1. Civil Procedure--submission of additional documents--failure to convert motion to
dismiss into motion for summary judgment
The trial court did not err by failing to convert defendants' motion to dismiss into a
motion for summary judgment in an action arising out of the alleged failure of defendant
insurance company and its agents to explain the extent of insurance coverage and the difference
between uninsured motorist coverage versus underinsured motorist coverage, because: (1) the
trial court clearly stated that none of the additional documents and a cassette tape submitted by
plaintiffs were considered by the court in its order of dismissal; and (2) our Court of Appeals has
previously held that the trial court was not required to convert a motion to dismiss into one for
summary judgment simply because additional documents were submitted.
2. Civil Procedure--consideration of supplemental materials--local rules
The trial court did not err by considering defendants' objection to plaintiffs' submission
of supplemental materials in an action arising out of the alleged failure of defendant insurance
company and its agents to explain the extent of insurance coverage and the difference between
uninsured motorist coverage versus underinsured motorist coverage, because: (1) even if
defendant's objection fell under Local Rule 11.7 concerning timeliness of filing, the trial court
has wide discretion in the application of local rules; and (2) plaintiffs have not shown the trial
court abused its discretion in considering defendants' objection
3. Insurance--automobile--UIM coverage--motion to dismiss--sufficiency of evidence
The trial court did not err by granting the motion of defendant insurance company and its
agents to dismiss plaintiffs' complaint for failure to state a claim for underinsured motorist
(UIM) coverage, because: (1) there was no genuine issue of material fact as to whether plaintiff
had UIM coverage under N.C.G.S. § 20-279.21(b)(4) since the insurance policy only provided
the minimum coverage required by statute, and UIM coverage is to be provided to policies with
limits exceeding the minimum limits unless rejected; and (2) plaintiffs are not entitled to any
benefits from defendants since plaintiffs only have uninsured motorist coverage, and the driver
and other passenger in the car were insured.
4. Insurance--automobile--UIM coverage--breach of fiduciary duty--
misrepresentation--unfair and deceptive trade practices
The trial court did not err by granting the motion of defendant insurance company and its
agents to dismiss plaintiffs' complaint for failure to state a claim for breach of fiduciary duty,
misrepresentation, and unfair and deceptive practices arising out of defendants' alleged failure to
explain the extent of insurance coverage and the difference between uninsured motorist (UM)
coverage versus underinsured motorist (UIM) coverage, because: (1) defendants had no duty to
advise plaintiff policyholder about his eligibility for UIM, nor did defendants have a duty to
increase plaintiff's underlying liability coverage so that he could obtain UIM coverage absent
plaintiff's request that defendants do so; (2) whether plaintiff would have increased the liability
limits above the statutory minimum if so advised is entirely speculative and not grounds for
overcoming a motion to dismiss; (3) the complaint does not allege that plaintiff was denied the
opportunity to investigate or that he could not have learned the requirements of UIM coverage orthe extent of plaintiff's existing coverage
by exercise of reasonable diligence; and (4) the
providing of UM coverage without UIM coverage cannot be construed as an unfair act where
N.C.G.S. § 20-279.21(b)(4) specifically authorizes eligible drivers to obtain UM coverage alone
or combined with UIM coverage.
Seth M. Bernanke for plaintiff-appellants.
Young Moore and Henderson, P.A., by R. Michael Strickland and
Glenn C. Raynor, for defendant-appellees.
HUNTER, Judge.
Plaintiffs Travis Clay Pinney (“Pinney”) and William H. Dick
(“Dick”) (collectively “plaintiffs”) appeal the trial court's order
dismissing their complaint for failure to state a claim against
defendant State Farm Mutual Automobile Insurance Company (“State
Farm”), and its agents, Eugene Davis and David Harling
(collectively “defendants”). For the reasons set forth below, we
affirm.
Plaintiffs filed a complaint against defendants on 28 January
2000, asserting negligence and/or breach of contract and unfair and
deceptive practices. In pertinent part, the complaint alleged the
following facts. Dick, Pinney's stepfather, had maintained
automobile insurance coverage through defendants continuously since
1980. Dick maintained only the statutory minimum amounts of
liability coverage under his automobile policy. In 1991, Dick
received a mailing from defendants stating that he was entitled to
receive $1,000,000.00 of additional coverage on his automobile
policy. The mailing included a rejection form, and indicated thatthe additional coverage would be added to Dick's policy if he
failed to return the rejection form. Dick did not return the
rejection form.
