Appeal by Defendants from judgment entered 15 December 2005 by
Judge Ronald L. Stephens in Superior Court, Durham County. Heard
in the Court of Appeals 1 November 2006.
Glenn, Mills & Fisher, P.A., by Carlos E. Mahoney, for
Law Offices of Robert E. Ruegger, by Robert E. Ruegger, for
Thomas J. Sitzman (Plaintiff) was riding his bicycle on a road
in Hillsborough on 24 May 2002 when he was struck and injured by a
vehicle operated by Willie McClinton Turrentine (Ms. Turrentine).
Plaintiff filed suit against Ms. Turrentine and a jury determined
that Plaintiff was injured by the negligence of Ms. Turrentine and
that Plaintiff was not contributorily negligent. The jury awardedPlaintiff $240,000.00 for personal injury and $955.00 for property
damage. The trial court entered judgment in favor of Plaintiff,
determining that Plaintiff should "recover from [Ms.] Turrentine
the sum of $240,955[.00]; pre-judgment and post-judgment interest
from the date of the filing of the Complaint on May 15, 2003 at the
rate of 8% as provided by law; and the costs of prosecuting this
action in the amount of $3,588.35."
Ms. Turrentine was insured at the time of the accident by
Nationwide Mutual Insurance Company (Nationwide), "with coverage in
the amount of $100,000. for personal injury, "$5,000. for
property damage and costs of the action." Nationwide paid
Plaintiff $106,755.28, which was comprised of $955.00 for property
damage, $100,000.00 for personal injury, $3,588.35 for the costs of
the action, and $2,211.93 for post-judgment interest.
Plaintiff was insured by Government Employees Insurance
Company and GEICO Direct Insurance Company (collectively GEICO)
under a policy which provided $100,000.00 of underinsured motorist
(UIM) coverage (the GEICO policy). Plaintiff was a named insured
under the GEICO policy, and the GEICO policy listed Plaintiff's
1987 Buick automobile as the insured vehicle. Plaintiff was also
insured under a policy, issued in Virginia to Plaintiff's parents,
by Harleysville Preferred Insurance Company (Harleysville), which
provided $500,000.00 of UIM coverage (the Harleysville policy).
The Harleysville policy listed a 1992 Toyota sedan and a 2001 Honda
sedan as insured vehicles. Plaintiff was an insured under the
Harleysville policy by virtue of being a family member of hisparents, who were the named insureds. Plaintiff reached a
settlement agreement with Harleysville for a portion of the
remainder of the judgment.
Plaintiff filed this action against GEICO seeking to recover
GEICO's pro rata share of the UIM liability. GEICO filed an answer
and Plaintiff subsequently moved for summary judgment. GEICO also
moved for summary judgment. The trial court granted Plaintiff's
motion for summary judgment and denied GEICO's motion for summary
judgment. The trial court determined that the excess clauses in
the GEICO and Harleysville policies were mutually repugnant and
that neither clause would be given effect. The trial court ordered
GEICO to pay to Plaintiff GEICO's pro rata share of the UIM
liability arising from the judgment Plaintiff recovered against Ms.
Turrentine. GEICO appeals.
GEICO argues the trial court erred by determining that the
excess clauses in the GEICO and Harleysville policies were mutually
repugnant and by ordering GEICO to pay a pro rata share of the UIM
liability. 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 any party is entitled to a
judgment as a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c)
(2005). "The construction and application of insurance policy
provisions to undisputed facts is a question of law, properly
committed to the province of the trial judge for a summary judgmentdetermination." Certain Underwriters at Lloyd's London v. Hogan
147 N.C. App. 715, 718, 556 S.E.2d 662, 664 (2001), disc. review
, 356 N.C. 159, 568 S.E.2d 188 (2002).
Where more than one UIM insurance policy provides coverage,
and "[w]here it is impossible to determine which policy provides
primary coverage due to identical 'excess' clauses, 'the clauses
are deemed mutually repugnant and neither . . . will be given
effect.'" Iodice v. Jones
, 133 N.C. App. 76, 78, 514 S.E.2d 291,
293 (1999) (quoting N.C. Farm Bureau Mut. Ins. Co. v. Hilliard
N.C. App. 507, 511, 369 S.E.2d 386, 388 (1988)). If excess clauses
are deemed mutually repugnant, "neither excess clause will be given
effect, leaving the insured's claim to be pro rated between the
separate policies according to their respective limits." North
Carolina Farm Bureau, Mut. Ins. Co. v. Bost
, 126 N.C. App. 42, 52,
483 S.E.2d 452, 458-59, disc. review denied
, 347 N.C. 138, 492
S.E.2d 25 (1997).
