An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NORTH CAROLINA COURT OF APPEALS
Filed: 19 December 2006
HELEN I. COLTRANE
No. 04 CVS 11141
CLARA H. MITTELMAN and STATE
FARM MUTUAL INSURANCE COMPANY
Appeal by plaintiff from judgment entered 7 September 2005 by
Judge Henry E. Frye, Jr. in Guilford County Superior Court. Heard
in the Court of Appeals 13 September 2006.
Crumley & Associates, P.C., by Adrienne S. Blocker and
Marshall Hurley, PLLC, by Marshall Hurley, for plaintiff-
Patterson, Dilthey, Clay, Bryson & Anderson, L.L.P., by Ellen
J. Persechini, for defendant-appellee.
Helen I. Coltrane (Coltrane), plaintiff, appeals from
summary judgment entered in favor of defendant, State Farm Mutual
Insurance Company (State Farm), on the issues of bad faith and
unfair and deceptive trade practices in an underinsured motorist
claim. We affirm.
On 30 May 2003, Coltrane was a passenger in a vehicle driven
by Nathan B. Lenna (Lenna) when the vehicle was struck by another
vehicle driven by Clara H. Mittelman (Mittelman). On the date of
the accident, Lenna was insured by State Farm. Subsequently,
Coltrane demanded payment under Lenna's insurance policy claimingLenna's policy included underinsured motorist coverage (UIM).
State Farm denied Lenna's policy included UIM coverage based upon
a selection/rejection form signed by Lenna in which UIM coverage
The validity of the selection/rejection form is the source of
Coltrane's contentions. The selection/rejection form listed the
name Joseph Lenna, Jr., Lenna's father, as A Named Insured.
Also, two policy numbers appeared on the form - a typewritten
number that corresponded with Joseph Lenna, Jr.'s policy number and
a handwritten number that was Lenna's policy number. More
importantly, an X was marked next to the option that states, I
choose to reject Combined Uninsured/Underinsured Motorists Coverage
and select Uninsured Motorists Coverage at limits of: Bodily Injury
50/100; Property Damage 50.
State Farm investigated the validity of the
selection/rejection form and concluded that Lenna validly rejected
UIM coverage. Based on the investigation, State Farm denied
Coltrane's request for UIM coverage. On 15 October 2004, Coltrane
filed a complaint alleging negligence against Mittleman and
alleging bad faith and unfair and deceptive trade practices against
During discovery, State Farm submitted Lenna's sworn
affidavits. Specifically, Lenna affirmed both the signature on the
selection/rejection form was his signature and his intention in
signing the form was to decline the UIM coverage. Lenna verified
the date that he signed the selection/rejection form was the datethe policy was issued. State Farm filed a motion for summary
judgment on 3 June 2005. The trial court granted the motion on 7
September 2005. Plaintiff appeals.
We review the grant of a motion for summary judgment de novo.
Stafford v. County of Bladen, 163 N.C. App. 149, 151, 592 S.E.2d
711, 713 (2004), review denied, 358 N.C. 545 (2004). In so doing,
we must consider whether the evidence viewed in the light most
favorable to the non-moving party shows any genuine issue of
material fact and whether the movant is entitled to judgment as a
matter of law. Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C.
App. 729, 733, 504 S.E.2d 574, 577 (1998). The showing required
for summary judgment may be accomplished . . . by showing through
discovery that the opposing party cannot produce evidence to
support an essential element of her claim. Dobson v. Harris, 352
N.C. 77, 83, 530 S.E.2d 829, 835 (2000)(citations omitted).
Evidence properly considered on a motion for summary judgment
includes admissions in the pleadings, depositions on file . . .
affidavits, and any other material which would be admissible in
evidence or of which judicial notice may properly be taken.
Murray v. Nationwide Mut. Ins. Co., 123 N.C. App. 1, 8, 472 S.E.2d
358, 362 (1996) (citations omitted).
Unfair Settlement Practices (Bad Faith)
Initially, Coltrane argues that the trial court erred by
granting State Farm's motion for summary judgment because State
Farm acted in bad faith by relying upon the selection/rejection
form signed by Lenna. The elements of an unfair settlementpractice claim, also known as a bad faith claim, are: (1) a
refusal to pay after recognition of a valid claim, (2) bad faith,
and (3)aggravating or outrageous conduct. Lovell v. Nationwide
Mut. Ins. Co., 108 N.C. App. 416, 420, 424 S.E.2d 181, 184 (1993).
