Appeal by plaintiff and defendant/third-party plaintiff from
summary judgment entered 12 October 2001 and appeal by plaintiff
from an order entered 25 October 2001, by Judge Michael E. Beale in
Rowan County Superior Court. Heard in the Court of Appeals 13
November 2002.
Law Office of Michael S. Adkins, by Michael S. Adkins, for
plaintiff-appellant.
Dean & Gibson, L.L.P., by Thomas G. Nance and Michael G.
Gibson, for defendant/third-party plaintiff-appellant.
Davis & Hamrick, L.L.P., by H. Lee Davis, Jr. and Ann C. Rowe,
for third-party defendant-appellee.
HUNTER, Judge.
Defendant/third-party plaintiff Erie Insurance Exchange
(“Erie”) appeals from the trial court's summary judgment in favor
of third-party defendant Robert Hurley (“Hurley”) as to Erie's
subrogation claim against Hurley, for the loss of Larry Barnes'
(“plaintiff”) 1989 Freightliner truck chassis (“Freightliner”)
caused by Hurley's alleged negligence. In addition, plaintiff
appeals from the trial court's summary judgment in favor of Erieand the trial court's summary judgment in favor of Hurley as to all
of plaintiff's claims against Erie and Hurley. We affirm in part
and reverse and remand in part for further proceedings for the
reasons set forth herein.
This action arises from a fire that occurred on 8 February
1998 at Hurley's residence. Plaintiff had property on Hurley's
premises that was destroyed at the time of the fire, including a
Pro-Stock Pontiac Firebird race car body, a racing engine and other
assorted unassembled parts, tools, and a Freightliner. The fire
began when Hurley, who was draining gasoline from his boat into a
container, overflowed the container causing gasoline to run across
the floor and come into contact with a kerosene heater that had
recently been shut off but was hot enough to ignite the gasoline on
the floor.
Plaintiff made a claim to its insurer, Erie, for insurance
coverage. Erie paid the claim for the Freightliner in the amount
of $55,876.73, but denied coverage for the Pontiac Firebird body
and the parts and tools that were located in Hurley's garage at the
time of the fire. Following Erie's refusal to pay this claim,
plaintiff filed a complaint against Erie on 22 October 1999
alleging breach of contract and unfair and deceptive trade
practices. Subsequently, on 13 January 2000, Erie filed an answer
to plaintiff's complaint; on 16 February 2000, Erie filed a third-
party complaint against Hurley, asserting a subrogation claim
alleging that Hurley, as bailee, had been negligent. Thereafter,
on 2 May 2000 Hurley filed an answer to the third-party complaint. On 1 November 2000, plaintiff filed a document entitled
“Plaintiff's Third-Party Complaint Against Third-Party Defendant
Robert Hurley,” to which Hurley responded in an answer filed 4
January 2001. Hurley's answer included a Motion to Strike
plaintiff's third-party complaint against Hurley pursuant to Rules
12, 14, and 15 of the North Carolina Rules of Civil Procedure.
Erie and Hurley each moved for summary judgment. The trial
court granted both motions by orders filed 12 October 2001 and 25
October 2001. In the 12 October 2001 summary judgment order, the
court granted Hurley's motion for summary judgment as to all of
plaintiff's and defendant's claims. The trial court ruled as
follows in the 12 October 2001 order: (1) Plaintiff's direct
claims against Hurley were barred by the statute of limitations and
no proper and timely motion to amend was before the court.
Therefore, plaintiff's “Third-Party Complaint Against Third-Party
Defendant Robert Hurley” was stricken and summary judgment was
entered in favor of Hurley as to all claims asserted by plaintiff
against Hurley; (2) summary judgment was entered in favor of Hurley
as to the claims brought by defendant against Hurley for any loss
associated with the Pontiac Firebird race car as a result of the
court's separate order of summary judgment in defendant's favor as
to plaintiff's claims against defendant; (3) summary judgment was
entered in favor of Hurley regarding defendant's claims concerning
the loss of the Freightliner. The court determined as a matter of
law, that as of the date of the loss, there was no bailment of the
Freightliner from plaintiff to Hurley. In its 25 October 2001order, the trial court granted Erie's motion for summary judgment
as to all of plaintiff's claims asserted against it. The trial
court did not include any specific findings of fact in this order.
Plaintiff and Erie appeal.
At the outset, in reviewing a motion for summary judgment, the
trial court must determine whether “(1) the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, show that there is no genuine issue as to any
material fact; and (2) the moving party is entitled to judgment as
a matter of law.” Gaunt v. Pittaway, 139 N.C. App. 778, 784, 534
S.E.2d 660, 664, appeal dismissed and disc. review denied, 353 N.C.
