1. Civil Procedure_summary judgment_supplemental affidavit
The trial court did not abuse its discretion by allowing the submission of a supplemental
affidavit during a summary judgment hearing where the supplemental affidavit was in response
to allegations made for the first time in an affidavit received the afternoon before the hearing and
the supplement contained only six additional sentences, which specifically rebutted the affidavit
received the day before the hearing.
2. Insurance_existence of exclusion_question of fact
The trial court erred by granting summary judgment for plaintiff insurer in a declaratory
judgment action to determine insurance coverage where plaintiff had submitted affidavits
averring that a policy endorsement excluded coverage and defendants submitted an affidavit in
opposition.
Pendleton & Pendleton, P.A., by Wesley L. Deaton, for
defendants-appellants.
Whiteside & Walker, L.L.P., by Nancy E. Walker and Michael
Kemper, for plaintiff-appellee.
ELMORE, Judge.
In this appeal, we must determine whether the trial court
erred by granting summary judgment in favor of Burlington Insurance
Co. (plaintiff) in its declaratory judgment action against The
Fishermans Bass Circuit, Inc., a/k/a the Fisherman's Bass Circuit,
Inc., and Jerry Rhyne (collectively, defendants). For the reasons
stated herein, we reverse the judgment and remand this matter to
the trial court. The facts giving rise to the present appeal are as follows:
defendant Fishermans Bass Circuit, Inc. (FBC) is a North Carolina
corporation which operates and conducts fishing tournaments
throughout the Southeast. Defendant Jerry Rhyne (Rhyne) is FBC's
president. On 6 June 1999, while FBC was conducting a tournament
in Alabama, a bass boat operated by a participant in the tournament
struck a houseboat occupied by Eldridge and Bobbie Loudermilk, two
non-participants in the tournament, killing Eldridge Loudermilk and
injuring Bobbie Loudermilk. On 8 June 2000, Bobbie Loudermilk
filed a civil action in the Marshall County Circuit Court, Marshall
County, Alabama, seeking damages against, inter alia, defendants.
Larry J. Baker, a passenger in the bass boat which struck the
Loudermilks and also a participant in the tournament, subsequently
filed a separate action in Alabama against, inter alia,
defendants.
(See footnote 1)
Plaintiff initially provided a defense, under a reservation of
rights, for defendants in the Alabama lawsuits, pursuant to the
terms of a commercial general liability insurance policy issued by
plaintiff in favor of defendants. However, on 20 July 2002
plaintiff filed the declaratory judgment action underlying this
appeal, alleging that it had no obligation under the policy to
provide coverage for defendants. In support of its allegations,
plaintiff averred that defendants “are not entitled to either a
defense or coverage under the Policy for the reason that the
occurrence giving rise to the claims in question is specificallyexcluded from coverage by Policy Endorsement BG-G-074 492.” A copy
of this endorsement was attached to plaintiff's complaint and read
in pertinent part as follows:
1. This insurance does not apply to:
a. “bodily injury,” “personal injury,” or “advertising
injury”
(1) arising out of any mechanical amusement rides,
batting cages, dunk tanks, moonwalks,
trampolines, animal rides, aircraft,
watercraft, . . .;
. . .
(4) To any person while practicing, instructing,
demonstrating, or participating in . . . any
type of sport or athletic activity or contest.
. . .
b. “property damage”
(1) To any vehicle while practicing for or
participating in any contest;
. . . . (emphasis added).
In their answer, defendants admitted that plaintiff issued to
them a commercial general liability insurance policy, and denied
that they were not entitled to a defense under this policy.
Defendants specifically “aver[red] that plaintiff is barred by
latches and estoppel from proceeding with this declaratory judgment
action because plaintiff, through its agents, bound the plaintiff
and agreed with the defendants to provide coverage” for the
incident which gave rise to the Alabama lawsuits. Defendants pled
in their answer that “the terms of the Policy and provisions of the
Policy speak for themselves[,]” but did not specifically plead that
Policy Endorsement BG-G-074 492 was not part of the policy, thatdefendants had no notice of the endorsement, or that any terms of
the policy were ambiguous.