On 9 February 1997, Pinney was injured in an automobile
accident while a passenger in an automobile driven by Kevin Lee
Simmons and owned by Pinney's wife, Teresa Pinney. Both Simmons
and Teresa Pinney maintained automobile liability coverage, the
limits of which were tendered to Pinney. At the time of the
accident, Pinney was residing with his mother and Dick.
The complaint further alleged that it was Dick's “expectation,
intent and belief” that the additional $1,000,000.00 of coverage
which Dick accepted in 1991 would cover the types of injuries
sustained by Pinney. However, the additional coverage, as alleged
in the complaint, provided $1,000,000.00 of liability coverage for
uninsured motorists (“UM”), and no coverage for underinsured
motorists (“UIM”). Plaintiffs alleged that defendants had a
fiduciary duty to explain to Dick the extent of the coverage and
the difference between UM and UIM coverage.
On 27 March 2000, defendants filed a motion to dismiss
plaintiffs' complaint for its failure to state a claim for relief
under Rule 12(b)(6) of the Rules of Civil Procedure. The trial
court heard the motion on 3 May 2000, and entered an order
dismissing the complaint on 10 May 2000. Plaintiffs appeal.
On appeal, plaintiffs argue that the trial court erred by (1)
failing to convert defendants' motion to dismiss into a motion for
summary judgment; (2) failing to consider a cassette tape exhibit
submitted by plaintiffs in response to defendants' motion todismiss; (3) considering defendants' objection to supplemental
materials submitted by plaintiffs; (4) granting defendants' motion
to dismiss; and (5) failing to grant summary judgment in favor of
plaintiffs.
[1]Plaintiffs first argue that the trial court erred in
failing to convert defendants' motion to dismiss into a motion for
summary judgment. On a motion to dismiss under Rule 12(b)(6), if
“matters outside the pleading are presented to and not excluded by
the court, the motion shall be treated as one for summary judgment
and disposed of as provided in Rule 56.” N.C. Gen. Stat. § 1A-1,
Rule 12(b) (1999); see also, Schnitzlein v. Hardee's Food Sys.,
Inc., 134 N.C. App. 153, 157, 516 S.E.2d 891, 893, disc. review
denied, 351 N.C. 109, 540 S.E.2d 365 (1999) (motion to dismiss must
be converted into motion for summary judgment where matters outside
pleadings presented to and considered by court).
In the present case, plaintiffs submitted to the trial court
a memorandum of law including documentary and other exhibits in
opposition to defendants' 12(b)(6) motion to dismiss. On 3 May
2000, defendants submitted an objection to the trial court's
consideration of any materials outside the pleadings. The trial
court sustained the objection as to a cassette tape submitted by
plaintiffs; however, the order sustaining the objection did not
address or mention the additional documents submitted by
plaintiffs. Plaintiffs argue that there “is no reasonable
interpretation” of the order other than the trial court only
excluded the cassette tape and considered the additional documents,requiring conversion to a motion for summary judgment.
Although the order sustaining defendants' objection to
consideration of the cassette tape is ambiguous as to the
additional documents, the trial court's order dismissing the
complaint is not ambiguous. That order clearly states that in
considering defendants' motion to dismiss, the trial court
considered only “the allegations of the Complaint” and “the
arguments of counsel.” Moreover, in its order settling the record
on appeal, the trial court clearly stated that “none of the
[additional] documents and cassette tape were considered by the
Court in its order of dismissal dated May 8, 2000.”
In Privette v. University of North Carolina, 96 N.C. App. 124,
132, 385 S.E.2d 185, 189 (1989), this Court held that the trial
court was not required to convert a motion to dismiss into one for
summary judgment simply because additional documents were
submitted:
While matters outside the pleadings were
introduced, the record is clear the trial
court did not consider these affidavits in
ruling on the Rule 12 motion. The trial court
specifically stated in its order that for the
purposes of the Rule 12 motion, it considered
only the amended complaint, memoranda
submitted on behalf of the parties and
arguments of counsel.
