Heard April 15, 2014
Counsel Amended January 7, 2015.
N.C. Court of Appeals. No. 13-167. R. Chris Dillon, Judge.
Abrams & Abrams, P.A., by Noah B. Abrams, Douglas B. Abrams, Margaret S. Abrams, and Melissa N. Abrams, for plaintiff-appellee.
Nelson Levine de Luca & Hamilton, by David L. Brown, Brady A. Yntema, and David G. Harris, II, for unnamed defendant-appellant North Carolina Farm Bureau Mutual Insurance Company.
White & Stradley, PLLC, by J. David Stradley; and Whitley Law Firm, by Ann C. Ochsner, for North Carolina Advocates for Justice, amicus curiae.
Sparkman Larcade, PLLC, by George L. Simpson, IV, for North Carolina Association of Defense Attorneys and Property Casualty Insurers Association of America, amici curiae.
BEASLEY, Justice. Justice HUNTER did not participate in the consideration or decision of this case. Justice NEWBY dissenting in part and concurring in part.
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision of the Court of Appeals, __ N.C.App. __, 747 S.E.2d 390 (2013), affirming an order of summary judgment entered on 13 November 2012 by Judge James U. Downs in Superior Court, McDowell County. Heard in the Supreme Court on 15 April 2014.
[367 N.C. 619] BEASLEY, Justice.
The primary issue in this appeal is whether an insured may, in a situation in which there is more than one at-fault driver responsible for the accident causing the insured's injuries, recover under his or her underinsured motorist (UIM) policy before exhausting the liability insurance policies of all the at-fault drivers. We conclude that the insured
is only required to exhaust the liability insurance coverage of a single at-fault motorist in order to trigger the insurer's obligation to provide UIM benefits. Accordingly, we affirm the Court of Appeals' decision on this issue. Because, however, the trial court's award of interest and costs against the insurer in this case exceeds the amount the insurer contractually promised to pay under the terms of its policy with the insured, the Court of Appeals erred in upholding that portion of the award. In this respect, we reverse the Court of Appeals.
The parties to this appeal have stipulated to the material facts, which tend to establish that on 18 September 2009, defendant Thomas E. Mills was operating a tractor-trailer owned by his employer, defendant James W. Crowder, III. Mills was traveling eastbound on Interstate Highway 40 in McDowell County when he lost control while rounding a curve, causing his vehicle to collide with the concrete median barrier and flip. Plaintiff Douglas Kirk Lunsford, a volunteer firefighter, responded first to the scene and found that Mills was injured and that diesel fuel was leaking from the tractor-trailer. Lunsford, who was standing in the highway median, attempted to lift Mills over the concrete divider so that he could carry Mills to safety and assess his injuries. As Lunsford was doing so, defendant Shawn T. Buchanan was driving westbound on Interstate Highway 40. When the vehicle in front of Buchanan slowed down because of the tractor- [367 N.C. 620] trailer accident, Buchanan swerved to the left to avoid the vehicle and struck Lunsford. Lunsford was dragged underneath Buchanan's car and suffered severe injuries, including multiple broken bones, lacerations, and internal injuries.
At the time of the accidents, Mills and Crowder were insured through Crowder's business motor vehicle policy with United States Fire Insurance Company (U.S. Fire), which provided a liability coverage limit of $1 million. The second driver, Buchanan, was insured under a policy written by Allstate Insurance Company (Allstate), providing liability coverage of $50,000. Lunsford maintained two policies with unnamed defendant North Carolina Farm Bureau Mutual Insurance Company (Farm Bureau): (1) a business policy with UIM coverage of $300,000; and (2) a personal policy with UIM coverage of $100,000.
Lunsford subsequently filed a negligence action against Mills, Crowder, and Buchanan (named defendants), claiming that they were jointly and severally liable for his injuries. All named defendants filed answers, which included crossclaims for indemnification and contribution. Farm Bureau, as an unnamed defendant, also filed an answer in which it claimed that it would be entitled to an offset with respect to Lunsford's UIM policies for any damages he recovered through the insurance policies held by the named defendants.
