N.C. Farm Bureau Mut. Ins. Co. v. Martin

376 N.C. 280

851 S.E.2d 891

NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY, INC.

v.Marina MARTIN, BY AND THROUGH her natural parent and guardian Jean O. MARTIN, Jean O. Martin, individually, and David M. Martin

No. 391A19

Supreme Court of North Carolina.

Filed December 18, 2020

Breit Cantor Grana Buckner, PLLC, by Jeffrey A. Breit, for defendant-appellants.

Young, Moore, and Henderson, P.A., by Walter E. Brock, Jr., Andrew P. Flynt, Raleigh, and Matthew C. Burke, for plaintiff-appellee.

Pinto Coates Kyre & Bowers, PLLC, by Jon Ward and Paul D. Coates, Greensboro, and Ann C. Ochsner, Raleigh, for amicus curiae North Carolina Advocates for Justice.

George L. Simpson, IV, for amicus curiae North Carolina Association of Defense Attorneys.

DAVIS, Justice.

In this case, we must determine whether defendants are afforded underinsured motorist and medical payments coverage under an insurance policy issued by the plaintiff insurance company to a family member. Because we conclude the trial court properly determined that defendants are not entitled to coverage under the policy, we affirm the decision of the Court of Appeals.

Factual and Procedural Background

This case arises from a car accident that occurred in Virginia Beach, Virginia, involving defendants Jean Martin (Jean) and Marina Martin (Marina). Marina is the teenage daughter of Jean and David Martin (David). On 6 January 2014, Jean was driving her 1994 Ford automobile with Marina in the passenger seat. Jean was crossing a four-way intersection when a vehicle driven by a third party, Santiago Livara, struck her car. Jean and Marina were both injured in the collision.

Jean and Marina subsequently sued Livara for negligence in the Virginia Beach Circuit Court. The parties eventually reached a settlement in which Livara's liability insurer paid its maximum liability coverage limits in the amount of $25,000 to both Jean and Marina.

Jean and Marina also sought additional coverage under two different automobile insurance policies issued by plaintiff North Carolina Farm Bureau Mutual Insurance Company, Inc. (Farm Bureau) to members of the Martin family. The first policy bore policy number APM-3887419 and was issued by Farm Bureau to David and Jean for the coverage period of 19 October 2013 to 19 February 2014. This policy identified David and Jean as the named insureds and listed three covered vehicles, including the Ford automobile that Jean was driving at the time of the accident. The policy provided medical payments coverage of up to $1,000 per person and uninsured/underinsured motorist coverage of up to $50,000 per person/$100,000 per accident. Because Jean and Marina both qualified as "insureds" under this policy, Farm Bureau paid the applicable policy limits of $1,000 each to Jean and Marina under the medical payments coverage and $25,000 each to Jean and Marina under the underinsured motorist coverage.

In addition, Jean and Marina asserted that they were also entitled to medical payments and underinsured motorist coverage under a second Farm Bureau policy. This second policy (the Policy) is the subject of this appeal and bore policy number APM-3482146. The Policy was issued by Farm Bureau to Mary Martin (Mary), who is the mother of David and the paternal grandmother of Marina. The Policy was issued for the period encompassing 13 October 2013 to 13 April 2014. The Policy designated Mary as the named insured, identified two covered drivers (Mary and her late husband William), and listed one covered vehicle.¹ The Policy provided medical payments coverage of up to $1,000 per person and uninsured/underinsured motorist coverage of up to $100,000 per person/$300,000 per accident. The Policy contained the following provisions that are relevant to this appeal:

DEFINITIONS

Throughout this policy, "you" and "your" refer to:

1. The "named insured" shown in the Declarations; and

2. The spouse if a resident of the same household.

....

"Family member" means a person related to you by blood, marriage, or adoption who is a resident of your household. This includes a ward or foster child.

....

PART B — MEDICAL PAYMENTS COVERAGE

INSURING AGREEMENT

We will pay reasonable expenses incurred for necessary medical and funeral services because of bodily injury:

1. Caused by accident; and

2. Sustained by an insured.

....

"Insured" as used in this Part means:

1. You or any family member;

a. while occupying; or b. as a pedestrian when struck by;

a motor vehicle designed for use mainly on public roads or a trailer of any type.

