in the Court of Appeals 7 May 2019.
by petitioner from order entered 6 September 2018 by Judge R.
Allen Baddour, Jr. in Wake County Superior Court. No. 17 CVS
Moore and Henderson, P.A., by Walter E. Brock, Jr. and Angela
Farag Craddock, for petitioner-appellant.
Poe Adams & Bernstein LLP, by Catharine Biggs Arrowood,
North Carolina Reinsurance Facility ("petitioner"
or "the Facility") appeals from the superior
court's order denying petitioner's petition for
review and affirming an order of the North Carolina
Commissioner of Insurance ("the Commissioner") that
reversed petitioner's denial of a reimbursement to
Allstate Indemnity Company ("respondent" or
"Allstate"). For the reasons that follow, we
reverse and remand.
October 2007, Allstate issued an automobile insurance policy
to Mr. Jason T. Crouse ("Mr. Crouse") that was
ceded to the Facility, "a nonprofit unincorporated legal
entity . . . consisting of all insurers licensed to write and
engaged in writing within this State motor vehicle insurance
or any component thereof[, ]" N.C. Gen. Stat. §
58-37-5 (2017), "which insures drivers who the insurers
determine they do not want to individually insure."
Discovery Ins. Co. v. N.C. Dep't of Ins., __
N.C.App. __, __, 807 S.E.2d 582, 585 (2017) (citation and
internal quotation marks omitted).
Crouse purchased this policy through Allstate agent Ms.
Jeannie Scott ("Ms. Scott") in North Carolina. Less
than a month later, on 2 November 2007, Mr. Crouse was
involved in an automobile accident in Clearwater, Florida.
Mr. Crouse's vehicle collided with a bicycle operated by
a minor, Mr. Matthew R. Hanna ("Mr. Hanna"). Mr.
Hanna suffered traumatic brain damage and other serious
Crouse reported the accident to Ms. Scott on 5 November 2007.
She informed him that he had to call a 1-800-Allstate
telephone number to report the loss. However, there is no
indication in the record that Mr. Crouse ever called the
1-800-Allstate telephone number, nor that Allstate received
any additional notice of the claim until after Mr.
Hanna's parents had hired counsel. The Hannas filed a
complaint against Mr. Crouse in Florida state court on 15
January 2008, seeking damages from the accident.
January 2008, a paralegal in the law office representing the
Hannas called the 1-800-Allstate telephone number to report
the claim, but did not notify Allstate that legal action had
commenced against Mr. Crouse. Allstate opened a claim file
and began investigating the claim that same day. The adjuster
assigned to the case interviewed Mr. Crouse, hired counsel to
represent him, and created an accident reconstruction. Within
five days, Allstate authorized the tender of the policy limit
of $50, 000.00 to the Hannas on 23 January 2008. Allstate
formally tendered this offer on 1 February 2008. The Hannas
rejected this offer on 14 February 2008.
Crouse entered into a stipulated settlement with the Hannas
on 6 September 2012, whereby he consented to the entry of a
$13, 800, 000.00 judgment against him and assigned his
"claims, rights, and interests in the policy . . . as
against Allstate . . . for any failure to settle or otherwise
administer his automobile claims arising out of the
Accident." As part of this settlement, the Hannas agreed
not to take affirmative actions to record or execute the
judgment against Mr. Crouse. The final judgment was entered
on 7 September 2012.
Hannas filed a complaint against Allstate in the Middle
District of Florida on 10 September 2012. The complaint
alleged Allstate breached its duty of good faith to Mr.
Crouse by failing to: (1) timely and reasonably affirmatively
seek out a settlement of the claims in the Hanna matter; (2)
communicate the exposure Mr. Crouse faced, and to offer
advice on how to minimize this exposure; and (3) adopt and
implement standards and procedures for timely and proactive
investigation and resolutions of claims and/or failing to
follow such standards Allstate had adopted. The matter went
to trial, and the jury returned a verdict on 3 March 2014
that determined Allstate had acted in bad faith by failing to
settle the claims arising out of the Hanna matter. The trial
court entered a $13, 800, 000.00 judgment against Allstate on
4 February 2014. Allstate appealed the judgment, but
eventually settled the matter on 29 September 2015 for $11,
filed a petition for reimbursement with the Facility on 30
October 2015. The Facility's claims committee heard the
matter on 1 February 2017. On 9 May 2017, the claims
committee recommended the denial of Allstate's petition.
Allstate objected to the claims committee's
recommendation, and requested a hearing before the
Facility's Board ("the Board"). The Board heard
the matter, and denied the petition for reimbursement on 14
appealed to the Commissioner pursuant to N.C. Gen. Stat.
§ 58-37-65(a) (2017). The matter came on for hearing
before the Commissioner's designated hearing officer,
Hearing Officer A. John Hoomani, Esq., on 30 October 2017.
The Commissioner ordered the Board to reconsider its ruling
because its denial of Allstate's petition was not in
accordance with the Facility Act, the Facility's Plan of
Operation, and the Facility's Standard Practice Manual.
Facility petitioned for judicial review of the
Commissioner's order on 21 December 2017, and named both
Allstate and the Commissioner as a respondent on appeal. The
Commissioner moved to dismiss himself as a party.
matter came on for hearing before the Honorable R. Allen
Baddour, Jr. on 31 July 2018 in Wake County Superior Court.
The trial court granted the Commissioner's motion to
dismiss, entered an order denying the Facility's petition
for review, and affirmed the Commissioner's order.
argues the trial court erred by affirming the
Commissioner's order because the Commissioner: (1) failed
to apply paragraph C.2. of Section 5 of the Facility's
Standard Practice Manual ("Rule 5.C.2.") according
to its plain meaning; and (2) erroneously determined
petitioner's grounds for the denial of Allstate's
petition were not in accordance with the Facility Act, the
Facility's Plan of Operation, and the Facility's
Standard Practice Manual. We agree with petitioner that the
superior court's affirming the Commissioner was error due
to failure to apply Facility Rule 5.C.2. according to its
plain meaning. Therefore, we reverse and remand, and do not
reach the second issue on appeal.