As to the first element, plaintiff offered no evidence that
defendant ever recognized plaintiff's claim as valid. After
plaintiff notified defendant of a potential claim under Lenna's
policy, the defendant informed plaintiff that Lenna had rejected
UIM coverage under his policy. Defendant then conducted an
investigation regarding the selection/rejection form. Defendant
concluded not only that the form was valid but also that Lenna had
properly rejected UIM coverage. Defendant never indicated that
plaintiff had a valid claim for UIM coverage under Lenna's policy.
The evidence viewed in the light most favorable to the plaintiff
fails to establish a genuine issue of material fact that defendant
refused to pay after recognition of a valid claim.
Plaintiff also failed to offer any evidence that defendant's
reliance upon the selection/rejection form was in bad faith.
[B]ad faith means not based on honest disagreement or innocent
mistake. Lovell, 108 N.C. App. at 421, 424 S.E.2d at 185
(citations omitted). Plaintiff contends that the
selection/rejection form was facially ambiguous and thus Lenna did
not validly reject UIM coverage. Plaintiff relies upon Hendrickson
v. Lee, 119 N.C. App. 444, 459 S.E.2d 275 (1995), as the basis for
this proposition. However, plaintiff's reliance is misplaced for
two reasons: First, in Hendrickson, the plaintiff's action was fordeclaratory relief against the defendant and not based upon a claim
of bad faith. See, id., 119 N.C. App. at 447, 459 S.E.2d at 277.
Therefore, the issue before the court in Hendrickson was the
validity of the selection/rejection form and not whether the
defendant's reliance upon it constituted bad faith on the
defendant's part. Second, the disputed selection/rejection form
was found to be invalid and did not conform with the Rate Bureau's
form. Specifically, the selection/rejection form did not allow for
the rejection of both uninsured and underinusured motorist
coverage. Id., 119 N.C. App. at 452, 459 S.E.2d at 280. The
structure of the selection/rejection form in Hendrickson was such
that it created an ambiguity as to whether the insured intended to
reject or select underinsured motorist coverage. Id.
In the case sub judice, plaintiff does not contest whether the
form itself conformed with the Rate Bureau's selection/rejection
form. Plaintiff contends that the manner in which the form was
signed did not reject UIM coverage. Plaintiff's argument, however,
fails to show defendant's denial of UIM coverage was not based on
an honest disagreement. This issue would have been appropriate
for the jury to decide if the plaintiff had appropriately asserted
it in her complaint. Instead, plaintiff chose to rely exclusively
on the claims of bad faith and unfair and deceptive trade
practices. We are thus constrained to hold that the evidence
viewed in the light most favorable to the plaintiff does not
establish a genuine issue of material fact regarding whether
defendant's reliance upon the selection/rejection form was anhonest disagreement. See Olive v. Great American Ins. Co., 76 N.C.
App. 180, 333 S.E.2d 41 (1985) (affirming dismissal of insured's
bad faith claim because no evidence insurer's denial of claim was
not an honest disagreement or innocent mistake); see also, Blis
Day Spa, LLC v. Hartford Ins. Group, 427 F. Supp. 2d 621 (W.D. N.C.
Finally, plaintiff produced no evidence of defendant's
aggravated conduct. [A]ggravated conduct has long been defined to
include 'fraud, malice, gross negligence, insult, . . . wilfully,
or under circumstances of rudeness or oppression, or in a manner
which evinces a reckless and wanton disregard of the plaintiff's
rights.' Dailey v. Integon Ins. Corp., 75 N.C. App. 387, 394, 331
S.E.2d 148, 154 (1985) (quoting Baker v. Winslow, 184 N.C. 1, 5,
113 S.E. 570, 572 (1922)). In Dailey, while the plaintiff and his
wife were on vacation, their house was destroyed by fire. After
the plaintiff-insured submitted a claim, the defendant delayed
processing the claim by sending the plaintiff improper forms and
twice rejecting the plaintiff's proof of loss form. During
investigation of the plaintiff's claims, the defendant's agent
interviewed the plaintiff's neighbors and accused the plaintiff of
deliberately setting the fire. Also, the defendant hired an
unlicensed professional to estimate the cost of repairs for the
plaintiff's home and the estimate was substantially lower than the
five estimates the plaintiff had procured. Based on these facts,
this Court found that defendant's conduct was aggravated and
oppressive. Id., 75 N.C. App. at 397, 331 S.E.2d at 155. Unlike the plaintiff in Dailey, the plaintiff sub judice
offered no evidence to prove defendant's actions constituted fraud,
malice, gross negligence, insult or were wilful, or under
circumstances of rudeness or oppression. After careful review of
the record, and viewing the evidence in the light most favorable to
plaintiff, we find no evidence that defendant's actions constituted
aggravated conduct. Defendant was entitled to summary judgment as
a matter of law.