In the present case, the excess clause in the GEICO policy
provides, in pertinent part:
[I]f 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 do not
own shall be excess over any other collectible
(Emphasis added). The parties agree that the GEICO policy is
primary under its excess clause. However, we must determine
whether the parties' interpretation is correct. In a treatise on
UIM insurance, the author interpreted the phrase "any insurance weprovide with respect to a vehicle you do not own shall be excess
over any other collectible insurance" as follows:
The key language is the phrase "with respect
to a vehicle you do not own." The word "you"
again means the named insured and, if they
live together, the named insured's spouse. In
] Farm Bureau Mut. Ins. Co. v. Hilliard
[90 N.C. App. 507, 369 S.E.2d 386 (1988),]
Bowser v. Williams
, [108 N.C. App. 8, 422
S.E.2d 355 (1992), overruled on other grounds
by McMillian v. N.C. Farm Bureau Mut. Ins.
, 347 N.C. 560, 495 S.E.2d 352 (1998),] and
Isenhour v. Universal Underwriters Ins. Co.
[341 N.C. 597, 461 S.E.2d 317, reh'g denied
342 N.C. 197, 463 S.E.2d 237 (1995),] the
Court of Appeals and the Supreme Court assumed
without discussion that the "vehicle" to which
the phrase refers is the vehicle in which the
insured is riding at the time of the accident.
George L. Simpson, III, North Carolina Uninsured and Underinsured
Motorist Insurance: A Handbook
§ 3:16, at 269 (2007). We note that
GEICO's excess clause differentiates on the basis of whether the
insured owns, or does not own, the vehicle in which the insured was
riding at the time of the accident.
In the present case, Plaintiff was riding his bicycle at the
time of the accident. Under North Carolina law, a bicycle is
considered a vehicle when operated upon a highway. See
Stat. § 20-4.01(49) (2005); Lowe v. Futrell
, 271 N.C. 550, 554, 157
S.E.2d 92, 96 (1967) (stating that "[a] bicycle is a vehicle and
its rider is a driver within the meaning of the Motor Vehicle
Law."). Accordingly, when applied to this case, GEICO's excess
clause reads: "[A]ny insurance [GEICO] provide[s] with respect to
a [bicycle] [Plaintiff] do[es] not own shall be excess over any
other collectible insurance." As a necessary corollary, anyinsurance GEICO provides with respect to a bicycle Plaintiff does
own shall be primary. It follows that because Plaintiff owned the
bicycle he was riding at the time of the accident, GEICO is primary
under its excess clause.
The excess clause in the Harleysville policy reads:
[T]he following priority of policies applies
and any amount available for payment shall be
credited against such policies in the
following order of priority:
First Priority[:] The policy applicable
to the vehicle the "insured" was
"occupying" at the time of the accident.
Second Priority[:] The policy applicable
to a vehicle not involved in the accident
under which the "insured" is a named
Third Priority[:] The policy applicable
to a vehicle not involved in the accident
under which the "insured" is other than a
We interpret this policy under Virginia law because the policy was
issued in Virginia. See Erie Ins. Group v. Buckner
, 127 N.C. App.
405, 406, 489 S.E.2d 901, 903 (1997) (stating that "[t]he parties
agree and we confirm that Virginia law governs our interpretation
of the subject policy because Erie issued the policy in that
State."). However, "North Carolina cases [are] instructive since
North Carolina law is substantially similar to Virginia law
concerning the legal standards determining coverage, exclusions and
duties of defense." Id.
at 407 n.1., 489 S.E.2d at 903 n.1. Like
North Carolina law, Virginia law also provides that "when 'other
insurance' clauses of two policies are of identical effect in that
they operate mutually to reduce or eliminate the amount ofcollectible insurance available, neither provides primary coverage
and . . . '[a] pro rata distribution . . . [is] appropriate.'"
Aetna Cas. & Sur. v. Nat. Union Fire Ins.
, 353 S.E.2d 894, 897 (Va.
1987) (quoting State Capital Ins. Co. v. Mutual Assur. Soc.
S.E.2d 759, 762 (Va. 1978)).
Unlike the GEICO excess clause, the Harleysville policy does
not differentiate between policies based upon ownership of the
vehicle in which the insured was riding at the time of the
accident. Rather, the Harleysville policy differentiates between
the first priority on one hand, and the second and third priorities
on the other, based upon whether the policy is applicable to (1)
the vehicle involved in the accident or (2) a vehicle not involved
in the accident. The Harleysville policy further differentiates
between the second and third priorities depending upon whether the
insured is a named insured or other than a named insured.
