Honeycutt v. Walker

458 S.E.2d 23 (1995)

119 N.C. App. 220

Michael Earl HONEYCUTT and Cathy Lynn Honeycutt, Plaintiffs, v. Roy Lee WALKER and North Carolina Farm Bureau Mutual Insurance Company, Defendants.

No. 94-645.

Court of Appeals of North Carolina.

June 6, 1995.

*24 Stewart & Hayes by Vernon K. Stewart and Heather A. Hayes, Dunn, for plaintiffs-appellees.

Thompson, Barefoot & Smyth by Theodore B. Smyth, Raleigh, for defendant-appellant.

McGEE, Judge.

Defendant-appellant Farm Bureau assigns as error the trial court's grant of summary judgment for the plaintiffs entitling them to underinsured motorist coverage under the Farm Bureau policy.

Farm Bureau first argues the family-owned exclusion clause prevents plaintiffs from recovering for injuries sustained by Mr. Honeycutt while operating a motorcycle owned by him but not listed in the Farm Bureau policy. Our analysis begins with a determination of whether Michael Honeycutt is a member of an insured class entitled to UIM coverage under the Farm Bureau insurance policy. In Bass v. N.C. Farm Bureau Mut. Ins. Co., 332 N.C. 109, 418 S.E.2d 221 (1992), the plaintiff was also injured *25 while riding his motorcycle. The insurance policy covering the motorcycle did not contain UIM coverage. The plaintiff attempted to recover under a policy insuring an automobile and a truck owned by him that did include UIM coverage. Our Supreme Court held that the plaintiff, as the named insured, was a person insured of the first class under N.C.Gen.Stat. § 20-279.21(b)(3) and therefore was "entitled to UIM benefits under his automobile/truck policy regardless of whether he [was] riding in the insured vehicles or on his motorcycle, or just walking down the street." Bass at 112, 418 S.E.2d at 223. The Court stated UIM insurance is essentially person oriented, unlike liability insurance which is vehicle oriented. Therefore the plaintiff could recover under the automobile/truck policy issued by the defendant. Id.

Mr. Honeycutt, as the named insured under the Farm Bureau policy, is a first class insured as defined by statute and under the Bass decision. As an insured of the first class, he is entitled to benefits under the UIM coverage contained in the Farm Bureau policy covering his Pontiac and Dodge automobiles, even though he was injured while riding his motorcycle.

Next, we must determine the effect of the family-owned exclusion clause. Farm Bureau argues this case is distinguishable from Bass because the Bass insurance policy contained no such clause. However, the existence of a family-owned exclusion clause in Mr. Honeycutt's insurance policy does not affect whether plaintiffs are entitled to UIM benefits. This Court rejected the family-owned exclusion with regard to UIM coverage in Nationwide Mutual Ins. Co. v. Mabe, 115 N.C.App. 193, 444 S.E.2d 664, disc. review allowed, 337 N.C. 802, 449 S.E.2d 748, 450 S.E.2d 485 (1994), cert. dismissed, 339 N.C. 614, 454 S.E.2d 255 (1995). Mabe held that a family-owned vehicle exclusion is contrary to the terms of G.S. 20-279.21(b)(4) because it attempts to impose a restriction not intended under the Financial Responsibility Act. Mabe at 205, 444 S.E.2d at 671. Accord, Harper v. Allstate Ins. Co., 117 N.C.App. 302, 450 S.E.2d 759 (1994), disc. review allowed, 339 N.C. 612, 454 S.E.2d 251 (1995). Mr. Honeycutt may collect UIM benefits under the Farm Bureau policy for injuries suffered while riding his motorcycle, notwithstanding the family-owned exclusion clause.

Finally, Farm Bureau argues the 1991 amendments to G.S. 20-279.21(b)(4) moved the focus of UIM coverage from persons to vehicles, thereby making a family-owned exclusion valid. The 1991 amendments to G.S. 20-279.21(b)(4) became effective 5 November 1991 and apply to all new and renewal policies written on or after that date. 1991 N.C.Sess.Laws ch. 646 § 4. Mr. Honeycutt renewed his Farm Bureau policy on 17 March 1992.

The amended statute states, in part:

In any event, the limit of underinsured motorist coverage applicable to any claim is determined to be the difference between the amount paid to the claimant under the exhausted liability policy or policies and the limit of underinsured motorist coverage applicable to the motor vehicle involved in the accident. Furthermore, if a claimant is an insured under the underinsured motorist coverage on separate or additional policies, the limit of underinsured motorist coverage applicable to the claimant is the difference between the amount paid to the claimant under the exhausted liability policy or policies and the total limits of the claimant's underinsured motorist coverages as determined by combining the highest limit available under each policy.... The underinsured motorist limits applicable to any one motor vehicle under a policy shall not be combined with or added to the limits applicable to any other motor vehicle under that policy.

N.C.Gen.Stat. § 20-279.21(b)(4) (1993). Based upon our reading of the statutory changes, Farm Bureau's final argument is unconvincing.

While no cases have directly addressed the impact of the 1991 amendments regarding stacking issues, several have discussed their probable intent. In Bass, our Supreme Court stated in a footnote that the amendment to G.S. 20-279.21(b)(4) "appears to prohibit intrapolicy stacking." Bass at 113, 418 S.E.2d at 223. In State Farm Mut. Auto. Ins. Co. v. Young, 115 N.C.App. 68, 443 S.E.2d 756, disc. review allowed, 338 N.C. *26 523, 453 S.E.2d 168 (1994), this Court held a family-owned exclusion to be void as contrary to the Financial Responsibility Act, noting the policy was issued "before G.S. § 20-279.21 was amended to preclude intrapolicy stacking of underinsured motorist coverage." Young at 69, 443 S.E.2d at 758. In Maryland Casualty Co. v. Smith, 117 N.C.App. 593, 452 S.E.2d 318, disc. review denied, 340 N.C. 114, 456 S.E.2d 316 (1995), this Court, in determining the validity of a rejection of UIM coverage after the 1991 amendments, noted that the amendments dealing with UIM coverage allowed only interpolicy stacking. Maryland Casualty at 597, 452 S.E.2d at 320. Further, the bill enacting the amendments was entitled "AN ACT TO PROHIBIT THE STACKING OF UNINSURED AND UNDERINSURED MOTORIST COVERAGE." 1991 N.C.Sess.Laws ch. 646.

Based upon our reading of the statute, discussions of the amendments in previous cases, and the title of the Act, the main purpose of the 1991 amendments to G.S. 20-279.21(b)(4) appears to be the prohibition of intrapolicy stacking of UIM coverage. We do not agree with Farm Bureau that an anti-intrapolicy stacking provision in the statute is equivalent to a family-owned exclusion. As this Court has stated, UM/UIM coverage follows the person, not the vehicle. Mabe at 204, 444 S.E.2d at 671. The amendments do not indicate the General Assembly intended to change the focus of UIM coverage from persons to vehicles. The anti-intrapolicy stacking provisions in the 1991 amendments to G.S. 20-279.21(b)(4) simply prevent an insured from receiving multiple UIM recoveries under a single policy. They do not prevent an insured from being covered while operating an owned vehicle not listed in the policy.

The trial court's entry of summary judgment against Farm Bureau in favor of the plaintiffs is affirmed.

Affirmed.

EAGLES and WALKER, JJ., concur.