262, 546 S.E.2d 401 (2000), cert. denied, 353 N.C. 371, 547 S.E.2d
810, cert. denied, 534 U.S. 950, 151 L. Ed. 2d 261 (2001); see also
N.C. Gen. Stat. § 1A-1, Rule 56(c) (2001). The evidence must be
viewed in the light most favorable to the non-moving party. Bruce-
Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 504 S.E.2d 574
(1998). A motion for summary judgment should be denied “[i]f
different material conclusions can be drawn from the evidence
. . . .” Credit Union v. Smith, 45 N.C. App. 432, 437, 263 S.E.2d
319, 322 (1980).
I.
Defendant/third-party plaintiff Erie contends the trial court
erred in concluding as a matter of law, that as of the date of the
loss, 8 February 1998, there was no bailment for the Freightliner
from plaintiff to third-party defendant Hurley. Erie argues therewas an issue of material fact as to whether a bailment existed and
accordingly, the entry of summary judgment was improper. We agree.
“A bailment is created when a third person accepts the sole
custody of some property given from another.”
Bramlett v. Overnite
Transport, 102 N.C. App. 77, 82, 401 S.E.2d 410, 413 (1991). “The
bailor has the burden of establishing the existence of a bailor-
bailee relationship.”
Fabrics, Inc. v. Delivery Service, 39 N.C.
App. 443, 447, 250 S.E.2d 723, 725 (1979). When a bailment is
created for the benefit of both the bailor and bailee, the bailee
is required to exercise ordinary care to protect the subject of the
bailment from negligent loss, damage, or destruction.
Strang v.
Hollowell, 97 N.C. App. 316, 387 S.E.2d 664 (1990);
Ward v. Newell,
68 N.C. App. 646, 315 S.E.2d 721 (1984).
A
prima facie case of actionable negligence .
. . is made when the bailor offers evidence
tending to show or it is admitted that the
property was delivered to the bailee; that the
bailee accepted it and thereafter had
possession and control of it; and that the
bailee failed to return the property or
returned it in a damaged condition.
McKissick v. Jewelers, Inc., 41 N.C. App. 152, 155, 254 S.E.2d 211,
213 (1979).
In the case
sub judice, the evidence shows that plaintiff
delivered the Freightliner to Hurley so that the truck could be
converted into a motor home. Plaintiff paid Hurley for making
improvements to the truck. Therefore, the alleged bailment was for
the mutual benefit of both the alleged bailor (plaintiff) and
alleged bailee (Hurley), obligating Hurley to exercise ordinary
care to protect the Freightliner from negligent loss anddestruction.
See Strang, 97 N.C. App. 316, 387 S.E.2d 664;
Ward,
68 N.C. App. 646, 315 S.E.2d 721.
Hurley asserts, however, that at the time of the fire, he did
not have the necessary exclusive possession, custody and control of
the Freightliner required for a bailment to exist.
See Fabrics,
Inc., 39 N.C. App. at 447, 250 S.E.2d at 726. According to Hurley,
plaintiff's testimony from his deposition demonstrated that the
improvements on the Freightliner had been completed in July 1997,
well before the Freightliner was lost in the fire on 8 February
1998. Hurley therefore argues that the bailment ended in July 1997
and thus, he was not in exclusive control of the Freightliner.
Hurley additionally points out that plaintiff testified that he was
on Hurley's property ten or fifteen times after the improvements on
the Freightliner were allegedly completed in July 1997 but before
the occurrence of the loss in February 1998 and thus, had an
obligation to retrieve the Freightliner from Hurley's property.
After reviewing plaintiff's deposition, we acknowledge that at
one point plaintiff testified that he finished some improvements on
the Freightliner in July 1997 and was paid for those improvements.
However, later in the deposition, when plaintiff was asked why the
Freightliner remained on Hurley's premises, plaintiff responded:
“The inside hadn't been finished out on it, and we was [sic]
waiting to finish the inside and started work on the trailer in the
other shop.” Therefore, we conclude there is a genuine issue of
material fact as to whether a bailment existed at the time the
Freightliner was destroyed by fire. Accordingly, the trial courterred in determining as a matter of law that as of the date of the
loss, there was no bailment of the Freightliner. Defendant Erie
provided ample evidence to make out a
prima facie case of
actionable negligence based on bailment. Thus, summary judgment
was entered in error on Erie's negligence claim against Hurley. We
therefore reverse the court's summary judgment as to Erie's
subrogation claim against Hurley for the loss of the Freightliner
and remand for further proceedings on this claim.