Id. The record is equally clear in the present case that the trial
court did not consider plaintiffs' additional documents. The trial
court was not required to convert defendants' motion into one for
summary judgment. We therefore need not address whether the trial
court erred in failing to consider the cassette tape submitted byplaintiffs.
[2]Plaintiffs further argue that the trial court erred in
considering defendants' objection to plaintiffs' submission of
supplemental materials because the motion was “untimely filed”
under Local Rule 11.7 (“[a]ll briefs and supporting cases, or any
other materials intended to be used in argument or submitted to the
Court, are to be delivered . . . for filing forty-eight hours prior
to the hearing on the motion”). Even if defendants' objection fell
within the scope of Rule 11.7, the trial court has wide discretion
in the application of local rules. See Young v. Young, 133 N.C.
App. 332, 333, 515 S.E.2d 478, 479 (1999) (quoting Lomax v. Shaw,
101 N.C. App. 560, 563, 400 S.E.2d 97, 98 (1991)). Plaintiffs have
failed to show that the trial court abused its discretion in
considering defendants' motion. These assignments of error are
overruled.
[3]Plaintiffs next argue that the trial court erred in
granting defendants' motion to dismiss the complaint for failure to
state a claim upon which relief may be granted. Plaintiffs argue
that the complaint establishes that Dick was entitled to UIM
coverage, and in the alternative, that defendants breached a duty
in failing to inform Dick that he did not have UIM coverage. We
disagree.
“In reviewing the grant of a 12(b)(6) motion to dismiss, we
assess the legal sufficiency of the complaint, taking all factual
allegations as true.” Lane v. City of Kinston, 142 N.C. App. 622,
624, 544 S.E.2d 810, 813 (2001) (citing Peacock v. Shinn, 139 N.C.App. 487, 491, 533 S.E.2d 842, 846, disc. review denied, 35
3 N.C.
267, 546 S.E.2d 110 (2000)). “'A complaint cannot withstand a
motion to dismiss where an insurmountable bar to recovery appears
on its face.'” Id. (citation omitted). An insurmountable bar to
recovery may include the absence of law to support a claim, the
absence of facts sufficient to state a good claim, or the
disclosure of some fact that necessarily defeats a claim. Al-
Hourani v. Ashley, 126 N.C. App. 519, 521, 485 S.E.2d 887, 889
(1997).
Issues of UIM coverage are governed by N.C. Gen. Stat. §
20-279.21(b)(4). This statute provides that automobile liability
insurance policies “[s]hall . . . provide underinsured motorist
coverage, to be used only with a policy that is written at limits
that exceed those prescribed by subdivision (2) of this section.”
N.C. Gen. Stat. § 20-279.21(b)(4) (1999). Subdivision 2 of the
section sets forth the statutory minimum limits for an automobile
insurance policy. The plain language of this statute has been
interpreted to require a policyholder to maintain liability
coverage that is above the statutory minimum in order to be
eligible for UIM coverage. See Morgan v. State Farm Mut. Auto.
Ins. Co., 129 N.C. App. 200, 204, 497 S.E.2d 834, 836, affirmed,
349 N.C. 288, 507 S.E.2d 38 (1998) (“pursuant to subdivision
(b)(4), UIM coverage may be obtained only if the policyholder has
liability insurance in excess of the minimum statutory
requirement”).
In Morgan, we held that there existed no genuine issue ofmaterial fact as to whether plaintiff had UIM cover
age under a
State Farm policy at the time of the accident “since the policy in
question only provided the minimum statutory-required coverage” and
thus “the policy was not required to provide UIM coverage under
section 20-279.21(b)(4).” Morgan, 129 N.C. App. at 205, 497 S.E.2d
at 837. This Court recently reaffirmed this principle in McNally
v. Allstate Ins. Co., 142 N.C. App. 680, 544 S.E.2d 807 (2001). We
held that “Section 20-279.21(b)(4) clearly states UIM coverage is
to be provided to policies with limits exceeding the minimum limits
unless rejected.” Id. at 682, 544 S.E.2d at 809. Since the
plaintiff in McNally did not purchase a policy that exceeded the
minimum limits, “UIM coverage was not actually available.” Id. We
stated: “[p]laintiff was not eligible for UIM coverage at the time
the rejection was signed, and the clear textual interpretation of
the statute is that the policy at issue was simply not subject to
the provisions of N.C. Gen. Stat. § 20-279.21(b)(4).” Id.
