Insurance--automobile--commercial policy--piercing the corporate veil
The trial court erred in an action arising out of an automobile accident by granting
summary judgment in favor of plaintiffs against defendant insurance company based on the
erroneous conclusion that plaintiffs were entitled to coverage under a commercial policy of
insurance issued by defendant insurance company to a corporation owned and operated by the
driver of the pickup truck involved in the collision, because: (1) the insurance policy covered
solely owned and temporary substitute vehicles of the insured company, and the pertinent truck
did not fall under these exclusions in the subject policy; (2) the driver of the truck was neither an
insured nor was the truck he was driving a covered vehicle; and (3) plaintiffs' propounded
application of the doctrine of piercing the corporate veil is rejected.
Taylor Law Office, by W. Earl Taylor, Jr., for plaintiffs-
appellees.
Patterson, Dilthey, Clay, Bryson & Anderson, L.L.P., by Mary
McHugh Webb and Heather R. Waddell, for defendant-appellant.
CALABRIA, Judge.
On 10 February 2001, Paul Bryan Jump (“Jump”) and William
Craig Herring (“Herring”) were returning from a field trial
competition for foxhounds. Jump was operating Herring's 2000
Chevrolet truck when it collided with a vehicle operated by Craig
G. Allen (“Allen”), who was killed as a result of injuries
sustained in the accident.
On the date of the accident, Jump was an “insured” under a
personal automobile policy issued by State Farm Mutual Automobile
Insurance Company (“State Farm”) to his wife. State Farm tenderedthe policy limits available under this policy to plaintiffs. In
addition, plaintiffs accepted the policy limits tendered under
Herring's automobile liability insurance on the 2000 Chevrolet
truck driven by Jump.
The issue in this case is whether plaintiffs are entitled to
coverage under a commercial policy of insurance (the “subject
policy”) issued by State Farm to B&L Mobile Repair, Inc. (“B&L”),
a corporation owned and operated by Jump. On 29 August 2001, Tesha
V. Cherry and Bridgette D. Allen, co-administratrix of Allen's
estate, brought a declaratory judgment action to determine the
rights and responsibilities of the parties.
State Farm moved for summary judgment on plaintiffs' claims
pursuant to Rule 56 of the North Carolina Rules of Civil Procedure,
asserting the subject policy did not provide coverage to Jump as an
“insured” or to the vehicle he operated as an insured vehicle.
Plaintiffs asserted the corporate veil of B&L should be pierced and
the corporate form disregarded so as to provide coverage to Jump as
the insured. After examining the insurance contract and hearing
oral arguments, the trial court denied State Farm's summary
judgment motion and granted summary judgment to plaintiffs. State
Farm appeals.
“Summary judgment is designed to 'ferret out those cases in
which there is no genuine issue as to any material fact and in
which, upon such undisputed facts, a party is entitled to judgment
as a matter of law.'” Cameron & Barkley Co. v. American Insurance
Co., 112 N.C. App. 36, 39, 434 S.E.2d 632, 634 (1993) (quoting
Haithcock v. Chimney Rock Co., 10 N.C. App. 696, 698-99, 179 S.E.2d865, 867 (1971)). “The construction and application of insurance
policy provisions to undisputed facts is a question of law,
properly committed to the province of the trial judge for a summary
judgment determination.” Certain Underwriters at Lloyd's London
v. Hogan, 147 N.C. App. 715, 718, 556 S.E.2d 662, 664 (2001).
We begin by setting forth several well-settled principles
governing the construction of insurance policies. “'[A]n insurance
policy is a contract and its provisions govern the rights and
duties of the parties thereto[.]'” Id. (quoting Fidelity Bankers
Life Ins. Co. v. Dortch, 318 N.C. 378, 380, 348 S.E.2d 794, 796
(1986)). “'[A]s with all contracts, the goal of construction is to
arrive at the intent of the parties when the policy was issued.'”
Id. (quoting Woods v. Insurance Co., 295 N.C. 500, 505, 246 S.E.2d
773, 777 (1978)). “The parties' intent may be derived from the
language employed in the policy.” Rouse v. Williams Realty Bldg.
Co., 143 N.C. App. 67, 69, 544 S.E.2d 609, 612 (2001).
In determining the meaning of the language
used in an insurance policy, the following
general rules of construction apply: “Where a
policy defines a term, that definition is to
be used. If no definition is given,
non-technical words are to be given their
meaning in ordinary speech, unless the context
clearly indicates another meaning was
intended. The various terms of the policy are
to be harmoniously construed, and if possible,
every word and every provision is to be given
effect. If, however, the meaning of words or
the effect of provisions is uncertain or
capable of several reasonable interpretations,
the doubts will be resolved against the
insurance company and in favor of the
policyholder. Whereas, if the meaning of the
policy is clear and only one reasonable
interpretation exists, the courts must enforce
the contract as written; they may not, under
the guise of construing an ambiguous term,
rewrite the contract or impose liabilities onthe parties not bargained for and found
therein.”