II.
Plaintiff contends the trial court erred in granting defendant
Erie's motion for summary judgment against plaintiff since there
was a genuine issue of material fact as to whether the insurance
policy covered plaintiff's loss of the Pontiac Firebird body and
unassembled parts. We disagree.
“The interpretation of language used in an insurance policy is
a question of law, governed by well-established rules of
construction.”
N.C. Farm Bureau Mut. Ins. Co. v. Mizell, 138 N.C.
App. 530, 532, 530 S.E.2d 93, 95,
disc. review denied, 352 N.C.
590, 544 S.E.2d 783 (2000). If an insurance “policy is not
ambiguous, then the court must enforce the policy as written and
may not remake the policy under the guise of interpreting an
ambiguous provision.”
Nationwide Mutual Ins. Co. v. Mabe, 342 N.C.
482, 492, 467 S.E.2d 34, 40 (1996). Moreover,
“a contract of insurance should be given that
construction which a reasonable person in the
position of the insured would have understood
it to mean and, if the language used in the
policy is reasonably susceptible of different
constructions, it must be given theconstruction most favorable to the insured,
since the company prepared the policy and
chose the language.”
Trujillo v. N.C. Grange Mut. Ins. Co., 149 N.C. App. 811, 813, 561
S.E.2d 590, 592 (quoting
Grant v. Emmco Ins. Co., 295 N.C. 39, 43,
243 S.E.2d 894, 897 (1978)),
disc. review denied, 356 N.C. 176, 569
S.E.2d 280 (2002).
The pertinent issue before us is whether, as a matter of law,
plaintiff's loss of the Pontiac Firebird body and unassembled parts
was barred from coverage under Erie's insurance policy. Erie
refused to pay for plaintiff's loss of his Pontiac Firebird
because, according to Erie, it was not an “auto” as that term is
defined in the policy; or in the alternative, plaintiff's Pontiac
Firebird was being prepared for organized racing activities which
is excluded under the express terms of the policy.
Assuming
arguendo that plaintiff's Pontiac Firebird was an
“auto” as defined in the insurance policy, we conclude that
plaintiff's loss was excluded from coverage under the policy since
the Pontiac Firebird was being worked on in preparation for racing.
The insurance policy issued by Erie to plaintiff contains the
following exclusionary language in pertinent part:
LIMITATIONS ON OUR DUTY TO PAY
What We Do Not Cover - Exclusions
We will not pay for loss:
. . . .
9. to any
owned auto while:
. . . .
b. being used in an organized
racing or demolition contest or
in any stunting activity or
preparation for any of these.
Plaintiff argues that the Pontiac Firebird body and
unassembled parts were not being worked on in preparation for a
race at the time of the fire and therefore, plaintiff's loss was
covered under the insurance policy. In addition, plaintiff points
out that he testified during a deposition that he and Hurley had no
timetable or schedule for racing the car, and in fact, were not
sure if they ever would be able to race the car. Plaintiff claims
that the car was being “stored” in Hurley's garage and therefore
was not being prepared for racing.
We note that plaintiff's deposition testimony indicates that
plaintiff's Pontiac Firebird and unassembled parts were on Hurley's
premises so that plaintiff and Hurley could assemble and prepare
the car for racing activities. The Pontiac Firebird body had no
motor vehicle title, no functional lights, and was not intended to
be used on public streets. Plaintiff testified that he planned to
race the Pontiac Firebird if he could, otherwise, he would sell it
and make a profit. Plaintiff never indicated that he and Hurley
were preparing the car for public street use.
Further, we are unpersuaded by plaintiff's contention that
because the Pontiac Firebird body and parts were not being worked
on in preparation for a race at the precise time of the fire,
plaintiff's loss was covered by the insurance policy. We do not
find this to be a reasonable interpretation of the exclusionary
provision. For the aforementioned reasons, we conclude as a matterof law that plaintiff's loss of the Pontiac Firebird body and parts
were excluded from coverage under the insurance policy.
Accordingly, the trial court properly entered summary judgment in
favor of Erie.
III.