Plaintiff took no further action in this matter until 16 April
2003, when it filed a motion for summary judgment and three
affidavits in support thereof. Plaintiff's first supporting
affidavit was executed by Jerry Dellinger (Dellinger), an insurance
agent employed by East Lincoln Insurance Agency. Dellinger stated
in his affidavit that in 1995, at Rhyne's request and while acting
as a retail agent for defendants, he “contacted Jackson Sumner &
Associates, the agent for [plaintiff], and was able to obtain
coverage for [defendants].” Dellinger's affidavit stated as
follows regarding the policy he procured for defendants:
5. The 1995 policy was written as spectator liability
only and covered property damage and/or personal
injuries sustained in the exercise of [defendants']
administrative functions during the tournament
events and did not cover acts by tournament
participants and others on the water.
6. [Defendants] renewed the policy each year since
1995.
7. Rhyne made no request to change his coverage for
the 1999 policy and never asked to add coverage for
participants or other persons arising out of the
use of watercraft.
Plaintiff's second supporting affidavit was executed by Frank
Dent, III, plaintiff's vice president. Dent stated in his
affidavit that “the occurrence giving rise to the [Alabama
lawsuits] is specifically excluded from coverage by Policy
Endorsement BG-G-074 492.” Dent's affidavit also stated that no
one in his office communicated with any representative of
defendants regarding purchase of the policy in question, and that
plaintiff “has no relationship whatsoever with East LincolnInsurance Agency or with Jerry Dellinger and they have no authority
whatsoever to make representations on behalf of [plaintiff].”
Plaintiff's third supporting affidavit was executed by Wayne
L. Sumner (Sumner), owner of Jackson Sumner & Associates, an
authorized wholesale agent for plaintiff. Sumner's affidavit
stated that his office was “contacted in 1995 by [Dellinger] . . .
the retail agent for [defendants],” and that the resulting “1995
policy was written as requested by Dellinger, and was renewed on a
yearly basis.” Regarding the policy written by plaintiff, Sumner's
affidavit stated as follows:
4. The 1995 policy provided by [plaintiff] covered
property damage and/or bodily injuries sustained in
the exercise of [defendants'] administrative
functions during the tournament events and
expressly excluded acts by tournament participants
and others on the water.
. . .
6. The 1999 policy in effect at the time of the
accident in this case provided the same coverage
for property damage and/or bodily injuries as
Burlington's 1995 through 1998 policies.
On 23 April 2003, in opposition to plaintiff's summary
judgment motion, defendants filed an affidavit executed by Rhyne.
Plaintiff's counsel received Rhyne's affidavit by mail on Friday,
25 April 2003, one business day prior to the hearing on plaintiff's
motion, which had been noticed for Monday, 28 April 2003. Rhyne's
affidavit alleged that Dellinger represented himself to be an agent
of plaintiff, rather than defendants; that when Rhyne spoke with
Dellinger in 1995 about procuring an insurance policy for
defendants, Rhyne emphasized to Dellinger that defendants needed
coverage for boating accidents; and that Dellinger told Rhyne hewould provide such a policy. Regarding Policy Endorsement BG-G-074
492, Rhyne's affidavit stated as follows:
10. I have never before been given, told of or heard of
the endorsements described in the Plaintiff's
complaint, to which Plaintiff makes reference in
its Motion for Summary Judgment. I further contend
that I would not ever have agreed to this
modification of my liability policy.
11. . . . I would never have agreed to a policy change,
and did not agree to a policy change, that would
have effectively nullified the protection of which
I had requested from Jerry Dellinger.