The Harleysville policy does not define the phrase "applicable
to [the or a] vehicle." GEICO argues the phrase "applicable to
[the or a] vehicle" is synonymous with "covering [the or a]
vehicle." Under that interpretation, the vehicle referred to would
be the vehicle listed as an insured vehicle under the policy. The
bicycle is not listed as an insured vehicle under either policy.
Therefore, the GEICO policy would have second priority because it
is "[t]he policy [covering] a vehicle not involved in the accident
[i.e., Plaintiff's 1987 Buick] under which [Plaintiff] is a named
insured." GEICO further argues the Harleysville policy has third
priority because it is "[t]he policy [covering] a vehicle notinvolved in the accident [i.e., Plaintiff's parents' vehicles]
under which [Plaintiff] is other than a named insured." Under this
interpretation, the GEICO policy would have higher priority and
would therefore be primary under the Harleysville excess clause.
Accordingly, the GEICO policy would be primary under both the GEICO
and Harleysville policies, and the excess clauses would not be
However, Plaintiff argues the phrase "applicable to [the or a]
vehicle" means "that can be applied to [the or a] vehicle."
Pursuant to Plaintiff's interpretation, the Harleysville policy
falls under first priority because it is "[t]he policy [that can be
applied to] the [bicycle] [Plaintiff] was 'occupying' at the time
of the accident." Plaintiff argues the Harleysville policy can be
applied to Plaintiff's bicycle because the Harleysville policy
provides coverage for "property damage" caused by an accident, and
the policy further defines "property damage" as injury to or
destruction of any tangible property. Therefore, Plaintiff argues,
because Plaintiff's bicycle was tangible property damaged in the
accident, and the bicycle was subject to coverage, the Harleysville
policy "can be applied" to the bicycle and the Harleysville policy
is entitled to first priority status. Plaintiff further argues
that the GEICO policy also can "be applied to" the bicycle
Plaintiff was riding at the time of the accident. Therefore,
Plaintiff argues, because more than one policy provides coverage on
the same level of priority, GEICO and Harleysville must share the
UIM liability on a pro rata basis. We agree with GEICO's interpretation of the phrase "applicable
to [the or a] vehicle." The Harleysville policy uses the phrase
"applicable to [the or a] vehicle" under each of the three
priorities. However, under the first priority, the vehicle to
which the policy applies is the one involved in the accident.
Under the second and third priorities, the vehicle to which the
policy applies is a vehicle not involved in the accident. To give
a uniform interpretation to the phrase "applicable to [the or a]
vehicle," we hold that the phrase "[t]he policy applicable to [the
or a] vehicle" refers to the policy under which the vehicle is
listed as an insured vehicle. In other words, the phrase
"applicable to [the or a] vehicle" means "covering [the or a]
vehicle." This is necessary because under Plaintiff's
interpretation of the phrase "applicable to [the or a] vehicle,"
any policy covering property damage under which a party is insured
would be a first priority policy. If, for example, Plaintiff had
lived with family members who also had UIM insurance covering
property damage under which Plaintiff could claim coverage, those
policies could also claim first priority status because they could
be applied to the bicycle Plaintiff was occupying at the time of
the accident. Furthermore, under Plaintiff's interpretation of the
phrase "applicable to [the or a] vehicle," the Harleysville policy
would fall under multiple priority levels. In addition to the
Harleysville policy having first priority, it would also have third
priority because it is "[t]he policy that [can be applied to] a
vehicle not involved in the accident[,] [being Plaintiff's parents'vehicles,] under which [Plaintiff] is other than a named insured."
Such a construction is unreasonable and irrational.
Our decision is supported by Dairyland Ins. Co. v. Sylva
S.E.2d 127 (Va. 1991), where a vehicle driven by Matthew Rockstroh
(Rockstroh) struck and injured the plaintiff while the plaintiff
was operating his motorcycle. Id.
at 128. Allstate Insurance
Company (Allstate) insured Rockstroh in the amount of $25,000.00
against liability for bodily injury. Id.
Company (Dairyland) provided $25,000.00 of uninsured motorist (UM)
and UIM coverage to the plaintiff "while operating his motorcycle."
Allstate also provided $25,000.00 in UM and UIM coverage to
the plaintiff as a named insured in a policy issued to the
plaintiff's wife. Id.
