WALTER CLARK ERWIN,
Plaintiff
v
.
Burke County
No. 99 CVS 278
LENA LOWDERMILK TWEED,
Defendant.
Bryce Thomas & Associates, by Bryce O. Thomas, Jr., for
plaintiff-appellant.
Willardson & Lipscomb, L.L.P., by William F. Lipscomb, for
unnamed defendant-appellee.
EAGLES, Chief Judge.
In an earlier appeal, the trial court's judgment regarding the
applicability of certain insurance policies to Walter Clark Erwin
(“the plaintiff”) was affirmed in part, reversed in part and
remanded. Erwin v. Tweed, 142 N.C. App. 643, 544 S.E.2d 803, disc.
review denied, 353 N.C. 724, 551 S.E.2d 437 (2001). While the
earlier appeal was pending, plaintiff moved for a determination
from the trial court that North Carolina Farm Bureau Mutual
Insurance Company (“Farm Bureau”) be allowed a credit of $37,334.00
towards Farm Bureau's Underinsured Motorist (“UIM”) coverage. The
trial court denied plaintiff's motion and allowed Farm Bureau acredit of $50,000.00. After careful consideration of the briefs
and record, we affirm.
On 19 December 1993, plaintiff, a fifteen year old boy, was
injured while riding his bicycle when he was struck by a vehicle
operated by Lena Tweed (“defendant”).
The parents of the plaintiff claimed that they were entitled
to payment for medical expenses that plaintiff incurred from the
date of the accident until plaintiff's eighteenth birthday. The
parents settled with defendant's personal automobile liability
carrier, State Auto Insurance Company (“State Auto”), for
$12,666.00 in 1995 for their claim. Plaintiff entered into a
settlement with State Auto for his claim on 27 March 1998 for
$37,334.00. State Auto's policy for defendant provided bodily
injury liability limits of $50,000.00 per person.
Plaintiff sought binding arbitration which occurred on 19, 21
and 22 September 2000. The arbitrators awarded plaintiff
$600,000.00. Plaintiff was an insured under certain automobile
insurance policies issued by Farm Bureau. Farm Bureau did not
dispute coverage under policy AP 3725121 which provided UIM Bodily
Injury coverage in the amount of $250,000.00 per person and
$500,000.00 per accident. On 16 October 2000, plaintiff filed a
motion in the cause requesting that the court “determine how much
of the liability payments herein [are] to be credited specifically
to the plaintiff, Clark Erwin, toward the arbitration award.”
Plaintiff moved that the court rule that Farm Bureau receive a
credit in the amount of $37,334.00 towards the UIM limit. In thealternative, plaintiff moved that if Farm Bureau was entitled to
receive a $50,000.00 credit, then the arbitration award should be
increased by $12,666.00. Plaintiff entered into a “Release”
agreement with Farm Bureau for $200,000.00 in UIM coverage under
policy AP 3725121 on 19 October 2000. In this agreement, plaintiff
reserved his right to continue with his claim for $12,666.00 in UIM
coverage from policy AP 3725121.
Plaintiff's motion was heard at the 26 February 2001 session
of Burke County Superior Court before Judge Timothy S. Kincaid.
The trial court denied plaintiff's motion. It determined that Farm
Bureau was entitled to a $50,000.00 credit towards the $250,000.00
UIM coverage and “that plaintiff [was] not entitled to have the
amount of the arbitration award increased.” Plaintiff appeals.
Plaintiff raises two issues on appeal. Plaintiff first
contends that the trial court committed reversible error in denying
plaintiff's motion to allow a $37,334.00 credit toward the
$250,000.00 UIM limit of AP 3725121. In the alternative, plaintiff
contends that the trial court committed reversible error in denying
plaintiff's motion to increase the arbitration award by
$12,666.00. After careful consideration, the decision of the trial
court is affirmed.
