Appeal by plaintiffs from order entered 28 March 2000 by Judge
J. Marlene Hyatt in Haywood County Superior Court. Heard in the
Court of Appeals 19 April 2001.
Van Winkle, Buck, Wall, Starnes and Davis, P.A., by Allan R.
Tarleton, for plaintiff-appellants.
McGuire, Wood & Bissette, P.A., by Joseph P. McGuire; and
Sonnenschein Nath & Rosenthal, by Mark L. Hanover, for
defendant-appellee.
MARTIN, Judge.
Plaintiff Charles B. Prentiss, III, was involved in a two-car
motor vehicle accident in Haywood County on 22 September 1997;
both cars sustained damage but neither party was injured.
Plaintiff was cited for operating a motor vehicle “by failing tosee before turning from a direct line that such movement could be
made in safety.” The charge was dismissed in the District Court of
Haywood County without adjudication.
At the time of the accident, plaintiff was covered by an
automobile insurance policy issued by defendant Allstate Insurance
Company. Defendant determined that plaintiff was at fault in the
accident. Because the property damage exceeded $2,000, defendant
eliminated plaintiff's safe driver discount and imposed a premium
surcharge for three driving record points in accordance with the
North Carolina Safe Driver Incentive Plan. Plaintiffs paid the
increased premium under protest.
Plaintiffs filed a class action complaint in Haywood County on
1 February 1999 asserting: (1) a private insurer's determination
of fault with the imposition of increased premiums is an
unconstitutional delegation of judicial power prohibited by Article
IV, Section 1 of the Constitution of the State of North Carolina;
(2) the imposition of increased premiums without adjudication of
fault is an unconstitutional civil penalty prohibited by Article I,
Section 19 of the Constitution of North Carolina; and, (3) the
North Carolina Rate Bureau has not provided reasonable means for a
person to dispute the insurer's determination of fault as required
by G.S. § 58-36-1(2) and § 58-36-65(h). Plaintiffs sought
reimbursement of the premium surcharges assessed and other
injunctive or equitable relief as appropriate. Defendant removed
the action to the United States District Court for the Western
District of North Carolina, and filed a motion to dismiss. The
magistrate judge issued a memorandum and recommendation, which wasadopted by the District Court, and the case was remanded back to
state court on 9 November 1999 pursuant to the Burford abstention
doctrine on the grounds that federal review would disrupt the
state's efforts to establish a coherent automobile insurance
policy. Prentiss v. Allstate Insurance Co., 87 F.Supp.2d 514
(W.D.N.C. 1999) (citing Burford v. Sun Oil Co., 319 U.S. 315, 87
L.Ed. 1424 (1943)). On remand to the Haywood County Superior
Court, defendant's motion to dismiss the complaint was granted on
28 March 2000. Plaintiffs appeal from the order of dismissal.
_______________________
The North Carolina Rate Bureau [hereinafter “Bureau”] was
created by G.S. § 58-36-1 to “promulgate and propose rates . . .
for insurance against theft of or physical damage to nonfleet
private passenger motor vehicles.” N.C. Gen. Stat. § 58-36-1(3).
All companies or other organizations that write insurance in North
Carolina must first subscribe to and become a member of the Bureau.
N.C. Gen. Stat. § 58-36-5. The rates proposed by the Bureau are
subject to review by the Commissioner of Insurance. N.C. Gen.
Stat. § 58-36-65(a). The statute further requires the Bureau to
file a Safe Driver Incentive Plan (SDIP) that “distinguishes among
various classes of drivers that have safe driving records and
various classes of drivers that have a record of at-fault
accidents; a record of convictions of major moving traffic
violations; a record of convictions of minor moving traffic
violations; or a combination thereof; and that provides for premium
differentials among those classes of drivers”; this plan alsorequires the approval of the Commissioner. N.C. Gen. Stat. § 58-
36-65(b).
Plaintiffs challenge the insurer's assessment of driving
record points pursuant to the SDIP because they contend G.S. § 58-
36-65 requires insurers to make determinations that an insured was
at-fault in an accident when there has been no adjudication of
fault, and that this requirement is an unconstitutional delegation
of judicial power. We conclude, however, the underlying substance
of plaintiffs' claim is an attack on the rates system, rather than
a constitutional challenge to the statute. Instructive to this
Court in reaching this conclusion is the fact that plaintiffs have
opted to bring the action against Allstate, the insurer who made
the at-fault determinations in dispute, instead of suing the State
which is enforcing the allegedly unconstitutional provision. Such
course of action appears to us inconsistent with plaintiffs'
contention that this suit is not a challenge to the rates system
but instead a challenge to the constitutionality of a statute.
Thus, because the substance of the claim is an attack on the
rates system, we must consider whether the action is properly
before the courts. G.S. § 150B-43 provides for judicial review of
administrative actions and states:
Any person who is aggrieved by the final
decision in a contested case, and who has
exhausted all administrative remedies made
available to him by statute or agency rule, is
entitled to judicial review of the decision
under this Article.
