Estoppel_statute of limitations_insurer concealing responsible party
A motion for summary judgment by a slip and fall defendant should have been denied
because plaintiff's claim of equitable estoppel established a defense against the statute of
limitations. Plaintiff sought to deal directly with the party responsible for the store in which he
was injured (a Piggly Wiggly), the company which insured both Piggly Wiggly and the company
to which the store was leased (Flockhart) responded on behalf of Piggly Wiggly, and settlement
discussions continued for sixteen months. The insurer concealed the responsible party by its
conduct, and plaintiff justifiably relied on that conduct to its detriment. An injustice would result
from holding that these facts do not present an exception to the general rule that insurers do not
act as agents for the insured when settling claims.
Thompson & Mikitka, P.C., by E. C. Thompson, III and Susan
Collins Mikitka, for plaintiff-appellant.
Patterson, Dilthey, Clay & Bryson, L.L.P., by Christopher M.
Hinnant, for defendant-appellee.
HUNTER, Judge.
Walter Hatcher, Jr. (“plaintiff”) appeals from a grant of
summary judgment in favor of Flockhart Foods, Inc. (“Flockhart”)
and the subsequent dismissal of his complaint against Flockhart as
being barred by the statute of limitations. For the reasons stated
herein, we reverse.
On 10 July 1997, plaintiff sustained several injuries when he
slipped and fell on a slick substance in a Piggly Wiggly grocery
store in Wallace, North Carolina (“the Store”). On 10 February
1999, plaintiff's counsel forwarded correspondence to the corporateoffice of Piggly Wiggly, Inc. to inform it that he was representing
plaintiff in a negligence claim for personal injuries as a result
of the fall. Great American Insurance Company, which was later
bought by Ohio Casualty Group, was the insurer of Piggly Wiggly,
Inc. and received notice of plaintiff's claim on or about 26 April
1999. A representative of the insurer contacted plaintiff by
telephone sometime thereafter, acknowledging the correspondence.
Plaintiff's counsel and the insurer's representatives engaged
in various communications over a period of approximately sixteen
months in an effort to settle the matter. During that time, no
representative ever indicated that he or she represented any entity
other than Piggly Wiggly, Inc. Plaintiff's counsel never inquired
about the lease or ownership status of the Store or who was the
responsible party for that property.
Due to the approaching three-year statute of limitations for
plaintiff's negligence claim, plaintiff's counsel informed the
insurer that he would be filing a complaint. Prior to filing that
complaint, plaintiff's counsel checked the corporation's registry
at the North Carolina Secretary of State website and discovered
that “Piggly Wiggly of Wallace, Inc.” was now known as “Wallace
Farm Mart, Inc.” Thus, plaintiff filed a complaint on 30 June 2000
naming “Wallace Farm Mart, Inc. formerly Piggly Wiggly of Wallace
Inc.” (“Wallace Farm Mart”) as the defendant. A courtesy copy of
the complaint was also forwarded to the insurer on that same day,
which was approximately ten days before expiration of the statute
of limitations. On 6 September 2000, Wallace Farm Mart filed a motion to
dismiss plaintiff's action and an answer that alleged it was not
the proper defendant because it had leased the Store to Flockhart.
Plaintiff then moved to add Flockhart as a party-defendant.
Wallace Farm Mart challenged plaintiff's motion on the ground that
the statute of limitations had expired. Nevertheless, plaintiff's
motion was allowed, and an amended complaint was filed on 13
December 2000. Afterwards, plaintiff voluntarily dismissed his
claim against Wallace Farm Mart.
On 1 February 2001, Flockhart filed a motion to dismiss
plaintiff's action on the ground that the statute of limitations
had expired prior to the filing of plaintiff's amended complaint.
In response, plaintiff filed a motion to amend his amended
complaint to particularly plead that Flockhart should be equitably
estopped from asserting the statute of limitations as a defense in
the matter. In separate orders entered on 14 September 2001, Judge
Jerry Braswell allowed plaintiff's motion, but denied Flockhart's
motion, in part, because “there was no recorded lease in the office
of the Register of Deeds of Duplin County indicating the property
was leased by the owner, Wallace Farm Mart, Inc., to lessee
Flockhart Foods, Inc.”
