Progressive Southeastern Insurance Company v. Mcleod et al, No. 7:2008cv00161 - Document 30 (E.D.N.C. 2010)
Court Description: ORDER denying 14 Motion for Summary Judgment and denying 16 Motion for Summary Judgment. On the court's own motion, the trial of this matter is hereby continued to this court's December 14, 2010, term. The clerk is directed to reschedule the pretrial conference accordingly. Signed by Senior Judge Malcolm J. Howard on 9/8/2010. (Heath, D.)
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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION NO. 7:08-CV-161-H PROGRESSIVE SOUTHEASTERN INSURANCE COMPANY, Plaintiff, Progressive Southeastern Insurance Company v. Mcleod et al Doc. 30 v. ORDER WILLIAM W. MCLEOD, Administrator of the Estate of ANNIE MORGAN MCLEOD, and KARON MCLEOD, Defendants. This matter is before the motions for summary judgment. court on the parties' cross- Appropriate responses and replies have been filed, and this matter is ripe for adjudication. STATEMENT OF THE CASE This is Progressive a declaratory Southeastern pursuant to 28 U.S.C. policy Policy") McLeod") of motor § Insurance 2201(a) action instituted Company by ("Progressive") seeking a determination that a #110016778 ("the issued by Progressive to defendant Karon McLeod ("Mrs. provided vehicle judgment only liability $50,000 accident of uninsured motorist per (UM) insurance person and $100,000 per coverage for an automobile Dockets.Justia.com accident which occurred on March 30, death of Mrs. Defendants coverage McLeod's contend that benefits 2008, daughter, and resulted in the Annie the policy provides because Mrs. McLeod was Morgan McLeod. $1 million in UM not provided an opportunity to reject or select alternative UM coverage at the time of the initial purchase of the policy. Subject matter § 1332(a) (1) jurisdiction exists based on diversity of pursuant to citizenship 28 U.S.C. between the parties and an amount in controversy in excess of $75,000. Discovery having concluded, this matter is now before the court on cross-motions for summary judgment. STATEMENT OF THE FACTS Annie automobile Wilmington, Morgan McLeod collision North died which Carolina of injuries occurred when the on car sustained March in passenger was struck by an intoxicated driver, 30, which in an 2008 in she was a Kelvin Caldwell. At the time of her death, Annie McLeod was twenty-two years old and a junior at the University of North Carolina at Wilmington. She is survived by her parents, William and Karon McLeod who are the heirs of her estate. he was and Mr. driving, was Neither Mr. Caldwell, nor the vehicle covered by automobile liability coverage, Caldwell is therefore defined as an uninsured motorist 2 for the purposes of North Carolina General Statute section 20 279.21(b) (3). Defendant William W. McLeod ("Mr. McLeod"), in his capacity as administrator of the Estate of Annie McLeod, has now asserted a claim for OM benefits affords OM coverage of under the Policy, alleging that $1 million for Annie McLeod's it injuries sustained in the accident. The Policy in effect on March 30, 2008 renewal of a policy initially sold to Mrs. 25, Isle 2003. was the eighth McLeod on November Mrs. McLeod purchased the policy through the Harbor Insurance ("Prevatte"), Agency ("Harbor Isle") and Richard Prevatte as an independent agent authorized to sell motor vehicle policies on behalf of Progressive and other insurers in North Carolina. The policy declarations state bodily inj ury liability coverage limits of $50,000 per person and $100,000 per accident and combined OM/UIM bodily injury coverage limits of $50,000 per person and $100,000 per accident. Mrs. 2003 to McLeod first obtain a contacted Harbor Isle in the spring of quote for automobile liability insurance coverage since her daughter Annie was preparing to obtain her driver's license. Mrs. McLeod Based on the quote received from Harbor Isle, placed her liability insurance Harbor Isle with Orion Insurance Company. 3 coverage through In the fall of 2003, Harbor Isle changing her suggested that insurance Ms. McLeod coverage want to consider Progressive. to may In November 2003, Mrs. McLeod traveled to Harbor Isle's office, stood at the counter and signed some "papers" to effectuate the change. does not remember the substance of her She conversation with any Harbor Isle employee during that office visit, nor does she have any Dep . specific at recollection what 27 - 2 8 . ) She "papers" testifies that she she paperwork and that "we didn't go over it." Mr. Prevatte, (McLeod signed. did not review the (McLeod Dep. at 31.) the agent through whom Mrs. McLeod purchased the Progressive Policy has no recollection of dealing with Mrs. McLeod. Neither Mr. Prevatte nor Progressive has been able to locate a signed UM/UIM selection/rejection form for the policy or even Harbor Isle's original McLeod file. 46-47. ) At his deposition, Mr. Prevatte (Prevatte Dep. provided