N.C. Farm Bureau Mut. Ins. Co., Inc. v. Hebert

898 S.E.2d 718

NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC.

v.Matthew Bryan HEBERT

No. 281A22

Supreme Court of North Carolina.

Filed March 22, 2024

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 285 N.C. App. 159, 877 S.E.2d 400 (2022), affirming an order denying plaintiff’s motion for judgment on the pleadings and granting judgment on the pleadings for defendant entered on 21 December 2021 by Judge Vince M. Rozier, Jr., in Superior Court, Wake County. On 1 March 2023, the Supreme Court allowed plaintiff’s petition for discretionary review as to additional issues pursuant to N.C.G.S. § 7A-31. Heard in the Supreme Court on 21 February 2024.

Lipscomb Law Firm, Wilkesboro, by William F. Lipscomb, for plaintiff-appellant.

Law Offices of James Scott Farrin, by Preston W. Lesley, for defendant-appellee.

Pinto Coates Kyre & Bowers, PLLC, by Jon Ward and Paul D. Coates, Greensboro, and Law Offices of C. Douglas Maynard, Jr., PLLC, Winston-Salem, by C. Douglas Maynard, Jr., for North Carolina Advocates for Justice, amicus curiae.

NEWBY, Chief Justice.

Pursuant to subdivision 20-279.21(b)(4) of the Motor Vehicle Safety and Financial Responsibility Act of 1953 (FRA), a claimant’s underinsured motorist (UIM) coverage must be "activated" for his UIM claim to proceed. At the "activation stage," the claimant must show that the tortfeasor’s car satisfies one of the statutory definitions of an "underinsured highway vehicle." Generally, a tortfeasor’s vehicle is an underinsured highway vehicle if the tortfeasor’s liability limits are less than the claimant’s "applicable limits of [UIM] coverage for the vehicle involved in the accident and insured under the owner’s policy." N.C.G.S. § 20-279.21(b)(4) (2019). If an accident results in more than one injured person, the tortfeasor’s vehicle may also qualify as an underinsured highway vehicle if "the total amount [of liability coverage] actually paid to" a single claimant is less than that claimant’s "applicable limits of [UIM] coverage for the vehicle involved in the accident and insured under the owner’s policy." Id.¹

[1] In this case we must determine whether defendant, who owned the at-fault vehicle but was not the tortfeasor, may stack multiple UIM coverage limits inter-policy—including those that do not insure the vehicle involved in the accident—to qualify his vehicle as an underinsured highway vehicle for his UIM claim brought under his policy insuring his vehicle. Although the FRA is to be "liberally construed" to accomplish its remedial purpose, this Court may only employ that canon of construction if the FRA’s plain language is ambiguous or susceptible to multiple reasonable interpretations. Here we conclude that subdivision 20-279.21(b)(4)’s plain language is clear and unambiguous: the only UIM limits that may be considered at the activation stage are those "for the vehicle involved in the accident and insured under the owner’s policy." Id. Accordingly, we conclude that the Court of Appeals erred when it permitted defendant to "stack and compare" at the activation stage—that is, when it allowed defendant to aggregate inter-policy all of the UIM policies available to defendant, regardless of their connection to the car involved in the accident, before comparing his UIM limits to the at-fault vehicle’s liability limits.

Without inter-policy stacking, defendant’s vehicle, which was the at-fault vehicle, does not qualify as an underinsured highway vehicle for purposes of defendant’s UIM claim brought under his own policy. Accordingly, we reverse the decision of the Court of Appeals and remand this case with instructions to remand the matter to the trial court for entry of judgment on the pleadings in plaintiff’s favor.

[2–5] In 2020, defendant owned a 2004 Chevrolet Malibu.² Plaintiff issued defendant a personal automobile policy covering defendant’s car. Defendant’s policy provided liability coverage with limits of $50,000.00 per person and $100,000.00 per accident. It also provided UIM coverage with limits of $50,000.00 per person and $100,000.00 per accident. Additionally, defendant was named as an insured on his parents’ personal automobile policy, which was also issued by plaintiff. Defendant qualified for UIM coverage under his parents’ personal auto policy, which provided UIM coverage with limits of $100,000.00 per person and $300,000.00 per accident. Defendant’s parents’ policy, however, did not insure defendant’s car.³

On 21 October 2020, Sincere Terrell Corbett was driving defendant’s car, and defendant, Chase Everette Hawley, and Jamar Direll Hicks, Jr., were passengers. Defendant’s car collided with another vehicle, which was owned and operated by William Rayvoin Coats.⁴ As a result of that collision, Corbett and Hicks died, and defendant and Hawley sustained significant injuries. Coats was also injured.⁵ Neither party disputes that defendant’s car was the at-fault vehicle and that Corbett, not defendant, was the tortfeasor.