Flockhart filed an answer to plaintiff's second amended
complaint on 8 October 2001, which included an answer to
plaintiff's equitable estoppel claim and a renewed request for
dismissal of plaintiff's cause of action. When the motion was
heard, Flockhart submitted additional materials for the court's
consideration, which effectively converted its motion to dismissinto a motion for summary judgment. By order entered on 12 April
2002, Flockhart's motion was allowed by Judge Benjamin G. Alford,
and plaintiff's complaint was dismissed. Plaintiff appeals.
Defendant assigns error to the trial court's order granting
summary judgment in favor of Flockhart. On an appeal from a grant
of summary judgment, an appellate court must determine whether the
trial court, after viewing the evidence in the light most favorable
to the non-movant, properly concluded that there was no genuine
issue of material fact. Bruce-Terminix Co. v. Zurich Ins. Co., 130
N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998). If such a
conclusion is made, the moving party is entitled to judgment as a
matter of law. Id.
In its order, the trial court concluded that “plaintiff's
contention of equitable estoppel fail[ed] to establish a defense
against the applicable statute of limitations for negligence
actions . . . .” As the defendant, Flockhart was vested with the
right to rely on the statute of limitations as a defense against
plaintiff's stale claim. See Staley v. Lingerfelt, 134 N.C. App.
294, 299, 517 S.E.2d 392, 396 (1999). Yet, a defendant “may be
equitably estopped from using a statute of limitations as a sword,
so as to unjustly benefit from his own conduct which induced a
plaintiff to delay filing suit.” Friedland v. Gales, 131 N.C. App.
802, 806, 509 S.E.2d 793, 796 (1998).
“[T]he essential elements of an equitable
estoppel as related to the party estopped are:
(1) Conduct which amounts to a false
representation or concealment of material
facts, or, at least, which is reasonably
calculated to convey the impression that the
facts are otherwise than, and inconsistent
with, those which the party afterwardsattempts to assert; (2) intention or
expectation that such conduct shall be acted
upon by the other party, or conduct which at
least is calculated to induce a reasonably
prudent person to believe such conduct was
intended or expected to be relied and acted
upon; (3) knowledge, actual or constructive,
of the real facts.”
Meachan v. Board of Education, 47 N.C. App. 271, 277-78, 267 S.E.2d
349, 353 (1980) (citation omitted).
Plaintiff contends that a statute of limitations defense
should not be available to Flockhart, the party being estopped,
because the insurer acted as an agent of both Wallace Farm Mart and
Flockhart thereby imputing its concealment of the proper
defendant's identity on Flockhart. We agree.
The law of estoppel as applied to agency is as follows:
“Where a person by words or conduct represents
or permits it to be represented that another
person is his agent, he will be estopped to
deny the agency as against third persons who
have dealt, on the faith of such
representation, with the person so held out as
agent, even if no agency existed in fact.”
Fike v. Bd. of Trustees, 53 N.C. App. 78, 80, 279 S.E.2d 910, 912
(1981) (citation omitted). As a general rule, our courts have held
that insurers and their agents “'do not act as agents for the
insured when settling claims.'” Cash v. State Farm Mut. Auto. Ins.
Co., 137 N.C. App. 192, 204, 528 S.E.2d 372, 379 (2000) (citation
omitted). This Court reasoned in Cash that
an insurance company, when settling claims
with third party outsiders, is acting in its
own interest. “It is a matter of common
knowledge that fair and reasonable settlements
can generally be made at much less than the
financial burden imposed in litigating
claims.” Therefore, [our courts] can deduce
that settling a . . . claim may cost an
insurance company less than actuallylitigating it, and thus is in the insurer's
best interest.
Id. at 201, 528 S.E.2d at 377 (citations omitted). However,
although this general rule was intended to allow an insurer the
freedom to reach a fair and reasonable settlement that is in its
best interest, the rule was never intended to allow the insurer or
the insured to circumvent liability in the manner presented by the
facts in the instant case.