Plaintiff next argues the trial court erred in entering
summary judgment in favor of third-party defendant Hurley, ruling
that plaintiff's claims were barred by the statute of limitations
and denying plaintiff's oral motion to amend his complaint to
include Hurley as a defendant. Hurley was not named as a defendant
in plaintiff's original complaint, filed 22 October 1999. Erie
filed an answer to plaintiff's original complaint on 13 January
2000 and Erie filed a third-party complaint against Hurley on 16
February 2000. Subsequently, plaintiff filed a document entitled
“Plaintiff's Third-Party Complaint Against Third-Party Defendant
Robert Hurley” on 1 November 2001. Hurley filed an answer to this
complaint on or about 4 January 2001. The trial court found that
the pleading entitled “Plaintiff's Third-Party Complaint Against
Third-Party Defendant Robert Hurley,” “was filed without prior
consent of the parties and without leave of Court and without any
pending Motion before the Court for leave to amend the Complaint or
leave to amend to add an additional party Defendant or leave to
amend to add the Third Party Defendant as an original Defendant.”
The trial court relied on
Crossman v. Moore, 341 N.C. 185, 459
S.E.2d 715 (1995),
Wicker v. Holland, 128 N.C. App. 524, 495 S.E.2d
398 (1998), and the North Carolina Rules of Civil Procedure indetermining that plaintiff's claims against Hurley were barred by
the statute of limitations.
Plaintiff asserts that his pleading entitled “Plaintiff's
Third-Party Complaint Against Third-Party Defendant Robert Hurley”
was proper pursuant to Rule 14 of the North Carolina Rules of Civil
Procedure. Plaintiff specifically relies on the following language
of Rule 14(a) to support his contention: “The plaintiff may assert
any claim against the third-party defendant arising out of the
transaction or occurrence that is the subject matter of the
plaintiff's claim against the third-party plaintiff . . . .”
N.C.R. Civ. P. 14(a). Plaintiff contends that Rule 14 provides
that a plaintiff may assert a complaint against a third-party
defendant without adhering to the requirements of Rule 15 of the
North Carolina Rules of Civil Procedure which applies to amendments
of pleadings. However, a plaintiff's assertion of a complaint
against a third-party defendant after already having filed an
original complaint is, in effect, an amendment to the original
complaint. Therefore, the requirements of Rule 15 would apply.
Since Erie had already filed an answer to plaintiff's original
complaint by the time plaintiff filed his complaint against Hurley,
pursuant to Rule 15(a), plaintiff
was only allowed to amend his
complaint by leave of court or by written consent of the adverse
party. N.C.R. Civ. P. 15(a). We note that plaintiff did not have
leave of court nor written consent of the adverse party prior to
filing his complaint against Hurley. In addition, plaintiff has
not cited, nor have we found, any cases in which our Courts haveauthorized the pleading method that plaintiff attempted to utilize.
Therefore, we conclude plaintiff's pleading was improper under Rule
15.
We must interpret Rule 14(a) and Rule 15(a) in such a way that
both provisions are given effect based on the following rules of
construction. “'Statutes
in pari materia, although in apparent
conflict or containing apparent inconsistencies, should, as far as
reasonably possible, be construed in harmony with each other so as
to give force and effect to each . . . .'”
Swain v. Elfland, 145
N.C. App. 383, 390, 550 S.E.2d 530, 535 (quoting
State v. Hutson,
10 N.C. App. 653, 657, 179 S.E.2d 858, 861 (1971)),
cert. denied,
354 N.C. 228, 554 S.E.2d 832 (2001). Further, “[i]nterpretations
that would create a conflict between two or more statutes are to be
avoided, and statutes should be reconciled with each other whenever
possible.”
Velez v. Dick Keffer Pontiac-GMC Truck, Inc., 144 N.C.
App. 589, 593, 551 S.E.2d 873, 876 (2001). If we interpret Rule
14(a) in the way that plaintiff argues, giving a plaintiff the
ability to assert a claim against a third party defendant without
requiring leave of court to amend or written consent of the adverse
party after a responsive pleading has been filed to the original
complaint, such interpretation would bypass Rule 15(a) requirements
for amending a complaint. We conclude the provisions at issue from
Rule 14(a) and Rule 15(a) must be interpreted in such a way as to
give effect to both. Therefore, we hold a plaintiff filing a claim
against a third-party defendant arising out of the transaction or
occurrence that is the subject matter of the plaintiff's claimagainst the defendant/third-party plaintiff must follow the
requirements pursuant to Rule 15(a) in order to amend the
plaintiff's original complaint. Hence, when the defendant or
third-party plaintiff has filed an answer to the plaintiff's
original complaint, in order for the plaintiff to assert a claim
against the third-party defendant, he must amend his complaint by
leave of court or by written consent of the adverse party.
During the summary judgment hearing on 1 October 2001, which
was after the three year statute of limitations had run on 8
February 2001, plaintiff made an oral motion to amend the
complaint, to name Hurley as an original defendant and to assert
claims against Hurley. This motion was denied by the trial court.