Underinsured motorist coverage is deemed to
apply when, by reason of payment of judgment
or settlement, all liability bonds or
insurance policies providing coverage for
bodily injury caused by the ownership,
maintenance, or use of the underinsured
highway vehicle have been exhausted.
Exhaustion of that liability coverage for the
purpose of any single liability claim
presented for underinsured motorist coverageis deemed to occur when either (a) the limits
of liability per claim have been paid upon the
claim, or (b) by reason of multiple claims,
the aggregate per occurrence limit of
liability has been paid. Underinsured motorist
coverage is deemed to apply to the first
dollar of an underinsured motorist coverage
claim beyond amounts paid to the claimant
under the exhausted liability policy.
In any event, the limit of underinsured
motorist coverage applicable to any claim is
determined to be the difference between the
amount paid to the claimant under the
exhausted liability policy or policies and the
limit of underinsured motorist coverage
applicable to the motor vehicle involved in
the accident.
G.S. § 20-279.21(b)(4) (emphasis added).
Plaintiff contends that the limit of UIM coverage that should
be available for his claim is $212,666.00. Plaintiff argues that
this figure is the difference between the $250,000.00 UIM coverage
and the $37,334.00 paid directly to plaintiff from State Auto.
Plaintiff contends that $37,334.00 is the figure that should be
used since that was “the amount paid to the claimant under the
exhausted liability policy.” Id. Plaintiff argues that the
remaining $12,666.00 of the $50,000.00 per person liability limit
was paid to his parents for their claim for medical expenses. Farm
Bureau contends that the amount of UIM coverage that should apply
is $200,000.00. Farm Bureau argues that this figure is the
difference between the $250,000.00 UIM coverage and the $50,000.00
paid to plaintiff and his parents under defendant's liability
policy.
The parties disagree over the limit of UIM coverage applicable
to plaintiff's claim. This figure is determined by taking thedifference between the limit of the UIM coverage applicable to the
vehicle and the amount paid to the claimant under defendant's
exhausted liability policy. G.S. § 20-297.21(b)(4); N.C. Farm
Bureau Mut. Ins. Co. v. Gurley, 139 N.C. App. 178, 180-81, 532
S.E.2d 846, 848, disc. review denied, 352 N.C. 675, 545 S.E.2d 427
(2000). The limit of the UIM coverage applicable to the vehicle is
$250,000.00. This figure is not in dispute. Therefore, the
question before this Court is what constitutes “the amount paid to
the claimant under the exhausted liability policy” in order to
determine the amount of UIM coverage applicable for plaintiff's
claim.
A parent has the right to recover medical expenses for
treating a child's injuries when the child is injured by the
negligence of another. Flippin v. Jarrell, 301 N.C. 108, 120, 270
S.E.2d 482, 490 (1980), reh'g denied, 301 N.C. 727, 274 S.E.2d 228
(1981). However, the parent's claim for medical expense is
derivative in nature. Holt v. Atlantic Cas. Ins. Co., 141 N.C.
App. 139, 142, 539 S.E.2d 345, 347 (2000); Howard v. Travelers
Insurance Cos., 115 N.C. App. 458, 463, 445 S.E.2d 66, 69, disc.
review denied, 337 N.C. 692, 448 S.E.2d 524 (1994). In Howard,
this Court
conclude[d] that the term “all damages” used
in the policy's “Limit of Liability” section
here is all-inclusive. The parents' claim for
the child's medical expenses is derivative in
nature; accordingly the parents cannot recover
since they themselves have sustained no
“bodily injury” within the meaning of the
policy.
Howard, 115 N.C. App. at 463, 445 S.E.2d at 69 (citations omitted).
Likewise, Holt relied on Howard in concluding that a parent's claim
for a child's medical expenses was derivative in nature. Holt, 141
N.C. App. at 142, 539 S.E.2d at 347. This Court stated that “when
Atlantic exhausted the per person limit of $25,000 in settling [the
child's] claim, who sustained the direct bodily injury, [the
parent's] derivative damage was subsumed within that settlement
award.” Id. at 142-43, 539 S.E.2d at 347.