Here, it is undisputed that the insurer insured both Wallace
Farm Mart and Flockhart. Yet, when plaintiff's counsel sent his
first correspondence to Piggly Wiggly, Inc., the insurer responded
on behalf of Piggly Wiggly, Inc. and not on behalf of Flockhart,
the lessee of the Store where plaintiff fell. During the
subsequent sixteen months in which the insurer and plaintiff
attempted to reach a settlement, the insurer never indicated that
it represented any party other than Piggly Wiggly, Inc. or that
Piggly Wiggly, Inc. was not the responsible party. In fact, in a
correspondence the insurer sent plaintiff on 19 July 2000, two
weeks after the complaint was filed, the insurer was still
referring to its insured as “Piggly Wiggly, Inc.” Thus, even if no
agency existed in fact, Flockhart's conduct permitted the insurer
to act on its behalf thereby imputing the insurer's concealment of
the responsible party on Flockhart.
Further, as the party asserting the defense of equitable
estoppel, plaintiff must offer evidence of the following: “'(1)
lack of knowledge and the means of knowledge of the truth as to the
facts in question; (2) reliance upon the conduct of the party
sought to be estopped; and (3) action based thereon of such acharacter as to change his position prejudicially.'” Meachan, 47
N.C. App. at 278, 267 S.E.2d at 353 (citation omitted). After
viewing the evidence in the light most favorable to plaintiff, we
can conclude that plaintiff lacked knowledge that Flockhart was the
proper defendant to sue and was unable to discover that knowledge
because the lease between Flockhart and Wallace Farm Mart was not
recorded in the Register of Deeds office. Plaintiff relied on
correspondence between he and the insurer that indicated “Piggly
Wiggly, Inc.” was the insured. At no point during the sixteen
months plaintiff sought to settle the matter did the insurer state
that Flockhart was actually the responsible party. Without that
knowledge, plaintiff filed a complaint that named Wallace Farm Mart
as the defendant. Plaintiff did not learn Wallace Farm Mart had
leased the Store to Flockhart, making Flockhart the proper
defendant, until Wallace Farm Mart filed its answer, which was
after the limitations period ran out.
Finally, this case is generally analogous to Fike, 53 N.C.
App. 78, 279 S.E.2d 910, in which a plaintiff successfully asserted
agency by estoppel to prevent the defendant Retirement System from
denying retirement benefits. In that case, the plaintiff followed
the defendant's published guidelines in submitting his claim for
benefits to his employer, despite the plaintiff's desire to deal
directly with the defendant. The defendant subsequently denied the
plaintiff's application because it was not timely submitted by the
employer. This Court concluded that although the plaintiff's
employer was not the defendant's actual agent, evidence of
representations by the defendant that the employer was its agentwas sufficient to create an agency by estoppel and that the
plaintiff justifiably relied on those representations to his
detriment. The Court reasoned that it would have been unjust to
allow the defendant to deny benefits when it led the plaintiff to
believe he was dealing with its agent when the plaintiff
specifically sought to deal with the defendant.
Like the plaintiff in Fike, plaintiff in the case sub judice
sought to deal directly with the party (i.e. the party's insurance
company) responsible for the Store in which he received his
injuries when he sent the initial correspondence to Piggly Wiggly,
Inc. The insurer responded to plaintiff on behalf of Piggly
Wiggly, Inc. and not on behalf of Flockhart, the entity that was
actually the responsible party and also insured by the insurer.
Thereafter, plaintiff engaged in sixteen months of settlement
discussions with the insurer during which time the insurer, by its
conduct, concealed that Flockhart was the responsible party, as
well as represented that the responsible party was Piggly Wiggly,
Inc. Ultimately, the action plaintiff initiated against “Wallace
Farm Mart, Inc. formerly Piggly Wiggly of Wallace Inc.” was
dismissed by the trial court because plaintiff had failed to name
Flockhart as the proper defendant prior to the applicable statute
of limitations running out. Thus, since plaintiff justifiably
relied on the insurer's conduct to his detriment, these facts are
sufficient to create an agency by estoppel.
In conclusion, the doctrine of equitable estoppel “rests on
principles of equity and is designed to aid law in the
administration of justice when without its aid injustice wouldresult.” Deal v. N.C. State University, 114 N.C. App. 643, 645,
442 S.E.2d 360, 362 (1994). If we were to hold that the facts in
this case did not present an exception to the general rule that
insurers do not act as agents for the insured when settling claims,
such an injustice would result. Accordingly, the trial court
should have denied Flockhart's motion for summary judgment because
plaintiff's contention of equitable estoppel established a defense
against the applicable statute of limitations.
Reversed.
Judges TIMMONS-GOODSON and ELMORE concur.
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