....

PART C2—COMBINED UNINSURED/UNDERINSURED MOTORISTS COVERAGE

INSURING AGREEMENT

We will pay compensatory damages which an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of:

1. Bodily injury sustained by an insured and caused by an accident; ...

....

We will also pay compensatory damage which an insured is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by an insured and caused by an accident.

....

Insured as used in this Part means:

1. You or any family member.

....

Jean and Marina asserted that they were covered under the Policy because they were "family members" of Mary Martin—that is, they were related to Mary and were "residents" of her "household." Farm Bureau disputed coverage and filed a declaratory judgment action on 13 April 2015 in Superior Court, Wake County, against Marina, Jean, and David (defendants) seeking a declaration that they were not entitled to coverage under Mary's policy because they were not "residents" of Mary's "household" at the time of the accident. On 16 March 2016, defendants filed a motion for summary judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. On 20 April 2016, a consent order was entered transferring the case to Superior Court, Currituck County. Farm Bureau filed a cross-motion for summary judgment on 19 May 2017.

The evidence before the trial court at the summary judgment stage did not contain any material factual disputes. On the date of the accident, Mary was the sole owner of the Martin Farm, a 76-acre property located on Knotts Island, North Carolina, that contained two separate houses located on the property. At all relevant times, Mary lived in the "main house" on the farm, while defendants lived in a separate "guest house" that was also situated on the farm. Both residences were owned by Mary, and Mary never charged defendants rent to live in the guest house.

The houses shared a single driveway but were both stand-alone structures located approximately 100 feet from one another. Each residence was visible from the other, and it took approximately 3-5 minutes to walk between them. The houses had different street addresses. Mary's home was located at 213 Martin Farm Lane, while the address of defendants’ residence was 224 Bay Orchard Lane. Defendants and Mary maintained separate post office boxes for the receipt of mail, but packages for both defendants and Mary were delivered to Mary's house. With the exception of occasional overnight stays (such as when a power outage occurred at one of the two houses), defendants and Mary lived separately in their respective homes at all relevant time periods.

Defendants visited with Mary almost every day, ate meals together, and performed chores for each other. Defendants possessed keys to Mary's house and were granted unlimited access to enter her residence. Mary had the same right of access to defendants’ house. At all relevant times, David and Jean worked on the Martin Farm, managing the crops and the winery. David and Jean, in turn, received a weekly salary—contingent upon there being sufficient funds available in the farm's bank account after all farm-related bills were paid.

The Martin Farm was operated as a limited liability company (LLC). Mary maintained a business checking account in the name of the LLC, which she used to pay most of the bills for the farm. The salaries of Jean and David were paid by the LLC. The utility bills and property taxes for both houses as well as the cost of repairs for both residences were also paid by the LLC. Additionally, the LLC paid for some of the personal expenses of defendants, including their gas, internet, and cell phone bills. However, defendants paid for their remaining personal expenses such as life insurance, groceries, cable, and clothing.

Beginning in 2013—approximately a year before the accident—Mary began staying for extended periods of time with her son Wayne in Virginia Beach while she received medical treatment for cancer. As Mary's health worsened, she was increasingly unable to travel back and forth between North Carolina and Virginia and had to remain primarily at Wayne's house in Virginia Beach. At that point, she started having all of her personal mail sent to Wayne's house—although farm-related mail was still sent to her North Carolina home.

A hearing was held on the parties’ summary judgment motions on 21 August 2017. On 28 September 2017, the trial court entered summary judgment in favor of Farm Bureau after concluding as a matter of law that defendants were not entitled to coverage under the Policy.

Defendants appealed to the Court of Appeals, which affirmed the trial court's order in a divided decision. In its opinion, the Court of Appeals majority concluded that defendants did not qualify as "residents" of Mary's "household" and, accordingly, were not covered under the Policy. Judge Inman dissented, stating her belief that defendants and Mary were all part of the same household and asserting that the majority's opinion conflicted with the Court of Appeals’ prior decision in N.C. Farm Bureau Mut. Ins. Co. v. Paschal , 231 N.C. App. 558, 752 S.E.2d 775 (2014). On 8 October 2019, defendants filed a notice of appeal with this Court based upon the dissent.

Analysis

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the...