sentence of
the amendment did not apply. Id. at 93-94, 671 S.E.2d at 34-35 (brackets omitted).
The Court titled the second sentence of the amendment the “multiple claimant
exception” and concluded the sentence only applies to accidents with multiple
claimants. Id. at 94, 671 S.E.2d at 34-35. Since the accident involved only one
claimant, the Court used the general definition of an underinsured highway vehicle
and concluded the vehicle met said definition. Id. at 94, 671 S.E.2d at 35.
Next, in Maurizzio, three family members, Destany, Daijah, and Desiree’, were
involved in a single car accident. 240 N.C. App. at 39, 769 S.E.2d at 417. Destany
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drove the vehicle owned by Suzanne Maurizzio, and Daijah and Desiree’ rode as
passengers. Id. at 39, 769 S.E.2d at 417. Desiree’ and Daijah suffered injuries. Id.
at 39, 769 S.E.2d at 417.
At the time of the accident, Suzanne insured the vehicle through a policy with
plaintiff insurer. Id. at 39, 769 S.E.2d at 417. The policy provided both liability and
UIM coverage with limits of $50,000 per person and $100,000 per accident. Id. at 39,
769 S.E.2d at 417. The parties settled Desiree’s claim within the liability coverage
limits of the policy. Id. at 39, 769 S.E.2d at 417.
Daijah’s injuries resulted in an excess of $200,000 of expenses. Id. at 39, 769
S.E.2d at 417. Plaintiff insurer tendered the $50,000 per person liability limit. Id.
at 39, 769 S.E.2d at 417. Daijah’s parents also had an insurance policy with plaintiff
insurer. Id. at 39, 769 S.E.2d at 417. This policy provided UIM coverage with limits
of $50,000 per person and $100,000 per accident. Id. at 39, 769 S.E.2d at 417-18.
Plaintiff insurer sought a declaratory judgment, declaring Daijah’s parents’
policy did not provide UIM coverage for Daijah’s injuries from the accident. Id. at 39,
769 S.E.2d at 418. Defendants moved for summary judgment and contended the UIM
coverage under the parents’ policy could be stacked with the UIM coverage under
Suzanne’s policy. Id. at 39, 769 S.E.2d at 418. Plaintiff insurer filed its own motion
for summary judgment, asserting the multiple claimant exception applied, and, thus,
the claimants could not stack the UIM coverage from Suzanne’s policy with any other
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UIM coverage. Id. at 40, 769 S.E.2d at 418. The trial court denied plaintiff’s motion
for summary judgment and granted defendants’ motion for summary judgment. Id.
at 40, 769 S.E.2d at 418. The trial court declared plaintiff insurer’s policies, to
Suzanne and Daijah’s parents, provided $100,000 in UIM coverage. Id. at 40, 769
S.E.2d at 418.
Plaintiff insurer appealed. Id. at 40, 769 S.E.2d at 418. Plaintiff insurer
argued the multiple claimant exception applied because two people were injured in
the accident. Id. at 40, 769 S.E.2d at 418. Our Court summarized the effect of
amendment as providing “an additional definition of ‘underinsured highway vehicle’
for situations where multiple claimants seek liability funds.” Id. at 42, 769 S.E.2d at
419. The Court explained:
[t]he multiple claimant exception prevents an increase in
liability or UIM exposure of the carrier providing coverage
for the tortfeasor’s vehicle. The exception states a vehicle
is not an “underinsured motor vehicle” if the owner’s policy
provides UIM coverage with limits, which are less than or
equal to that policy’s bodily injury liability limits.
Id. at 43, 769 S.E.2d at 420 (citing N.C. Gen. Stat. § 20-279.21(b)(4)).
The Court held the multiple claimant exception was not triggered “simply
because there were two injuries in an accident.” Id. at 44, 769 S.E.2d at 420. The
Court limited the exception’s applicability to “when the amount paid to an individual
claimant is less than the claimant’s limits of UIM coverage after liability payments
to multiple claimants.” Id. at 44, 769 S.E.2d at 420-21 (citation omitted).
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Plaintiff insurer and Desiree’ settled her claim in the per person liability
coverage. Id. at 44, 769 S.E.2d at 421. Thus, the liability payment did not reduce the
liability coverage available for Daijah’s claim. Id. at 44, 769 S.E.2d at 421.
Accordingly, the multiple claimant exception did not apply. Id. at 44-45, 769 S.E.2d
at 421.
Turning to the case at bar, the parties disagree on the issue before our Court.
Plaintiff contends the case is an issue of first impression and is not question of
stacking insurance policies. Additionally, Plaintiff asserts the General Assembly
sought “to broaden UIM coverage only for occupants of an innocent operator’s
vehicle . . . and expressly excludes occupants of a tortfeasor’s vehicle from the
expanded UIM coverage[.]”
Defendants disagree and argue the issue is not one of first impression. Instead,
Defendants assert the issue only requires this Court to apply settled law permitting
stacking of insurance policies. Defendants further contend Plaintiff’s interpretation
would “pervert the statute by adding a restrictive distinction that would punish
innocent victims of a tortfeasor’s negligence by exempting the latter’s underinsured
motorist coverage from his own passenger’s claims.”
We agree with Defendants’ framing of the issue and conclude the multiple
claimant exception does not apply to the case sub judice. The General Assembly
added the multiple claimant exception post-Ray in an effort to further protect
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innocent victims of financially irresponsible motorists. To construe the multiple
claimant exception to limit UIM recovery to innocent occupants of a tortfeasor’s
vehicle, while allowing recovery by innocent occupants of an innocent operator’s
vehicle, would be “an interpretation which results in injustice[.]” Chantos, 293 N.C.
at 440, 238 S.E.2d at 603 (citation omitted).
Keeping in mind we are required to liberally construe the Act, we decline to
apply the multiple claimant exception in a way which would reduce compensation to
innocent victims and conflict with the avowed purpose of the Act. Pennington, 356
N.C. at 573, 573 S.E.2d at 120 (citation omitted). Moreover, this holding comports
with the intent of the legislature, and we considered the “nature and purpose of the
act and the consequences which would follow its construction one way or the other”
and “the language of the statute, the spirit of the statute, and what it seeks to
accomplish.” Sutton, 325 N.C. at 265, 382 S.E.2d at 763 (citations omitted); Benton,
195 N.C. App. at 92, 671 S.E.2d at 34 (quotation marks and citation omitted).
Because we hold the multiple claimant exception does not apply, the trial court
properly permitted Defendants to recover UIM coverage under their own policies and
the UIM coverage under Hietha’s policy with Plaintiff. Accordingly, the trial court
properly granted Defendants’ motion for summary judgment and properly denied
Plaintiff’s motion for summary judgment.
IV. Conclusion
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For the foregoing reasons, we affirm the trial court’s order.
AFFIRMED.
Judge ZACHARY concurs.
Judge DIETZ concurs in a separate opinion.
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DIETZ, Judge, concurring.
I concur in the majority opinion but write separately to emphasize that
“[w]here the language of a statute is clear and unambiguous, there is no room for
judicial construction and the courts must construe the statute using its plain
meaning. Wilkie v. City of Boiling Spring Lakes, __ N.C. __, __, 809 S.E.2d 853, 858
(2018). In other words, “[i]f the statutory language is clear and unambiguous, the
court eschews statutory construction in favor of giving the words their plain and
definite meaning.” Id. We address the General Assembly’s intent and the potential
for injustice in this case only because N.C. Gen. Stat. § 20-279.21(b)(4), read in its
entirety, is open to more than one reasonable interpretation and is therefore
ambiguous.