at extensive testimony concerning his custom and habit of sitting down with each customer and going through all of the customer, the documentation with including not only the application, selection/rejection form. (Prevatte Dep. but also the at 11-13, Using the insurance company's computer software, 17-20, 39.) the agent would generate a policy application, which printed all forms necessary for completion, Form Number NC including 0185. The a UM/UIM selection/rejection signed application 4 and the form, signed selection/rejection forms were then forwarded to the carrier via (Prevatte Dep. the internet as well as by mail. he mailed the documents, (Prevatte Dep. at 80.1) When at 69.) they were typically stapled together. Prevatte and his wife were the only agents licensed to sell insurance during his time at Harbor Isle (Prevatte Dep. at 9.) Harbor Isle typically personal motor vehicle policies each month. sold 25 to 30 (Prevatte Dep. at 19. ) Progressive admits that it cannot produce a signed selection/rejection form and is unable to explain why it cannot produce the alleged Progre s s i ve by Mr. page which application is selection/rejection Prevatte. as forwarded Progressive has produced a signed by Mrs. designated forms having McLeod, been which is successfully to six- undated but uploaded to Progressive on November 25, 2003. This six-page application does not include Form NC 0185, the selection/rejection form. Prevatte testified that based on his signature on 1 However, the policy lThe Policy application bearing Mrs. McLeod's signature reflects the liM/UIM coverage limits noted above. Progressive contends that within the six-page application signed by Mrs. McLeod, the language "I hereby declare that the statements contained herein are true to the best of my knowledge and belief and do hereby agree to pay any surcharges applicable under the company rules which are necessitated by inaccurate statements. Liability coverage, Uninsured Motorists Coverage, Combined Uninsured/Underinsured Motorists Coverage, and the available limits of these coverages were explained to me, and I have selected the limits shown," is sufficient to meet the requirements of N.C. Gen. Stat. § 20-279.21(b) (3). 5 application as the producing agent and based on his business practices he was "[a] hundred percent sure" customary that Mrs. McLeod signed the application. 2 (Prevatte Dep. at 44-45.) The policy was renewed eight times following its issuance. Upon each renewal, Progressive mailed to Mrs. McLeod a declarations page, stating UM/UIM coverage limits of $50,000 per person and $100,000 per accident. charged and collected premiums wi th the $50,000 for In addition, UM/UIM per person and $100,000 coverage per progressive consistent accident bodily injury limits. COURT'S DISCUSSION I. Standard of Review Summary judgment is appropriate pursuant to Fed. R. Civ. P. 56 when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Liberty seeking Lobby, Inc., summary 477 jUdgment U.S. 242, bears 247 the (1986). initial Anderson v. The party burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). 2 It was unclear from the deposition whether he was testifying only that he was sure she signed the application, which is in evidence, or whether he was sure she also signed a selection/rejection form. 6 Once the moving party has met its burden, may not rest on the allegations the non-moving party or denials in its pleading, Anderson, 477 U.S. at 248, but "must come forward with 'specific facts showing that Ma tsushi ta Elec. U.S. court 574, 587 has there Indus. (1986) stated, is Co., a genuine Ltd. v. judgment Civ. P. is not court to resolve disputed factual issues. reviewing a claim at the trial. ,,, 475 56 (e)) . As this vehicle a for Fai rc loth v. States, 837 F. Supp. 123, 125 (E.D.N.C. 1993). court for Zeni th Radio Corp., (quoting Fed. R. summary issue the Uni ted Instead, a trial summary judgment stage determine whether a genuine issue exists for trial. should Anderson, 477 U.S. at 249. In making inferences favorable Inc., 369 this drawn determination, from the the underlying to the non-moving party. U.S. 654, 655 (1962) court facts in must the view light most United States v. (per curiam). the Diebold, Only disputes between the parties over facts that might affect the outcome of the case Anderson, properly preclude 477 at U.S. the 247-48. entry of summary Accordingly, the judgment. court must examine "both the materiality and the genuineness of the alleged fact issues" in ruling on this motion. at 125. 