“A motion to amend the pleadings is addressed to the sound
discretion of the trial court.”
Mabrey v. Smith, 144 N.C. App.
119, 121, 548 S.E.2d 183, 185-86,
disc. review denied, 354 N.C.
219, 554 S.E.2d 340 (2001). We conclude the trial court properly
determined that plaintiff's claims against third-party defendant
Hurley were barred by the statute of limitations and did not abuse
its discretion in denying plaintiff's oral motion to amend his
complaint to add Hurley as a defendant. N.C. Gen. Stat. § 1A-1,
Rule 15(c) governs the relation back of amendments to pleadings.
Our Supreme Court has provided the following interpretation of Rule
15(c):
Nowhere in the rule is there a mention of
parties. It speaks of claims and allows the
relation back of claims if the original claim
gives notice of the transactions or
occurrences to be proved pursuant to the
amended pleading. When the amendment seeks toadd a party-defendant or substitute a party-
defendant to the suit, the required notice
cannot occur. . . . We hold that this rule
does not apply to the naming of a new party-
defendant to the action. It is not authority
for the relation back of a claim against a new
party.
Crossman, 341 N.C. at 187, 459 S.E.2d at 717. Applying this
interpretation, the
Crossman Court held that an amendment to the
complaint naming Van Dolan Moore, II as the defendant (where the
original complaint named as the defendant Van Dolan Moore) could
not relate back to the filing of the original complaint pursuant to
Rule 15(c).
Wicker, 128 N.C. App. 524, 495 S.E.2d 398, is perhaps even
more instructive on the particular facts of the instant case
. In
Wicker, the plaintiff made a motion to amend in order to name the
third-party defendant as a defendant to her original complaint.
The plaintiff in
Wicker attempted to distinguish her case from
Crossman,
as does plaintiff in this case, by noting that the third-
party defendant would not suffer any prejudice by being designated
as a party-defendant because it was on notice of the claim.
However, this Court concluded that the lack of prejudice argument
based on the third-party defendant's notice of the claim was
irrelevant under the
Crossman Court's analysis of the limited reach
of Rule 15(c).
Wicker, 128 N.C. App. at 527, 495 S.E.2d at 400.
This Court therefore found no error in the trial court's denial of
the plaintiff's motion to amend.
Plaintiff attempts to compare this case with
Liss v. Seamark
Foods, 147 N.C. App. 281, 555 S.E.2d 365 (2001), in which thisCourt allowed a motion to amend to relate back to the date of the
original complaint, even though the statute of limitations had run,
in order to correct a misnomer of the defendant. We do not find
the
Liss case controlling since the case
sub judice does not
concern the correction of a misnomer but instead involves the
addition of a third-party defendant not named in the original
complaint.
In following
Crossman and
Wicker, we conclude the trial court
did not err in denying plaintiff's oral motion to amend his
complaint and concluding that plaintiff's direct claims against
Hurley were barred by the statute of limitations. Therefore,
summary judgment was properly entered in Hurley's favor as to all
of plaintiff's claims.
(See footnote 1)
Plaintiff argues that the trial court erred in striking his
third-party complaint against Hurley pursuant to N.C. Gen. Stat. §
1A-1, Rule 12(f) because plaintiff asserts that Rule 12(f) would
not apply since it is designed to allow a court to strike any
“insufficient defense or any redundant, irrelevant, immaterial,
impertinent, or scandalous matter.” N.C. Gen. Stat. § 1A-1, Rule
12(f) (2001). We conclude that since plaintiff's third-partycomplaint against Hurley was improper under the North Carolina
Rules of Civil Procedure and the statute of limitations had run at
the time of the hearing on Hurley's motion for summary judgment,
plaintiff's pleading was immaterial and had no possible bearing
upon the litigation. Therefore, the court was proper in striking
plaintiff's third-party complaint against Hurley pursuant to Rule
12(f).
In sum, we reverse the trial court's summary judgment entered
in favor of Hurley as to Erie's subrogation claim against Hurley
for the loss of plaintiff's Freightliner and remand for further
proceedings on this claim. We affirm the trial court's summary
judgment in favor of Erie as to all of plaintiff's claims against
Erie since we conclude as a matter of law that plaintiff's loss of
the Pontiac Firebird body and parts were excluded from coverage
under the insurance policy. Finally, we also affirm the trial
court's summary judgment entered in Hurley's favor as to all of
plaintiff's claims.
Reversed and remanded in part; affirmed in part.
Judges WYNN and TIMMONS-GOODSON concur.
Footnote: 1