On 24 May 2011, Allstate tendered to Lunsford the $50,000 liability coverage limit for Buchanan's policy. Lunsford's attorney notified Farm Bureau the next day of Allstate's tender and demanded that Farm Bureau tender payment on Lunsford's UIM claim. In a letter dated 7 June 2011, Farm Bureau indicated that (1) it would not advance the liability policy limits tendered to Lunsford by Allstate; and (2) it would review its legal options regarding Lunsford's UIM claim and respond " at a later date." On 15 November 2011, Lunsford's attorney informed Farm Bureau that Lunsford had tentatively settled his claims against Mills and Crowder for $850,000, which was to be paid through Crowder's policy with U.S. Fire. At the time of these settlements, Farm Bureau had not provided UIM coverage to Lunsford.
On 12 January 2012, the trial court entered an order approving the settlement agreements. On 19 July 2012, Farm Bureau filed a motion for summary judgment on Lunsford's UIM claim, arguing that he was not entitled to UIM coverage because the total amount of his settlements with Buchanan, Mills, and Crowder ($50,000 $850,000 = $900,000) exceeded the aggregate amount of Lunsford's UIM policies [367 N.C. 621] ($300,000 $100,000 = $400,000). Lunsford also moved for summary judgment, maintaining that his UIM policies stacked and that he was entitled to recover $350,000 from Farm Bureau--the amount of his aggregated UIM coverage limit ($400,000) minus the $50,000
he recovered through his settlement with Buchanan.
After conducting a hearing on the parties' motions, the trial court entered an order on 13 November 2012 granting summary judgment in favor of Lunsford. The trial court accordingly ordered Farm Bureau to pay Lunsford $350,000, plus costs and pre- and post-judgment interest " as provided by law."
Farm Bureau appealed the trial court's order to the Court of Appeals, primarily arguing that the trial court erred in granting summary judgment in favor of Lunsford and ordering Farm Bureau to pay $350,000 in UIM coverage because, under the statute governing UIM coverage, Farm Bureau " was not required to provide coverage until all applicable policies--meaning all policies held by all the named Defendants--had been exhausted." Lunsford v. Mills, __ N.C.App. __, __, 747 S.E.2d 390, 393 (2013). The court disagreed based on its reading of the UIM statute: " 'Underinsured motorist coverage is deemed to apply when, by reason of payment of judgment or settlement, all liability bonds or insurance policies providing coverage for bodily injury caused by the ownership, maintenance, or use of the underinsured highway vehicle have been exhausted.'" Id. at __, 747 S.E.2d at 393 (quoting N.C.G.S. § 20-279.21(b)(4) (emphasis added by court)). The court interpreted this language " to mean that UIM coverage is triggered the moment that an insured has recovered under all policies applicable to ' a '--meaning one --'underinsured highway vehicle' involved in a motor vehicle accident resulting in injury to the insured." Id. at __, 747 S.E.2d at 393 (emphasis added).
Noting that the issue of when UIM coverage is triggered in situations involving multiple potential at-fault drivers is one of first impression in North Carolina, the Court of Appeals believed that its interpretation of the UIM statute was consistent with that court's precedent suggesting that " insureds should [not] 'be kept hanging in limbo as they are forced to sue any and all possible persons . . . before they could recover UIM benefits' just because other potential tortfeasors also happen to be covered under automobile policies." Id. at __, 747 S.E.2d at 394 (quoting Farm Bureau Ins. Co. of N.C. v. Blong, 159 N.C.App. 365, 373, 583 S.E.2d 307, 312, disc. rev. denied, 357 N.C. 578, 589 S.E.2d 125 (2003)). In light of this rationale, the court determined that, in such a situation, UIM carriers are obligated [367 N.C. 622] " to first provide coverage, and later seek an offset through reimbursement or exercise of subrogation rights." Id. at __, 747 S.E.2d at 394. Consequently, the court determined that upon the exhaustion of " all policies applicable to Mr. Buchanan's vehicle," Lunsford's " UIM coverage was triggered," and " Farm Bureau was not at liberty to withhold coverage until [Lunsford] reached settlement agreements with Mr. Mills and Mr. Crowder." Id. at __, 747 S.E.2d at 394.
