PEERLESS INSURANCE,
Plaintiff,
v
.
Caldwell County
No. 99 CVS 1703
SHIRLEY ANN CORNETT, MICHAEL
CORNETT, JACK CORNETT AND
GRANITE HOMES, INC.,
Defendants.
Morris York Williams Surles & Barringer, LLP, by Gregory C.
York, for plaintiff appellee.
Cannon & Correll, P.A., by J. Michael Correll, for Michael
Cornett, Jack Cornett and Granite Homes, Inc., defendant
appellants.
Wilson, Palmer, Lackey & Rohr, P.A., by Timothy J. Rohr, for
Shirley Ann Cornett defendant appellant.
McCULLOUGH, Judge.
On 30 June 1998, defendant Shirley Ann Cornett was seriously
injured when a car driven by Michael Cornett struck and ran over
her. The accident occurred in the parking lot of Granite Homes,
Inc. (Granite Homes), a North Carolina corporation located in
Caldwell County, North Carolina. Jack Cornett was the President of
Granite Homes, and also operated a separate proprietorship known as
Jack W. Cornett d/b/a Jack W. Cornett Mobile Home Movers (MobileHome Movers). At the time of the accident, Ms. Cornett was an
employee of Granite Homes, and Michael Cornett was an employee of
Mobile Home Movers. After the accident, Ms. Cornett filed a civil
lawsuit against Michael Cornett, the driver of the car (and alleged
tortfeasor) and Jack Cornett, alleging that she sustained personal
injury as a proximate result of their negligence.
Some time before the accident, Jack Cornett purchased a
liability insurance policy for Granite Homes. The policy, number
BA 9234575, was issued by plaintiff Peerless Insurance (Peerless)
and was in effect from 3 June 1998 to 3 June 1999, a period which
encompassed Ms. Cornett's accident on 30 June 1998. Though the
policy was issued by Peerless Insurance, the paperwork was done at
Hudson Insurance Agency in Hudson, North Carolina. Pursuant to the
policy and the North Carolina Financial Responsibility Act, N.C.
Gen. Stat. § 20-279.1 (1999), Peerless paid Ms. Cornett $25,000.00
for injuries she sustained in the accident. In return, Ms. Cornett
executed a covenant not to sue in favor of Granite Homes. When Ms.
Cornett later sought additional money beyond the $25,000.00 already
paid, Peerless refused to pay, citing the following exclusion
contained in the policy:
B. EXCLUSIONS
This insurance does not apply to any
of the following:
. . . .
5. FELLOW EMPLOYEE
“Bodily injury” to any fellow
“employee” of the “insured” arising out of and in the
course of the fellow
“employee's” employment or
while performing duties related
to the conduct of your
business.
On 21 October 1999, Peerless filed a request for declaratory
judgment, asking the trial court to determine its liability under
insurance policy BA 9234575. Peerless maintained (1) that its
$25,000.00 payment to Ms. Cornett satisfied its duties under the
North Carolina Financial Responsibility Act, N.C. Gen. Stat. § 20-
279.1 (1999); and (2) that Ms. Cornett fell within a policy
exclusion because she was an “employee” of the “insured” who
suffered “bodily injury.” Specifically, Peerless asked the trial
court for the following remedies:
1. That the Court enter a declaratory
judgment that Plaintiff insurer has no further
obligations, liability, or duty to defend,
pursuant to Policy Number BA 9234575,
regarding the damages complained of in 99-CVS-
788 or any other alleged damages or injuries
sustained by the Defendant SHIRLEY ANN CORNETT
arising out of the accident of June 30, 1998;
2. That the Court stay the proceedings
in 99-CVS-788 until such time as a decision
has been rendered regarding the Plaintiff
insurer's action for declaratory judgment;
3. That all issues of fact be tried by a
jury; and
4. For such other and further relief as
the Court deems just and proper.