On 28 April 2003, plaintiff's motion for summary judgment came
on for hearing. At the hearing, defendants argued that Rhyne's
affidavit created “a genuine issue of material fact as to whether
. . . Dellinger, who sold the policy to [defendants], . . . is an
agent under the terms of the law for [plaintiff],” such that
Dellinger, by making representations to Rhyne as alleged therein,
“has bound the plaintiff to coverage.” Defendants also argued that
Rhyne's affidavit created a second genuine issue of material fact,
that being whether Policy Endorsement BG-G-074 492 was ever agreed
to by defendants or ever delivered to defendants. Plaintiff's
counsel responded by noting that she received Rhyne's affidavit in
the mail one business day before the hearing, and that Rhyne
therein averred, for the first time, that Policy Endorsement BG-G-
074 492 was not part of the insurance policy at issue and that he
had no notice of its existence. In response to these averments,
plaintiff's counsel procured a supplemental affidavit from Sumner
late on the afternoon of the last business day before the hearing,
which she tendered to the trial court during the hearing. The
trial court received Sumner's supplemental affidavit overdefendants' objection. Sumner's supplemental affidavit stated in
pertinent part as follows:
3. The 1995 policy issued by [plaintiff] to
[defendants] included Endorsement BG-G-074 492.
4. [Plaintiff's] 1995 policy was renewed by
[defendants] each year through their agent, Jerry
Dellinger, and always included Endorsement BG-G-074
492.
6. [sic] For each renewal of coverage, Jackson Sumner
& Associates physically mailed to Jerry Dellinger,
the agent for [defendants], two complete copies of
the insurance policy . . . . Endorsement BG-G-074
492 was included in each of the policies sent to
Jerry Dellinger's office each year.
7. The 1999 policy in effect at the time of the
accident in this case contained Endorsement BG-G-
074 492 as did all of policies issued to
[defendants] since 1995.
Thereafter, by order entered 30 April 2003, the trial court
concluded “that there are no genuine issues of any material fact[]
and . . . that the policy does not provide coverage for claims
arising out of the Alabama boating accident[,]” and granted
plaintiff's motion for summary judgment. From this order,
defendants appeal.
[1] By their first assignment of error, defendants contend the
trial court abused its discretion by allowing plaintiff to submit
Sumner's supplemental affidavit during the hearing on plaintiff's
summary judgment motion, despite the fact that the affidavit was
not served upon defendants prior to the hearing. Defendants argue
plaintiff's failure to serve the affidavit prior to the day of the
hearing constitutes reversible error. We disagree.
This Court has stated that “[a]lthough affidavits in support
of a motion for summary judgment are required by G.S. 1A-1, Rules6(d) and 56(c) to be filed and served with the motion, Rule 56(e)
grants to the trial judge wide discretion to permit further
affidavits to supplement those which have already been served.”
Rolling Fashion Mart, Inc. v. Mainor, 80 N.C. App. 213, 216, 341
S.E.2d 61, 63 (1986) (citing Nationwide Mut. Ins. Co. v. Chantos,
21 N.C. App. 129, 203 S.E.2d 421 (1974)); see also Chaplain v.
Chaplain, 101 N.C. App. 557, 560, 400 S.E.2d 121, 122 (1991) (“The
provision requiring service of materials before a hearing for
summary judgment is not inviolable. Unserved materials are
receivable within the court's discretion.”)
In the present case, plaintiff submitted Sumner's supplemental
affidavit to rebut assertions made, for the first time, in Rhyne's
affidavit that Policy Endorsement BG-G-074 492 was not part of the
insurance policy at issue and that Rhyne had no notice of its
existence. Plaintiff's counsel received Rhyne's affidavit on the
afternoon of the last business day prior to the summary judgment
hearing. When plaintiff tendered Sumner's supplemental affidavit
during the hearing, the trial court received it “as a rebuttal to
an allegation that was not previously made.” Sumner's supplemental
affidavit contained only six sentences which were not present in
his original affidavit, and these six sentences specifically
rebutted Rhyne's affidavit by stating that the 1995 policy
contained Policy Endorsement BG-G-074 492, as did all subsequent
renewals thereof, each of which was mailed to Dellinger as
defendants' agent. On these facts, we discern no abuse of
discretion in the trial court's admission or consideration of
Sumner's supplemental affidavit. [2] By their second assignment of error, defendants contend
the trial court erred in granting plaintiff's motion for summary
judgment because a genuine issue of material fact existed as to
whether Policy Endorsement BG-G-074 492 was part of the contract of
insurance upon which plaintiff and defendants agreed.