Howard and Holt dealt with the derivative nature of a parent's
claim for medical expenses incurred as a result of a child's injury
in relation to liability coverage under an automobile insurance
policy. Here, the insurance coverage at issue is UIM coverage.
However, the pertinent language of the “Limit of Liability”
sections analyzed by this Court in Howard and Holt are similar to
the “Limit of Liability” provision in the UIM section of the policy
here.
“Part C-Uninsured Motorists Coverage” of the policy at issue
here contains the following language:
The limit of bodily injury liability shown in
the Declarations for each person for Uninsured
Motorists Coverage is our maximum limit of
liability for all damages for bodily injury,
including damages for care, loss of services
or death, sustained by any one person in any
one auto accident.
Subject to this limit for each person, the
limit of bodily injury liability shown in the
Declarations for each accident for Uninsured
Motorists Coverage is our maximum limit of
liability for all damages for bodily injury
resulting from any one accident. The limit of
property damage liability shown in the
Declarations for each accident for UninsuredMotorists Coverage is our maximum limit of
liability for all damages to all property
resulting from any one accident. This is the
most we will pay for bodily injury and
property damage regardless of the number of:
1. Insureds;
2. Claims made;
3. Vehicles or premiums shown in the
Declarations; or
4. Vehicles involved in the accident.
(Emphasis added.) “Part D-Combined Uninsured/Underinsured
Motorists Coverage” provides:
This coverage is subject to all of the
provisions of the policy with respect to the
vehicles for which the Declarations indicates
that combined Uninsured Underinsured Motorists
Coverage applies except as modified as
follows:
I. Part C. is amended as follows:
. . . .
D. The following is added to the
Limit of Liability provision:
The most we will pay under this
coverage is the lesser of the
amount by which the:
a. limit of liability for
this coverage; or
b. damages sustained by an
insured for bodily
injury;
exceeds the amount paid under
all bodily injury liability
bonds and insurance policies
applicable to the insured's
bodily injury.
“[T]he applicable UIM limit under [G.S.] § 20-279.21(b)(4)
will depend on two factors: (1) the number of claimants seeking
coverage under the UIM policy; and (2) whether the negligent
driver's liability policy was exhausted pursuant to a per-person or
per-accident cap.” Gurley, 139 N.C. App. at 181, 532 S.E.2d at
848. This Court went on to state that “when only one UIM claimant
exists, the per-person limit under the policy will be the
applicable UIM limit.” Id. at 181, 532 S.E.2d at 849.
“[A] UIM carrier is entitled to credit for the amounts paid to
a claimant under the tortfeasor's liability policy.” Onley v.
Nationwide Mutual Ins. Co., 118 N.C. App. 686, 690, 456 S.E.2d 882,
885, disc. review denied, 341 N.C. 651, 462 S.E.2d 514 (1995).
Here, plaintiff is the only claimant seeking UIM coverage from Farm
Bureau so the appropriate UIM limit would be the per person UIM
limit of $250,000.00. State Auto paid plaintiff and plaintiff's
parents from the same per person limit of $50,000.00. Exhaustion
occurs when the “limits of liability per claim have been paid upon
the claim” or when “by reason of multiple claims, the aggregate per
occurrence limit of liability has been paid.” G.S. § 20-
279.21(b)(4). Here, State Auto's per occurrence limit was not used
and only one per person limit was used to pay both the plaintiff
and his parents. The per person limit was the limit exhausted by
defendant's liability carrier. While plaintiff directly received
only $37,334.00 of the $50,000.00 per person liability limit, the
remaining $12,666.00 was paid to the parents for plaintiff's
medical expenses incurred by his parents prior to plaintiff turningeighteen. The $50,000.00 paid “exhausted” the liability limit
which enabled plaintiff to pursue his UIM coverage. The figure
that “exhausted” the limit should be used to calculate the credit
for the UIM carrier. Since the parents' claim is derivative and
the per person liability limit was used to pay the initial claims,
the “exhausted” amount which allows the plaintiff to proceed with
a UIM claim should be the $50,000.00 paid under defendant's per
person liability limit. This is the amount which was “paid to the
claimant.”