On 12 November 1999, Ms. Cornett answered Peerless' request
for declaratory judgment. In her answer, she denied that the
policy insured Granite Homes, denied that the employee exclusionapplied to her, and denied that the policy did not cover bodily
injury of the type she suffered on 30 June 1998. However, Ms.
Cornett admitted she was employed by Granite Homes on 30 June 1998
and that Peerless had already paid her $25,000.00 for her injuries.
Defendants Michael Cornett, Jack Cornett, and Granite Homes filed
an answer on 10 January 2000; their answer mirrored the
aforementioned statements made by Ms. Cornett.
On 12 June 2000, Peerless filed a motion for summary judgment.
Ms. Cornett filed a response asserting her right to recovery and
denying that Granite Homes was involved with the lawsuit or with
the underlying accident. Defendants Michael Cornett, Jack Cornett,
and Granite Homes adopted Ms. Cornett's response as their own when
they filed their response to Peerless' motion for summary judgment
on 11 July 2000. On 3 August 2000, defendants collectively filed
their own motion for summary judgment, along with a portion of the
insurance policy and an affidavit from Jack Cornett. The affidavit
stated that policy BA 9234575 was issued to Mobile Home Movers, not
Granite Homes, and was the only policy insuring Mobile Home Movers.
He also clarified that Mobile Home Movers was a separate entity
from his other business, Granite Homes.
On 14 August 2000, Peerless answered defendants' motion for
summary judgment and attached several documents, including the
entire insurance policy, certification of the policy from Peerless'
Underwriting Department, and an affidavit from Ms. Shirley Walker,
the office manager of Hudson Insurance Agency, who dealt with the
Peerless policy issued to Jack Cornett. Ms. Walker's affidavitstated that the policy was originally issued to Mobile Home Movers.
However, on 8 June 1998, Ms. Cornett requested that the insured's
name be changed from Mobile Home Movers to Granite Homes. Ms.
Walker's affidavit further stated that the change was made, and
Granite Homes remained the named insured on the policy until 16
December 1998, when Ms. Walker was instructed to change the named
insured back to Mobile Home Movers. Attached to Ms. Walker's
affidavit were two exhibits, which included a memo from Hudson
Insurance Agency. Ms. Walker attested she wrote a notation on that
memo, which read:
Amend name to read Jack Cornett DBA
Cornett Mobile Home Movers -- changed to
Granite Homes Inc. by mistake -- Thank you.
/s/ Shirley Walker.
The effective date of the change was 16 December 1998.
After considering the parties' cross-motions for summary
judgment, the trial court entered an order on 11 December 2000
denying defendants' motion for summary judgment and granting
summary judgment in favor of plaintiff. All defendants filed
written notice of appeal on 21 December 2000.
In their sole assignment of error, defendants challenge the
trial court's grant of summary judgment in favor of Peerless.
After careful review of the proceedings below, we affirm the
decision of the trial court.
“The purpose of Rule 56 is to provide an expeditious method of
determining whether a genuine issue as to any material fact
actually exists, and if not, whether the moving party is entitledto judgment as a matter of law.” Schoolfield v. Collins, 12 N.C.
App. 106, 108-09, 182 S.E.2d 648, 650 (1971), rev'd on other
grounds, 281 N.C. 604, 189 S.E.2d 208 (1972). N.C. Gen. Stat. §
1A-1, Rule 56(c) (1999) states that
[t]he judgment sought shall be rendered
forthwith if the pleadings, depositions,
answers to interrogatories, and admissions on
file, together with the affidavits, if any,
show that there is no genuine issue as to any
material fact and that any party is entitled
to a judgment as a matter of law.
“On appeal from an order granting summary judgment, we must review
the pleadings, affidavits and all other materials produced by the
parties at the summary judgment hearing to determine whether there
existed any genuine issue of fact and whether one party was
entitled to judgment as a matter of law.” Bradley v. Wachovia Bank
& Trust Co., 90 N.C. App. 581, 582, 369 S.E.2d 86, 87 (1988). See
also Willis v. Town of Beaufort, 143 N.C. App. 106, 108, 544 S.E.2d
600, 603, disc. review denied, 354 N.C. 371, 555 S.E.2d 280 (2001).