N.C. Gen. Stat. § 150B-43. This section requires that a plaintiff
first exhaust all administrative remedies prior to bringing thematter before the courts. The administrative remedy set out by
Chapter 58 for plaintiff in this case is contained in G.S. § 58-36-
65(h), which states:
If an insured disputes his insurer's
determination that the operator of an insured
vehicle was at fault in an accident, such
dispute shall be resolved pursuant to G.S. 58-
36-1(2), unless there has been an adjudication
or admission of negligence of such operator.
N.C. Gen. Stat. § 58-36-65(h). G.S. § 58-36-1(2) provides “[t]he
Bureau shall provide reasonable means to be approved by the
Commissioner whereby any person affected by a rate or loss costs
made by it may be heard in person or by the person's authorized
representative before the governing committee or other proper
executive of the Bureau.” There is no evidence in the record in
this case to show any attempt by plaintiffs to dispute the at-fault
determination by seeking the recourse provided under the statute,
nor is there evidence that plaintiffs have sought review of the
determination pursuant to the provisions in Article 3A of the
Administrative Procedure Act (APA).
See N.C. Gen. Stat. § 150B-38.
However, plaintiffs argue they are not required to exhaust
their administrative remedies because no agency decision is at
issue and the APA, therefore, does not apply. Instead, plaintiffs
contend they are challenging a statute enacted by the legislature,
and an action by Allstate, a non-agency, in complying with that
statute. This Court must, therefore, determine which source has
given the insurer the power to make a unilateral determination of
an insured's fault: the legislature or an agency.
Plaintiffs contend that G.S. § 58-36-65(h), cited above,requires insurers to make at-fault determinations wher
e there has
been no adjudication of the issue. In interpreting a statute, we
must “give effect to the intent of the legislature.”
Whitman v.
Kiger, 139 N.C. App. 44, 46, 533 S.E.2d 807, 808 (2000),
affirmed,
353 N.C. 360, 543 S.E.2d 476 (2001). “'Where the language of a
statute is clear and unambiguous, there is no room for judicial
construction[,] and the courts must give [the statute] its plain
and definite meaning, and are without power to interpolate, or
superimpose, provisions and limitations not contained therein.'”
Walker v. Board of Trustees of the North Carolina Local,
Governmental Employees' Retirement System, 348 N.C. 63, 65-66, 499
S.E.2d 429, 430-31 (1998) (quoting
State v. Camp, 286 N.C. 148,
152, 209 S.E.2d 754, 756 (1974)). The plain and definite meaning
of the terms of G.S. § 58-36-65(h) make evident that the
legislature's intent in enacting this provision was to provide a
remedy for an insured to challenge an insurer's at-fault
determination. To hold that the intent of the statutory provision
is to require insurers to make at-fault determinations would force
us to interpolate additional meaning, which we cannot do.
We agree with defendant that the SDIP is the source of the
requirement that insurers make determinations that an insured was
at-fault where there has been no adjudication of fault. The SDIP
is applied in rating all eligible autos, including private
passenger cars and some pickup trucks or vans owned by an
individual or household. SDIP Rule 5A. It requires that insurers
assess driving record points for various automobile-relatedconvictions. SDIP Rule 5B1a. For example, the rule requires
insurers to assess four points where the insured was convicted of
“driving a motor vehicle in a reckless manner.” SDIP Rule
5B1a(4)(b). A “conviction” is defined under the SDIP as “a plea of
guilty, or of nolo contendere or the determination of guilt by a
jury or by a court.” SDIP Rule 5B, Note (1). In a separate
provision, the SDIP requires the assessment of points for accidents
where the insured was at-fault. SDIP Rule 5B1b. For example, the
rule requires that an insurer assess three points “for each at-
fault accident that results in . . . [t]otal damage to all property
. . . of $2,000 or more.” SDIP Rule 5B1b(1). The rule further
provides:
The phrase “at-fault” means negligent. No
points shall be assigned for accidents when
the operator of an insured vehicle is free of
negligence.
SDIP Rule 5B, Note (3).
Considering the foregoing provisions together, we conclude
that the SDIP requires that insurers make determinations of fault
in automobile accidents. First, it provides that an insurer
must
assess points for an at-fault accident. Second, an “at-fault
accident” must mean one which was not adjudicated by a court
because there is a separate provision for convictions. Finally, an
insurer cannot assess points where the insured was free of
negligence. Therefore, the SDIP rule on its face necessitates that
an insurer make a determination of the insured's fault in an
accident where the issue was not adjudicated.
Because Chapter 58 requires that the SDIP be approved by theCommissioner of Insurance, we hold that this case invol
ves an
agency decision which is subject to the APA.
See North Carolina
Reinsurance Facility v. Long, 98 N.C. App. 41, 390 S.E.2d 176
(1990). We note that our conclusion accords with that reached by
the District Court, which considered a similar argument as it
pertained to the
Burford abstention doctrine.
Prentiss, 87
F.Supp.2d at 522 (rejecting plaintiffs' claim that federal review
would have no impact on a state regulatory scheme because
plaintiffs do not find fault with any specific agency action).
Accordingly, we hold that plaintiffs must first exhaust their
administrative remedies before seeking judicial review and that the
superior court did not err in dismissing the complaint. Therefore,
we do not need to address defendant's claim that the suit is also
barred by the filed rate and primary jurisdiction doctrines.
Affirmed.
Judges THOMAS and BIGGS concur.
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