“The Financial Responsibility Act is a remedial statute and
the underlying purpose is the protection of innocent victims who
have been injured by financially irresponsible motorists.” Haight
v. Travelers/Aetna Property Casualty Corp., 132 N.C. App. 673, 678,
514 S.E.2d 102, 106, disc. review denied, 350 N.C. 831, 537 S.E.2d
824 (1999). The application of $50,000.00 as the credit achieves
the purpose of UIM coverage. “'UIM coverage is intended to place
a policy holder in the same position that the policy holder would
have been in if the tortfeasor had had liability coverage equal to
the amount of the UM/UIM coverage.'” Gurley, 139 N.C. App. at 183,
532 S.E.2d at 849-50 (quoting Mutual of Enumclaw Ins. Co. v. Key,
883 P.2d 875, 877 (Or. Ct. App. 1994)) (emphasis in original). If
defendant had liability coverage equal to the amount of plaintiff's
UIM coverage, defendant would have had $250,000.00 in liability
coverage. Since the plaintiff's parents claim is derivative and
subject to one per person limit, if the limit was tendered,
plaintiff would have received $237,334.00 and plaintiff's parentswould have received $12,666.00. This is the same amount that was
actually received by plaintiff by applying $50,000.00 as the
credit. Therefore, plaintiff is in the same position as if
defendant had had liability coverage in the amount of $250,000.00.
Based on the facts of this case, we conclude that the trial
court properly determined that Farm Bureau was entitled to a
$50,000.00 credit towards its UIM coverage limit.
Plaintiff next contends that the trial court committed
reversible error in denying plaintiff's motion to increase the
arbitration award by $12,666.00. We are not persuaded.
G.S. § 1-567.14 “provides the sole means by which a party may
have an award modified or corrected.” Palmer v. Duke Power Co.,
129 N.C. App. 488, 496, 499 S.E.2d 801, 806 (1998). G.S. § 1-
567.14 states:
(a) Upon application made within 90 days after
delivery of a copy of the award to the
applicant, the court shall modify or correct
the award where:
(1) There was an evident miscalculation
of figures or an evident mistake in the
description of any person, thing or
property referred to in the award;
(2) The arbitrators have awarded upon a
matter not submitted to them and the
award may be corrected without affecting
the merits of the decision upon the
issues submitted; or
(3) The award is imperfect in a matter of
form, not affecting the merits of the
controversy.
Plaintiff argues that the application of $50,000.00 as the
credit will leave him unable to collect the $12,666.00 that waspaid to his parents. Plaintiff contends that in the event he is
able to collect the entire arbitration award, he would only receive
$587,334.00 rather than $600,000.00. Plaintiff contends that by
raising the arbitration award to $612,666.00, he would be able to
collect $600,000.00 even with the use of $50,000.00 as the credit.
“[O]nly awards reflecting mathematical errors,
errors relating to form, and errors resulting
from arbitrators exceeding their authority
shall be modified or corrected by the
reviewing courts.” “If an arbitrator makes a
mistake, either as to law or fact, it is the
misfortune of the party, and there is no help
for it. There is no right of appeal and the
Court has no power to revise the decisions of
'judges who are of the parties' own
choosing.'”
Palmer, 129 N.C. App. at 496-97, 499 S.E.2d at 807 (citations
omitted).
The trial court properly denied plaintiff's motion to increase
the arbitration award as plaintiff did not show that the
arbitrators made an evident mathematical error, error relating to
form, or error evidencing that the arbitrators exceeded their
powers.
Accordingly, the decision of the trial court is affirmed.
Affirmed.
Judges HUDSON and BRYANT concur.
Report per Rule 30(e).
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