We note that
[a]n issue is material if “the facts alleged
would constitute a legal defense, or would
affect the result of the action, or if its
resolution would prevent the party against
whom it is resolved from prevailing in the
action.”
Carolina Place Joint Venture v. Flamers Charburgers, Inc., 145 N.C.
App. 696, 698, 551 S.E.2d 569, 571 (2001) (citations omitted).
“The party moving for summary judgment has the burden of
establishing the absence of any triable issue of fact. [The
materials offered to support his motion] are meticulouslyscrutinized and all inferences are resolved against him.” Boyce v.
Meade, 71 N.C. App. 592, 593, 322 S.E.2d 605, 607 (1984), disc.
review denied, 313 N.C. 506, 329 S.E.2d 390 (1985). See also
Garner v. Rentenbach Constructors, Inc., 350 N.C. 567, 572, 515
S.E.2d 438, 441 (1999). “The movant may meet its summary judgment
burden by showing either (1) an essential element of the non-
movant's claim is nonexistent, or (2) the non-movant cannot produce
evidence to support an essential element of his claim.” Dalton
Moran Shook Inc. v. Pitt Development Co., 113 N.C. App. 707, 714,
440 S.E.2d 585, 590 (1994). Finally, “[i]n construing insurance
policies, the burden is on the insured to show coverage. If the
insurer relies on a clause of the policy which excludes coverage,
the burden is on the insurer to establish the exclusion.”
Insurance Co. v. McAbee, 268 N.C. 326, 328, 150 S.E.2d 496, 497
(1966). With these principles in mind, we turn to the case at
hand.
Peerless first moved for summary judgment and based its motion
on the pleadings and the language of policy BA 9234575. The
pleadings included Ms. Cornett's 12 November 1999 answer to
Peerless' request for declaratory judgment. In that answer, Ms.
Cornett stated
8. It is admitted that at the time of the
accident which gives rise to 99-CVS-788,
this answering defendant was an employee
of Granite Homes, Inc. and that she
sustained personal injuries on June 30,
1998.
The pleadings also contained an undisputed statement that Ms.Cornett suffered bodily injury as a result of the accident on 30
June 1998. Thus, the only potential issue of material fact was the
identity of the insured at the time of the accident.
Defendants made their own motion for summary judgment on 3
August 2000. In support of their motion, defendants presented the
affidavit of Jack Cornett, as well as a portion of the insurance
policy. Peerless answered defendants' motion for summary judgment
by presenting the affidavit of Ms. Walker, the entire insurance
policy, and certification of the policy from Peerless' Underwriting
Department. Thus, at the time the trial court made its
determination regarding summary judgment, it had before it the
policy, as well as supporting documents from both parties.
The insurance policy showed that the initial insured party was
Mobile Home Movers, but that the insured was changed to Granite
Homes on 8 June 1998. The policy remained in the name of Granite
Homes until 16 December 1998, when it was changed again, this time
in favor of Mobile Home Movers. Based on this evidence, Granite
Homes was the named insured on 30 June 1998, the date of the
accident. The policy and the other documents tendered by the
parties showed that Ms. Cornett suffered bodily injury on 30 June
1998, and that she was an employee of Granite Homes at that time.
The policy and documents also showed that Granite Homes was the
named insured at the time of the accident, such that Ms. Cornett
fell under the policy's exclusion and was not entitled to further
recovery. The sum total of the evidence left no genuine issue of
material fact, and summary judgment was properly entered in favorof Peerless, because it carried the burden of proving the existence
of a policy exclusion. See McAbee.
Based on the foregoing, we believe the trial court correctly
granted summary judgment in this case. We have carefully reviewed
the remaining arguments of defendants and find them to be without
merit. The trial court's order granting summary judgment in favor
of Peerless Insurance is therefore
Affirmed.
Chief Judge EAGLES and Judge BIGGS concur.
Report per Rule 30(e).
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