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Liberty Mutual Insurance Co. v. Ditillo

May 08, 1998

LIBERTY MUTUAL INSURANCE COMPANY AND STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
v.
PATRICIA E. DITILLO, EXECUTRIX OF THE ESTATE OF JOHN JOSEPH DITILLO; PAULA C. BURGOON, ADMINISTRATRIX OF THE ESTATE OF RALPH JEAN CLARK; DONNA T. STILWELL, ADMINISTRATRIX OF THE ESTATE OF CHARLES BRUCE STILWELL; RELIANCE INSURANCE COMPANY; AND DAY & ZIMMERMAN, INC.



The opinion of the court was delivered by: Frye, Justice

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 125 N.C. App. 701, 482 S.E.2d 743 (1997), affirming in part and reversing in part a judgment entered 1 February 1996 by Helms (William H.), J., in Superior Court, Union County. On 5 June 1997, the Supreme Court granted discretionary review of additional issues. Heard in the Supreme Court 19 November 1997.

This case arises out of an automobile accident on 31 January 1991 in which Charles Bruce Stilwell (Stilwell), Ralph Jean Clark (Clark), and John Joseph Ditillo (Ditillo) were killed. The issue to be decided is whether the uninsured motorist (UM) coverage in personal automobile policies owned by Stilwell and Clark is available to their estates where the amount of workers' compensation benefits exceeds the UM coverage limit of each policy. Based on N.C.G.S. § 20-279.21(e) and our recent decision in McMillian v. N.C. Farm Bureau Mut. Ins. Co., 347 N.C. 560, 495 S.E.2d 352 (1998), the answer is no.

All facts pertinent to this case were stipulated to by the parties and, thus, are not in dispute. At the time of the accident, Stilwell, Clark, and Ditillo were employees of Day & Zimmerman, Inc. (D&Z) and were acting in the course and scope of their employment. At the time of the accident, Stilwell was the operator of a 1991 Dodge automobile that was leased for his use by D&Z, and Clark and Ditillo were passengers. D&Z was insured by its workers' compensation carrier, Reliance Insurance Company (Reliance). Pursuant to the Workers' Compensation Act, N.C.G.S. ch. 97 (1991 & Supp. 1997), D&Z and Reliance filed with the North Carolina Industrial Commission written admissions of liability for the deaths of Stilwell, Clark, and Ditillo. D&Z and Reliance are liable under the Workers' Compensation Act to Donna T. Stilwell, widow of Stilwell, and Patricia E. Ditillo, widow of Ditillo, for compensation in the sum of $162,400 each and are liable to the three daughters of Clark for compensation in the total sum of $130,997.62.

Donna T. Stilwell, Paula C. Burgoon, and Patricia E. Ditillo, as personal representatives of the estates of Stilwell, Clark, and Ditillo, respectively, each commenced a wrongful death action against the operators and owners of the other vehicles involved in the accident. The wrongful death cases were consolidated for trial, and the liability issues were tried at the 28 November 1994 Special Civil Jury Session of Superior Court, Union County. A jury determined that the negligence of Francisco Landaverde Covarrubias (Covarrubias) was the sole proximate cause of the collision that resulted in the deaths of Stilwell, Clark, and Ditillo. At the time of the accident, Covarrubias was operating an uninsured motor vehicle and was an uninsured motorist as defined by N.C.G.S. § 20-279.21.

Prior to 31 January 1991, Liberty Mutual Insurance Company (Liberty Mutual) had issued and delivered to Donna T. and Charles Bruce Stilwell, named insureds, a policy of personal automobile insurance that was in full force and effect at the time of the accident. The Liberty Mutual policy has UM coverage limits for bodily injury in the amount of $100,000 per person and $300,000 per accident. State Farm Mutual Automobile Insurance Company (State Farm) had issued and delivered to Ralph Jean Clark, named insured, a personal automobile policy that was also in full force and effect at the time of the accident. The State Farm policy also has UM coverage limits of $100,000/$300,000. There was no UM coverage under any policy of insurance listing as an insured vehicle the 1991 Dodge leased to D&Z and operated by Stilwell at the time of the accident.

Subsequent to the filing of the wrongful death actions, Liberty Mutual and State Farm filed the declaratory judgment action which is the subject of this case. Various cross-claims followed, filed by and against the personal representatives of Stilwell and Ditillo, *fn1 D&Z, and Reliance.

The ultimate question in this case is whether the Liberty Mutual and State Farm policies owned by Stilwell and Clark provide any UM coverage to their estates because the amount of workers' compensation benefits to their survivors exceeds the UM coverage limits in each policy. Both the Liberty Mutual and the State Farm policies contain identical limitation of liability and exclusionary provisions in the UM coverage section. The limitation of liability provision in the UM coverage section of each policy provides, in part:

Any amount otherwise payable for damages under this coverage shall be reduced by all sums:

2. Paid or payable because of the bodily injury under any of the following or similar law:

a. workers' compensation law . . . .

The exclusion (exclusion "C") in the insuring agreement of the UM coverage section of each policy provides:

C. This coverage shall not apply directly or indirectly to benefit any insurer or self-insurer under any of the following or similar law:

1. workers' compensation law . . . .

For purposes of the declaratory judgment action, the parties stipulated, inter ...


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