7 Faircloth, 837 F. Supp. II. Analysis The North Carolina Responsibility Act, N.C. Motor Vehicle Gen. Stat. Safety § and 20-279.1 Financial et or the seq. (hereinafter the "Financial Responsibility Act" "Act") defines insurers' obligations for offering UM and UIM coverage on motor vehicle policies sold in North Carolina, as well as the procedural coverages. mechanism The for determining the Financial Responsibility Act, limits in effect at time, provides, in pertinent part, as follows: No policy of injury bodily liability insurance, covering liability arising out of the ownership, maintenance, or use of any motor vehicle, shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State unless coverage is provided therein or supplemental thereto, under provisions filed with and approved by the Commissioner of Insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom, in an amount not to be less than the financial responsibility amounts for bodily injury liability as set forth in G.S. 20-279.5 nor greater than one million dollars ($1,000,000), as selected by the policy owner. The coverage required under this subdivision is not applicable where any insured named in the policy rejects the coverage. An insured named in the policy may select different coverage limits as provided in this subdivision. If the named insured in the 8 of such the policy does not rej ect uninsured motorist coverage and does not select different coverage limits, the amount of uninsured motorist coverage shall be equal to the highest limit of bodily injury and property damage liability coverage for anyone vehicle in the policy. Once the option to rej ect the uninsured motorist coverage or to select different coverage limits is offered by the insurer, the insurer is not required to offer the option in any renewal, reinstatement, substitute, amended, altered, modified, transfer, or replacement policy unless the named insured makes a written request to exercise a different option. The selection or rejection of uninsured motorist coverage or the failure to select or reject by a named insured is valid and binding on all insureds and vehicles under the policy. Rejection of or selection of different coverage limits for uninsured motorist coverage for policies under the jurisdiction of the North Carolina Rate Bureau shall be made in writing by a named insured on a form promulgated by the Bureau and approved by the Commissioner of Insurance. N.C. Gen. Section Stat. (b) (4) § 20-279.21(b) (3) (2002) (emphases contains requirements for the offer, coverage. virtually selection, Pursuant to the Act, identical added) . language and and/or rejection of UIM the North Carolina Rate Bureau promulgated NC Form 0185 UM/UIM Selection/Rejection form, which form was approved by the Commissioner of Insurance for use by insurers in this state. See Stegenga v. 196 (2005). 9 Burney, 174 N. C. App. The Act is a "remedial statute which must be liberally construed in order to achieve the beneficial purpose intended by its enactment," which is to protect "innocent victims who may be injured by financially irresponsible motorists." Lee, 119 N.C. App. 44, 449 North Carolina carriers must case (1995) law has strictly Hendrickson v. (internal quotations omitted). consistently held comply with requirements of liM or UIM coverage. the that insurance selection/rejection Furthermore, the insurance carrier has the burden of proving the validity of rejection uninsured coverage. Erie Insurance Exchange v. Miller, of 160 N.C. App. 21 7 ( 2 0 03) . 3 Section 20-279.21 specifically provides that the rejection of or selection of alternative liM coverage be in writing and on a form specifically promulgated Commissioner of Insurance. v. Fortin, Progressive 350 N.C. is 264, unable to by the Rate Bureau and the See State Farm Mutual Auto. Ins. Co. 269 (1999). produce a In the instant matter, selection/rejection form signed by Mrs. McLeod. The parties cite two cases from the North Carolina courts. In State Farm v. Fortin, the insured purchased a motor vehicle 3progressive does not dispute the existence of combined liM/UIM coverage at the amounts reflected in the policy. Progressive has already tendered payment of $50,000 in liM benefits to the Estate of Annie McLeod for injuries sustained in the March 30, 2008 accident. (Burton Aff. ~ 18.) 10 policy in July of 1991 and at that time executed the appropriate selection/rej ection form rej ecting UIM coverage. Fortin, 350 N.C. 264 General Assembly (1999). amended State Farm v. In October of that same year, the the Financial Responsibility Act to change the amount of UM and UIM coverage available to an insured and required to be offered by an insurer. Those amendments allowed an insured to select UM and UIM coverage with limits as high as $1 million, as does the version of the statute at issue in the instant matter. It was undisputed in Fortin that the insurer failed to obtain a new selection/rejection form from its insured following the 1991 amendments. insured in 1992 previously Instead, a policy renewal form sent to the advised him that existing UM/UIM if limits, he wanted to he should change contact his his insurance agent. The North Carolina Supreme Court held that the insurer to failed provide the insured with the proper selection/rejection form as required by the statute and, that there was no valid