(See footnote 2)
We find
defendants' argument on this point persuasive.
In a declaratory judgment action, summary judgment is properly
granted “where '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 any party is entitled to a judgment as a
matter of law.'” Williams v. Blue Cross Blue Shield of N.C., 357
N.C. 170, 178, 581 S.E.2d 415, 422 (2003) (quoting N.C. Gen. Stat.
§ 1A-1, Rule 56(c) (2003)). Our Supreme Court has stated that “'an
issue is genuine if it is supported by substantial evidence,' which
is that amount of relevant evidence necessary to persuade a
reasonable mind to accept a conclusion,” Liberty Mut. Ins. Co. v.
Pennington, 356 N.C. 571, 579, 573 S.E.2d 118, 124 (2002)
(citations and internal quotation marks omitted). Further, “anissue is material if the facts alleged would constitute a legal
defense, or would affect the result of the action, or if its
resolution would prevent the party against whom it is resolved from
prevailing in the action.” Koontz v. City of Winston-Salem, 280
N.C. 513, 518, 186 S.E.2d 897, 901 (1972). In order to defeat a
motion for summary judgment, the nonmoving party “must by
affidavit, or other means provided in the Rules, set forth specific
facts showing a genuine issue of fact for the jury; otherwise,
'summary judgment, if appropriate, shall be entered against [the
nonmoving party].'” In re Will of McCauley, 356 N.C. 91, 101, 565
S.E.2d 88, 95 (2002) (quoting N.C. Gen. Stat. § 1A-1, Rule 56(e)).
“When considering a motion for summary judgment, the trial judge
must view the presented evidence in a light most favorable to the
nonmoving party.” Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d
704, 707 (2001).
In the present case, plaintiffs moved for summary judgment on
the grounds that Policy Endorsement BG-G-074 492 excluded plaintiff
from liability for acts committed by participants and others
arising from the use of watercraft during fishing tournaments
conducted by defendants. In support of its motion, plaintiff
submitted affidavits averring that defendants' insurance policy
included Policy Endorsement BG-G-074 492 and therefore covered only
losses arising from defendants' “administrative functions during
the tournament events and expressly excluded acts by tournament
participants and others on the water[,]” and that Dellinger had no
authority to make any contrary representations to plaintiff. Defendants submitted the affidavit of Rhyne in opposition to
plaintiff's motion for summary judgment. Rhyne avers therein that
(1) Dellinger represented himself to be an agent of plaintiff; (2)
Rhyne related to Dellinger the nature of defendants' business and
told Dellinger that he “wanted a liability policy . . . for
protection from boating liability[;]” (3) Dellinger assured Rhyne
that he could provide such a policy; (4) Rhyne read the original
1995 policy, and it did not contain Policy Endorsement BG-G-074
492; and (5) Rhyne never received notice of any subsequent addition
of Policy Endorsement BG-G-074 492 to the policy.
On these facts, we conclude that defendants have carried their
burden of setting forth specific facts showing a genuine issue of
material fact for the jury as to whether the contract for insurance
agreed upon by the parties included Policy Endorsement BG-G-074
492. Consequently, we reverse the trial court's grant of summary
judgment in plaintiff's favor and remand to this case to the trial
court for further proceedings.
Reversed and remanded.
Judges MCGEE and MCCULLOUGH concur.
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