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PHC Inc. v. North Carolina Farm Bureau Mutual Insurance Co.

June 16, 1998

PHC, INC., PLAINTIFF,
v.
NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Horton, Judge.

Appeal by defendant from amended final judgment and award of costs entered 9 July 1997 by Judge David Q. LaBarre in Durham County Superior Court. Heard in the Court of Appeals 29 April 1998.

Plaintiff owned a 1989 Ford E250 work van which was destroyed in an accident on 14 October 1994. An insurance policy issued by defendant provided both liability and property damage coverage on the Ford van. Plaintiff reported the accident to defendant on 21 October 1994. Defendant investigated the loss and attempted to negotiate a settlement with plaintiff. The parties could not agree on the amount of plaintiff's loss, and plaintiff filed a complaint on 28 December 1994, seeking damages for breach of contract, and unfair and deceptive trade practices against defendant. After filing an answer, defendant moved that the court require plaintiff to abide by the terms of the insurance contract which set out the terms of an appraisal procedure. On 3 May 1995, the trial court ordered that the value of the vehicle be determined by "arbitration" as set out in the insurance policy, but retained jurisdiction of the matter. Eventually, the parties complied with the appraisal procedure and an umpire's report was filed with the court setting the value of the Ford van at $7,300, less the applicable deductible. The umpire's report was confirmed by the trial court on 20 March 1997.

The case was heard before a jury during the April 1997 Session of Durham County Superior Court on the unfair and deceptive trade practices claim. The jury answered all issues in favor of the defendant. The trial court granted plaintiff's motion for attorneys' fees and for prejudgment interest. Thereafter, defendant appealed.

Bugg & Wolf, P.A., by William J. Wolf, for plaintiff appellee.

Haywood, Denny & Miller, L.L.P., by Robert E. Levin, for defendant appellant.

Defendant North Carolina Farm Bureau Insurance Company ("Insurance Company") contends the trial court erred in (I) awarding attorneys' fees to plaintiff, PHC, Inc., and (II) awarding prejudgment interest on the umpire's award.

I. N.C. Gen. Stat. § 6-21.1 (1997) permits the trial court, in its discretion, to allow reasonable attorneys' fees to a litigant who (1) obtains a judgment for recovery of damages; (2) in the amount of $10,000 or less; (3) against an insurance company; (4) in a property damage suit; (5) where the insured is the plaintiff; (6) upon a finding by the court that there was an "unwarranted refusal" by defendant insurance company to pay the claim which is the basis for the suit. Defendant Insurance Company contends that under the facts of this case, plaintiff was not entitled to collect attorneys' fees in any amount. Further, defendant contends that in any event, there was no "unwarranted refusal" to pay the claim and the court erred in awarding attorneys' fees in any amount.

The first issue on appeal is whether a trial court can award attorneys' fees to a plaintiff pursuant to N.C. Gen. Stat. § 6-21.1 (1997), where the provisions of an automobile insurance policy provide an appraisal procedure for determining the value of an insured plaintiff's collision loss to his vehicle, and the amount of loss to the vehicle is determined through that procedure. The question presented is one of first impression in this jurisdiction.

In the instant case, the pertinent insurance policy provides in part:

APPRAISAL FOR PHYSICAL DAMAGE LOSS

If you and we disagree on the amount of "loss", either may demand an appraisal of the "loss". In this event, each party will select a competent appraiser. The two appraisers will select a competent and impartial umpire. The appraisers will state separately the actual cash value and amount of "loss". If they fail to agree, they will submit their differences to the umpire. A decision, in writing, agreed to by any two will be binding. Each party will:

a. Pay its chosen appraiser; and

b. Bear the other expenses of the appraisal and umpire equally.

If we submit to an appraisal, we will still retain our right to deny the ...


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