In the present case, the face of plaintiffs' complaint reveals
that Dick was not entitled to UIM coverage. The complaint clearly
avers that Dick “maintained minimum liability limits on the
policy.” Under G.S. § 20-279.21(b)(4), defendants were prohibited
from providing Dick UIM coverage. Nor are plaintiffs entitled to
any benefits at all from defendants since plaintiffs only have UM
coverage, and both Simmons and Teresa Pinney were insured. Thus,
an insurmountable bar to recovery of UIM or UM coverage benefits
appears on the face of plaintiffs' complaint.
[4]Plaintiffs further argue that even if the complaint failsto state a claim for UIM coverage, the complaint state
s claims for
breach of fiduciary duty, misrepresentation, and unfair and
deceptive practices. Plaintiffs argue that defendants breached a
fiduciary duty to Dick by failing to inform him regarding the
extent of his coverage and explain the requirements of UIM
coverage. This Court has addressed and rejected an identical
argument.
In Phillips v. State Farm Mut. Auto. Ins. Co., 129 N.C. App.
111, 113, 497 S.E.2d 325, 327, disc. review denied, 348 N.C. 500,
510 S.E.2d 653 (1998), this Court addressed the extent of an
insurer's duty to inform a minimum limits policyholder of the
nature of UIM coverage and that the policyholder must increase the
underlying coverage above the statutory minimum limits in order to
be eligible for such coverage. We noted that “an insurance agent
has a duty to procure additional insurance for a policyholder at
the request of the policyholder.” Id. (citing Johnson v. Tenuta &
Co., 13 N.C. App. 375, 381, 185 S.E.2d 732, 736 (1972)). “The duty
does not, however, obligate the insurer or its agent to procure a
policy for the insured which had not been requested.” Id. (citing
Baldwin v. Lititz Mutual Ins. Co., 99 N.C. App. 559, 561, 393
S.E.2d 306, 308 (1990)). In holding that the trial court correctly
dismissed the plaintiff's action, we stated:
At all times relevant herein, a
policyholder could only obtain UIM coverage
when the policyholder purchased a policy of
automobile liability insurance in excess of
the minimum statutory requirement. N.C. Gen.
Stat. § 20-279.21(b)(4) (1993 & Cum. Supp.
1997); Hollar v. Hawkins, 119 N.C. App. 795,797, 460 S.E.2d 337, 338 (1995). In this
case, plaintiff had minimum liability coverage
at all times in question. We hold that, under
these circumstances, defendants had no duty to
advise plaintiff that, if he increased his
liability coverage limits, he would be
eligible for UIM coverage. We note that even
had plaintiff been so notified, it is entirely
speculative whether he would have incurred the
additional expense of increasing his liability
limits above the statutory minimum limits in
order to avail himself of the opportunity to
purchase UIM coverage.
Id. (emphasis added).
Defendants had no duty to advise Dick about his eligibility
for UIM, nor did they have a duty to increase his underlying
liability coverage so that he could obtain UIM coverage absent
Dick's request that they do so. Plaintiffs argue in their brief
that “[t]he reasonable inference from this evidence is that
Plaintiff Dick would have done what was required in order to obtain
the insurance” had defendants appropriately advised him of the
requirements for UIM coverage. However, this Court in Phillips
clearly stated that under these circumstances, whether the
plaintiff would have increased the liability limits above the
statutory minimum if so advised is “entirely speculative” and not
grounds for overcoming a motion to dismiss. Id. The complaint
fails to state a claim for breach of fiduciary duty.
Plaintiffs' claims for misrepresentation and unfair and
deceptive practices likewise fail to withstand a motion to dismiss.
Plaintiffs base their claim for misrepresentation on the allegation
in the complaint that Dick discussed the $1,000,000.00 policy with
an assistant in defendants' office, and that she told him “that thecoverage would protect [Dick] and his family up to $1,000,000.00
for injuries caused by some other person,” and that she “did not
explain what uninsured or underinsured motorist coverage was or
that there was a difference in coverages.” However, as discussed
above, defendants were not obligated to advise Dick regarding UIM
coverage and that he would be eligible for UIM coverage if he
increased his liability coverage limits. The assistant had no duty
as a matter of law to undertake to explain the requirements of UIM
coverage to Dick, absent an allegation that Dick requested such
information.