rej ection. that there ~because coverage nor a statutes provides was selection ~[the neither of thus The Fortin court concluded a valid different rejection coverage of UIM limits,H the claimant's] UIM coverage is $100,000 per person and $300,000 per accident, 11 H the highest limit of bodily injury liability coverage for anyone vehicle in the policy. Id. at 271. In Williams v. Nationwide, 174 N.C. App. 601 (2005), undisputed opportunity limits. that the to reject insured UIM had never coverage or been select it was offered the different UIM The Court of Appeals distinguished Fortin, noting that "a lack of fresh choice concerning the selection of UIM coverage in a renewal form, as occurred in Fortin, is not equivalent to the situation at hand where there has been a total failure to provide the insured with an opportunity to select UIM coverage." Williams, 174 N.C. App. At 605. " [s] uch a failure The court further held that should not invoke the minimum UIM coverage limits established" in the statute and "shield the insurer from additional liability." Id. at 605-06. The held that because of the "total failure" choice, Court of Appeals to offer the insured a the insured was entitled to the maximum amount of UIM coverage available under the statute, $1 million. Progressive asks this court to instant matter analogous to Fortin, find the facts sitting substantive in law of diversi ty, North Carolina Supreme Court. this Carolina I s court highest Private Mortgage 12 the while defendants argue that the facts of this case are more like Williams. court of Inv. As a must court, federal apply the Servs., the North Inc. v. Hotel Club Assocs., & "Where the [North] Inc., 296 F.3d 308, 312 (4th Cir.2002). Supreme has spoken Carolina Court neither directly nor indirectly on the particular issue before us, federal courts are] rule 505, intermediate Appeals, is.'" called upon to predict how that court would if presented with the 527-28 (4th [the Cir. 1999) . appellate Wells v. issue." court, Decisions the '" consti tute the next best North Liddy, of 186 F. 3d the Carolina state's Court of indicia of what state law Id. However, decisions of that court "'may be disregarded if the federal court is convinced by other persuasive data that the highest court of the state would decide otherwise.' " Although this court is troubled by the reasoning Williams and the statutory construction it employs, need not determine, at this time, whether the of this court North Carolina Supreme Court would adopt the reasoning of Williams, as there remain disputed factual issues that preclude summary judgment in this case. Mrs. McLeod Unlike in Fortin and Williams,4 it is unclear whether was offered coverage and if so, an opportunity to select or reject whether that selection or rejection was in compliance with the statutory requirements. 4 The court notes that the facts were not in dispute in either Fortin or Williams. In Fortin, the forms were in evidence. Fortin, 350 N.C. at 266-67. In Williams, the matter was presented to the trial court upon stipulated facts. Williams, 174 N.C. App. At 602. 13 As to the factual issues, in Progressive v. Greene, No. even though it cannot Progressive contends, as it did 1:07-CV-412 produce a signed (M.D.N.C. form, 2008), that it may present evidence of the habit or routine business practice of its agent, Mr. Prevatte, thereby showing that Mrs. McLeod did sign a form identical to the approved Rate Bureau form. See Fed. R. Evid. 406 (providing that evidence "of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless prove that of the the presence conduct of of the eyewitness, person or is relevant organization to on a particular occasion was in conformity with the habit or routine practice.") . In contrast to Progressive's routine practice evidence, Mrs. McLeod's deposition reveals that she remembers going into the Harbor Isle Agency to sign some papers, but does not remember many details of the visit. She does not remember the substance any during of that her conversation office visit with nor does recollection what "papers" she signed. Harbor Isle employee have any specific she (McLeod Dep. at 27-28.) She does testify that she did not review the paperwork and that "we didn't go over it." (McLeod Dep. at 31.) Based on these two divergent factual scenarios, is unable to say, as a matter of law, 14 the court that Progressive did or did not give Mrs. McLeod the opportunity to reject OM coverage. Accordingly, summary judgment is not appropriate at this time. CONCLUSION For the foregoing summary judgment motion, the court's reasons, [DE #14 & #16] trial December of 14, the parties' are DENIED. this matter 2010, is term. cross -mot ions for On the court's own hereby continued to this The clerk is directed reschedule the pretrial conference accordingly. ,I/ This ~ ~ay of September 2010. s District Judge At Greenville, NC #26 15 to
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