Insurance_UIM_stacked policies_one at statutory minimum liability amount
UIM coverage was not available where one of the two involved policies was not above
the statutory minimum liability amount. N.C.G.S. § 20-279.21(b)(4).
Currin & Dutra, L.L.P., by Lori A. Dutra and Amy R. Edge, for
plaintiffs-appellees.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.,
by Steven M. Sartorio and Christopher R. Kiger, for
defendants-appellants.
ELMORE, Judge.
Defendant State Farm Mutual Automobile Insurance Company
(State Farm) contends the trial court erred in denying its motion
for summary judgment and granting summary judgment in favor of
plaintiffs Robert and Mary Purcell in a declaratory judgment action
to determine whether underinsured motorist (UIM) coverage was
available to plaintiffs under two automobile insurance policies
issued by State Farm. We agree, and therefore reverse the trial
court's order.
The parties stipulated to the following facts: on 29 June
1997, plaintiffs were seriously injured when their motorcycle was
struck by a vehicle operated by defendant Oscar Downey (Downey).
Plaintiffs' injuries were proximately caused by the accident, andplaintiffs suffered damages in excess of $125,000.00 each.
Downey's vehicle was insured by North Carolina Farm Bureau
Insurance Company (Farm Bureau) under a policy which provided
liability coverage to Downey in the amount of $100,000.00 per
person/$300,000.00 per accident. Pursuant to a “Settlement
Agreement with Primary Liability Carrier Only/Covenant Not to
Enforce Judgment” executed by each plaintiff, Farm Bureau paid
plaintiffs $100,000.00 each, representing the single per person
limits of the liability coverage it provided to Downey. At the
time of the accident, plaintiffs owned two policies of automobile
insurance issued by State Farm, policy numbers 157-2910-E30-33P
(Policy One) and 161-9221-F13-33D (Policy Two). Plaintiffs paid
separate premiums to State Farm for Policy One and Policy Two and
were current in their payments on both policies at the time of the
accident. Policy Two insured the motorcycle on which plaintiffs
were riding when the accident occurred. Policy One insured
plaintiffs' three automobiles.
The record evidence tends to show that Policy One, the policy
insuring plaintiffs' three automobiles, provided liability and UIM
coverage with limits in the amount of $100,000.00 per
person/$300,000.00 per accident. Plaintiffs purchased Policy One
in 1980. Policy Two, a minimum limits policy insuring the
motorcycle plaintiffs were operating when injured, was purchased in
1990 and provided liability coverage with limits in the amount of
$25,000.00 per person/$50,000.00 per accident, with no stated UIM
coverage. State Farm provided plaintiffs with a“Selection/Rejection Form” which Robert Purcell signed on 5
December 1991, purportedly rejecting UIM coverage on Policy Two.
Plaintiffs filed their declaratory action on 28 June 2000,
seeking a determination that (1) Policy One and Policy Two provided
UIM coverage to them at the time of the accident; (2) the limits of
the UIM coverage provided by the two State Farm policies should be
aggregated, or “stacked;” and (3) as a result, plaintiffs are now
entitled to receive an additional $25,000.00 apiece from State Farm
in UIM coverage. In other words, plaintiffs contend that Policy
One has UIM limits of $100,000.00 per person/$300,000.00 per
accident, that Policy Two has UIM limits of $25,000.00 per
person/$50,000.00 per accident, and that the UIM limits of Policies
One and Two should be stacked to provide plaintiffs with total UIM
coverage in the amount of $125,000.00 per person/$350,000.00 per
accident. Plaintiffs thus argue they are entitled to receive a
total of $50,000.00 in UIM coverage from State Farm, in addition to
the $200,000.00 they have already received from Farm Bureau in
payment of the “per person” limits of the liability coverage Farm
Bureau provided to Downey.
The parties filed cross-motions for summary judgment, and the
trial court heard their motions on 4 June 2001. From an order
entered 30 December 2002 granting summary judgment in plaintiffs'
favor and denying State Farm's cross-motion for summary judgment,
State Farm appeals.