Hogan, 147 N.C. App. at 718-19, 556 S.E.2d at 664-65 (quoting
Woods, 295 N.C. at 505-06, 246 S.E.2d at 777); see also Gaston
County Dyeing Machine Co. v. Northfield Ins. Co., 351 N.C. 293,
299-300, 524 S.E.2d 558, 563 (2000). With these principles in mind
we turn to the subject policy to see whether the vehicle being
operated at the time of the accident was a covered vehicle under
the policy or whether Jump was a person to whom the policy provided
coverage as an insured.
I. Covered Vehicles
There is no dispute the 2000 Chevrolet truck was not a vehicle
covered by the subject policy issued to B&L. Liability insurance
is vehicle-oriented rather than person-oriented, Smith v.
Nationwide Mutual Ins. Co., 328 N.C. 139, 148, 400 S.E.2d 44, 50
(1991); Haight v. Travelers/Aetna Property Casualty Corp., 132 N.C.
App. 673, 679, 514 S.E.2d 102, 106 (1999), and we have upheld
exclusions that limit “liability coverage to personal injury or
property damage arising out of the ownership, maintenance or use of
the covered vehicle.” Haight, 132 N.C. App. at 679, 514 S.E.2d at
106.
The subject policy provided State Farm would pay, on behalf of
the insured, any amount the insured was legally obligated to pay as
damages due to bodily injury or property damage covered if “caused
by an occurrence and arising out of the ownership, maintenance or
use, . . . of an owned automobile or of a temporary substitute
automobile . . . .” An owned automobile was defined, in pertinent
part, as one “owned by the named insured and described in thedeclarations[.]” In the instant case, the subject policy set forth
two owned automobiles, a 1992 Dodge truck used primarily by Jump
for business purposes and a 1983 Toyota truck used by Jump to get
to and from work and around town. Neither of these trucks were the
trucks driven by Jump at the time of the accident.
The subject policy also provided coverage for temporary
substitute automobiles. This category included any “automobile not
owned by the named insured or any resident of the same household,
while temporarily used with the permission of the owner as a
substitute for an owned automobile when withdrawn from normal use
for servicing or repair or because of its breakdown, loss, or
destruction[.]” Herring's 2000 Chevrolet truck driven by Jump
could not be considered a temporary substitute vehicle since it was
not being used as a replacement for an owned automobile withdrawn
from normal use. Accordingly, the exclusions in the subject policy
preclude the conclusion that it provided coverage for the vehicle
driven by Jump in the instant case.
II. Piercing the Corporate Veil
Plaintiffs ask this Court to pierce the corporate veil of B&L,
the named insured. Plaintiffs assert that once the corporate veil
is pierced, B&L would have no legal independent existence from
Jump; therefore, Jump would be construed as the insured under the
subject policy at the time of the accident in which Allen was
killed. We find plaintiffs' proposed use of the doctrine of
piercing the corporate veil misplaced.
“[T]he doctrine that a corporation is a legal entity distinct
from the persons composing it is a legal fiction devised to servethe ends of justice.” Atlantic Tobacco Co. v. Honeycutt, 101 N.C.
App. 160, 164, 398 S.E.2d 641, 643 (1990). The doctrine of
disregarding a corporation's separate and independent existence is
commonly referred to as piercing the corporate veil, and we do not
invoke it lightly. Department of Transp. v. Airlie Park, Inc., 156
N.C. App. 63, 68, 576 S.E.2d 341, 344, appeal dismissed by, 357
N.C. 504, ___ S.E.2d ___ (2003). Accord Keener Lumber Co. v.
Perry, 149 N.C. App. 19, 37, 560 S.E.2d 817, 829, disc. rev.
denied, 356 N.C. 164, 568 S.E.2d 196 (2002) (quoting Dorton v.
Dorton, 77 N.C. App. 667, 672, 336 S.E.2d 415, 419 (1985)) (noting
that piercing the corporate veil is “'a drastic remedy' and 'should
be invoked only in an extreme case where necessary to serve the
ends of justice'”). “Piercing the corporate veil of a corporation
allows a plaintiff to impose legal liability for a corporation's
obligations, or for torts committed by the corporation, upon some
other company or individual that controls and dominates the
corporation.” Id.
Plaintiffs have not asserted Jump has dominated or controlled
B&L for the purpose of imposing the legal liability of B&L's
obligations on Jump and thereby reach Jump's individual assets.
Rather, plaintiffs ask this Court to disregard B&L's separate
corporate identity under the doctrine of piercing the corporate
veil for the purpose of reaching State Farm's coverage. Granting
plaintiffs' request would be tantamount to rewriting the terms of
the subject policy by requiring State Farm, B&L's liability
insurance provider, to cover someone other than the named insured.
Plaintiffs have cited no authority supporting the application ofpiercing the corporate veil in this manner, and we decline to adopt
it.
In summary, the insurance policy by State Farm covered solely
owned and temporary substitute vehicles of B&L, the insured. Jump
was neither an insured, nor was the truck he was driving a covered
vehicle. We reject plaintiffs' propounded application of the
doctrine of piercing the corporate veil. Accordingly, the trial
court erred in granting summary judgment in favor of plaintiffs
against State Farm. The judgment of the trial court is reversed,
and the case is remanded with instructions to enter summary
judgment for State Farm.
Reversed and remanded with instructions.
Judges McGEE and HUDSON concur.
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