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Nationwide Property and Casualty Insurance Co. v. Smith

Court of Appeals of North Carolina

November 21, 2017

NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY; NATIONWIDE MUTUAL INSURANCE COMPANY; AND NATIONWIDE INSURANCE COMPANY OF AMERICA, Third-Party Plaintiffs,
v.
TIMOTHY W. SMITH and TIMOTHY R. SMITH, Third-Party Defendants.

          Heard in the Court of Appeals 7 September 2017.

         Appeal by Third-Party Plaintiffs from order entered 2 December 2016 by Judge Phyllis M. Gorham in Duplin County Superior Court, No. 14 CvS 380.

          Marshall, Williams & Gorham, L.L.P, by William Robert Cherry, Jr., for the Third-Party Plaintiffs-Appellants.

          Donald E. Clark, Jr., Attorney at Law, PPLC, by Donald E. Clark, Jr., for the Third-Party Defendants-Appellees.

          DILLON, JUDGE.

         The Third-Party Plaintiffs (collectively "Nationwide") appeal from an order of the trial court dismissing their Third-Party Complaint pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.

         I. Background

         Plaintiffs George Olsen, Sr., and his wife, Sharon N. Olsen, purchased a personal automobile underinsurance motorist insurance policy from Nationwide.

         This policy provided coverage to the Olsens should they be injured by an at-fault driver whose liability coverage limits were too low to cover their damages.

         In late 2013, Mr. Olsen was walking by the side of the road when he was struck by a car driven by Skylar Wellington ("Defendant"). Defendant had lost control of her vehicle and drifted off of the paved portion of the street. About three hours after the accident, Defendant's blood alcohol concentration was tested and registered a blood alcohol level of .15.

         In 2014, Plaintiffs filed this action against Defendant and Nationwide. Nationwide filed a third-party complaint against Timothy W. Smith and Timothy R. Smith, alleging that the Smiths had negligently served Defendant alcohol and allowed her to drive.[1] Nationwide sought contribution from the Smiths for a portion of their alleged common liability for Plaintiffs' injuries.

         Defendant's auto liability carrier offered the full limit of their liability coverage to Plaintiffs in exchange for Plaintiffs' execution of a covenant not to enforce judgment. Defendant's liability carrier was thus released from further liability and was not obligated to participate in the lawsuit.

         Plaintiffs then negotiated a settlement with Nationwide for $850, 000. Following the settlement, Plaintiffs signed a release of all claims and filed a voluntary dismissal of their complaint with prejudice. Accordingly, the only remaining issue in the case was Nationwide's third-party complaint against the Smiths, who had allegedly served Defendant alcohol shortly before the accident.

         The Smiths' moved to dismiss Nationwide's third-party complaint for contribution. The trial court granted the Smiths' motion based on Rule 12(b)(6) for failure to state a claim upon ...


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