Moreover, “'[t]he tort of negligent misrepresentation occurs
when in the course of a business or other transaction in which an
individual has a pecuniary interest, he or she supplies false
information for the guidance of others in a business transaction,
without exercising reasonable care in obtaining or communicating
the information.'” Ausley v. Bishop, 133 N.C. App. 210, 218, 515
S.E.2d 72, 78 (1999) (emphasis added) (quoting Fulton v. Vickery,
73 N.C. App. 382, 388, 326 S.E.2d 354, 358 (citation omitted),
disc. review denied, 313 N.C. 599, 332 S.E.2d 178 (1985)); see also
Driver v. Burlington Aviation, Inc., 110 N.C. App. 519, 525, 430
S.E.2d 476, 480 (1993) (emphasis omitted) (“[i]n this State, we
have adopted the Restatement 2d definition of negligent
misrepresentation and have held that the action lies where
pecuniary loss results from the supplying of false information to
others for the purpose of guiding them in their business
transactions”). The statement by defendants' office assistant thatthe coverage would protect for up to $1,000,000.00 is in no way
false. Plaintiffs have not alleged that the assistant represented
that Dick was covered for this amount of UIM, or any amount other
than what appeared on his policy.
It has also been held that when a party relying on a
“misleading representation could have discovered the truth upon
inquiry, the complaint must allege that he was denied the
opportunity to investigate or that he could not have learned the
true facts by exercise of reasonable diligence.” Hudson-Cole Dev.
Corp. v. Beemer, 132 N.C. App. 341, 346, 511 S.E.2d 309, 313
(1999). Plaintiffs' complaint does not allege that Dick was denied
the opportunity to investigate or that he could not have learned
the requirements of UIM coverage or the extent of his existing
coverage by exercise of reasonable diligence. Indeed, the
complaint does not allege that Dick ever requested any information
regarding UIM coverage.
Plaintiffs' claim for unfair and deceptive practices must also
fail. The basis of the claim, as alleged in the complaint, is that
the sale of $1,000,000.00 UM coverage with zero UIM coverage, by
itself, and in conjunction with the “default” method of choice by
failure to return the rejection form, constitutes an unfair and
deceptive practice in violation of Chapter 75 of the North Carolina
General Statutes.
The providing of UM coverage without UIM coverage cannot be
construed as an unfair act where N.C. Gen. Stat. § 20-279.21(b)(4)
specifically authorizes eligible drivers to obtain UM coveragealone, or combined with UIM coverage. The statute requires that
only UM coverage be offered to insureds whose policies reflect only
the minimum statutory liability coverage. Defendants were
prohibited by law from providing Dick with UIM coverage until he
increased his underlying liability coverage. Therefore, the
providing of UM coverage without UIM coverage cannot be construed
as “unfair” within the meaning of Chapter 75.
Moreover, in order to prove an unfair and deceptive practice,
the plaintiff must show that the defendant committed an unfair or
deceptive act or practice, in or affecting commerce, and that the
plaintiff sustained an actual injury as a result. Vazquez v.
Allstate Ins. Co., 137 N.C. App. 741, 744, 529 S.E.2d 480, 481-82
(2000) (citing Murray v. Nationwide Mutual Ins. Co., 123 N.C. App.
1, 13, 472 S.E.2d 358, 365 (1996), disc. review denied, 345 N.C.
344, 483 S.E.2d 172 (1997)).
Here, the allegations of plaintiffs' complaint fail to show
that plaintiffs sustained actual injury as a result of the
“default” method of choice. Through the default mailing, Dick
received $1,000,000.00 of UM coverage. As noted previously, Dick
was not entitled to UIM benefits; therefore, the nature of the
mailing or whether Dick returned the rejection form has no bearing
on plaintiffs' ability to recover UIM benefits in this action, and
thus, cannot be construed as injuring plaintiffs as a result. To
the extent plaintiffs' argument is based on the theory that
defendants did not adequately inform Dick about UIM coverage,
Phillips is controlling. The trial court did not err in dismissing plaintiffs'
complaint. We need not address plaintiffs' remaining argument that
the trial court should have granted summary judgment in favor of
plaintiffs.
Affirmed.
Judges WYNN and TYSON concur.
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