After the accident, plaintiff tendered the $100,000.00 per accident limit of liability coverage under defendant’s policy, and the four claimants agreed to divide the payout as follows: $49,500.00 to Hicks’s estate, $49,500.00 to Hawley, $900.00 to Coats, and $100.00 to defendant. Plaintiff also paid defendant $99,900.00 in UIM coverage under defendant’s parents’ policy.⁶

On 29 July 2021, plaintiff filed a complaint seeking a judgment declaring that defendant’s UIM coverage under his policy is unavailable because defendant’s car, as the at- fault vehicle, does not qualify as an underinsured highway vehicle for his UIM claim brought under his own policy. On 15 Septem- ber 2021, defendant filed his answer, requesting that he be paid the UIM coverage under his policy insuring his car. On 30 September 2021, plaintiff moved for judgment on the pleadings pursuant to North Carolina Rule of Civil Procedure 12(c). On 20 December 2021, the trial court denied plaintiff’s motion for judgment on the pleadings, and it granted judgment on the pleadings for defendant. Plaintiff appealed.

The Court of Appeals affirmed in a divided decision. N. C. Farm Bureau Mut. Ins. Co. v. Hebert, 285 N.C. App. 159, 165, 877 S.E.2d 400, 404 (2022). "[G]uided by the ‘avowed purpose’ of the Financial Responsibility Act," the majority declined to construe subdivision 20-279.21(b)(4) "in a manner that would … limit the recovery of innocent occupants of a tortfeasor’s vehicle." Id. at 163–64, 877 S.E.2d at 403–04. Applying the stack and compare rule, the majority permitted defendant to "stack" his own policy’s UIM limits with his parents’ policy’s UIM limits before comparison to defendant’s policy’s liability limits. Id. at 163–65, 877 S.E.2d at 403–04 (first citing N.C. Farm Bureau Mut. Ins. Co. v. Bost, 126 N.C. App. 42, 50–51, 483 S.E.2d 452, 458 (1997), and then citing Nationwide Affinity Ins. Co. of Am. v. Le Bei, 259 N.C. App. 626, 630, 816 S.E.2d 251, 254 (2018)). After doing so, the majority concluded that defendant’s car satisfied subdivision 20-279.21(b)(4)’s general definition of an underinsured highway vehicle,⁷ thus activating his policy’s UIM coverage. See id. at 164–65, 877 S.E.2d at 403–04. Furthermore, the majority reasoned that subdivision 20-279.21(b)(4)’s "multiple claimant exception" did not apply to defendant’s UIM claim simply because there were multiple injuries in the accident.⁸ Id. at 164, 877 S.E.2d at 404 (citing Integon Nat’l Ins. Co. v. Maurizzio, 240 N.C. App. 38, 44, 769 S.E.2d 415, 420 (2015)). Because it concluded that the multiple claimant exception did not apply, the majority further stated that the multiple claimant exception’s caveat sentence⁹ did not prevent defendant’s vehicle from qualifying as an underinsured motor vehicle for his claim under his policy insuring that car. Id. Accordingly, the majority affirmed the judgment on the pleadings in defendant’s favor. Id. at 165, 877 S.E.2d at 404.

Conversely, the dissent first concluded that defendant’s car did not qualify as an underinsured highway vehicle under subdivision 20-279.21(b)(4)’s general definition because the liability limits of defendant’s policy covering his car were equal to its UIM limits. Id. at 165, 877 S.E.2d at 404–05 (Arrowood, J., dissenting). The dissent then considered the multiple claimant exception and similarly concluded that defendant’s car did not qualify as an underinsured highway vehicle for purposes of his UIM claim brought under his own policy insuring his car because his policy’s liability limits were the same as the UIM limits. Id. at 165–66, 877 S.E.2d at 405. Although the dissent recognized that "inter-policy stacking is generally permitted," id. at 167, 877 S.E.2d at 405, it believed that "in this particular type of claim"—namely, UIM claims under the owner’s policy insuring the at-fault vehicle involved in the accident—"[t]he General Assembly … specifically confined the limit coverage comparison to the owner’s policy," id. at 166–67, 877 S.E.2d at 405. Therefore, reasoning that "consider[ation of] multiple insurance policies in this particular type of claim is impermissible pursuant to [subdivision 20-279.21(b)(4)]," id. at 167, 877 S.E.2d at 405, the dissent would have reversed the trial court’s order, id. at 167, 877 S.E.2d at 406.

Plaintiff appealed based on the dissent.¹⁰ This Court also allowed plaintiff’s petition for discretionary review, wherein plaintiff sought review of the application of the stack and compare rule.

[6–8] "After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." N.C.G.S. § 1A-1, Rule 12(c) (2021). "A Rule 12(c) movant must show that ‘the [pleading] … fails to allege facts sufficient to state a cause of action or admits facts which constitute a complete legal bar’ to a cause of action." CommScope Credit Union v. Butler & Burke, LLP, 369 N.C. 48, 51, 790 S.E.2d 657, 659 (2016) (ellipsis in ...