Insurance--passenger in wrecked auto--failure to timely adjust claim--no privity with
driver's insurer
There was no privity between a passenger in a rented automobile and the driver's
insurance company, and a 12(b)(6) motion to dismiss plaintiff passenger's claim against the
insurance company for unfair and deceptive trade practices and bad faith in its refusal to timely
adjust plaintiff's claim was properly granted.
Rudolf Widenhouse & Fialko, by M. Gordon Widenhouse, Jr., for
plaintiff-appellant.
Frazier & Frazier, L.L.P., by Torin L. Fury, for defendant-
appellee.
JACKSON, Judge.
Plaintiff appeals from the order granting defendant GEICO
Indemnity Company's (“GEICO”) motion to dismiss entered 29 April
2004 in Guilford County Superior Court. This appeal arises out of
claims filed by plaintiff resulting from an automobile accident on
3 December 2000. Plaintiff, along with Nahikulani Kerekes
(“Kerekes”), was a passenger in a vehicle driven by defendant
Chasity Demidovich (“Demidovich”) which collided with a vehicle
driven by defendant Orval Wing (“Wing”) resulting in serious and
permanent injuries to plaintiff and Kerekes. At the time of the accident Demidovich was covered by an
automobile liability insurance policy provided by GEICO and was
driving a rental car belonging to defendant Alamo Financing. The
policy limits were $50,000 bodily injury per person and $2000
medical payments per person. Demidovich attempted to make a left
turn across Wing's lane of travel and her vehicle was struck by
Wing's vehicle, resulting in plaintiff's injuries.
Plaintiff made a demand on GEICO for payment under the policy
issued to Demidovich on 1 July 2002. GEICO paid plaintiff $2000
for medical payments under the policy on 20 November 2003 and
plaintiff filed the instant action 3 December 2003. On the same
date GEICO offered a settlement amount less than the $50,000 policy
limit, which plaintiff refused.
Plaintiff bases his claims of unfair and deceptive trade
practices and bad faith in refusal to timely adjust his claim on
the delay in time for GEICO's response to his claim and the fact
that Kerekes' demand for payment was satisfied on or about 20
November 2001 in the amount of $50,000 for bodily injury and $2000
for medical payments - the policy limits. GEICO answered
plaintiff's complaint and asserted various defenses including
failure to state a claim upon which relief could be granted. GEICO
then made a motion to dismiss plaintiff's claims against it
pursuant to Rule 12(b)(6). GEICO's motion was heard on 26 April
2004 in the Superior Court of Guilford County. After hearing oral
arguments and without taking evidence the trial court grantedGEICO's motion and dismissed plaintiff's claims as to GEICO with
prejudice. Plaintiff timely appeals from this order.
On appeal, plaintiff argues that the trial court erred in
granting GEICO's motion to dismiss his claims of bad faith and
unfair and deceptive trade practices. The standard of review for
a motion to dismiss under Rule 12(b)(6) of the North Carolina Rules
of Civil Procedure is “whether, as a matter of law, the allegations
of the complaint, treated as true, are sufficient to state a claim
upon which relief may be granted under some legal theory.” Block
v. County of Person, 141 N.C. App. 273, 277, 540 S.E.2d 415, 419
(2000) (internal quotations and citations omitted). Further,
“[t]he complaint must be liberally construed, and the court should
not dismiss the complaint unless it appears beyond a doubt that the
plaintiff could not prove any set of facts to support his claim
which would entitle him to relief. Id,, at 277-78, 540 S.E.2d at
419.
“North Carolina does not recognize a cause of action for
third-party claimants against the insurance company of an adverse
party based on unfair and deceptive trade practices under N.C.G.S.
. 75-1.1.” Wilson v. Wilson, 121 N.C. App. 662, 665, 468 S.E.2d
495, 497 (1996). Nothing in plaintiff's complaint asserts that
there is any privity between plaintiff and GEICO, and therefore,
even liberally construing the complaint and taking it as true,
plaintiff cannot set forth any set of facts which would entitle him
to relief. Plaintiff argues in his brief that he was an intended third-
party beneficiary under the automobile liability policy issued to
Demidovich by GEICO. Plaintiff relies on Murray v. Nationwide
Mutual Ins. Co., 123 N.C. App. 1, 472 S.E.2d 358 (1996), in support
of this position. Plaintiff's reliance on Murray in this case is
misplaced. In Murray we stated, “[t]he injured party in an
automobile accident is an intended third-party beneficiary to the
insurance contract between insurer and the tortfeasor/insured
party.” 123 N.C. App at 15, 472 S.E.2d at 366. In support of this
statement we cited Lavender v. State Farm Mut. Auto. Ins. Co., 117
N.C. App. 135, 136, 450 S.E.2d 34, 35 (1994). In both Murray and
Lavender a significant factual distinction with the instant case
exists - specifically, that in both of those cases the third-party
plaintiff already had obtained a judgment against the defendant
insurance company's insured. In fact, in Lavender we stated, “[i]t
is settled law that where 'the liability of the insured has been
established by judgment, the injured person may maintain an action
[as a third-party beneficiary] on the [insured's] policy of
[liability] insurance.'” 117 N.C. App. at 136, 450 S.E.2d at 35
(emphasis added)(quoting Hall v. Harleysville Mut. Casualty Co.,
233 N.C. 339, 340, 64 S.E.2d 160, 161 (1951)).
The facts of the case sub judice, with regard to the
relationship between plaintiff and GEICO, are more similar to those
in Wilson. In Wilson the plaintiff was the wife of Nationwide's
insured who was injured in an automobile accident resulting from
her husband's negligence. The Wilson plaintiff brought her claimfor unfair and deceptive trade practices, seeking punitive damages,
against the insurer prior to obtaining a judgment against her
husband and this Court held that her claim was not recognized in
North Carolina. Wilson, 121 N.C. App. at 667, 468 S.E.2d at 499.
Similarly here, plaintiff brought his claim against GEICO prior to
Demidovich's liability having been established judicially.
Plaintiff contends that his right to bring a claim of bad
faith against GEICO also is based on our holding in Murray. As we
have held supra, Murray is not applicable under the facts of this
case.
We hold that because plaintiff's claims against GEICO are not
recognized in North Carolina prior to a judicial determination of
the insured's liability, the complaint demonstrates, without
question, that no set of facts can be established which would
entitle plaintiff to relief for either the bad faith or the unfair
and deceptive practices claims. Accordingly, plaintiff's claims
were properly dismissed for failure to state a claim for which
relief can be granted.
Affirmed.
Judges WYNN and BRYANT concur.
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