Farm Bureau alternatively argued that, even it were required to provide UIM coverage, the trial court nevertheless erred in ordering it to pay pre- and post-judgment interest and costs. In support of this contention, Farm Bureau cited our decision in Sproles v. Greene, 329 N.C. 603, 613, 407 S.E.2d 497, 503 (1991), in which we concluded that North Carolina's compulsory motor vehicle insurance laws do not impose an obligation on liability insurers to pay interest on a judgment in excess of the insurer's policy limits, but rather, such an obligation " is governed by the terms of the [insurance] policy." The Court of Appeals believed that Sproles was distinguishable on the ground that Sproles held that a " UIM carrier is not required to pay pre and post-judgment interest on behalf of the insured where the judgment has been entered against the insured." Lunsford, N.C.App. at, 747 S.E.2d at 395 (citing Sproles, 329 N.C. at 605, 407 S.E.2d at 498). Here, in contrast, " the judgment was entered against Farm Bureau itself, not against its insured (Plaintiff)." Id. at __, 747 S.E.2d at 395. Thus the court concluded that Sproles " ha[d] no bearing on the case at hand" and upheld the trial court's award of interest and costs. Id. at __, 747 S.E.2d at 395 (2013).
Farm Bureau petitioned this Court for discretionary review of the Court of Appeals' decision regarding both the UIM coverage and the judgment interest issues. We allowed Farm Bureau's petition with respect to
both questions. 367 N.C. 259, 749 S.E.2d 843 (2013).
Standard of Review
Under Rule 56(c) of the North Carolina Rules of Civil Procedure, summary judgment is appropriate when the record establishes that there are no genuine issues of material fact and that any party is entitled to judgment as a matter of law. N.C. R. Civ. P. 56(c); e.g., In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008). Here the parties have stipulated to the material facts, and therefore, the only question for our consideration is whether either party is entitled to judgment as a matter of law. Answering this question primarily involves interpretation of the Motor Vehicle Safety and Financial [367 N.C. 623] Responsibility Act of 1953 (commonly referred to as the " FRA" ), N.C.G.S. § § 20-279.1 through -279.39 (2013), and examination of the terms of Farm Bureau's motor vehicle insurance policy, each a question of law. See Brown v. Flowe, 349 N.C. 520, 523, 507 S.E.2d 894, 896 (1998) ( " A question of statutory interpretation is ultimately a question of law for the courts." ); Wachovia Bank & Trust v. Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970) (observing that the interpretation of " the language used in [a] policy of insurance" is " a question of law" ). This Court reviews questions of law de novo, meaning that we consider the matter anew and freely substitute our judgment for the judgment of the lower court. In re Greens of Pine Glen Ltd. P'ship, 356 N.C. 642, 647, 576 S.E.2d 316, 319 (2003) (citation omitted).
Underinsured Motorist Coverage
The parties' principal dispute centers on the proper interpretation of subdivision 20-279.21(b)(4), the FRA's provision governing UIM coverage. The primary objective of statutory interpretation is to ascertain and effectuate the intent of the legislature. Burgess v. Your House of Raleigh, Inc., 326 N.C. 205, 209, 388 S.E.2d 134, 137 (1990). " If the language of the statute is clear and is not ambiguous, we must conclude that the legislature intended the statute to be implemented according to the plain meaning of its terms." Hyler v. GTE Prods. Co., 333 N.C. 258, 262, 425 S.E.2d 698, 701 (1993) (citations omitted), superseded in part by statute, Workers' Compensation Reform Act of 1994, ch. 679, sec. 2.5, 1993 N.C. Sess. Laws 394, 399-400, as recognized in N.C. Ins. Guar. Ass'n v. Bd. of Trs., 364 N.C. 102, 691 S.E.2d 694 (2010). Thus, in effectuating legislative intent, it is our duty to give effect to the words actually used in a statute and not to delete words used or to insert words not used. N.C. Dep't of Corr. v. N.C. Med. Bd., 363 N.C. 189, 201, 675 S.E.2d 641, 649 (2009); accord In re Banks, 295 N.C. 236, 239, 244 S.E.2d 386, 388-89 (1978) (" [C]ourts must give [a clear and unambiguous] statute its plain and definite meaning, and are without power to interpolate, or superimpose, provisions and limitations not contained therein." ).
The first paragraph of subdivision 20-279.21(b)(4) defines the term " underinsured highway vehicle" as
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 [367 N.C. 624] underinsured motorist coverage ...