Plaintiff Ralph Michael Hopper (Hopper) was injured while a
passenger in a vehicle driven by Susan Prince Watley (Watley). The
Watley vehicle was struck by an automobile driven by defendant, Ila
Blake Flynn, and owned by her husband, Floyd Flynn (the Flynns).
At the time of the collision, the Flynns were insured by Allstate
Insurance Company under a liability policy with limits of $100,000
per person. Watley's vehicle was insured by State Farm Insurance
Company, and plaintiff was insured by Progressive Insurance
Company.
The Flynns' insurer, Allstate, tendered the sum of $100,000 to
Hopper on behalf of the Flynns and the parties entered into a
settlement agreement in which Hopper reserved his right to assertclaims against the underinsured motorist (UIM) coverage provided by
State Farm and Progressive. Plaintiff subsequently filed this
action alleging that he is entitled to recover under the UIM
coverage of the State Farm and Progressive policies. State Farm
filed an answer in which it alleged that it has UIM limits of
$100,000 and, as the primary UIM carrier, is entitled to full
credit for the $100,000 paid plaintiff by Allstate.
Pursuant to a motion in the cause filed by Allstate seeking to
be relieved of its duty to defend defendant Ila Flynn, the trial
court ordered that Allstate be released from liability regarding
the accident but explicitly ordered that defendant Flynn was not
released “from liability as a result of her alleged negligence, or
Progressive and State Farm from any alleged liability under
underinsured motorist coverage and specifically preserves all right
of the plaintiff to continue this cause of action.”
The matter was submitted to the trial court, sitting without
a jury, upon stipulated facts to determine the issue of “whether
the Progressive policy issued for UIM coverage to the plaintiff or
the State Farm Insurance policy covering the vehicle in which the
plaintiff was riding as to which policy is primary and which policy
is excess coverage.” The trial court concluded as a matter of law
“that the State Farm policy is primary and is therefore entitled to
the full credit of the $100,000 paid by Allstate and that the
Progressive policy provides the excess coverage.” Plaintiff
appeals. “Insurance policies are considered contracts between two
parties.”
Metropolitan Prop. and Casualty Ins. Co. v. Lindquist,
120 N.C. App. 847, 851, 463 S.E.2d 574, 576 (1995). Since contract
interpretation is a question of law, we apply a
de novo standard of
review to the trial court's conclusion of law.
Harris v. Ray
Johnson Constr. Co., 139 N.C. App. 827, 829, 534 S.E.2d 653, 654
(2000).
Plaintiff argues that the “other insurance” provisions of the
State Farm and Progressive policies are mutually repugnant so that
neither is primary and any credit for payment on behalf of the
underinsured motorist, Flynn, is prorated. “Other insurance” or
“excess” clauses can be mutually repugnant when they “are worded in
such a way that it is impossible to distinguish between them or to
determine which policy is primary.”
Aetna Casualty and Surety Co.
v. Continental Ins. Co., 110 N.C. App. 278, 282, 429 S.E.2d 406,
409 (1993). The result of deeming excess clauses mutually
repugnant is that “neither . . . will be given effect, leaving the
insured's claim to be pro rated between the separate policies
according to their respective limits.”
N. C. Farm Bureau Mut. Ins.
Co. v. Bost, 126 N.C. App. 42, 52, 483 S.E.2d 452, 459,
disc.
review denied, 347 N.C. 138, 492 S.E.2d 25 (1997).
Under the “Other Insurance” clause of Hopper's Progressive
policy, when there are multiple applicable policies,
the following order shall be used to determine
which insurer is responsible for providing
payment:
1. a policy insuring the
injured person
[Hopper] as a named insured; then 2. a policy insuring the injured
person's
spouse or any
relative; then
3. policies insuring the
owner or
operator of the
motor vehicle occupied in
the
accident.[State Farm]
If we are responsible for providing payment under
this Part III to an
insured person and there is
more than one (1) applicable policy of the same
priority,
we will pay only
our share of the
damages.
Our share is the proportion that
our
Limit of Liability bears to the total of all
available coverage limits on the same level of
priority.
Therefore, under the language of the Progressive policy, it would
be primary, and the State Farm policy considered excess. However,
Watley's State Farm UIM coverage provides:
if there is other applicable similar
insurance, we will pay only our share of the
loss. Our share is the proportion that our
limit of liability bears to the total of all
applicable limits. However, any insurance we
provide with respect to a vehicle you [Watley]
do not own shall be excess over any other
collectible insurance.
It follows that State Farm's UIM coverage is not “excess” over
other insurance, because Watley owned the vehicle in which the
accident occurred.
Iodice v. Jones, 133 N.C. App. 76, 78-79, 514
S.E.2d 291, 293 (1999). Because each policy would be considered
primary under its own terms, we determine that these clauses are
mutually repugnant and we can give neither effect. Therefore, the
trial court erred in determining the State Farm Policy was primary
and the Progressive Policy was excess; plaintiff Hopper's UIM claim
must be pro rated between both insurers, according to their
respective limits of liability.
Reversed. Judges BRYANT and GEER concur.
Report per Rule 30(e).
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