The parties tentatively agreed to settle the plaintiff's claim
for $50,000.00, but could not agree whether Allstate or Dairyland
would be entitled to offset the $25,000.00 in liability insurance.
The plaintiff filed a complaint against Allstate and
Dairyland, seeking a determination of the priority of the two
The trial court held that Dairyland was primarily responsible
for paying the plaintiff's UIM claim. Id.
at 129. The Virginia
Supreme Court interpreted the pertinent Virginia statute:
"If an injured person is entitled to
underinsured motorist coverage under more than
one policy, the following order of priority of
policies applies and any amount available for
payment shall be credited against such
policies in the following order of priority:
1. The policy covering a motor vehicleoccupied by the injured person at the time of
2. The policy covering a motor vehicle not
involved in the accident under which the
injured person is a named insured;
3. The policy covering a motor vehicle not
involved in the accident under which the
injured person is an insured other than a
Where there is more than one insurer
providing coverage under one of the payment
priorities set forth, their liability shall be
proportioned as to their respective
underinsured motorist coverages."
(emphasis omitted) (quoting Va. Code Ann. § 38.2-2206(B)). The
Virginia Supreme Court held that "Dairyland's policy covered the
motorcycle 'occupied' (ridden) by [the plaintiff] and, under a
literal reading of the statute, Dairyland would thus be entitled to
priority in the credit for Rockstroh's liability coverage." Id.
Accordingly, Dairyland was entitled to a complete offset of its
$25,000.00 in UIM coverage. Id.
Pursuant to Dairyland
, the policy covering the vehicle is the
policy under which that vehicle is listed as an insured vehicle.
In the present case, Plaintiff argues that Dairyland
because the Virginia Supreme Court was interpreting the statutory
language, which is more narrow than the language used in the
Harleysville policy. Plaintiff argues "the Harleysville policy
provides broader coverage to Plaintiff than he would be entitled to
receive under the statutory code." However, as we have already
determined, the only reasonable interpretation of the Harleysville
policy requires us to interpret the phrase "applicable to [the ora] vehicle" as "covering [the or a] vehicle." Accordingly, because
interprets the Virginia statutory language, Dairyland
In the case before us, under this interpretation, the GEICO
policy has second priority under the Harleysville policy's excess
clause. The GEICO policy lists Plaintiff's 1987 Buick as the
insured vehicle. The 1987 Buick was not involved in the accident
and Plaintiff is a named insured under the GEICO policy.
Therefore, the GEICO policy is "[t]he policy applicable to a
vehicle not involved in the accident [i.e., Plaintiff's 1987 Buick]
under which [Plaintiff] is a named insured." The Harleysville
policy has third priority. The Harleysville policy lists two
vehicles as insured vehicles, neither of which was involved in the
accident. Moreover, Plaintiff is "other than a named insured"
under the Harleysville policy because he is a family member of the
named insureds. Therefore, the Harleysville policy is "[t]he
policy applicable to a vehicle not involved in the accident [i.e.,
Plaintiff's parents' vehicles] under which [Plaintiff] is other
than a named insured." Under the Harleysville excess clause, the
GEICO policy has higher priority than the Harleysville policy and
the GEICO policy is therefore primary.
Because the GEICO policy is primary under both the GEICO and
Harleysville excess clauses, the excess insurance clauses are not
mutually repugnant. Rather, they can be read harmoniously as
determining that GEICO provides primary UIM coverage in this case.
"'[T]he primary provider of UIM coverage . . . is entitled to thecredit for the liability coverage. The excess UIM coverage
providers still get the benefit of the credit for the coverage
because their UIM coverage does not apply until the liability
coverage and the primary UIM coverage are exhausted.'" Iodice
N.C. App. at 79, 514 S.E.2d at 293 (quoting Falls v. N.C. Farm
Bureau Mut. Ins. Co.
, 114 N.C. App. 203, 208, 441 S.E.2d 583, 586,
disc. review denied
, 337 N.C. 691, 448 S.E.2d 521 (1994)).
Accordingly, GEICO is entitled to set off the entire
$100,000.00 of liability insurance provided by Nationwide against
any UIM amount GEICO owes. Because GEICO's limit of UIM coverage
is $100,000.00, GEICO is entitled to a full offset of its UIM
coverage. Therefore, Plaintiff must seek the remainder of his UIM
coverage from Harleysville. We reverse the trial court and remand
with instructions to enter judgment in favor of GEICO.
Reversed and remanded.
Judges BRYANT and STEELMAN concur.
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