Unfair and Deceptive Trade Practices
Plaintiff contends defendant's reliance upon the
selection/rejection form signed by Lenna violated N.C. Gen. Stat.
§ 75.1 by offend[ing] established public policy. Alternatively,
plaintiff argues defendant's reliance upon the selection/rejection
form violated N.C. Gen. Stat. § 58-63-15(11)(f)(2005) because it
was not an [attempt] in good faith to effectuate [a] prompt, fair
and equitable settlement of claims in which liability has become
reasonably clear and thus violated N.C. Gen. Stat. § 75-1.1 as a
matter of law.
To prevail on a claim of unfair and deceptive trade practices
under N.C. Gen. Stat. § 75-1.1 (2005), the plaintiff must show: 1)
an unfair or deceptive act or practice, or an unfair method of
competition, 2) in or affecting commerce, and 3) which proximately
caused actual injury to the plaintiff or his business. Murray,
123 N.C. App. at 9, 472 S.E.2d at 362. 'A [trade] practice is
unfair when it offends established public policy as well as when
the practice is immoral, unethical, oppressive, unscrupulous, orsubstantially injurious to consumers.' Walker v. Sloan, 137 N.C.
App. 387, 395, 529 S.E.2d 236, 243 (2000) (quoting Opsahl v.
Pinehurst, Inc., 81 N.C. App. 56, 69, 344 S.E.2d 68, 76 (1986)).
Furthermore, a party is guilty of an unfair act or practice when
it engages in conduct which amounts to an inequitable assertion of
its power or position. Id. (internal quotations omitted). Good
faith or lack of intent are not defenses to an unfair and deceptive
trade practice action. Miller v. Nationwide Mut. Ins. Co., 112
N.C. App. 295, 301-02, 435 S.E.2d 537, 542 (1993). The
determination of whether an act or practice is an unfair or
deceptive practice that violates § 75-1.1 is a question of law for
the court. Gray v. N.C. Ins. Underwriting Ass'n, 352 N.C. 61, 68,
529 S.E.2d 676, 681 (2000).
Plaintiff's sole argument that defendant's conduct violated §
75-1.1 is that defendant relied upon the rejection/selection form
signed by Lenna. However, plaintiff produced no evidence that
defendant's reliance offended established social policy or was in
any other way unfair or deceptive. We find, after viewing the
evidence in the light most favorable to plaintiff, no evidence
exists to substantiate an unfair or deceptive trade practice claim
under N.C. Gen. Stat. § 75-1.1.
Unfair or deceptive trade practices in the insurance industry
are governed by [N.C. Gen. Stat.] § 58-63-15. Miller, 112 N.C.
App. at 302, 435 S.E.2d at 542. A violation of [N.C. Gen. Stat.]
§ 58-63-15 constitutes an unfair and deceptive trade practice in
violation of G.S. § 75-1.1 as a matter of law. Id. Therelationship between the insurance statute and the more general
unfair or deceptive trade practices statutes is that the latter
provide[s] a remedy in the nature of a private action for the
former. Kron Medical Corp. v. Collier Cobb & Assoc., 107 N.C.
App. 331, 335, 420 S.E.2d 192, 194 (1992).
Plaintiff argues defendant's reliance upon the
selection/rejection form was not an attempt in good faith to
effectuate prompt, fair and equitable settlements of claims in
which liability has become reasonably clear. N.C. Gen. Stat. §
58-63-15(11)(f) (2005). We do not find plaintiff's argument
persuasive. Upon receipt of plaintiff's claim, defendant
immediately researched the validity of the claim and notified
plaintiff that Lenna did not have UIM coverage. Defendant
conducted a thorough investigation regarding the validity of the
selection/rejection form and determined that the form was valid.
Defendant also contacted Lenna, who swore in a signed affidavit
that it was his signature on the form and he intended to reject UIM
coverage. Viewing the evidence in the light most favorable to the
plaintiff, we hold there was no genuine issue of material fact as
to whether defendant handled plaintiff's claim promptly and fairly
in accordance with N.C. Gen. Stat. § 58-63-15(11)(f) and defendant
was entitled to summary judgment as a matter of law.
In conclusion, we do not determine the validity of the UIM
selection/rejection form. Our holding focuses solely on whether
genuine issues of material fact exist in plaintiff's claims of bad
faith and unfair and deceptive trade practices. For the reasons stated herein, we affirm the order of the
Judges TYSON and GEER concur.
Report per Rule 30(e).
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