State Farm's lone contention on appeal is that the trial court
improperly denied its motion for summary judgment and instead
granted summary judgment in plaintiffs' favor because the trialcourt should have determined, as a matter of law, that Policy Two
did not provide any UIM coverage to plaintiffs which could
subsequently be stacked with the UIM coverage provided by Policy
One. Specifically, State Farm argues that pursuant to N.C. Gen.
Stat. § 20-279.21(b)(4), UIM coverage is not available with Policy
Two because Policy Two provides only the statutorily mandated
minimum limits of liability coverage. For the reasons discussed
herein, we agree.
Summary judgment is appropriate “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 [a] party is entitled to a
judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c)
(2003). In a declaratory action where, as here, there is no
substantial controversy as to the facts disclosed by the evidence,
either party may be entitled to summary judgment, since the legal
significance of those facts is the only matter in controversy.
Blades v. City of Raleigh, 280 N.C. 531, 187 S.E.2d 35 (1972). The
party moving for summary judgment bears the burden of establishing
the lack of a triable issue of fact. Pierce Concrete, Inc. v.
Cannon Realty & Construction Co., 77 N.C. App. 411, 412, 335 S.E.2d
30, 31 (1985).
In order to determine “whether insurance coverage is provided
by a particular automobile liability insurance policy, careful
attention must be given to the type of coverage, the relevant
statutory provisions, and the terms of the policy.” Smith v.
Nationwide Mutual Ins. Co., 328 N.C. 139, 142, 400 S.E.2d 44, 47,reh'g denied, 328 N.C. 577, 403 S.E.2d 514 (1991). The type of
coverage at issue in the present case is UIM coverage, and the
relevant statute is N.C. Gen. Stat. § 20-279.21(b)(4). Section 20-
279.21(b)(4) provides that an automobile owner's liability
insurance policy:
Shall . . . provide underinsured motorist coverage, to be
used only with a policy that is written at limits that
exceed those prescribed by subdivision (2) of this
section and that afford uninsured motorist coverage as
provided by subdivision (3) of this subsection, in an
amount not to be less than the financial responsibility
amounts for bodily injury liability as set forth in G.S.
20-279.5 nor greater than one million dollars
($1,000,000) as selected by the policy owner.
N.C. Gen. Stat. § 20-279.21 (b)(4) (2003). At the time of the
accident, section 20-279.21(b)(2) established the minimum limits
for an automobile liability insurance policy as:
twenty-five thousand dollars ($25,000) because of bodily
injury to or death of one person in any one accident and,
subject to said limit for one person, fifty thousand
dollars ($50,000) because of injury to or destruction of
property of others in any one accident[.]
N.C. Gen. Stat. § 20-279.21(b)(2) (1997). Moreover, section 20-
279.21(b)(4) further provides that:
if a claimant is an insured under the [UIM] coverage on
separate or additional policies, the limit of [UIM]
coverage applicable to the claimant is the difference
between the amount paid to the claimant under the
exhausted liability policy or policies and the total
limits of the claimant's [UIM] coverages as determined by
combining the highest limit available under each
policy[.]
N.C. Gen. Stat. § 20-279.21 (b)(4) (2003). UIM coverage allows
recovery by the insured where, as here, the tortfeasor has
insurance, but the tortfeasor's coverage is insufficient to fully
compensate the injured party. Sutton v. Aetna Casualty & Surety
Co., 325 N.C. 259, 263, 382 S.E.2d 759, 762, reh'g denied, 325 N.C.437, 384 S.E.2d 546 (1989). However, our appellate courts have
repeatedly construed section 20-279.21(b)(4) “to require a
policyholder to maintain liability coverage that is above the
statutory minimum in order to be eligible for UIM coverage.”
