Lavender v. State Farm Mut. Auto. Ins. Co.

450 S.E.2d 34 (1994)

117 N.C. App. 135

Gregory Scott LAVENDER v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 9427SC11.

Court of Appeals of North Carolina.

November 15, 1994.

Tim L. Harris & Associates by T. Scott White and Jerry N. Ragan, Gastonia, for plaintiff-appellant.

*35 Golding, Meekins, Holden, Cosper & Stiles by Harvey L. Cosper, Jr. and Paul R. Dickinson, Charlotte, for defendant-appellee.

GREENE, Judge.

Gregory Scott Lavender (plaintiff) appeals from an order entering summary judgment for State Farm Mutual Automobile Insurance Company (defendant).

In this action, filed 22 March 1993, the plaintiff seeks a declaration of his rights under an insurance policy issued by the defendant to James Edward Parks, Jr. (Parks), specifically whether he is entitled to recovery from the defendant of the punitive damages awarded the plaintiff against defendant's insured. In that policy the defendant agreed to pay "damages for bodily injury or property damage for which any insured becomes legally responsible because of an auto accident." On 6 February 1988, Parks was involved in an automobile collision with the plaintiff in which the plaintiff sustained personal injuries. A jury trial was conducted and the jury rendered a verdict for the plaintiff in the amount of $30,000 in compensatory damages and $10,000 in punitive damages. A judgment for the plaintiff against Parks was docketed on 5 July 1989. On 13 July 1989, the defendant satisfied the compensatory award portion of the judgment, but not the punitive damage award.

The issues presented are (I) whether the policy language includes coverage for punitive damages and (II) if so, whether the three year statute of limitations bars the plaintiff's claim.

The defendant first argues that summary judgment was appropriate because it has no liability under its policy to pay for punitive damage awards entered against its insured. We disagree. This Court has recently held that the precise language contained in this policy provided coverage for punitive damages. New South Ins. Co. v. Kidd, 114 N.C.App. 749, 754, 443 S.E.2d 85, 88, disc. rev. denied, 336 N.C. 782, 447 S.E.2d 427 (1994). If the insurance company wishes to exclude punitive damages from its coverage, it must do so specifically. Id. In the policy at issue, there is no express exclusion of punitive damages, thus the punitive damage award is within the coverage of the defendant's policy. Accordingly, summary judgment for the defendant on this issue cannot be sustained.

In the alternative, the defendant argues that the plaintiff's claim is barred by the statute of limitations. We agree.

It 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." Hall v. Harleysville Mut. Casualty Co., 233 N.C. 339, 340, 64 S.E.2d 160, 161 (1951); see Smith v. King, 52 N.C.App. 158, 159, 277 S.E.2d 875, 876 (1981). The injured person's claim is therefore in contract and is governed by the three year statute of limitations, N.C.G.S. § 1-52(1) (Supp.1993), which begins to run "at the time of entry of judgment against the insured." 20A John A. Appleman & Jean Appleman, Insurance Law and Practice § 11614 (rev. vol. 1980); see Penley v. Penley, 314 N.C. 1, 20, 332 S.E.2d 51, 62 (1985).

In this case, the complaint was filed on 22 March 1993, more than three years after 5 July 1989, the date of the entry of the judgment against Parks, the insured. Accordingly, the summary judgment of the trial court is affirmed on this basis.

Affirmed.

JOHNSON and LEWIS, JJ., concur.