Pinney v. State Farm Mut. Ins. Co., 146 N.C. App. 248, 253, 552
S.E.2d 186, 190 (2001), disc. review denied, 356 N.C. 438, 572
S.E.2d 788 (2002); see also Smith v. Nationwide Mutual Ins. Co.,
328 N.C. 139, 147, 400 S.E.2d 44, 50, reh'g denied, 328 N.C. 577,
403 S.E.2d 514 (1991) (“Under § 20-279.21(b)(4), UIM coverage may
be obtained only if the policyholder has liability insurance in
excess of the minimum statutory requirement[.] . . .”); Morgan v.
State Farm Mut. Auto. Ins. Co., 129 N.C. App. 200, 205, 497 S.E.2d
834, 837, aff'd, 349 N.C. 288, 507 S.E.2d 38 (1998) (“[S]ince the
policy in question only provided the minimum statutory-required
coverage of $25,000/$50,000, the policy was not required to provide
UIM coverage under section 20-279.21(b)(4)”).
In the present case, of the two automobile insurance policies
owned by plaintiffs and issued by State Farm, only Policy Two
provided liability coverage for the motorcycle involved in the
accident. Our appellate courts have allowed interpolicy stacking
of UIM coverages where the vehicle involved in the accident was
listed on only one of the policies, reasoning that “[t]he statutory
scheme for liability insurance is primarily vehicle oriented while
. . . UIM insurance is essentially person oriented.” Smith, 328
N.C. at 148, 400 S.E.2d at 50; see also Bass v. N.C. Farm Bureau
Mut. Ins. Co., 103 N.C. App. 272, 274, 405 S.E.2d 370, 371 (1991),
aff'd, 332 N.C. 109, 418 S.E.2d 221 (1992). However, in both Smithand Bass, unlike the instant case, each of the multiple policies
which were held to provide stackable UIM coverages were written at
limits that exceeded the statutorily-required minimum liability
amount.
In the present case, the declarations page for Policy One
indicates that both liability and UIM coverage with limits in the
amount of $100,000.00 per person/$300,000.00 per accident were
provided by that policy. By contrast, the declarations page for
Policy Two indicates this policy provided liability coverage with
limits equal to the statutorily-required minimum amount of
$25,000.00 per person/$50,000.00 per accident, with no stated UIM
coverage. Thus, under section 20-279.21(b)(4), no UIM coverage was
available with Policy Two, since that policy only provided
liability coverage in an amount that did not exceed the
statutorily-required minimum limits. Smith, 328 N.C. at 147, 400
S.E.2d at 50; Pinney, 146 N.C. App. at 253, 552 S.E.2d at 190;
Morgan, 129 N.C. App. at 205, 497 S.E.2d at 837. Moreover, the
validity of plaintiffs' purported 1991 rejection of UIM coverage on
Policy Two is immaterial to this analysis “because plaintiff was
not purchasing a policy written at limits that exceeded the minimum
limits of $25,000/$50,000, [and] UIM coverage was not actually
available” when the purported rejection was made. McNally v.
Allstate Ins. Co., 142 N.C. App. 680, 682, 544 S.E.2d 807, 809,
disc. review denied, 353 N.C. 728, 552 S.E.2d 163, (2001) (stating
that because the policy at issue provided only the statutorily-
required minimum limits for bodily liability coverage at the time
the purported rejection was signed, the policyholder was noteligible for UIM coverage at that time, and the policy was not then
subject to section 20-279(b)(4)).
We hold that because Policy Two is a minimum limits policy
which by its terms was not “written at limits that exceed” the
minimum financial responsibility amounts set forth by Section 20-
279.21(b)(2), Section 20-279.21(b)(4) mandates that as a matter of
law, UIM coverage is not available to plaintiffs under Policy Two.
Consequently, we conclude that there is no additional UIM coverage
available to be stacked with the $100,000.00 of UIM coverage
provided to each plaintiff by Policy One, which is equal to the
amount already paid to each plaintiff under the tortfeasor's
exhausted liability policy. We therefore reverse the trial court's
order and remand with instructions to enter an order granting
summary judgment in favor of State Farm.
Reversed and remanded.
Judges BRYANT and CALABRIA concur.
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